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Making the Hosted UC Decision, Part 2: The Cons

Posted by Paul Desmond

Aug 4, 2014

In a previous post, we went through some of the advantages inherent in a hosted UC solution, including ease of deployment and maintenance, (usually) lower up-front costs and pay-as-you grow pricing. But virtually no IT decision is without some drawbacks and hosted UC is no different.
Cloud-UC-SecurityFirst, a cloud-based solution will be far less customizable than a premise-based UC system. When you install your own UC system, you can pick and choose which components you want. (Of course then you have to integrate them yourself, a job that falls to the cloud provider under the hosted solution – one of the pros of that approach.) With a hosted solution, you’ll likely have a few options to choose from in terms of features and functions but if what you want is not on your provider’s menu, you’ll either have to look elsewhere or do without it.

Making the Business Case for Hosted UC


Company size will play a big role in the decision. UC solutions generally make financial sense for small- and medium-sized businesses, but for enterprises the business case can be far more difficult to make. Industry consultant Alex Lewis makes this point in a recent blog post, in which he writes:
At scale, hosted services are often grossly more expensive than on-premises solutions, even including human resource costs to manage the solution. For example, on a recent project I worked on, the return on investment (ROI) from bringing just web conferencing in house was just over $6 million per year, with 100 percent ROI achieved in less than 6 months.

Any company also needs to consider “unexpected” costs, especially if this is the firm’s first foray into a cloud-based IT solution, says Gary Audin, a consultant with Delphi, Inc. and author of a two-part blog post on the topic. In part 1 he says such costs can include a needs assessment, site surveys and system design, along with the new or upgraded IP phones or headsets. Also consider that your existing phone service will likely need to operate in conjunction with the cloud-based service for 30 to 60 days, in case you encounter any problems with the new service. And despite what cloud-based providers may say, factor in training costs as well.

Audin also advises that companies be wary of inflexible contract terms, especially if the deal is for 3 or more years. He says companies should ask “what if” questions such as:

  • The selected features and functions selected by IT are not what end up being used?
  • The selected feature and function mix changes, either increased or decreased?
  • The enterprise has a reduction in force, is acquired, or experiences a business downturn leading to fewer users and possibly the elimination of some features and functions? Will this affect discounts producing a higher per user cost for the service?
  • The technologies offered do not meet the enterprise needs as the enterprise matures in its use of UC?

Ensuring Security for Cloud-based UC

Security is another oft-cited issue with respect to any cloud service. But for SMBs and even many enterprises, it’s one that I think is overblown. It’s a rare SMB that can provide security for its own IT environment that will be as airtight as that of a good cloud service provider. Certainly companies should ask about what security measures are in place, and insist on encryption where it makes sense. But they should also ask, can I do it any better myself?

That said, Audin raises some legitimate issues to consider around data privacy with respect to cloud-based UC, especially for enterprises. He writes:
What if a government agency subpoenas data of another enterprise sharing the same virtualized UC cloud service? There has been more than one case where the FBI confiscated all the servers and storage systems because it could not isolate the subpoenaed data. This created a situation where the other service subscribers could no longer access to their data. For intents and purposes, the stored data was lost. How is the enterprise protected in this case is part of the legal agreement?

He also points out the need to ensure the provider can handle 911 and E911 calls, noting that E911 is state-regulated and thus requirements vary by location. In some instances, third party 911 and E911 services may be required, which may not be covered in the provider’s standard contract. “Look for disclaimers in the contract that assigns the burden solely to the enterprise,” he advises.

Regulatory Gotchas with Cloud-based UC

Finally, companies may run into some regulatory issues with some cloud-based UC services, Audin notes. Many countries have strict rules around where data is stored as well as whether encryption can be used, for example. You’ll need to determine whether your provider has the authority to offer services in whatever countries you may require service to and make sure it’s aware of and following all the relevant rules.

Topics: cloud, networking, Business Case, Security