I always look forward to seeing the new Gartner UCaaS Magic Quadrant when it comes out so I can take a look and see how companies have moved up or down (or in and out) in the rankings. This year, however, Gartner threw me a curveball and took the UCaaS report worldwide, making comparisons to previous year’s reports irrelevant. In many ways this makes sense. as there are over 250 UCaaS vendors worldwide with approximately 100 in North America alone and Gartner is looking to define the industry leaders based on the ability to not only innovate, but also to execute globally. Some of the inclusion criteria that vendors had to meet in order to be considered included:
Having a UCaaS solution that is commercially available in three regions: North America, Europe and Asia/Pacific
Showing UCaaS revenue of at least $50 million annually
Displaying the ability to support customers with more than 1,000 employees
Here’s how the first Worldwide UCaaS Magic Quadrant shook out:
First Look at the UCaaS Global Magic Quadrant
One of the first things you may notice is there are a number of well-known UCaaS vendors that didn’t make the cut, like Alcatel-Lucent, Interactive Intelligence, MegaPath, Fonality and a whole bunch of other. In many cases, these otherwise strong vendors were excluded because of insufficient global coverage. The second thing that caught my eye was the lead that Google and Microsoft have above everyone else in the “Ability to Execute” axis (no real surprise there), but that they weren’t in the “Leaders” quadrant. According to Gartner, this is due to the fact that, even though they offer a low-cost, scalable solution that is being deployed like crazy and is strong in presence, IM, UM and videoconferencing, they don’t have an enterprise-grade telephony offering. Of course that may be changing soon...read our recent post Microsoft Dives Deeper into Telephony.
Another note of interest. While companies like 8x8, ThinkingPhones and RingCentral were well along the “Visionaries” axis based on their proprietary UCaaS platforms and ability to innovate, there are a number of business in the report that make their name building upon and extending the Cisco and Microsoft (Skype for Business) stacks, or both. Cisco-based solutions are offered by AT&T, BT, CSC, NTT Communications, Orange, Verizon and West, while Microsoft-based solutions are offered by AT&T, Avenade, BT, CSC, Interoute, NTT and Orange. Several vendors also offer solutions built upon the Broadsoft stack.
Takeaways on The UCaaS Market - Directions and Drivers
While the move towards global assessment was a key factor in the report, there are also a number of trends and drivers impacting the UCaaS market that are highlighted. My takeaways include:
Smaller Businesses Opt for UCaaS
Small and medium businesses, those below 1,000 employees, are most likely to deploy UCaaS offerings. According to the report:
SMBs increasingly opt for UCaaS when factoring in service costs, the difficulty of obtaining internal technical expertise, the operational expense business model and the pace of innovation. In addition, SMBs are more open to leveraging UCaaS providers with limited brand and have less rigorous integration requirements.
When going upmarket to larger enterprises, the UCaaS model runs into some challenges. For medium sized companies with more than 1,000 employees, UCaaS remains an option, however these businesses are looking for larger vendors with a proven track record and also require greater customizations and integrations. This often leads to many midsized enterprises opting for more traditional premise-based deployments. For large companies with multiple international locations, UCaaS remains the exception, not the rule.
“Mobile First” Deployments are Accelerating
Gartner cites a trend towards increased “mobile-first” UCaaS deployments in which companies have a major segment of their workforce not use a traditional handset at all, instead handling their voice communications entirely through softphones (we’re assuming with headsets, hopefully these people aren’t yelling at their computers all day) and mobile devices. This is not an all or nothing approach, but most companies are segmenting employees based on whether a mobile-first approach makes sense. As the report states:
Some deployments may request that 80% of users want a handset, while other companies may request phones for only 20% of their users. In some isolated cases, the entire workforce is mobile-only.
The age of the workforce, the business vertical and geographic locations all play a role in the speed at which a mobile-first approach is adopted. Expect this trend to continue.
APIs and Integration Increasingly Important to Users of UCaaS
Companies are expressing strong interest in connecting their UCaaS solutions with other applications to streamline business processes, and the market is responding with APIs (Application Program Interface) to accomplish this. Integrations to solutions like CRM (Salesforce, SugarCRM, Marketo), the Microsoft and Google IT stacks and storage solutions like Box and Dropbox are becoming more common or even expected. As Gartner explains:
Integrating UCaaS with leading cloud applications via APIs enables businesses to operate more efficiently. A user running Salesforce can place a call via the customer’s Salesforce record and have the connection added to the record. The business may even choose to record and archive the call.
UCaaS offerings are becoming much more competitive with traditional premise-based alternatives, as the API/integration example shows. Just the fact that Gartner focused the UCaaS Magic Quadrant on companies that can deliver internationally shows that UCaaS is seen as an increasingly legitimate option in the minds of companies and IT executives. At The UC Buyer we expect that UCaaS will continue to grow quickly and move slowly up towards larger enterprises as capabilities continue to mature and companies become increasingly comfortable moving to the cloud.