Why do the hidden costs of Unified Communications solutions need to change?
Unified Communications has rapidly become a key business buzzword. Companies large and small are being urged to adopt Unified Communications solutions as their next generation communications platform, and a growing community of vendors and service providers has emerged, with a bewildering range of offers. They promise numerous benefits, such as increased productivity and greater efficiency – all at an affordable price.
But there are pitfalls that can trap the unwary and create risks for your business – and which are preventing thousands of businesses from capitalising on Unified Communications. While Unified Communications can deliver, you need to really understand the hidden costs. In this article, we’ll explore these pitfalls, show how changing pricing models can unlock the potential of Unified Communications, and help you make the right choice for your business. First, though, let’s make sure we understand what we are talking about.
What is Unified Communications?
As usual, the use of a new term can be confusing. Many businesses are now aware of the benefits of hosted voice over IP – VoIP solutions – which take the functions of a traditional PBX and deliver them from a hosted (or cloud) network, across broadband connections. One way of looking at Unified Communications is to simply consider it as the next phase in the evolution of hosted VoIP services, adding new collaboration and integration possibilities to established telephony functions. So, a typical Unified Communications solution adds things like presence, instant messaging, team collaboration and integration with CRM (Customer Relationship Management) products, as well as other business software.
And, while there are solutions that can be deployed in the company’s premises, the more common model is for Unified Communications to be deployed in the cloud and accessed via broadband connectivity, with one platform being shared by many companies and their employees. There are many offers available in the market, but most are really variations around these key themes. Importantly, most are packaged and sold under what are known as “Software as a Service” or SaaS models, which has opened the market and brought Unified Communications solutions to a wider audience.
How is Unified Communications sold?
SaaS, as the name suggests, means that a service, usually enabled by a software-based solution, is sold to users under a rental license. Unified Communications solutions are usually offered in this way, but with a crucial difference, as we shall see.
So, most providers offer their business customers a fixed monthly fee for each registered user account. Providers will often point to the cost savings that can result. Whereas the old model relied on selling a platform and deploying it in a company’s own network infrastructure, typically with a large upfront cost and investment in capital, SaaS moves expenditure to operational budgets – OPEX. This saves cash and provides, in theory, a predictable cashflow that can easily be afforded and included in monthly and annual budgets. As a result, Unified Communications has become more affordable and is within range of many smaller companies, which could not previously access such advanced communications functionality.
In addition to the service, vendors often provide fixed telephones as part of the package. However, there are pitfalls to this model, which can lead to unexpected costs, reduce business agility and, ultimately, are limiting adoption of Unified Communications – denying many companies the promised benefits.
As things stand, the SaaS model behind Unified Communications is usually a combination of pure SaaS and other costs. These include:
In addition, call charges may be included in the bundle, but there may also be fees for out-of-bundle calls, when pre-defined limits are exceeded or if calls to destinations and number types not covered by the plan are made.
Does this sound familiar?
Today’s Unified Communications services are similar to post-paid mobile
Like the Unified Communications sector, the mobile industry enjoyed a flush of early growth, as adopters eagerly embraced the novelty of mobile communications. The cost of mobile devices was (and remains) high, so to stimulate adoption of mobile services, providers introduced subsidies, so that the cost of a phone was spread over a contract period. This is effectively what today’s Unified Communications service providers are doing.
They are locking customers into long-term plans, often with additional variable charges, in which costs are spread over the period of the contract. This means that prices, while superficially affordable, can actually be much higher through the life-time of a plan that had been anticipated.
For larger companies, this can be an acceptable approach. They may be happy to sign up for multi-year contracts and be prepared to accept variability in charges, based around an average cost per user. And, of course, the service provider benefits from such an approach, as its customers are turned into assets at a stroke, helping boost their own market valuations.
Why this limits adoption and agility
Many smaller businesses do not have three-year time horizons. They are concerned with cashflow today and managing their resources. They do not have time to scrutinise long-term contracts. They do not want to be locked into contracts that might seem competitive at the outset, but which may not be so attractive in two- or three-years’ time.
Smaller businesses operate in a world of uncertainty. They may have a thriving business, but conditions can change, and they need to protect themselves against external factors that they cannot influence while protecting their resources. It is easier by far to simply defer non-critical decisions, such as choosing a communications solution, irrespective of the benefits that it might offer. Complex pricing, fixed-term contracts and unexpected variables all make it easy to simply avoid adopting a solution that you may not think you really need.
At the same time, while Unified Communications is like SaaS, it’s not exactly the same. That’s because most pure-play SaaS offers have the option for monthly or annual subscriptions. In other words, you can choose to lock-in, perhaps to benefit from price discounts, or you can opt for flexibility, with the ability to cancel at any time.
Of course, as the value of the solution becomes apparent to your business, you are probably less likely to cancel a solution that delivers benefits – but the ability to explore these benefits without being tied to a contract provides businesses with the confidence to explore and discover them internally, rather than simply believe the vendor’s sales pitch.
So, many smaller businesses, faced with uncertain (unproven) benefits and contracts that require commitments, are simply not adopting Unified Communications solutions at all. This is very similar to the state of the mobile industry, when it was in its infancy back in the 1990s.
Mobile changed – what happened?
In the early days of the mobile industry, mobile subscriptions were costly and seen as a luxury. Today, that seems ridiculous – everyone has a mobile and a shiny device! So, what changed and how can the Unified Communications industry change too to boost uptake and reach even the smallest businesses?
In a word, prepaid. Prepaid, otherwise known as “pay as you go” brought the novelty of mobility to the masses. It unlocked the market and led to an explosion in subscriber numbers. It’s based on a simple concept. Originally, users would buy their own device, get a SIM from a provider. They would pay a fee, in advance and the credit would be used to fund their calls and other service consumption. When the credit had been used, they would simply “top-up” to recharge their accounts. If they didn’t like the service, they could simply stop and move to a different provider, taking their number with them or obtaining a new one.
Things have evolved somewhat and, today, mobile providers offer a huge range of prepaid packages, but the principle remains the same. There is no contract, no long-term commitment and no lock-in. According to UK regulator, Ofcom, in 2001, a staggering 70% of mobile customers were using prepaid accounts. These were new customers, attracted by simplicity, ease of use and the convenience of choosing what they want, when they want.
This shook up the market. The number of mobile users exploded. In 2018, according to Ofcom, UK mobile penetration exceeds 100%, with more than 90 million mobile connections in service. As more powerful devices emerged and as data connection rates improved, mobile providers responded by launching new packages, reducing contract costs and commitment periods. So, prepaid numbers have dropped – settling at 30% of the market in 2017, as reported by Ofcom – but the impact is clear.
The launch of prepaid had a dramatic positive impact on the market. It brought mobility within reach of millions, introduced certainty and flexibility, and bringing real choice to customers. Crucially, it expanded the mobile market to enable mobility to reach its full potential. Unified Communications is held back by the current post-paid approach.
Prepaid for Unified Communications
In the UK, government figures show that small businesses account for 99.3% of private companies. Small is defined as being a business with fewer than 50 employees – and there are more than 12 million people in total employed in such companies. These are companies that are not racing to adopt Unified Communications. Despite the headlines, Unified Communications has largely been adopted in larger companies. The market is held back. The key to unlocking this market is to learn the lessons of prepaid mobile.
Businesses should be able to buy Unified Communications services on a pay-as-you-go basis. They should not have to commit to long-term, multi-year contracts. You should be able to explore the service, understand the benefits and see what Unified Communications can do for you, without having to enter into hire purchase agreements for equipment, without startup costs and with the freedom to stop and start services as they please. That’s what VoIPstudio can do for you.
Unified Communications for all
VoIPstudio takes the best of prepaid models and brings them to the enterprise community. If you are a small business, startup or are simply considering migrating to Unified Communications – but are afraid of the risk in committing to a lengthy contract, then VoIPstudio is for you. It’s a pay-as-you-go Unified Communications service, with a fully-features virtual PBX at its core. It offers instant messaging, team collaboration, presence and more, so that you can experience the benefits of Unified Communications.
It democratises pricing, so any business can enjoy a superior communications experience and is bringing powerful, business-grade features to the mass market. Simple, flexible pricing with the freedom to activate or end services, when you want, it delivers convenience and control to your business.
VoIPstudio – democratising Unified Communications for the business community. By adopting proven prepaid models, it’s unleashing Unified Communications for all.
Start a free 30 day trial now, no credit card details are needed!
Thousands of businesses across the world trust VoIPstudio for all of their most vital business communications. Why not be the next?
Start a free 30 day trial now, no credit card details are needed!