Optimal UCC Performance Vital to Digital Transformation ... · the time/staff to evaluate them. If...

N e m e r t e s R e s e a r c h G r o u p I n c . w w w . n e m e r t e s . c o m 1 - 8 8 8 - 2 4 1 - 2 6 8 5

OptimalUCCPerformanceVitaltoDigitalTransformationSuccessPerformanceManagementToolsReduceOpex,BoostAdoptionAscompaniesfocusincreasinglyondigitaltransformationinitiatives,aUnifiedCommunicationsandCollaborationinfrastructurethatoperatesoptimallyiscrucialtosuccess.Operatingthatinfrastructurewiththeappropriateperformancemanagementtoolsensuresbetteruptime,fasterresolutionofproblems,andmoreaccuratenotificationofpotentialissues.Butanotherbenefitalsoemerges—significantoperationalcostsavings.Thisreportdemonstrateshowcompaniescanbenefitfromperformancemanagement.

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ByRobinGareissPresidentNemertesResearch

CompassDirectionPoints:

! UCCcorrelateswithdigitaltransformationsuccess.CompanieswithsuccessfuldigitaltransformationinitiativesinvestinUCC72%morethanunsuccessfulcompanies.

! Performancemanagementreducescosts.ThoseusingperformancemanagementtoolsspendlessthanhalfonUCCoperationalcostsvs.thosewhodon’tusetools.

! IRcustomersseebiggestopexdecrease.IRcustomersspend33%lessthanthenextcompetitor.

©NemertesResearch2017!www.nemertes.com!888-241-2685!DN5985

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TableofContents

EXECUTIVESUMMARY 3

THEISSUE 4

DIGITALTRANSFORMATIONDRIVESBUSINESSTECHNOLOGYDECISIONS 4KEYTECHNOLOGIESSUPPORTINGDIGITALTRANSFORMATION 5

UCC’SVITALROLEINTRANSFORMATION 6CHALLENGESTOEFFECTIVEMANAGEMENT 6COSTOFDOWNTIME 8

UCCMATTERS.WHYNOTMAKESUREITWORKSWELL? 9DEFININGPERFORMANCEMANAGEMENT,PROVIDERS 9SIGNIFICANTCOSTSAVINGSWITHMANAGEMENTTOOLS 10OPERATIONALCOSTDETAILS 12INCREASEDADOPTION 12

CONCLUSIONANDRECOMMENDATIONS 12

METHODOLOGY 13DEMOGRAPHICS 13


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ExecutiveSummaryNearly70%oforganizationshaveadigitaltransformationinitiativeunderway.Inorderforthoseprojectstobesuccessful,theymusthaveasolidfoundationtosupportcommunicationsandcollaboration.Infact,inNemertes’DigitalTransformationandITFuturesresearch,wefoundthatsuccessfuldigitalcompaniesareinvestinginUCCatamuchhigherratethanunsuccessfulcompanies.ThisunderscoresthehighvisibilityofUCCatcompanies—amongboththeITandbusinessstaffs.InorderforUCCtooperateatmaximumefficiency,ITleadersmustcarefullyevaluatemanagementandmonitoringtools.Most,however,delaythisanalysisuntiltheyrunintoproblems.Theystarttheirdeploymentsusingtoolsthatcomefromtheplatformprovider,andwithinonetotwoyearsfindtheminsufficienttogetthelevelofanalytics,reporting,root-causeanalysisandmore.What’smore,theyalsofinddowntimeishigherthantheywouldlike—andananalysistypicallyshowsdowntimecostsmorethanmostrealize.Whentheypurchaseperformancemanagementtools,theyfindseveralbenefits.Amongthem:

• Lessdowntimeandquickerresolutionofproblems• UCCoperationalcostscutinhalfvs.thosewhodonotusethetools• Thirty-onepercentincreaseinthenumberofpeopleactuallyusingUCC

becausetheappsworkbetter.Nemertes’annualUnifiedCommunicationsandCollaborationTotalCostofOperationsresearchprojectprovidesdetailedcostandutilizationdatatoseewhatthereal-worlddifferencesarewiththeuseofperformancemanagement.


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TheIssueDigitaltransformationinitiativeshavefacilitatedstrongdemandforreliablecommunicationsandcollaborationinfrastructurethathelpemployeesworkasefficientlyaspossible.Withouteffectivecommunicationsandcollaborationcapabilities,employeesareatacompetitivedisadvantagewithslowerproductdevelopmentanddecision-makingoverall.Infact,companiesidentifiedinthe“successgroup”ofNemertes’2016DigitalTransformationandITFuturesresearchplannedtoincreasespendinginUCC72%morethanthosenotinthesuccessgroup.Morethanhalfofcompaniesplantoincreasetheir2018UCCbudgetsbyanaverageof12.3%.Atthesametime,businessandITleadersarepayingmoreattentiontooperationalefficiencysotheirspendinggoesfurther.Increasingrelianceonanalyticstoolsdocumentoperationalefficiency(orlackthereof),puttingmorepressureonITstaffstominimizedowntime.GiventheincreasedinvestmentofUCCoverall,alongwiththetechnologybeingaconduittosuccessfuldigitaltransformationprojects,it’smorevitalthaneverthatUCCisreliable,reducesoperatingcosts,andimprovesefficiency.

DigitalTransformationDrivesBusinessTechnologyDecisionsNemertesdefinesdigitaltransformationastheinnovativeapplicationoftechnologythatimprovesorcreatesaprocess,product,orexperiencethatultimatelydrivesvalue.

Figure1:DigitalTransformationDefined

Digital Transformation: At its Basic Level

Innovative Application

of Technology

Improves, creates process, product,

experience

To Drive Value

•  Cloud •  Mobility •  IoT •  Analytics •  Artificial Intelligence •  Virtual Reality •  Collaboration •  Security

•  Insurance claim filed via iPhone with photo, electronic form

•  Car tells you what’s wrong, schedules service call

•  Sensors vs. people monitor remote oil rigs

•  Employees use digital whiteboard & video to meet

•  Improved customer experience

•  Reduced cost •  Improved productivity •  Higher sales


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Thetechnologycanincludeanewapplicationofexistingproducts,services,orapps,ortheimplementationofentirelynewproducts,services,orapps.(PleaseseeFigure1forexamplesofsuchtechnologies.)Theapplicationofthatexistingornewtechnologyresultsintransformation—anewwayforemployeestoworkorcommunicate,abetterwayforcustomerstogetwhattheyneed,orafasterwaytogetwordtomarketaboutanewproduct,forexample.Butinordertohaveatruedigitaltransformation,measureablevaluemustultimatelyresultfromthechanges.Thevalueitdrivescanincludeanyofthefollowing:

• Generatesrevenue• Reducescost• Increasesemployeeproductivity• Improvescustomerexperience• Bolstersemployeerecruitmentandloyalty.

KeyTechnologiesSupportingDigitalTransformationThoughwemayreadabouttheexcitementsurroundingartificialintelligence,virtualreality,orInternetofThings(IOT),themajorityofsuccessfuldigitalcompaniesfocusonfoundationaltechnologiesfirsttosupportthemoreadvanceddigitaltransformationinitiatives.Foundationaltechnologiesincludethenetwork,cloudinfrastructure,andUCC.UCC,though,straddlesbothfoundationalandinnovativetechnology.Astrongfoundationincludessolidtelecommunicationscapabilities,alongwithsomebasics,suchasinstantmessaging,presence,andconferencing.Movingforward,organizationsareexploringteamcollaboration,virtualwhiteboards,andmobile-enabledcollaborationtofurtherenhanceinteractions.WeaskedITleaderswheretheyplannedtoincreasespendingin2017.Wethensegmentedtheresultsbythosewhometourcriteriaforsuccessfuldigitaltransformationorganizationsandthosewhodidnot.Wehighlightedthedifferences—andbywhatpercentages—betweenthoseinthesuccessgroupandthosenot.AsshowninFigure2,companiesfindingsuccesswithdigitaltransformationplantoincreasetheirspendingonUCC72%morethanunsuccessfulcompanies.


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Figure2:SuccessfulDigitalCompanies'2017SpendingPlans1

WithUCCbeingsovitaltoorganizations’broaderdigitaltransformationinitiatives,it’simperativefortheUCCproducts,apps,andservicestooperateatmaximumefficiency.

UCC’sVitalRoleinTransformationAlltoooften,wetalkwithITleaderswhoareexperiencingproblemswiththeirIPtelephonyorUCperformance.Typically,theseareon-premisesdeploymentsthatreliedonlyonthemanagementandmonitoringtoolsthatcomewiththeplatform.However,platformprovidersdonotspecializeinmanagement,nordotheytypicallymanageacrossplatformsinamulti-vendorenvironment,sothecapabilitiesandreacharelimited.Withinonetotwoyears,theyrealizetheyneedadditionaltoolstoassistwithroot-causeanalysis,predictiveanalysis,eventmanagement,andmore.

ChallengestoEffectiveManagementSowhydoITleadersoftenbypassbuyingthird-partymanagementandmonitoringtoolsiftheycanhelpthemoperatetheircommunicationsinfrastructuresmoreeffectively?Andindoingso,whatotherchallengesdotheyface?AfterconductingresearchwithhundredsofITprofessionals,Nemerteshascharacterizedchallengesinthefollowingchallenges:1CCCE=ContactCenterandCustomerEngagement;MPS=ManagedandProfessionalServices

12%

17%

18%

21%

23%

25%

26%

27%

32%

42%

50%

54%

59%

63%

72%

Security/MPS

UCC/MPS

PaaS

CCCE

SaaS

DevOps

APIs

Security/Capital

Wearables

IaaS

IoT

DC Infrastructure

WAN Infrastructure

WAN Services

UCC

Successful Companies Will Increase Spending __% More than Unsuccessful:


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• Awareness–Manyorganizationsareunawaretoolsexistspecificallytohelpmanagereal-timecommunicationstraffic.They’vebecomeaccustomedtolengthyMeanTimeToRepair(MTTR),consistentfingerpointingamongpartners,andcomplaintsfromemployeesandcustomerswhenperformanceissuesbecometooextreme.

• Budget–Giventheirlackofawarenessandunderstandingoftheeffectivenessoftools,ITleadersrarelyseekthebudgettobuythem—orhavethetime/stafftoevaluatethem.Iftheydorequestbudget,itoftengetsdeniedbecauseofthenumberofothertoolsalreadyinuse(networkmanagement,appmanagement,eventmanagement,etc.)orthelackofacompellingbusinesscasejustifyingthespending.

• Discoveryofproblems–Mostcompanieslearnaboutproblemswithappsornetworksthroughuserscallingthehelpdeskorfilinganelectronictroubleticket.Bythattime,theproblemalreadyhasaffectednumerouscustomers,employeemeetings,salescalls,etc.

• Determiningrootcause–Oncetheyknowaproblemexists,theymustfigureoutwhatiscausingit—thecallserver,handset,circuit,application,orperhapsaninteroperabilityissue.Timeaftertime,administratorssaytheyhadtomanuallyrecreatetheproblems,pullingpiecesofdatafromvarioustoolstoarriveatarootcause.Thisprocessrarelytakeslessthanafewhours,andoftentakesdays—orevenweeksinacomplexnetworkorcontactcenter.

• Repairingtheproblem–Determiningrootcausecertainlyhelpswiththeactualrepair.Often,though,ITleaderssaytheyonlyfoundthegeneralcauseoftheproblemandneededmorespecificdetailstouncoverthedetailedcause.Serviceprovidersandvendorspointfingersatoneanotherbecausetheroot-causeanalysisonlypointstoaproblemoutsidethenetwork,andnoonehasthedetailstodeterminewhereoutsidethecorporatenetwork.

• Managingpartnerfingerpointing–Withoutdetailsaboutnetworkandapplicationperformance,ittakesnumerouscallsandrefereeingbetweenproviderswhoeachdenyownershipoftheproblem.

• Improvingcustomerexperience–Customerexperiencehasbecomeakeycompetitivedifferentiatorandonethathasmeritedincreasingattentioninrecentmonths.Proactivemanagementcanaddressproblemsbeforetheybecomeseriousenoughtoaffectcustomers.And,theycangenerateusefulanalyticstoshowwhichUCCappsaremostwidelyused—andmostsuccessfullyused,helpingwithemployeetrainingandimprovingtheoverallcustomerexperience.

Givenemployees,customers,andpartnersallrelyonUCCtocommunicateandcollaborate,outagesorslowdownsbydefinitionwillslowperformance,directlyaffectingthevaluemetricssocrucialtodigitaltransformationinitiatives.What’s


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more,asadoptionofUCCincreases,thepainsthatresultfrompoorperformancebecomeevermorevisiblebecausemorepeopleareaffected.

CostofDowntimeThecostofdowntimeaddsup,yetwhenuptimenumberslike99.9%oreven99.999%gettossedaround,thecostsseeminsignificantonthesurface.Figures3and4illustratetheannualcostofdowntimeintwoscenarios.Figure3showsproductivityofemployees.SomeChiefFinancialOfficersdiscounttheseas“soft-dollar”coststhatwon’tshowuponabalancesheet,sothey’reirrelevant.However,timeequalsmoney,particularlyinhighlycompetitivemarketswhereautomationistakinghold.

Figure4showsamoreconcreteexampleofacontactcenter,whichgeneratesonaverage$230percall.Downtimeaffectingeitherthecontactcenteritself,orthecollaborationappssuchaspresenceandIMtocheckwithexperts,directlyaffectssales.Downtimeextendsintoothermeasureableproblemareas.Forexample,whencontact-centerchannelsdonotworkproperly,customersatisfactionorNetPromoterscoresmaydrop.Whencollaborativeenvironments(video,virtualwhiteboards,TeamCollaboration,etc.)forproductdevelopmentdon’tworkwell,thatITstaffscanmeasure,productdevelopmenttimeslengthencreatingacompetitivedisadvantage.Downtimealsocandamagethebrand,particularlyifit’shappeningregularlyandcustomersstartcomplainingonsocialmedia.Iftheissuedegradessignificantly,companiesstandthechanceoflosingcustomersforeveroralongtime,affectingtheaveragelifetimevalueofcustomers.

Number'of'employees 10,000Number'of'employees'affected'by'downtime 4,500Number'of'downtime'minutes'per'year'at'99.9%'uptime 525.6Average'knowledge'worker'salary' $70,000PerFemployee'annual'cost'of'downtime $301Total'annual'cost'of'downtime'in'employee'productivity $1,352,894

Example:)Cost)of)Employee)Downtime

Average'sale'per'call'reaching'contact'center $230Number'of'calls'per'day 4,000Number'of'downtime'minutes'per'year'at'99.9%'uptime;'10Dhour'day'in'contact'center 219Number'of'calls'per'minute 6.70Lost'calls'per'year'because'of'downtime 1467Total'annual'cost'of'downtime'in'employee'productivity $337,479

Example:)Cost)of)Customer)Downtime

Figure3:EmployeeDowntimeCost Figure4:CustomerDowntimeCost


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UCCMatters.WhyNotMakeSureitWorksWell?CompaniesclearlypayforUCCdowntimeinharddollars,customersatisfaction,oremployeeproductivity.ButmakingsureUCCperformsefficientlyhelpspreventsuchproblems—andspecifically,reducesoperationalcosts.NemerteshastrackedUCCTotalCostofOperationsfor12yearsthroughresearchprojectsannuallywithhundredsoforganizations.Wehaveconsistentlyfoundthatwhenorganizationsusespecialtymanagementandmonitoringtools,theiroperationalcostsaresubstantiallylowerthanthosewhodonotusesuchtools.

DefiningPerformanceManagement,ProvidersBeforeexaminingthenumbers,let’slookatperformancemanagementandtheplayerscitedbyITleadersinourresearch.Performancemanagementprovidersfocusonuptime,problem/resolution,root-causeanalysis,andongoingperformance

ofUCCapps.Ourresearchindicatesthat22.7%ofITprofessionalsusethesetools.However,amongthosewithmorethan2,500UCCendpoints,thatfigurejumpsto55%.Figure5showsthespecificproviderscitedinourresearch.OrganizationsuseIRmostfrequentlyforperformancemanagementfunctions,followedbyRiverbed,UnifySquare,EventZero,andNectar.Severalcitedotherproviders,butnoneofthosereceivedenoughresponsestobecountedindividually.

Amongtheproviderscited,threearemulti-vendor(IR,Riverbed,andNectar),

andtwoaresinglevendor(EventZeroandUnifySquare),specificallymanagingMicrosoft.

IR 21%

Riverbed 14%

Unify Square 12% Event Zero

12%

Nectar 12%

Other/Unsure 29%

Performance Management Providers

Figure5:PerformanceManagementProviders


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Figure6:PerformanceManagementFunctions

ITleadersrelyonperformancemanagementformultiplefunctions,outlinedinFigure6.Theyusethetoolsmostcommonlyforreporting,performancemonitoring,andanalytics.Otherfunctionsincludeeventmonitoring,auditing,rootcauseanalysis,andfaultmanagement.ThegoalofthesetoolsistohelpvoiceandUCappsrunningatoptimalperformance.Whenissuesdooccur,theyaimtoprovidequicknotificationofaproblemorpendingproblem,alongwiththeanalysistonarrowdownanddiagnosethecauseoftheproblem.Bypreventingandshorteninganyoutagesorslowdowns,companiesa.)havelessdowntimeandreducetheproblemscitedearlierinthepaper(lostsales,employeeproductivitydrains,etc.);andb.)reducetheITstaffingrequirementsandotheroperationalcoststooperatetheUCCinfrastructure.

SignificantCostSavingsWithManagementToolsIronically,ITleadersoftensaytheycouldnotgetbudgettobuyspecialtymanagementtools.Yet,thetoolsthemselvessavesignificantlymorethantheircost.Overall,largeorganizationsthatuseperformancemanagementtoolsspendlessthanhalfonUCCoperationalcoststhanthosethatdonotuseperformancemanagement.

54%$

50%$

37%$35%$

33%$

25%$ 25%$

12%$

2%$0%

10%

20%

30%

40%

50%

60%

Reporting Performance monitoring

Analytics Event Monitoring

Auditing Root cause analysis

Fault management

Unsure Other

How are you using your performance management tool?


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Figure7:AnnualUCCOperationalCosts,CorrelatedbyManagementProvider

Fourperformancemanagementprovidersgarneredenoughresponsetobecountedindividuallyinourresearch.Whencomparedagainstoneanother,IRhasthelowestoperationalcostperendpoint,followedbyEventZero(whichonlymanagesMicrosoftenvironments),Riverbed,andNectar.(PleaseseeFigure7.)Tocompareapplestoapples,IR,Riverbed,andNectarallmanagemultiplevendors.IRcustomerswith2,500endpointsormorespend33%lessonUCCoperationalcoststhanRiverbed,and56%lessthanNectar.Inourgeneralcostdataresearch,wegatherinformationoncapital,implementation,andoperationalcostsusingthefollowingmetricsandcalculations:

• Capitalcostperendpoint:IncludesPBX,endpointdevicesandlicenses,servers,otherhardware.Insomecases,bundledlicensesincludecertainUCapps

o =Capitalcosts/numberofendpoints(handsets,softphones,etc.)• Implementationcostperendpoint:Includesstafftimeandthird-party

consultantsandintegratorso =((Stafftime*loadedhourlyrate)+third-partycosts)/numberof

endpoints• Operationalcostperendpoint:Includesstafftime,equipment

maintenance,third-partymanagedservices,trainingandcertificationo =((NumberofFTEs*averageannualloadedsalary)+equipment

maintenance+managedservices+training/certification)/numberofendpoints

!$242!! !$249!!

!$322!!

!$377!!

$-

$50

$100

$150

$200

$250

$300

$350

$400

IR Event Zero Riverbed Nectar

UCC Opex by Performance Management Provider (2,500+ Endpoints; Annual Cost Per Endpoint)


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OperationalCostDetailsWhatmakesuptheoperationalcosts,andhowdotheydifferwithandwithouttheuseofmanagementtools?ITstaffingcosts,whichmakeupthebiggestpercentageofoperationalcosts,dropsby33%withtheuseofperformancemanagementtoolsoverall.Theyalsospendlessontraining,bothuserandIT,by50%.ITtrainingcostsdropbecausefewerITstaffmembersmustbetrained(sincefewerareneededthankstothetools).Usertrainingdropsbecauseorganizationsdevotemorepeopletoformaluserawarenessandadoptionprograms,whicharerunmoreeffectivelyandefficiently.Managedservicesdroptoalmostnothingwiththeuseofperformancemanagement.Theonlycomponentthatincreasesisequipmentmaintenance,asthemanagementtoolsthemselvesrequiremaintenance.

IncreasedAdoptionInadditiontoloweroperationalcosts,theuseofperformancemanagementtoolscorrelateswithincreaseduseradoptionofUCC.Amongcompanieswith2,500ormoreendpoints,94%ofemployeeshaveUCClicenseswhenperformancemanagementisinuse,vs.72%whentheydonotuseperformancemanagement.

ConclusionandRecommendationsAscompaniesforgeaheadwithdigitaltransformationinitiatives,efficientlymanagedUCCiscrucialtosuccess.Nemertesrecommendsthefollowing:

• MakesurebusinessunitleadersunderstandtheimportanceofUCCappstotheirdigitaltransformationinitiatives.ThatwillhelptoensurefundingfornewandcontinuedUCCapps.

• Evaluateandleverageperformancemanagementtoolsearlyinyourdeploymenttomaximizeoperationalcostsavings.

• Performance-managementtoolshelpstoreducethenumberofITstaffmembersyouneedrunningtheday-to-dayoperationsofUCC.Reassignthosepeopleorheadcounttomorestrategicfunctionsthatultimatelydrivevalue(i.e.,increaserevenue,decreasecosts,improveproductivity,etc.)forthecompany.Theseincludebusiness-technologyliaisons,partnermanagement,anduserawarenessandadoptionprograms.


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MethodologyNemertesconductedthe2017UnifiedCommunicationsandCollaborationTotalCostofOperationsresearchfromJanuarythroughMarch2017.Wegathered723datapointsfromacombinationofinterviewsandsurveysofITleaders.TheITleaderswererequiredtohavedecisionmakingauthorityorinfluenceoverIPtelephonyorUCCdecisions.WedefinedthefollowingtechnologiesaspartofUCC:

• ExternalIPtelephony• Voicechat• Instantmessaging• Presence• Desktopvideoconferencing

• Audioconferencing• Webconferencing• Teamcollaboration• Messaging• Socialsoftware

InadditiontotheUCCapps,wealsogathereddataoncloudtrends,managementandmonitoringtools,endpoints,SIPtrunkingandSBCs.WeaskedtheITleadersfordetailedinformationontheircostsrelatedtoUCC,aswellasvendorselection,drivers,inhibitors,andmore.Wecorrelateddata,wheresamplesizesallowed,bycompanysize,provider,rolloutsize,andmore.

DemographicsThestudyincludescompaniesfromallsizesandavarietyofindustries.MostcompaniesareU.S.-based,androughly50%areglobalmultinationals.Thechartsthatfollowshowcompanysize,bynumberofemployees,averagenumberoflocationsbysizeofcompany,industry,andtitlesofthoseincludedintheresearch.


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AboutNemertesResearch:NemertesResearchisaresearch-advisoryandconsultingfirmthatspecializesinanalyzingandquantifyingthebusinessvalueofemergingtechnologies.YoucanlearnmoreaboutNemertesResearchatourWebsite,www.nemertes.com,[email protected].

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