The Lippis Report

Communications or I should say dial tone did not change much in over 100 years. But since 1996 when Cisco, 3Com, ShoreTel, et al launched the IP telephony industry, change has been enormous. IP telephony brings communications into Moore's Law, accelerating it at the pace of computing and semiconductor density advances. This rapidly reduced cost, and in less than ten years IP telephony solutions offer a lower acquisition and operational cost model than TDM telephony. But in only the past eighteen months, IP telephony has transformed into unified communications (UC) being wrapped into software economics which has allowed Avaya, Siemens, et al to announce UC feature-rich packages that cost as low as fifteen cents a day. While Moore's Law is an innovation accelerator, software economics is proving to be a multiplier to this accelerator. All this innovation and competition is usually good, but for UC I'm finding that business and IT leaders are thinking that innovation is moving faster than they can absorb it into their organizations.

The enterprise communications market finds itself in a precarious position in that communications innovation is accelerating much faster than business and IT leaders can absorb it, creating an increasing gap between innovation and adoption. Layer the alleged coming recession on top of this adoption lag and you have the makings of a potential slow down.

Just this past week at an industry conference and exhibition there were a flurry of announcements and new products that increased UC functionality. For example, Cisco announced its 3200 Telepresence system increasing the number of people who can participate in a Telepresence session. Avaya announced packaged UC offerings, an intelligent branch office solution and most importantly its Integrated Presence Server (IPS). IPS aggregates presence information from multiple communication platforms such as Microsoft's OCS, IBM's Sametime, Google, Yahoo, AIM, Avaya One-X, etc., and bi-directionally presents a single view of presence for all contacts into a user's presence client, be it OCS, One-X, Sametime, etc. Siemens totally transformed its product line into software economics with its UC Server and UC applications and ushered in hi-def video conferencing. Microsoft demonstrated click-to-conference capabilities within OCS to Tandberge and Polycom conferencing products. Mitel has integrated in leaps and bounds with its Inter-Tel acquisition, demonstrating interoperability and integration. Even Nortel and Microsoft's ICA showed integration progress.

Now the above announcements are becoming routine; every six months there is a major UC industry announcement with UC just being eighteen months old. But even though the industry has just entered the UC software economic phase, many suppliers are communicating next generation capabilities. Many firms are aggressively developing Communications Enabled Business Processes (CEBP) products and roadmaps. The thinking here is that business processes can benefit by injecting communications into them so that delays both human and system can be reduced, speeding up business, be it workflow, supply chain or the agility of an organization to respond to events. The key aspect of CEBP is the exposure of communication features to .net and web services-based developers which number in the millions. Think about the innovation that will occur when CEBP is unleashed upon millions of developers who can now shape and model communications to address specific business processes. Other industry players are painting a communication vision that links collaboration with social networking to deliver enterprise value. The thinking here is that collaboration is at the heart of modern enterprise communications and that social networking is the next generation of IT applications to be unleashed upon the economy. Linking social networking with UC collaboration will drive the economy to the next level of productivity.

Both models are valid and could and will co-exist. But what I hear more often is that business and IT leaders are growing increasingly confused over the direction of communications and how to integrate it into their operations. At the center of this complexity is the fact that communications is evolving from a product selection process to a platform investment. The IP telephony products which an IT executive acquires will dictate to a large degree that executive's UC and forward strategy. As such, UC vendor selection weighs heavily on the minds of IT; thus the market is starting to take its time in choosing. At the above-mentioned conference last week a view of the exhibit floor provided a peek into market dynamics. All major supplier exhibits were packed with potential buyers. There was no dominant player; all were equally being probed, meaning that the market is in exploration mode trying to learn the array of options available from each supplier.

This is an important time for the vendor community. No vendor currently communicates an enterprise communications value proposition that includes IP telephony, UC and beyond that is wrapped around a technical and business architecture that the industry can understand and most importantly invest in. Not Cisco, nor Microsoft, IBM, Avaya, Siemens, Nortel, ShoreTel, Mitel, etc. Not one, yet.

For business and IT leaders now is the time to develop a comprehensive UC network architecture and evolution plan. With a plan in hand, IT leaders can sort through the waves of innovation more easily with a simple test: does this innovation benefit my corporation and what is the level of difficulty to absorb it? A UC architecture needs to be business requirement driven, integrating line of business needs. These needs can then be prioritized and mapped into UC requirements. These requirements drive the architecture, which specifies networks, communications and application development protocols and interfaces. Equipped with a UC architecture IT leaders can then develop an evolution plan that dictates the pace of innovation adoption. There may be economic or organizational constraints that should be factored into the evolution plan too. For example, Kent School District does not have capital budget to spend on a UC roll-out, so they are deploying UC one building at a time and funding this evolution by the elimination of the existing PBX maintenance contract. Others who do have a capital budget, such as Bank of America are rolling out a 150,000 IP phone UC deployment.

The most important aspect of a UC evolution plan is to develop a set of principles which guide procurement and are based upon the architecture so that as UC innovation is absorbed and implemented into the corporation it moves closer and closer to the target architecture. If architecture is the bridge between business strategy and UC evolution, then principles are the sign posts that get you over the bridge. For example, a principle may be that all UC end-points will be SIP-based. Another principle may be that all UC servers and applications will be accessible via .net and/or web services/SOA IT developers. Another could be that UC applications are network agnostic, meaning that they can be extended over WLAN/LAN/WAN and mobile networks.

As mentioned above there are two drivers to a potential slowdown which defers UC acquisition: one being the innovation absorption lag and the second being the potential US recession. If both these drivers interact to deliver the potential slowdown then what can we expect? First during slowdowns many business and IT leaders become introspective, analyzing business processes, customer relationships, projects, product development and their timing, etc. This may very well be a good development, since it will provide business and IT leaders with time to develop a UC architecture that is tightly linked to their business needs. It may also bifurcate industries into firms who adopt UC based upon a business plan and those that either defer deployment or don't adopt until the recession passes, creating competitive differentiation, market share gain, and overall better positioning as the economy improves for those who act now. For the vendor community it affords time to develop a value proposition rooted in a technical and business architecture that will last over the next two plus business cycles.

There is no mistaking the fact that communications is in the midst of its most significant change since Alexander Graham Bell said, “Mr. Watson "” Come here "” I want to see you.” Software economics is not only lowering acquisition cost but it's making communications accessible to IT programmers who will use this access to innovate at a pace few can imagine. If the slowdown to occur, then perhaps this slight pause is needed for the industry to collectively gather its breath before it ushers in the next communications-based productivity revolution.