Recession drives cloud-based UC services in Europe

With limited capital available for investment, recession-hit enterprises are now considering unified communications (UC) deployment to cut costs and increase productivity, according to analysts Frost & Sullivan.

Its new report, European Cloud-based Unified Communications Services Market, finds that the market earned revenues of €46.9m in 2009 and estimates this to reach €1.6bn in 2014, growing at a compound annual growth rate (CAGR) of 79.3 percent.

While the concept of hosted enterprise communications services was first introduced more than a decade ago, rising costs and a fall in the availability of capital during the economic downturn, has seen companies is favouring OPEX-based solutions.

“Down economy favouring OPEX-based solutions coupled with market’s need for flexibility and focus on core competencies, all boost cloud-based UC services adoption,” says Frost & Sullivan research analyst Dorota Oviedo. “Both small businesses and large enterprises are interested in communications delivered as a service.”

In case of SMEs, the lack of internal IT skills is a major factor spurring uptake. Being able to eliminate complexities in managing and integrating multiple applications and vendors, as well as testing various UC applications, is attracting enterprises, says the firm.

Despite the positive outlook for cloud-based UC services in Europe, the market has several challenges to battle. These include the general preference for customer premise equipment, low market awareness of cloud communications services, market fragmentation and negative perceptions of security and reliability, says the research.

“Cloud-based UC market participants claim that customer mindset is one of the major barriers to adoption,” explains Oviedo. “Reliability and security issues are among the main customer concerns.
“Eventually, the cost-effective approach of cloud services’ in terms of ‘pay-as-you-go’ functionality should dominate the argument, especially in the small- and medium-size business sector,” concludes Oviedo.