Customers count on IPC’s expertise to optimize spending on cloud-based unified communications.
Conventional wisdom says that shifting IT workloads to the cloud will result in significant cost savings. That’s not always true, however. In the case of unified communications (UC) solutions, studies show that a move to the cloud can increase expenses unless organizations take a strategic approach to cost optimization.
According to a Nemertes Research study, only about 18 percent of companies that move UC to the cloud reduce their expenses in the first year. In fact, companies average first-year cost increases of 47 percent. Although capital expenses and implementation costs decrease in subsequent years, Nemertes finds that UC operational costs increase by an average of 87 percent.
Jeff Andrews, EVP of National Client Services for IPC Technologies is quick to point out that this should not dissuade companies from shifting UC and other functions to the cloud. It just points to the need for setting realistic expectations and establishing good management practices to minimize waste and ensure the most efficient use of resources.
“The main reason organizations continue to shift workloads to the cloud is for increased agility and innovation,” said Andrews. “The UC-as-a-Service model allows companies to leverage a wide range of communication channels, improve collaboration and teamwork, and increase productivity. It delivers the scalability and elasticity you need to deal with the rapid pace of change that underscores digital transformation efforts.
“Still, nobody can afford to waste money and other resources. That’s why moving to the cloud requires a focused effort to identify and understand the factors that impact your costs and apply effective cost optimization solutions to eliminate waste and inefficiencies.”
Working with a provider that specializes in the design and deployment of UC solutions is a proven way to manage costs. According to the Nemertes research, companies that work with a provider specializing in the implementation and management of UC solutions experience, on average, a 59 percent reduction in operational costs when compared to companies that work directly with public cloud providers.
Providers such as IPC with broad and deep experience in IP communication technologies can help business leaders understand UC-as-a-Service costs prior to migration. They can also show the elimination of equipment maintenance, PSTN trunks and other costs make UC-as-a-Service a good value.
Many providers use performance management tools and integrated analytics solutions to control costs and resource utilization. Among other benefits, these tools help reduce the cost of cloud migration by up to 50 percent by automatically discovering, extracting and validating phone and user data. This also reduces errors by eliminating traditional spreadsheet-based data manipulation.
IPC can also help customers cut through the complexity of cloud pricing and billing that frequently contributes to overspending. Some UC-as-a-Service providers may bill based on the number of users and services included in the subscription, while others bill based on actual usage. Tier pricing, volume pricing and variant pricing further complicate matters.
“Most cloud users will tell you that sorting out billing is hardest, most confusing part about using cloud services,” said Andrews. “We can help our customers with that by analyzing bills to uncover errors and hidden costs, find discounts and identify unusual usage patterns.”
Waste Not, Want Not
Cost management is not exclusive to UCaaS — it’s a challenge for all types of cloud instances. According to the RightScale 2019 State of the Cloud Report from Flexera, most enterprise organizations now spend more than $1 million per year on public cloud, but as much as 35 percent of that is being wasted because companies are not effectively managing their cloud spend. Gartner analysts agree, forecasting that 80 percent of organizations will exceed their cloud budgets over the next two years due to poor cost optimization practices.
Nemertes has cited software licensing as one of the chief drivers of cloud cost increases. Software manufacturers can have wildly different ways of addressing cloud use of their products. Some base licensing on the number of users, others charge per processor and others charge based on actual usage.
Overprovisioning is another wasteful cloud habit. Lacking visibility into ever-changing workload demands, many IT teams tend to overprovision cloud resources to assure performance. Flexera estimates that this practice results in companies using up to 40 percent of their cloud budget on virtual machines (VMs) with utilization rates of less than 40 percent.
“Operating in the cloud offers terrific business benefits, but organizations have to understand the challenges,” said Andrews. “As with just about anything, experience equals insight — and we’ve been helping customers integrate UC features with business processes and applications for more than two decades. Our deep understanding of the UCaaS model enables us to identify waste, recommend corrective actions, provide budgetary guidance and implement automation solutions for increased efficiency.”
Brought to you by IPC Tech — Platinum Certified Mitel Support Partner specializing in connecting your business applications to optimize your communication experience.