The Importance of ‘Total Cost of Operations’ in Evaluating UC Platforms

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In our last post, we explained why end-users should have a seat at the table when selecting a unified communications (UC) solution. Gartner says that the primary value of UC lies in its ability to improve productivity and enhance business processes. In order to derive that value, employees must actually use the UC system. And you’re going to maximize user adoption if you select and implement a solution that meets users’ needs and expectations.

When investing in UC, there is a tendency to factor upfront costs into the equation. All else being equal, go with the lower-cost solution — right? Trouble is, capital costs don’t have much bearing on the UC decision anymore. In fact, a new report by Nemertes Research shows that year-over-year UC capital costs have dropped by 25 percent due to increased competition in the market and growing adoption of cloud-based solutions. Capital costs for IP phone systems have increased a modest 7 percent year-over-year, largely due to investments in video phones, headsets and session border controllers (SBCs).

Nemertes conducts its analysis of real-world UC costs annually, and has always emphasized total cost of ownership (TCO) in evaluating UC systems. TCO is broken down into three categories:

  • Capital costs for hardware, software and endpoint devices
  • Implementation costs, whether related to internal staff time or third-party systems integrators and consultants
  • Operational costs, including staff time, training and certification plus maintenance contracts and third-party support

According to the Nemertes report, implementation costs for UC increased 60 percent year-over-year due to a greater emphasis on upfront planning and engineering and integration with enterprise applications, among other factors. Operational costs for UC increased 21 percent year-over-year due to increased demands on IT teams and growing need for managed services.

In light of these market dynamics and to better reflect the importance of ongoing operational costs and the rise of cloud and hybrid architectures, Nemertes is now calling TCO “total cost of operations” rather than “total cost of ownership.” The research firm says organizations should evaluate total cost of operations for cloud and on-premises UC deployments since implementation and ongoing costs can often erase any benefit associated with lower acquisition costs.

Nemertes evaluated three scenarios — companies with 100, 750, and 1,500 employees — and found that ShoreTel has the lowest total cost of operations across all sized deployments, both cloud and on-premises, for UC and IP phone systems. In each scenario, ShoreTel has the greatest costs savings and lowest overall cost over a five-year period, when compared to the industry average and various providers for both on-premises and cloud. Providers evaluated included 8×8, Alcatel-Lucent, Avaya, Cisco, Microsoft, Mitel, NEC and Vonage.

Robin Gareiss, president of Nemertes Research, said it best:

“Those who use ShoreTel devote fewer IT staff members to managing the solution and relationship than did those using competitors. It is primarily those ongoing operational costs that keep ShoreTel lower to operate than competitors. For cloud and hybrid, we found ShoreTel’s actual subscription costs are lower than competitors, so over a five-year period the savings add up — often significantly.”

Contact IPC to discuss ShoreTel’s industry-leading features, world-class user experience and long-term operational cost savings.