Opportunities for hosted UC services amidst cautious spending 
ConvergenceAsia staff
17/12/2008

Asian enterprises are expected to adopt a cautionary approach towards IT investments in the next two years, preferring to spend on applications that can shift capital costs to operational costs and solutions that focus on growing top- and bottom-lines.

This is likely to work in favour of driving demand for hosted unified communications (UC) services which offer OPEX (operational expenditure) or utility-based pricing models.

New analysis from Frost & Sullivan finds that the Asia Pacific Unified Communications (UC) Services Market - covering six sub-regions (14 countries) in Asia-Pacific - earned revenues of US$2.59 billion in 2007 and estimates this to reach US$6.58 billion by end-2014, at a CAGR (compound annual growth rate) of 14.2 per cent (2007-2014).

The Asia-Pac UC services market is forecasted to grow by 13.4 per cent (year-on-year) in 2008 to close the year at revenues of US$2.94 billion, and by a further 14.2 per cent next year, reaching a market size of US$3.36 billion by end-2009.

Hosted UC services, which include telephony, email and conferencing services, are the most commonly contracted UC services, accounting for approximately 53 per cent of revenues in 2007, 2008, as well as 2009.

According to Frost & Sullivan senior industry analyst Yen Yen Har, in the next 24 months, businesses will look to spend-to-save and focus heavily on technologies that can help reduce costs and optimise resources. "While CIOs understand the potential benefits of newer and emerging technologies such as UC in meeting these priorities, the high upfront cost of full-scale UC deployment is a big limiting factor."

“The hosted model allows enterprises to trial and experience the real value of UC without the significant capital investments,” she says, adding that hosted services are expected to continue to account for the bulk of UC services revenues, hovering just over the 50 per cent mark by 2014.

The greatest challenge towards wider adoption of UC technologies among businesses is the difficulty in quantifying real productivity gains and demonstrating tangible ROI (return on investments), as well as the complexity in implementation.

“The whole UC deployment process involves long-term strategic planning requiring business process re-engineering, and in some cases, a complete change management program. It involves changes to existing structures and the way people work; which is why very few enterprises are committed to changing the already established work cultures and embark on UC deployments,” she notes.

“Given that UC is a fairly recent concept also means that there is a lack of skilled resources to tackle complex voice and data integration projects. System integrators and service providers will need to invest in training
and certifying project teams,” Har suggests. “There is also a need to understand how UC will fit into an organisation’s existing business processes and support a much wider company strategy.”

She adds that partnerships with leading vendors and complementary solutions providers to offer end-to-end services will also help strengthen UC offerings in order to influence corporations to adopt a truly integrated UC
environment.

The Asia Pacific Unified Communications (UC) Services Market study is part of the Enterprise Communications Growth Partnership Service program, which also includes research in the following markets: UC quarterly trackers, UC end user studies (selected countries), enterprise telephony, managed telephony services, and conferencing and collaboration.

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