The Unified Communications (UC) services market in the Asia Pacific has been tipped to grow by 13.4 percent this year and clock revenues of US$2.94 billion, according to analysts firm Frost & Sullivan. 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 focus on growing top and bottom-lines. This is likely to work in favour of driving demand for hosted UC services which offer OPEX (operational expenditure) or utility-based pricing models, said Frost & Sullivan analysts.
Further estimates from Frost & Sullivan indicate that the market can grow by a further 14.2 percent 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 percent 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 said. Hosted services are expected to continue to account for the bulk of UC services revenues, hovering just over the 50 percent mark by 2014.
Other UC segments are looking good too
UC typically involves the integration of various UC elements from a variety of best-of-breed solutions providers, as well as with other business applications and existing business processes. The need to manage such complex implementation which demands a comprehensive understanding of networks and voice-data integration skills makes professional services the second biggest contributor to UC services.
Professional services, encompassing consulting, implementation and integration, accounted for 22.2 percent (US$575 million) of the total UC services revenues in 2007 and this is expected to grow to 25.5 percent (US$1.68 billion) by end-2014.
Managed UC services--by far the smallest segment in UC services currently, accounting for about 8.3 percent (US$215.1 million) of revenues last year--is expected to see rising uptake as more businesses find it viable to outsource such functions and eliminate the need for costly in-house technical expertise.
Maintenance services, which accounted for 16.6 percent (US$430.3 million) of the total UC services revenues in 2007, are expected to decline over time as maintenance is increasingly viewed as a standard service in any given hosted or managed services contract. To compete more effectively, system integrators and service providers bundle maintenance while focusing on delivering higher margin services such as consulting, integration and implementation.
Proving the business value
Har said that 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 noted.
"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 suggested. "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 added 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 an integrated UC environment.
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