Tuesday, May 23, 2006

Yankee Group: The Emerging Effect of Enterprise Fixed-Mobile Convergence

Nicholas McQuire at Yankee Group guest posts at Daniel Taylor's Mobile Enterprise Weblog. These guest posts have made a great blog on the oft-neglected mobile enterprise space even better in my opinion so hats off to Dan for keeping the discussion rolling.

McQuire writes that "critical shifts are about to occur in the enterprise telephony landscape over the coming 18 to 24 months as a number of supply and demand trends coalesce to bring about integration of fixed PBX and mobile telephony systems in the enterprise. These forces will encourage fixed-mobile convergence (FMC) in the large enterprise segment in the next 5 years, creating new service models around high-value managed telephony services.

He points out that "voice remains the most common and costly enterprise application today, reaching most employees and consuming 10% to 25% of enterprise ICT budgets annually. Additionally, enterprise telephony costs are growing and becoming more distributed across multiple cost centers because of an increasing amount of mobile working."

He believes that "those that embrace FMC based telephony services will enjoy lower customer churn levels, increased account penetration, average revenue per enterprise uplifts and, perhaps most important, increased strategic standing with valuable enterprise customers." McQuire outlines the following benefits FMC brings to enterprise end users:

  • A single device with integrated PBX and PIM capability
  • Personal/private number separation or a single number that enables presence capabilities and location transparency
  • Single integrated voicemail box
  • Single work/personal directory and look up functionality
  • Mobile call recording features
  • Fixed/PBX functionality on mobile devices, such as mobile conference calling, call transfers and call waiting
He also notes that for IT managers, FMC enables:
  • A dismantling of the management barriers and costs between deploying separate fixed and mobile telephony through a consolidated and centralized service
  • The enterprise to leverage existing PBX technology or future fixed investments while delivering cost-effective mobility
  • Although difficult to measure, ROI associated with greater employee productivity
  • A reduction in and greater control of mobile costs through PBX-routing capability
McQuire states Yankee Group "sees significant scope for FMC in the large enterprise segment over the coming years," but points out that:
  • Enterprises are largely ignorant of FMC technology. Demand will grow as awareness of FMC’s benefits reach enterprise decision-makers. Much depends on the ability of vendors to simultaneously nurture enterprise interest and grow service provider support in line with enterprise PBX upgrade cycles over the coming 24 months.
  • Channel conflicts, service provider uncertainty and inertia will hold back large-scale progress through the next 12 months, but integrated operators, systems integrators and value-added resellers (VARS) are likely channels in the near term.
  • Dual-mode VoWLAN/cellular solutions will be impeded over the medium term by high VoWLAN barriers. Despite the early momentum behind dual-mode solutions such as Meru Networks, which has seen the world’s largest deployment in Japan as well as British Telecom’s announced intent in a dual-mode service with Alcatel, we believe mobile-only PBX-extension solutions driven by the likes of Nokia, Avaya and Ericsson have a medium term advantage, especially in Europe.
  • FMC is predominantly a large enterprise solution and will be challenged in the SME and SOHO markets by fixed-mobile substitution-driven mobile Centrex services from the mobile operators and possibly (although not certain) UMA-based solutions.
  • Aggressive MNOs will embrace mobile PBX solutions via partnerships to enhance their ability to deliver high value enterprise telephony services to large businesses. Such capabilities are necessary to counter the customer threat posed by fixed operators, resellers and systems integrators.
  • Critical long-term drivers of FMC for all players will be related device management and softswitch/IMS applications that integrate voice with other applications such as presence, messaging and next-generation push-to-talk capabilities. Future softswitch applications, if tailored properly to meet enterprise requirements, could have a transformative effect on enterprise processes, further enhancing the return on investment from FMC.
McQuire concludes that:
We believe that enterprise telephony in the large enterprise segment will evolve toward fixed-mobile convergence, en route to IMS in the coming years. As a result, multiple service providers, including mobile operators, will profit from this evolution. These converged services will vary in design, architecture and business model and for the most part will be driven by service provider strategies and most importantly a complex array of enterprise requirements.