On-premises and cloud UC debate amplified by pandemic

Three unified communications analysts offer insights on the current state of the on-premises vs. cloud debate as organizations grapple with industry changes.

The adoption of cloud communications has clearly soared during the pandemic as employees work from home and need to access business applications and collaborate remotely. So, on-premises systems are dead, right? No more on-premises infrastructure -- just throw everything into the cloud. Not so fast.

The on-premises and cloud quandary has raged for years. For instance, does an organization go all-in on cloud, keep systems on premises or adopt a hybrid model? As usual with unified communications (UC), the answer is a resounding: It depends. Different organizations have different needs, especially when considering organizational size.

Although cloud adoption and innovation are ramping up, about one-quarter to one-third of companies still have on-premises systems for their contact center and UC services, according to industry reports. Work-from-home policies, though, have accelerated cloud adoption, as 65% of companies are more likely to use cloud services now to support remote work, according to Robin Gareiss, president of Nemertes Research.

"Do we tell the on-premises world they have to move to cloud? I don't think you can make that blanket recommendation to everybody," Gareiss said during an Enterprise Connect virtual panel discussion earlier this month.

On premises and cloud -- an issue of control

Dave MichelsDave Michels

The on-premises and cloud clash is reinvigorated every week with news stories detailing security breaches on cloud-based services, said Dave Michels, principal analyst of TalkingPointz. Recent high-profile hacks on services such as Twitter, EncroChat and Garmin serve as regular reminders to rethink the on-premises and cloud tradeoff.

Cloud distrust and frustration are growing among consumers, Michels said, citing Facebook and TikTok as two examples of apps with questionable data analysis practices. The increase and proven track record of unsecure systems will drive the conversation to reevaluate premises-based services since they offer organizations more control, Michels said.

The argument for premises-based controls is "getting stronger every week," Michels said, as security failures flood the news cycle. If organizations think they can establish better security controls by themselves -- instead of relying on third-party outsourcing -- then they'll want premises-based systems.

"Premises will have a market for quite some time," he said. "It's not dead, but it's dying in the sense that it's smaller than it used to be -- because, as cloud grows, it's at the expense of premises."

On-premises and cloud integration

Many companies have on-premises infrastructure and have no plans to change, Gareiss added. Those companies with on-premises systems have invested heavily in the technology and have dedicated teams to manage the infrastructure.

Robin GareissRobin Gareiss

Also, moving a massive contact center, for example, to the cloud would be complex, time-consuming and maybe not beneficial. Instead, Gareiss said, companies could build cloud-based applications on top of their on-premises platforms.

"I don't think you have to rip out on premises in order to innovate," she said. "I think you can still innovate on premises."

Although many on-premises contact centers are considering cloud deployments, Gareiss said those companies would prefer to keep their on-prem operations and innovate on top of them. As companies consider a move to the cloud, they'll need to evaluate their business needs, how much money they can spend and how much time they can spend making the transition.

Over the last several years, Gareiss said she has talked with many companies that say they're moving to the cloud. But, as the years have passed, they haven't budged.

Sheila McGee-SmithSheila McGee-Smith

Geographic infrastructure confines cloud

In the same Enterprise Connect panel, Sheila McGee-Smith, principal analyst at McGee-Smith Analytics, told the story of a contact center in India that was switching on-premises providers. She said the contact center's managers didn't feel the data center and internet infrastructure in India is strong enough yet to support a cloud deployment.

With the new vendor, however, the contact center is buying an on-premises system on a subscription basis with flexible licensing that enables a move to the cloud in the future when India's infrastructure is ready. This kind of payment plan is a much different way to buy on-premises systems compared with traditional purchasing processes. Historically, buying on-premises systems meant customers were locked into a multiyear update cycle with expensive hardware.

Echoing Gareiss' point, McGee-Smith said some contact center and UC vendors have constructed their products to enable customers to stay on premises, while layering cloud apps on top.

"It's that baby step toward the cloud," she said. "The innovation is not going to be on premises. We're going to get to the point where premises just doesn't have the features, and we're going to have to flip to cloud."

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