3 Factors Supporting the Business Case for a Subscription-Based Model for Communications


When IT decision-makers consider the cloud for communications, they tend to think more about how that impacts their existing infrastructure than what will follow in place of that. This can be particularly problematic where this idea is new, as cloud is an entirely different deployment model, and the underlying services and application have a different business model. Not only will cloud be new for many, but it’s quite different from the long-established world of premises-based infrastructure.

Prior to the cloud, investments in communications technology were primarily hardware-based, so when it came time for a new phone system, the change was like-for-like. Nothing really changed aside from getting an updated phone system, so IT’s job was done once the change was made. Things have changed somewhat with VoIP, especially as telephony has become more software-based than hardware-based.

Cloud, however, is a much bigger story, where the fundamental change pertains to who owns and operates things. For telephony, the value of the investment lies more in the applications than the physical hardware sitting on the desk. Financially, this means a shift from Capex to Opex, and the business model shifts from owning to renting. These are the key characteristics of SaaS – software as a service – where cloud-based services are consumed on an on-demand subscription basis.

In this environment, your next phone system will not be like-to-like if you’re currently using legacy, premises-based technology. The new solution will most likely be cloud-based, and if IT chooses, it can be managed almost entirely by the cloud provider. There’s a lot to like here, especially if IT would rather be tending to other priorities where they can add greater value. To that end, here are three considerations for building a business case around the subscriber model for communications services.

1. It’s becoming the norm for all services

Technology adoption in the business world usually lags the consumer world, and as products increasingly morph into services, the subscription model has become dominant. For digital natives, almost every facet of their lives is filtered through the virtual world of the Internet. They don’t have the same attachment to physical objects as digital immigrants, whose sensibilities are rooted in the real world. Not surprisingly, then, when the products that digital immigrants were happy to buy and own become digitized and offered as services, digital natives will embrace them. Almost all forms of media are now consumed via streaming, and a growing number of everyday activities are now bought and sold “as a service”.

While workers are not the economic buyers of telephony – or other forms of workplace communications – the emerging models of UCaaS and CCaaS are completely aligned with their consumption patterns in the business world. This is important because today’s cloud-based environment is increasingly becoming user-driven, so the preferences of workers will go a long way to determining which communications applications and platforms will gain traction with them. IT’s chances of winning them over with UCaaS will be much greater when the all-important user experience has a look and feel that is similar to other subscription services. Also, keep in mind that these same digital natives will soon become economic buyers, and they won’t think twice about using the SaaS model for communications.

2. IT can future-proof communications capabilities

Shifting from the end user to IT, the subscription model offers many practical benefits. Aside from the per user costs being set on a fixed pricing basis, the on-demand consumption model means you only pay for what you use. Since SaaS is Opex-based, IT can do budget planning with greater certainty, and will have more control over managing costs.

Finances aside, though, the subscription model is dynamic, meaning that end users will always have the latest versions and features. This is a major improvement from legacy technology, and provides a much better form of future-proofing. In today’s environment, the rationale is much weaker for IT to own and operate premises-based communications technology and systems. Technology changes too quickly now, and IT has limited ability to keep current, so with the advent of cloud-based options, the subscription model can mitigate the risk associated with becoming a technology laggard.

3. Leveraging the cloud value proposition

Businesses can certainly continue using premises-based communications technology, and if maintaining control is paramount for IT, that approach will remain effective. At some point, however, that plan will run its course, and since the subscription model is central to the cloud value proposition, the two reinforce each other. The business case for subscription stands well on its own, but is even stronger when considering the broader benefits of cloud-based communications. As with all SaaS-based offerings, the cloud offers scale, flexibility and economics that premises-based offerings cannot match.

These are familiar factors, but it’s also worth noting that there are multiple deployment models, namely public, private and hybrid. Whereas premises-based offerings come only in one flavor, this range of options means that IT can choose the cloud model that works best for them. On a high level, public cloud is the most affordable, but has fewer options for customization. Private cloud, on the other hand, offers the highest degree of security and control, but at a higher cost. All cloud models support subscription, so when considering UCaaS, IT will have more choice compared to staying premises-based, which only has one model of deployment.