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The Market Speaks – 5 trends driving the shift to Hybrid UC

11/15/2024
Ruairi O'Shaughnessy

One of the dominant trends in Unified Communications (UC) in 2024 is the shift towards Hybrid UC as the preferred infrastructure model for enterprise communications.

In a previous blog, Beyond Remote Work: The Benefits and Challenges of Hybrid UC, we introduced the basics of Hybrid UC, with the advantages and potential hurdles to consider.

In 2024, we engaged with our UC and UCaaS Partners, analysts and customers, and conducted a market research survey involving 120 business decision-makers around Europe.

The aim was to uncover the genuine concerns and identify the key trends that are influencing leaders’ decision-making today.

Our research reveals that public and private enterprises across various industries are embracing this hybrid approach for multiple reasons.

What is driving this change in IT leader’s behaviour?

1. Increased Remote and Hybrid Work

The evolution of work models is a leading driver for hybrid cloud communications adoption. Employees expect flexible work styles and organisations must support disparate on-site, remote and hybrid workers, with the aim to provide the same CX regardless of location.

This is supported by our Enterprise Survey where over 73% of respondents enjoy a hybrid mix of on-site and remote working. 

Diagram showing survey results about current work setup in organisations, e.g. remote or office

Hybrid work has even become a differentiator for enterprises retaining talent. A new survey - The 2024 Cpl Salary Guide for Ireland – outlined that as high as 60% of people would turn down a new job if it did not offer hybrid working opportunities.

For enterprises leaders the onus on them is to provide top class cloud functionality for their remote and hybrid teams.

2. Commercial imperatives

Many business leaders today are carefully prioritising the evaluation of their current UC environments, having previously reacted quickly to the accelerated need to support remote work.

In our 2024 market survey, 40% responded that ‘My organisation rushed to implement new tools to adapt to an increase in remote working.’

Many IT leaders also indicated that they intend to reinvest in UC tools:

diagram showing survey results on planned investments in communication tools

Cloud-based UCaaS offers an attractive subscription model that can significantly reduce upfront costs and ongoing maintenance expenses, allowing scalability and cost flexibility.

However, many CFO and CTOs need to ensure they see the benefits of existing UC investments. The legacy PBX vendors built and delivered robust, feature rich UC solutions that last, and a lot of businesses invested in these systems pre-2020. These assets have not fully depreciated and need minimal OpEx funding.

Integrating cloud functionality with existing infrastructure can facilitate a phased transition, easing user adoption and financial impact.

3. On-Premise UC still has its place

The Eastern Management Group’s extensive 2024 research found that half of the current UC installed base consists of on-premises PBX.

Certain industries have unique operational and regulatory compliance needs that suit the reliability and security of on-premise UC, e.g. Government, Energy, Healthcare and Banking. Strict data, resiliency and control requirements are not sufficiently supported by UCaaS solution alone.

In addition, many legacy UC tools like alarming servers, analog fax, pagers, intercoms, DECT phones etc. are ‘must-haves’ for these verticals, that cloud alone cannot support

Despite the rapid and ongoing growth in cloud UC, on-premise PBXs are estimated to make up 40% of all new UC system shipments in 2024.

However, this year we have seen the first real interest in these industries to explore moving parts of their business to the cloud while retaining the on-premise UC for mission critical functions.

Frontline/Critical workers staying on-premise while office workers move to hybrid voice and cloud collaboration, is the most discussed use case in these verticals for 2025.

4. UC and UCaaS Vendor Convergence

An interesting trend across the market in 2024 is how the previously fierce rivals of UC and UCaaS have had to work together to stay competitive. We see 3 key drivers:

The rest of the UC/UCaaS market have had find a way to integrate with Teams or risk losing huge market share. This has led to a mostly hybrid model where enterprise keep their existing telephony system/provider and using MS Teams for collaboration. Providers also develop Custom and Native apps within Teams to extend their features.

  • Legacy UC providers needed to add cloud services quickly or lose customers

By partnering with UCaaS rivals they could offer immediate public cloud and hybrid options to customers. A smooth integration could keep the customer on your platform while developing own in-house hybrid capabilities. Avaya and Mitel with RingCentral and Zoom are good examples of this.

Cisco is an example of a different approach. By expanding its hybrid portfolio, both on-premise and cloud, all within its own unified Webex platform, Cisco was able to offer a credible alternative to MS Team.

  • UCaaS market maturing and providers struggle to differentiate on features

The UCaaS market has become homogenous, and providers are seeking ways to add more value to their platforms or risk a race to the bottom on price. By partnering with legacy UC providers, they gain access to new market segments and position themselves as a future UCaaS alternative to MS Teams.

Takeaway: For the customer this means that increasingly the market is providing better and more integrated hybrid solutions. This will allow decision makers to choose between a unified platform or a mix of cohesive integrated solutions that suits specific operational and financial needs.

Key Players in the Hybrid UC Market

The top UC/UCaaS players now all offer hybrid UC solutions:

table showing key vendors in the unified communications market, comparing strenths and weaknesses

5. A new driver: GenAI

AI has been used under the hood in UC products for many years. What has been a seismic change is the advent of Generative AI, the subset of AI that focuses on creating new content based on learned data.

UC/UCaaS systems, as the link between communication channels, as well as the collectors of vast amount of data, have become an early focus for GenAI use cases and tools. Microsoft with Copilot and Cisco, Zoom with their AI assistants, have been leaders in the space.

These are cloud-based tools and to maximise the value of these tools firstly requires the data to be in the cloud and ready for AI. In addition to data readiness concerns, there can be privacy and security issues, compliance requirements and integrations challenges. Despite what some vendors will say this is not a simple and fast process!

At Damovo we get two almost universal concerns from our customer’s C-Suite:

‘I know I should be doing something with AI, but I don’t where to start and how much resources I need!’

“The return on investment and the risk vs reward is still not clear to me.”

A recent McKinsey 2024 Global survey found that organisational maturity with GenAI is strikingly low. In the survey, only 13% of respondents’ companies have implemented multiple use cases, a group they call “early adopters”. Employees are using GenAI, but companies are slower to adopt.

So, many decision makers want a low-risk, low-cost way to test this new technology. A hybrid model can allow experimentation in a controlled and secure manner. Sensitive data can be ring-fenced, and you can prepare for AI across a sub-set of the cloud estate.

Conclusion

There are multiple factors attracting enterprises to hybrid UC adoption and it is very much the model of choice for the immediate future.

For IT Leaders and CXOs it’s no longer an On-premise vs Cloud decision. Regardless of business or industry, a hybrid model is often the most cost efficient and flexible model. And the good news is the vendor market, and the latest technology is evolving to match.