November 14, 2016
April 13, 2016
Gartner Magic Quadrant for Web Conferencing 2015
Magic Quadrant
Source: Gartner (December 2015)
28 December 2015 | ID:G00273007
Analyst(s): Adam Preset, Whit Andrews
January 18, 2015
Gartner's Magic Quadrant for Web Conferencing 2014
VIEW SUMMARY
Web conferencing is a foundational capability for accelerated decision making and a strategic requirement for real-time collaboration and communications in the digital workplace. This Magic Quadrant assesses 13 significant vendors to help enterprise buyers select the right solution for their needs.
Market Definition/Description
Web-conferencing products are real-time collaboration tools that support interactions over a network between participants in multiple meeting formats. Types of meetings and communications that fall into the category of Web conferencing include collaborative meetings, learning and training, and webinars. Some vendors segment their product lines to target and scale to each of those use cases, while others offer a broad solution that can be fitted to each purpose. A separate telephone bridge is sometimes used for the audio portion, with a callback feature desirable, but voice over Internet Protocol (VoIP) in the browser or client is often available and simple to use. Video between desktops, smartphones or tablets is essential to meetings. Vendor offerings are increasingly enabling users not only to participate in, but also to host meetings from mobile devices with video. For VoIP and video support, accessories such as headsets and webcams should be included in the purchasing decision, because wise investments here will improve the quality of the user experience and foster adoption. Company laptop PCs and mobile devices with built-in video cameras are common.
The Web-conferencing market consists of offerings that are predominantly cloud-based, although buyers still need hybrid, on-premises, managed and dedicated deployment options. Web conferencing is still a stand-alone market, but is more frequently becoming a key requirement in purchasing decisions for unified communications and collaboration (UCC). Capabilities span a range from low-end freemium to high-end premium services. Historically, enterprise buyers have been from lines of business (LOBs) where support for specific use cases (such as training, and sales and marketing webinars) is needed. Strategic decisions involve enterprise IT around broader UCC initiatives.
Web conferencing benefits businesses in various ways. It can help to reduce geographic barriers for teams that need to work on projects or specific business processes. Training can be rolled out virtually, to employees in multiple locations. There are potential productivity increases and cost reductions from reducing business travel. Because of worldwide economic trends, Web conferencing has become not only a way to cut expenses, but also the preferred method of communication (ahead of travel) in many organizations. Organizations often make conscious decisions that separate Web conferencing for internal use — for collaboration and learning — from external use for marketing, and will run products from more than one vendor. With Web-conferencing tools, enterprises can also benefit from engaging with external constituents, such as business partners and customers, to continually build those relationships.
Magic Quadrant
Source: Gartner (December 2014)
Vendor Strengths and Cautions
Adobe
Adobe Connect (www.adobe.com) is offered as SaaS, hybrid, on-premises or managed service deployments.
Strengths
- Adobe offers a portfolio of solutions that accommodates key use cases, from collaboration to training and webinars, along with a sophisticated set of prebuilt integration pods and APIs for customization.
- Features such as breakout rooms and an engagement dashboard (leveraging Adobe's analytics platform) speak to its suitability for training, and its hybrid and on-premises deployment options appeal to government customers wishing to control services themselves.
- Presenters hosting meetings from devices will find that the Adobe Connect mobile apps have controls that are nearly equal to the desktop applications.
Cautions
- Adobe's focus on its Creative Cloud and Marketing Cloud portfolios results in less visible emphasis on horizontal offerings such as Adobe Connect — which integrates with other products such as Adobe Experience Manager, Adobe Analytics and Adobe EchoSign.
- Adobe Connect on the desktop relies on Flash Player — distributed with Google Chrome, Internet Explorer 10 and with Windows 8, but also a necessary download for other browsers and operating systems (OSs) — in order to function.
- Adobe Connect may be preferable for specific advanced use cases, rather than general basic collaboration, as suggested by its reference customers.
Arkadin
ArkadinAnywhere (www.arkadin.com) is offered as SaaS.
Strengths
- ArkadinAnywhere runs directly in the browser with no necessary downloads or plug-ins.
- Arkadin offers live chat, phone and in-meeting support by local personnel in 32 countries and 18 languages, which may be advantageous for global enterprises.
- ArkadinAnywhere is easy to use and low-cost, as reported by references.
Cautions
- Arkadin was acquired by global network service provider NTT Communications during 2014. This extends its footprint beyond Europe and North America, Arkadin's main markets, and justifies its re-examination by buyers looking for a global offering.
- ArkadinAnywhere lacks advanced features such as HD video and HD audio, and its APIs for integration are limited to provisioning and call control. Buyers with those requirements will have to review other vendors' Web-conferencing products that Arkadin resells as a channel partner (Adobe and Cisco, for example).
- Administration of the ArkadinAnywhere service needs improvement in areas such as upgrade process and notifications, and tools to delegate administration and account provisioning to local internal support; all issues cited by reference customers that Arkadin proposes to address in new end-user and administrator portals by the end of 2014.
AT&T
AT&T Connect (www.att.com) is offered as a SaaS, hybrid, on-premises or managed service.
Strengths
- AT&T has a flexible deployment model that allows blending of premises-based cloud services, enabling consolidation of load at high-volume sites and failover to cloud for usage spikes.
- AT&T's Hybrid Virtual Desktop will appeal to enterprises that must deliver Web conferences over virtual desktop infrastructure.
- AT&T's understanding of business needs and strong management of account relationships are key reasons why its reference customers select its products.
Cautions
- AT&T Connect does not offer HD video or HD audio.
- AT&T's range of pricing options, from per-minute usage with no commitment to per-host flat rate monthly subscriptions, may require close management for cost-efficiency.
- AT&T's user interface, product customization, accounting and reporting features are limited and need improvement, according to customer references.
Blackboard
Blackboard Collaborate (www.blackboard.com) is offered as SaaS.
Strengths
- Blackboard accommodates key use cases, from collaboration to training and webinars with up to 1,000 participants.
- Blackboard Collaborate includes a rich set of accessibility features, including multiple streams of closed captioning, enlarged video, scaling of content area, an activity window for screen readers, auditory event notification, keyboard navigation and accelerator keys for menus, navigation and common functions.
- References indicated that Blackboard's understanding of the needs of users in education and training, including integration with learning management systems and ease of use, were key influences in their product selection.
Cautions
- Blackboard's focus on learning use cases may make it less tenable for enterprise collaboration, which requires features such as Outlook integration, feature parity for presenter controls between desktop and mobile clients, or browser-only options for meeting guests.
- Blackboard's products and licensing are in transition, which may call for some buyers to migrate from Wimba Classroom and Elluminate Live products to Collaborate (now cloud-only with no on-premises option), or from legacy per-user licensing to cloud subscription based on organization size.
- Client setup and resolving issues with Java can be more time-consuming than expected, according to Blackboard's reference customers. Blackboard proposes to integrate a browser-only experience, enabled by its 2014 acquisition of Requestec.
Cisco
Cisco WebEx Enterprise Edition (www.cisco.com), which includes Meeting Center, Training Center, Event Center and Support Center, is offered as SaaS.
Strengths
- WebEx includes a portfolio of solutions that accommodates key use cases, together with a rich set of enterprise communications and conferencing service integrations.
- Mature global infrastructure has contributed to driving high-volume usage of the WebEx platform among organizations with varying technology adoption profiles — from conservative to mainstream to aggressive.
- WebEx integrates with enterprise telecommunications, telepresence and group video systems through Cisco Collaboration Meeting Rooms, which, together with ease of use, are the key reasons why reference customers select WebEx.
Cautions
- Cisco is in the process of transitioning its video and Web-conferencing business units into one that is aligned to develop and support converged conferencing products. This will force IT planners to re-examine whether Cisco's integration will be sufficient for their needs, or if third-party integrators are a better fit for price and functionality.
- Voice can be handled in a variety of ways — including VoIP in the browser, WebEx Cloud Connected Audio, and third-party conferencing providers — and selecting the best-fit option for price and functionality is complex.
- WebEx customers have cited support, licensing models and leveraging resellers effectively as challenges for Cisco.
Citrix
Citrix (www.citrix.com) GoToMeeting, GoToTraining, GoToWebinar and GoToAssist are offered as SaaS.
Strengths
- Citrix offers a portfolio of solutions that accommodates key use cases, from collaboration to training and webinars, along with strong integration with CRM and APIs for customization.
- Citrix's GoToMeeting offering has kept pace with enterprise collaboration needs such as Outlook integration, feature parity for presenter controls between desktop and mobile clients, HD video, and support for compliance.
- GoToMeeting is easy to use, a key influencing factor in product selection according to its references.
Cautions
- Attendees using GoToMeeting Web Viewer should be aware that it requires Flash Player (distributed with Google Chrome, Internet Explorer 10 and Windows 8, but also a necessary download for other browsers and OSs) and will not be able to share video unless they install the full desktop application. A browser-only experience, no plug-in and zero download, is currently achieved in GoToMeeting Free.
- The Citrix offering is a cloud-only deployment, and the vendor reports that a cloud-based recording service is on its road map. Currently, however, all recording of meetings, training sessions and webinars can be captured only with the rich desktop client.
- GoToMeeting reference customers expressed concern over sporadic issues with stability and an impression that capacity issues are handled reactively. Citrix reports that it has transitioned to a dynamic capacity model during 2014, to improve performance and scalability.
Fuze
Fuze (www.fuze.com) is offered as SaaS.
Strengths
- Fuze has a simple, cost-effective subscription pricing model for meeting hosts and rooms.
- Fuze has kept pace with enterprise collaboration needs such as Outlook integration, feature parity for presenter controls between desktop and mobile clients, HD video and voice, and support for compliance.
- Reference customers for Fuze emphasize ease of use, integration with videoconferencing, high-quality voice, federated single sign-on, and continuous engagement and support from the vendor as sources of satisfaction.
Cautions
- Fuze may be dismissed due to its initial focus on Europe and North America (its main markets), but recent partnership with BT justifies re-examination of its services and costs for buyers in global organizations.
- The Fuze client is not as feature-rich, nor does the platform have as many mature integrations and APIs, as its competitors.
- Areas for improvement include a fully functional browser-only client and an increase in the current meeting attendee limit of 250, both concerns raised by Fuze's reference customers.
Google Hangouts (www.google.com/work/apps/business/products/hangouts/) is offered as SaaS.
Strengths
- The bundling of Hangouts and its tight integration with other collaboration tools within the Google Apps for Work suite is compelling in functionality and pricing for those organizations already invested in Google.
- Chromebox for Meetings (introduced in February 2014) leverages the Hangouts software and infrastructure, can be managed as part of a Google Apps domain and is an accessible entry point for Google customers who want to extend collaboration into meeting rooms.
- References emphasize the ease of use and cost-effectiveness of Hangouts.
Cautions
- While the current limit of 15 video endpoints may meet users' needs for internal collaboration, enterprises may not find Hangouts tenable for larger internal learning and training sessions or confidential large-scale internal meetings such as town halls.
- Guests joining a Web-conferencing session are required to authenticate via a Google Apps customer account or Gmail account.
- Enterprises that require private or internal meeting recording (as essential to their business processes or for compliance) will need to investigate third-party desktop capture, because Google's option, Hangouts On Air, publishes recordings publicly on its YouTube platform and restricting privacy to a domain is possible only after the fact.
IBM
IBM (www.ibm.com) offers Sametime Conference in on-premises or managed service deployments, and IBM Connections Meetings Cloud as SaaS.
Strengths
- IBM Sametime Conference and IBM Connections Meetings Cloud are offerings suitable for key use cases, from collaboration to training and webinars, with mobile meetings that are close in parity to the desktop experience.
- IBM's solutions are well-suited to global enterprises due to the rich ecosystem of sales, technical and implementation partners.
- Sametime's strong integration with other collaboration tools and IBM cloud services, and IBM's strength in managing account relationships, are key influencers in the choices of its reference customers.
Cautions
- The transition of the branding of IBM's collaboration portfolio (from IBM SmartCloud for Social Business to IBM Connections Meetings Cloud), as well as the options to buy Meetings Cloud unbundled or to license and run Sametime on-premises, calls for potential buyers to seek clarity on the exact fit for their needs.
- Video support is available only in Sametime, not in the Meetings Cloud offering, although IBM reports that video is in its product road map.
- References express concern that the service architecture is complex and would benefit from simplification. They have also experienced issues with client software, plug-ins and the requirement for Java, which IBM proposes to remove from the browser experience by the end of 2014.
InterCall
Unified Meeting (www.intercall.com) is offered as SaaS, hybrid or a managed service.
Strengths
- InterCall has a rich partner ecosystem that allows extension of its platforms via federation, unified communications, collaboration and integration providers.
- Unified Meeting leverages many of InterCall's significant audioconferencing features, notably hybrid audio over the public switched telephone network or VoIP, tunneled VoIP, detailed accounting and billing, and project codes.
- Unified Meeting has attractive pricing and total cost of ownership as well as strong integration with audioconferencing — according to its references.
Cautions
- Unified Meeting lacks features such as HD video and integration with room video systems, so buyers with those requirements will have to review other vendors' Web-conferencing products that InterCall resells as a channel partner (Adobe and Cisco, for example).
- InterCall's mobile app, MobileMeet, allows joining only the audio portion of a Web conference; participants cannot see the screen-share or video. However, InterCall's road map proposes to add screen sharing and video during 2015.
- Unified Meeting's user interface, pace of offering new features and the stability of its Outlook plug-in are potential concerns, according to its reference customers, although InterCall has performed significant refreshes in these areas since our survey.
Microsoft
Microsoft (www.microsoft.com) offers Lync Server for hybrid and on-premises deployments, and Lync Online as SaaS.
Strengths
- Lync Online's tight integration as part of the Microsoft Office 365 suite is compelling in functionality and pricing for those organizations looking for an integrated cloud collaboration solution from Microsoft.
- Lync Server and Lync Online features, such as Outlook integration, offer parity for presenter controls between desktop and mobile clients, plus HD video and voice. Rich APIs match the needs of the enterprise.
- Lync integrates with videoconferencing services and is easy to use, which are key reasons for product selection by reference customers.
Cautions
- There is no integrated cloud or server-based recording, and meetings can be captured only with the rich desktop client; this may be a concern for organizations that require recordings for certain business processes or compliance.
- Lync Online does not support meetings of more than 250 participants, and those customers planning to transition from hosted Live Meeting (which allows 1,250 participants) must plan to wait, and hold to existing contracts and enterprise agreements, until Microsoft provides an alternative option with comparable scalability — Lync Broadcast Meeting, which was publicly announced during 2014.
- End users may find that the video and presenter controls, user interface and video quality in the Lync client need improvement — according to Microsoft's reference customers.
PGi
PGi's (www.pgi.com) iMeet and GlobalMeet are SaaS offerings.
Strengths
- PGi has simple, cost-effective subscription pricing models for all-you-can-meet and per-minute audio, for both simple face-to-face Web video meetings with iMeet (125-attendee limit) and more complex collaborative meetings and webinars with GlobalMeet (325-attendee limit).
- PGi's services leverage its significant audioconferencing capabilities, notably HD audio, dial-out and connect-me functionality, and detailed reporting.
- Both iMeet and GlobalMeet are easy to use and have attractive pricing, and PGi's customer service focus has been a key influencer in its selection by reference customers.
Cautions
- iMeet and GlobalMeet lack advanced features such as HD video and integration with room video systems, so buyers with those requirements will have to review other vendors' Web-conferencing products that PGi resells as a channel partner (Adobe and Cisco, for example).
- iMeet and GlobalMeet on the desktop rely on Flash Player — distributed in Google Chrome, Internet Explorer 10 and with Windows 8, but also a necessary download for other browsers and OSs — in order to function.
- Feature parity between the desktop and mobile experiences, and a lack of availability in certain geographies are limitations identified by PGi's customer references.
Vidyo
Vidyo (www.vidyo.com) is offered as a SaaS, hybrid, on-premises or managed service.
Strengths
- Vidyo's solutions are well-suited to scenarios in which video is the main component of the collaboration, and client stability and adaptation to low-bandwidth, high-latency conditions are concerns.
- VidyoDesktop Virtual Edition (VE) is worth examining for those enterprises challenged to deliver Web-conferencing services to a Citrix virtual desktop infrastructure.
- Vidyo's integration with third-party videoconferencing systems — such as its VidyoH20 product that connects Google Hangouts to Polycom, Lifesize and others — and its video quality and delivery optimization capabilities were key reasons for product selection by references.
Cautions
- VidyoWeb, needed for guests to join via a Web browser, is a necessary plug-in download.
- Vidyo's focus on video collaboration use cases may make it less tenable for learning and training and webinar scenarios, which require features such as polling, Q&A management, engagement indicators and analytics.
- Meeting recording requires VidyoReplay, a hardware appliance. A software approach was expressed as desirable by Vidyo's reference customers.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Added
- Arkadin now meets our inclusion criteria and has been added.
- Google now meets our inclusion criteria and has been added.
- Vidyo now meets our inclusion criteria and has been added.
Dropped
- Dialcom was removed following its acquisition by ClearOne, because it no longer meets the inclusion criteria for revenue.
- Saba was removed because its market focus has narrowed to providing Web conferencing in support of its talent management and HR software.
Inclusion and Exclusion Criteria
We applied the following criteria for inclusion in this Magic Quadrant:
- The product must provide at least the following minimal functionality:
- Presentation delivery. All participants can see an online presentation (usually delivered by Microsoft PowerPoint), which is under the control of one participant who is designated the presenter.
- Desktop or application sharing. All participants can see, but not necessarily directly interact with or modify, the presenter's desktop or a specific application on the presenter's system.
- Text chat. Participants can exchange real-time textual messages with other participants or the presenter using an IM-like interface.
- Shared whiteboard. A meeting participant can add annotations — viewable by all — by typing or drawing on a whiteboard application, or on top of a presentation or shared application window.
- Basic security. Encrypted data transfer and password-protected meetings.
- Remote control. Useful for technical support, this gives one participant control of applications or the desktop on another system.
- Integrated VoIP audio. To remove or reduce the need for telephone-based audio, qualifying products must use a speaker and microphone (or a headset) to enable participants to listen and speak.
- Video. Qualifying products must show live video feeds of participants or the presenter from a desktop webcam or mobile device camera.
- Mobility. Qualifying products must have specific support for mobile devices and tablets.
- The product must support at least five participants. Products that support one-to-one interaction or small groups are generally aimed at the consumer market or at other specialized markets not covered by this Magic Quadrant.
- The vendor must have at least $7 million in annual revenue from sales of Web-conferencing products.
- The vendor must provide at least one reference with more than 1,000 seats of internal users.
- Sales and marketing efforts connected with the product must not be limited primarily to a particular vertical or horizontal process (such as training).
- The vendor must develop and market the primary Web-conferencing product, not resell a white-label product produced by another company in an OEM relationship. The product can be the result of an acquisition.
Service providers such as Arkadin, AT&T, InterCall and PGi are included in this Magic Quadrant because they market and develop their own Web-conferencing offerings. They also resell other vendors' products, but those are not considered in this evaluation.
Evaluation Criteria
Ability to Execute
Several factors contribute to the vendors' ratings for Ability to Execute:
- We evaluated the capabilities of the vendors' products separately for basic and advanced functionality.
- Because this market includes many small vendors with uncertain futures, financial viability was an important factor.
- We evaluated pricing in terms of comparative pricing levels and the vendors' flexibility in supporting the kinds of pricing models that customers want (such as concurrent user, named user, per minute and flat rate).
- We judged the customer experience by speaking to Gartner clients that use the products and by surveying users identified as reference customers by the vendors.
Source: Gartner (December 2014)
Completeness of Vision
We evaluated the vendors' Completeness of Vision by examining customers' requirements for usage and purchasing, and by assessing how the products aligned with these requirements:
- To evaluate vendors' marketing and product strategies, we looked at how they position their products and whether their products adequately address the chosen positioning.
- We rated the vendors' flexibility in supporting both SaaS and on-premises deployment models more highly than a strategy of concentrating on a single deployment model.
- We also evaluated vendors' product innovation and ability to address the trends we expect to see in the Web-conferencing market.
Source: Gartner (December 2014)
Quadrant Descriptions
Leaders
Vendors in the Leaders quadrant have achieved significant market share, while demonstrating an ability to respond to customers' needs. Leaders have robust, scalable products with a wide range of features, a large installed base, acceptable financial performance and good distribution. Leaders are doing well today and are prepared for the future.
Challengers
Vendors in the Challengers quadrant are characterized by operational excellence and good standing in the market. Compared with vendors in the Leaders and Visionaries quadrants, either they do not have long-term road maps or their products lack some features.
Visionaries
Visionaries typically have important, unique and/or well-developed technical capabilities and provide key innovations that illustrate the future of the market. However, they have not yet developed the sales and support capabilities to address or influence the whole market.
Niche Players
Niche Players may have good technology, but are limited by their size, breadth of product line, track record in the market, vertical or horizontal focus, geographic niche, and/or financial circumstances. Some have chosen a niche strategy (for example, regional vendors with a local focus or targeted functionality intended to run on top of, or alongside, other technologies).
Context
Web-conferencing services are still purchased mainly by departments and LOBs. IT leaders responsible for collaboration, real-time technology and infrastructure should:
- Assess and inventory existing real-time assets.
- Engage technical architects to map out future architecture with respect to real-time technologies.
- Influence sourcing/procurement officers to ensure that future investments in real time are aligned to, and can be integrated with, the architecture.
More than ever, Web-conferencing decisions need to be made together with other decisions about communications and collaboration infrastructure. Mobility and video support have also emerged as core decision criteria when buyers evaluate Web-conferencing offerings.
Market Overview
Web-conferencing services are deployed via several different delivery models, with SaaS as the most prominent — although there are options for on-premises, hybrid and managed services, and there are buyers for all. The vendors in this market consist of service providers (such as Arkadin, AT&T, InterCall and PGi), UCC vendors (such as Cisco, Google, IBM and Microsoft), collaboration and training vendors (such as Blackboard), best-of-breed Web-conferencing vendors (such as Adobe and Citrix), and vendors that blend video and Web-conferencing capabilities (such as Fuze and Vidyo). Buyers gravitate toward one of these focus areas as they select vendors to investigate.
Trends
There are several trends affecting the market, from pricing to pervasive video and mobility support. Smaller and lower-cost vendors continue to disrupt pricing dynamics, resulting in downward-facing pricing pressure that is causing changes in licensing models to justify charging a premium for Web-conferencing services. In addition to vendors offering free trials, many offer freemium models — usually with modest functionality for small meetings. These are intended to hook users and then influence LOBs, or even central IT and procurement, on an upsell to premium services with more enterprise features. Of particular note are two distinctly different approaches to the topic: Adobe discontinued its freemium offering during 2013, and Citrix introduced GoToMeeting Free in 2Q14 following its successful experiment (Hutt) in browser-based video rooms.
Interest in contextual collaboration continues to rise, adding real-time communications capabilities such as Web conferencing into office collaboration, social networking and CRM applications. It is becoming more common to see those capabilities a single click away within a business application, either within the software packages themselves or via integrations and middleware meant to improve responsiveness, time to market or partner collaboration.
The integration of Web-conferencing capabilities with UCC infrastructure gives UCC vendors strong leverage in enterprises. Best-of-breed vendors must ensure integration with UCC offerings to gain further traction into enterprises beyond an individual LOB. Democratization of video by leveraging mobile endpoints — through bring your own device (BYOD) or corporately owned, personally enabled (COPE) programs — is complicated by requirements to support multiple form factors, mobile OSs and browsers. Deployments of inexpensive room video systems backed by Web-conferencing technology seem to be favored above new builds of expensive telepresence.
Large-scale webcasting is the purview of specialist vendors such as ON24 or TalkPoint (acquired by PGi in 3Q14), but at the more modest scale of a few hundred or thousand attendees for a company town hall or quarterly shareholder meeting, it is increasingly common to see high-end Web-conferencing vendors or enterprise video content managers handle the use case for live streaming.
Rich client applications on the desktop and native mobile apps continue to offer the most features and functionality for presenters; however, the common expectation is for a reasonable experience for guests in a browser-only mode with no plug-ins. An emerging area of interest and investment for vendors is HTML5 and its related protocols, such as Web Real-Time Communication (WebRTC). The promise of WebRTC is that real-time communication, such as video, can occur in the browser and between browsers. While still early in its development, this has the potential to disrupt current conferencing delivery models — where a majority of offerings require users to download a client. The more recently a vendor has entered the space, the more likely it is to have less legacy code to pull forward and therefore to prefer an approach with WebRTC — although this limits its potential markets as not all browsers support the standard equally. We expect WebRTC to initially affect consumer use of real-time capabilities in browsers, and then to affect the enterprise.
Deployment Models
Users have four basic deployment options for Web-conferencing applications:
- SaaS — Web-conferencing software runs on the vendor's (or a partner's) system on a multitenancy basis, and the user accesses the capabilities over the Internet (see Note 1).
- On-premises — Installs software on systems owned and operated by the enterprise.
- Hybrid — Combines the SaaS and on-premises models by allowing segmentation of users across both environments, or failover from on-premises to SaaS (either automated or manual) in high-load conditions or during a disaster.
- Managed services — IT management of the Web-conferencing solution is completely outsourced and managed either directly by the Web-conferencing vendor or by a third-party provider.
November 20, 2014
Gartner 2014 Magic Quadrant Corporate Telephony
VIEW SUMMARY
Corporate telephony is a mature market that plays a critical role in enterprise communications. Telephony platforms are migrating to software-based solutions that are tightly integrated within a UC suite. This research can help IT managers select the best vendor for their telephony requirements.
Market Definition/Description
This Magic Quadrant reviews corporate technology vendors that design, manufacture and distribute on-premises corporate telephony solutions for 1,000 or more users. The telephony solutions can be centralized or distributed platforms dedicated for use by a single company, whether provisioned as stand-alone solutions or as part of a unified communications (UC) suite. Enterprises looking to upgrade legacy systems can use this research to decide whether to stay with an incumbent vendor or consider alternative suppliers.
The corporate telephony market is evolving from a focus on innovation in proprietary hardware to use of commodity hardware and standards-based software. While most telephony solutions shipping today are Internet Protocol (IP)-enabled or IP-PBX solutions, the associated endpoints are a mix of time division multiplexing (TDM) and IP. In 2013, 44% of new desktop phone shipments were still TDM-based (see "Market Share Analysis: Enterprise Telephony Equipment, Worldwide, 2013"). Enterprises are changing the mix of desktop phones and softphones, with some enterprises moving a significant number of employees to softphones and mobile phones.
Decision criteria for corporate telephony platforms should focus on high-availability, scalable solutions, which support Session Initiation Protocol (SIP), desktop and softphone functionality and the ability to integrate with enterprise IT applications while delivering toll-grade voice quality. Enterprise telephony and procurement managers should be aware that a small subset of telephony services can drive the majority of the decision criteria for new systems. These requirements can include:
- Very high availability — 99.999% availability to provide dial tone with access to emergency services when power and/or WAN connectivity is lost at the facility
- Analog support — Legacy phone, fax and modem devices, and elevator alarms, including phones that work where Ethernet is not available
- 911 — Ability not only to provide E911, but also to observe, record and notify enterprise security personnel when an emergency service call is made
- Softphone — Support for softphones on tablets, mobile devices and desktops with functionality equivalent to desktop phones
- Attendant consoles — An operator or administrative assistant who has to answer and transfer many calls quickly and efficiently, with the option of phone paging
- Auto attendant — Automated system to answer and direct incoming calls
Magic Quadrant
Source: Gartner (October 2014)
Vendor Strengths and Cautions
Alcatel-Lucent Enterprise
Alcatel-Lucent Enterprise is the sixth-largest corporate telephony vendor, with 5.7% of the global market in 2013. Alcatel-Lucent Enterprise is an independent French company, headquartered near Paris, that was formed recently by the sale of the former Enterprise division of Alcatel-Lucent to China Huaxin, a Chinese technology investment firm; Alcatel-Lucent retains a 15% stake in the new company. Customers and prospects should seek clear strategic plans for the enterprise group from Alcatel-Lucent Enterprise's management team to satisfy any concerns about investment protection.
OmniPCX Enterprise is the vendor's primary platform for corporate telephony. It supports analog, digital and IP endpoints, and can scale to 25,000 IP terminations per server and 100,000 endpoints per single-system image. The platform provides centralized intelligence, network management and user applications delivered across single- or multiple-site deployments, with a virtualized deployment requiring less space and a lower total cost of ownership (TCO). Alcatel-Lucent markets the OmniPCX Enterprise platform as a stand-alone telephony system and as part of its OpenTouch UC suite. The OmniPCX product line is a proven telephony system with a UC road map and strong support for wireless and mobile applications.
Alcatel-Lucent Enterprise is providing its legacy TDM base with incentives to upgrade to voice over IP (VoIP) to ease the transformation process. This effort includes simplifying the complex licensing, hardware and software upgrades required when migrating to VoIP, and adding additional UC features. Enterprises in EMEA should consider Alcatel-Lucent Enterprise where it is a dominant player.
Strengths
- Alcatel-Lucent Enterprise has a comprehensive software offering that is optimized for running on virtualized servers and can support high availability across multiple data centers.
- Architecturally and commercially, the OmniPCX Enterprise is available as an on-premises-based perpetual license or in a scalable, hosted and cloud-based utility model from selected service providers and channel partners.
- OmniVista, the vendor's network management platform, provides a unified management capability that enables telephone and voice mail administration changes from a single, common interface.
Cautions
- OpenTouch UC requires OmniPCX Enterprise, which means Alcatel-Lucent Enterprise will need to succeed in selling upgrades to the installed exchange equipment and desk phones to drive growth in revenue from its customer base.
- With the acquisition by China Huaxin, there is continued uncertainty about the company's future that Alcatel-Lucent Enterprise will have to address by communicating its road map and investment strategy.
- Enterprises with offices in North America should research Alcatel-Lucent Enterprise-certified sales and support capabilities.
Avaya
Avaya is the second-largest corporate telephony vendor worldwide, with 12.1% market share in 2013. While Avaya's overall revenue has been declining, sales in corporate telephony and contact centers remain strong. Avaya is evolving its sales strategy to focus on communications solutions that provide business value versus a product orientation focused primarily on cost.
The Avaya Aura Platform is Avaya's flagship telephony solution for large organizations. Its foundation is Avaya Aura Communication Manager, which provides rich voice, video, mobility, messaging, contact center and collaboration capabilities on a resilient, distributed network natively supporting SIP, H.323, digital and analog endpoints. Avaya has an open, standards-based platform that integrates with multivendor solutions, primarily through SIP. A single Avaya Aura Communication Manager server supports up to 36,000 users with a system handling up to 250,000 users. Avaya has succeeded in virtualizing its communications platform as it evolves into a software-based company.
Consider Avaya Aura for large, heterogeneous voice environments that have significant contact center and sophisticated telephony feature requirements, or that have an existing significant investment in Avaya. Avaya's IP Office is a cost-effective solution for small or midsize businesses (SMBs). Avaya provides global coverage through its 1,000-plus partners, where it derives approximately 80% of its revenue.
Strengths
- Telephony and contact centers remain cornerstones in Avaya's portfolio, as the company maintains brand recognition in these areas while continuing to strengthen its overall UC portfolio. Avaya has continued its investment in integration with Microsoft Lync and is a step ahead of its competition.
- Avaya Aura Collaboration Environment provides a rapid application development platform and a robust, scalable runtime environment that allows developers to focus on business opportunities with ease and speed.
- Avaya is making progress reducing its broad array of products by focusing increasingly on specific lead products and services in each area. Similarly, Avaya has simplified pricing by focusing on suites of functionality, rather than components, enabling its channel partners to streamline proposals.
Cautions
- While Avaya has solid enterprise telephony technology, it has been late to market in meeting demand for user-friendly solutions, virtualization and differentiated cloud offers.
- Although Avaya is focused on consolidating its portfolio, its portfolio still contains redundant capabilities, creating confusion with its go-to-market strategy. For instance, Avaya must execute on its plans to unify the user experience by consolidating its Flare Experience, Scopia, Aura Conferencing and Avaya one-X clients across fixed and mobile platforms.
- Avaya financially stability has made some progress, with recent financial performance results showing revenue still going down year over year, while profitability ratios have improved.
Cisco
Cisco is the industry leader in the corporate telephony global market with 70 million IP phones shipped since 1998, and a 14.5% global market share in 2013. Its success is based on Cisco Unified Communications Manager (Unified CM), which is Cisco's core telephony platform, scaling to 80,000 users in a megacluster. Cisco also introduced Packaged Collaboration Solutions, a portfolio of turnkey, single-server, centrally managed platforms, known as Cisco Business Edition 6000 (BE6000) and Business Edition 7000 (BE7000), that offer a common set of core applications including Cisco Unified CM, Cisco Prime Provisioning and Cisco TelePresence running on Cisco UCS servers. These platforms are ordered with single SKUs and arrive ready to activate, which simplify the purchasing, installation and support.
BE6000 is designed for midsize businesses with up to 1,000 users, while BE7000 is for enterprises with more than 1,000 users and uses a building-block approach to scale by stacking servers to increase system capacity without limits. By leveraging virtualization, organizations can architect communications solutions for distributed survivability across data centers, as well as cloud environments. Cisco continues to improve on its core telephony offerings, with a recent example of the release of the Cisco VG350 Analog Voice Gateway supporting analog devices, including those requiring distances up to 18,000 feet away.
With its global distribution network and comprehensive product portfolios, Cisco is a strong contender in enterprise voice communications infrastructure. Enterprises should consider Cisco if they are inclined toward using a single vendor for end-to-end solutions that include network gear, servers, video and collaboration requirements.
Strengths
- Cisco benefits from its leadership position in data networking and relationships with IT professionals, business unit leaders and the C-suite. Cisco has been successful in adapting to market trends, such as virtualization and cloud, and customizing its solutions to drive business value.
- Through carrier and service provider partners, Cisco is advancing attractive hybrid on-premises and cloud options. Cisco's Hosted Collaboration Solution (HCS) is based on the same software as Cisco's on-premises offering, Cisco Unified CM, enabling deployment choices without sacrificing functionality.
- The standard version of Cisco's collaboration network management solution, Prime Collaboration, ships with all new orders of Cisco Unified CM, offering monitoring, diagnostics, provisioning and change management for VoIP devices in a single platform with a scale to 150,000 endpoints.
Cautions
- Gartner clients report that choosing Cisco as sole-source provider for IP telephony, UC, data networking, Web conferencing and video can lead to reduced negotiating leverage.
- Jabber is Cisco's UC client including a softphone that can run on smartphones, tablets, Macs and PCs. Users who require advanced desktop phone features or want to use Cisco Prime Collaboration should use traditional Cisco endpoints, such as the 7900 or 8800 series.
- Enterprises not selecting Cisco's Packaged Collaboration Solutions, BE6000 or BE7000s, tell Gartner that Cisco's telephony solution is complex to order and install, and expensive to maintain.
Huawei
Huawei is the eighth-largest corporate telephony vendor, with 3.6% of the global market share and strong double-digit growth, especially in Asia/Pacific. Huawei has been successful providing complete network and communications solutions for enterprises. Huawei continues to increase the breadth and depth of its corporate communications products and services, including telephony.
Huawei's corporate telephony solution eSpace is based on its U1900 and U2900 series of hardware and software communications platforms. Its modular design makes it scalable, with references of between 50,000 and 400,000 users in China. In 2013, Huawei added a unified session manager and a unified management platform for its eSpace enterprise networking products, taking it closer to its goal of a more tightly integrated solution suite.
Consider Huawei telephony solutions in regions where its carrier and large-enterprise business resources are significant enough to provide capable support, especially Asia/Pacific and EMEA markets.
Strengths
- Huawei has strong user and administrative interfaces from one single management application (Huawei eSight) which is globally available and supports multiple languages.
- Huawei has increased its worldwide smartphone market share to the No. 3 position, which is contributing to its strong growth in corporate telephony.
- Huawei's eSpace solution is highly scalable, runs on virtualized platforms and offers software APIs for integration with business applications and Microsoft Lync.
Cautions
- Growth for Huawei in North American and selected Western European enterprise telephony markets has been difficult, despite growing the number of its global channel partners. Some IT planners in the U.S., the U.K. and Australia have expressed concerns to Gartner regarding the Chinese government's potential influence on Huawei.
- Huawei needs to continue its expansion of its global support model and logistics capability for managing and delivering spare parts, as well as its ecosystem for hardware and software upgrades for the enterprise market.
- Huawei has approximately 350 telephony features — more than the features offered by new entrants to the market, such as Microsoft, but half as many as those offered by mature vendors, such as Avaya.
Microsoft
Microsoft is the seventh-largest corporate telephony vendor with 5.1% of the global market in 2013 with significant annual growth of 106% in 2013. Microsoft continues its strong growth in 2014 and is being chosen by more enterprises as their strategic corporate telephony platform.
Microsoft continues to develop Lync as a corporate telephony solution, although organizations generally select it initially for presence, instant messaging (IM) and conferencing needs, and then evaluate it as a replacement for their legacy PBX platforms. The architecture for Lync is highly scalable, with references of 200,000 users. Microsoft has a strategy of delivering software-only solutions and creating an ecosystem of partners to provide solutions such as desktop phones, media gateways, session border controllers (SBCs) and paging systems. The all-software strategy enables Microsoft to deliver a market-leading UC platform with strong messaging, conferencing, presence, telephony and mobile functionality. At the same time, enterprises must work with multiple vendors when deploying a Microsoft telephony solution.
Choosing the right Microsoft partners is critical to providing features and high availability required for corporate telephony. The addition of communications competency in the Lync partner program will help users validate partner competencies, specifically for telephony and UC. There are currently 79 certified Lync support partners worldwide, ranging from the large telecom operators and system integrations to regional or country-specific value-added resellers.
Lync 2013 represents an important step to adding further high-availability support and integrating voice, video and content sharing to Lync Mobile clients on Windows Phone, iOS and Android operating systems. Lync is a strategic UC choice for many organizations, and potentially an alternative to replace legacy PBX installations.
Strengths
- Organizations with a Microsoft volume licensing agreement usually consider Lync financially competitive compared with other telephony solutions for basic telephony needs. This is especially true if the enterprise primarily adopts, or plans to adopt, softphones and deploys few desktop phones.
- Microsoft has strong brand awareness for UC. It deploys Lync for IM, voice, video and Web conferencing. The company is building a strong global portfolio of Lync partners to help clients execute on telephony and UC strategies.
- The Lync 2013 mobile client works on Microsoft, Apple and Android operating systems and is a strong solution for those enterprises seeking a UC and telephony client for their mobile devices.
- Skype integration enables Microsoft to offer multiple tiers of service for those seeking an enterprise-grade and a best-effort service that competes with other freemium services from Google, Zoom and Fuze.
Cautions
- Without a volume licensing agreement, Gartner clients indicate Lync is not financially competitive compared with other telephony solutions, especially for a user base that demands desktop phones.
- The complexity of Microsoft Lync telephony installation and support deters some enterprises from migrating from legacy PBX systems, which satisfy basic telephony needs.
- Gartner clients report challenges in providing high availability with Microsoft Lync for basic telephony. Poor call quality, dropped calls and system outages plague some implementations that did not utilize a qualified Microsoft Lync integrator.
- Availability of Microsoft Lync telephony features depends on the third-party desk phones. Clients report limitations associated with features such as music on hold, multiple appearances of the same directory number on the same phone, local intercom calling between managers and staff, and recording calls.
Mitel
Mitel is the fourth-largest corporate telephony vendor, with 8.2% of the global market in 2013. Mitel's acquisition of Aastra, along with its solid organic growth, positions the company well in the corporate telephony market for years to come. Approximately 93% of Mitel sales are through channel partners in the global telephony market.
For larger enterprises, MiVoice MX-ONE (from the Aastra and Ericsson heritage), is Mitel's standard platform, which scales to 500,000 users. MiVoice MX-ONE is targeted at customers that require high-availability features, including stateful failover. Mitel enables users to access Mitel UC functionality through the Mitel Applications Suite (now Mitel MiCollab), which supports a UC client for desktops and mobile devices. Mitel MiVoice and associated components can be deployed on-premises, hosted, in the cloud or in a hybrid configuration.
Enterprises should consider Mitel if they want a corporate telephony platform at the forefront of several industry shifts. These include the shift from premises to cloud and hybrid deployments, moving away from capital products toward services and consumption, from hardware to software-based solutions, from voice-centric desktop communications toward rich multimodal communications, and from a desktop to a mobile-first strategy.
Strengths
- Mitel is a strong global player, especially in EMEA and North America, with over 1,500 channel partners.
- Mitel's experience supporting virtualized environments can streamline communications infrastructure costs, simplify implementation and reduce ongoing operating costs.
- Mitel offers MiCloud for the delivery of cloud-based solutions that support telephony, UC and videoconferencing, which can also complement on-premises MiVoice deployments. Service providers and Mitel dealers can build and deploy hybrid cloud capabilities using the same software that supports Mitel's on-premises enterprise platform.
Cautions
- Mitel's global brand awareness lags other vendors in the large-enterprise segment. Mitel has acquired a number of companies as part of its growth strategy and folded them into the Mitel brand.
- Mitel's dual portfolio of telephony products may hamper R&D. While Mitel has done an effective job of integrating various UC products through a common desktop application, full integration of the two telephony platforms is not as far along.
- Mitel has an aggressive growth strategy based on adding new products and features. Based on the limited success of acquisitions by its competitors, it is prudent to monitor Mitel going forward to ensure its execution remains on track.
NEC
NEC is the third-largest corporate telephony supplier, with 10.3% share of the global market in 2013. NEC has a large installed base of customers, especially in Asia/Pacific. NEC customers have been slow to migrate to VoIP; half of the phones that NEC sold in 2013 were traditional TDM phones.
NEC's SV9500 platform has high reliability standards and will scale to 192,000 users. NEC positions different solutions in different regional markets with the SV9000 family as a software-based telephony platform that runs on virtualized servers. The SV9000 family combines the feature functionality of the appliance-based approach of the Univerge SV8000 series with the hybrid TDM and IP telephony platforms of the Univerge 3C series. The SV9500 is offered in three flexible delivery models: software only, prepackaged virtual server and a purpose-built appliance. The software-based approach appeals to enterprises of all sizes, particularly in North America.
Consider NEC when scalability, high availability and multiple levels of redundancy with a good migration path to UC are strategic requirements or if there is an existing large investment in NEC. Users in industry verticals such as hospitality, healthcare, education and government may also be attracted to NEC's specific sectorial solutions.
Strengths
- NEC is a large, diversified global supplier of information and communications technology, products and solutions, including corporate telephony. It has significant financial strength, extensive internal resources and established channel partners in North America, EMEA, Latin America and Asia/Pacific, including master distributors, communications service providers (CSPs) and dealers.
- NEC has sustained its strengths in selected vertical markets such as hospitality, healthcare, government and education, with standardized solutions. It provides customized and scalable telephony solutions based on Univerge SV Series appliances or Univerge 3C software.
- NEC uses multiple servers and virtualization for Univerge 3C software solutions deployed in various network locations for dynamic load balancing. Its range of media gateways reliably provides remote-site survivability. NEC's SIP implementations are certified with major CSPs.
Cautions
- NEC technology is robust and highly scalable. However, NEC's marketing is not as robust as its competitors', and brand recognition for corporate telephony is lagging in the North American market.
- Enterprises should investigate the experience and skills of NEC's partners, since not all of NEC's dealers offer comprehensive support for NEC's full array of on-premises, hosted, distributed, centralized and cloud telephony solutions.
- NEC's extensive product lines are targeted for both SMBs and large enterprises. Large enterprises should validate NEC's dealers' experience in designing, installing and supporting large deployments.
ShoreTel
ShoreTel is the 10th-largest corporate telephony vendor globally, with 1% of the market in 2013. ShoreTel's technology has been particularly well-suited for SMBs with distributed communications requirements. It continues to make progress among enterprises with more than 1,000 centralized users or enterprises that have many branch offices and remote sites.
ShoreTel 14.2 is the latest release, which scales to 20,000 users on a single platform, which can be run on a VMware server. The ShoreTel architecture is particularly well-known for its simplicity of installation and administration. Survivability is provided via ShoreTel's N+1 switch failover capability; a switch can fail over to another switch anywhere in the network. ShoreTel also supports a full set of mobile options. ShoreTel 14 supports video connectivity with room-based systems supported by video providers, such as Polycom and Lifesize. ShoreTel's one-click access to join conference calls is a popular feature reported by Gartner's clients. ShoreTel Sky is its cloud offering and runs the same software as the premises-based systems, offering enterprises multiple deployment options. Utilizing the cloud for redundancy is gaining popularity.
Consider ShoreTel if your company is distributed and is looking for telephony and mobility capabilities that are easy to install; have intuitive management for administration, a simple user interface, and a low TCO; and have offices based in North America.
Strengths
- ShoreTel's focus on customer satisfaction throughout the implementation cycle and beyond translates to generally high satisfaction ratings from its channel partners and customers.
- Enterprises can expand ShoreTel's system capacity for software, trunks and users by adding switch modules that can be administered from a centralized interface, regardless of where the modules are physically located.
- ShoreTel offers low TCO based on simplicity of administration, no expensive licensing and hardware dependencies, an investment protection plan, and competitive pricing models for the SMB market.
Cautions
- ShoreTel does not have much visibility outside of the telecommunications market, and its brand recognition lags that of its competitors.
- ShoreTel has had a complete change in its senior management team in the past two years. The new leaders are driving ShoreTel's cloud and new services strategy, but it is too early to tell how successful they have been.
- ShoreTel's market share is a lot smaller, with fewer resources and less brand awareness outside North America, compared with other vendors in the market. Organizations should evaluate geographic coverage and local support capabilities early in the sales process.
Toshiba
Toshiba is the 11th-largest corporate telephony vendor globally, with 0.6% of the market in 2013. Toshiba is a large diversified manufacturer and marketer of electronics and electrical products. Toshiba Telecommunication Systems Division sells corporate telephony to many vertical markets, including automotive/transportation, education, entertainment, financial/business services, government, nonprofit, healthcare/medical, and retail chains. Toshiba also has a large national accounts program.
The Toshiba Strata CIX series and IPedge telephony platforms support up to 1,000 users, with the latter built on a Linux-based platform that includes telephony, voice mail, unified messaging, IM/presence and SIP trunking capabilities in a single-server architecture. Although the Strata CIX and IPedge solutions are positioned to customers in the same size segments, the Strata CIX solution supports digital and IP devices, while IPedge is a pure IP-based solution. The solutions can be networked together. Toshiba offers a cloud-based VoIP service called VIPedge. The same Toshiba distribution network sells Toshiba on-premises and cloud solutions.
Toshiba products appeal to organizations with centralized requirements or that need to support remote sites in vertical markets (such as retail, automotive, banking, financial services and government), including locations that cross geographic boundaries. The company offers a unique, centrally managed national accounts program that includes uniform pricing for multisite deployments in multiple regions.
Strengths
- All Toshiba Strata CIX series systems use the same applications, endpoints, cabinets and interfaces, with capability to support a wide range of wired and wireless devices and softphones. Toshiba offers a seven-year manufacturer's warranty that is unique in the industry.
- Toshiba has IPedge-certified dealers in every major and secondary market in the U.S. and Canada, as well as distribution in Mexico.
- For cloud-based communications, Toshiba positions VIPedge as a virtualized version of IPedge with similar capabilities that is operated in its network operation centers and charged through a monthly service-based subscription fee.
Cautions
- Although Toshiba is a large diversified manufacturer and marketer of electronics and electrical products, its communications business does not have any presence in the large-enterprise market in EMEA, nor does it have a global strategy that focuses on IP telephony requirements outside the U.S., Canada, Mexico, the U.K., parts of the Asia/Pacific region, and Japan.
- Toshiba's installed base is composed of approximately 80% small and midsize organizations with fewer than 1,000 users. Enterprises with sites that have more than 1,000 users may want to consider other platforms that scale higher.
- In the event of a failure, a compatible gateway is required to automatically reroute incoming calls to an alternative Strata CIX or IPedge system.
Unify
Unify, formerly Siemens Enterprise Communications, is the fifth-largest global corporate telephony vendor, with 6.2% of the market in 2013. Unify is in the process of restructuring to reduce expenses and drive the company toward a software-based business. Unify telephony shipments dropped 18.7% in 2013. The new top management team, with roots in distribution, sales and marketing, is focused on transforming its go-to-market strategy and establishing momentum in North America.
OpenScape Enterprise is Unify's enterprise flagship platform, scaling to 100,000 users in a single node configuration and 500,000 in a network. It supports private, hybrid or public cloud deployments, and may be virtualized with VMware or any open virtualization, format-compliant hypervisor. Unify also offers OpenScape Enterprise Express, a comprehensible all-in-one solution for up to 1,000 users with preconfigured applications, which include UC, contact center, session border controller (SBC) and management. Unify maintains a strong presence in Europe and Latin America and is working to improve coverage in North America. Project Ansible is a new software-as-a-service overlay of a communication solution that enables a team- and task-oriented way of interworking. Ansible's planned release is in 4Q14 and represents Unify's long-term strategy of becoming a software-only company.
OpenScape Enterprise solutions support midsize to very large enterprise requirements, and they are an obvious choice for customers that want to upgrade their existing installed base. Large organizations should consider OpenScape Enterprise for its ability to be deployed globally as a single, highly resilient system that customers can manage centrally from different locations.
Strengths
- Unify has successfully made the transition to a software-oriented supplier and is well-placed to offer competitive licensing formats, such as perpetual right to use, as well as subscription-based licenses, allowing the solution to grow with customers' needs.
- The company offers vertical-specific solutions. OpenScape Xpert is targeted at financial services organizations and includes trading turrets. The solution enables customers to benefit from the networking capabilities of OpenScape Enterprise.
- OpenScape Enterprise supports private, hybrid and public cloud deployments, and it may be virtualized. Unify maintains a strong presence in Europe and Latin America.
Cautions
- Unify is wagering on Project Ansible to provide market differentiation and buzz to generate sales in large global enterprises. To be successful, in addition to the announced "connectors" to existing Unify platforms, Unify will need to provide a cost-effective path to encourage enterprises to adopt Ansible.
- Some Unify customers tell Gartner that response times are variable for product and technical support in regions where coverage needs improvement, such as Asia/Pacific and North America.
- In North America, distribution and support are limited, compared with its main competitors in that region.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Added
None
Dropped
Aastra Technologies — Acquired by Mitel
Inclusion and Exclusion Criteria
To be included in the corporate telephony Magic Quadrant, solution providers must meet the following minimum criteria:
- Demonstrate an IP-based corporate telephony application that provides enterprisewide call routing and management for enterprises with more than 1,000 voice users, including switchboard operations across multiple wired and wireless networks.
- Have a product that includes the management of legacy telephony environments, including media gateways; the connection of IP with circuit-switched-based networks; and functions such as call admission control, survivability, codec management, echo cancellation, and access to emergency services and agencies. The systems must integrate with UC functionality — not only telephony, but also conferencing (including audio, Web and video); IM and presence; messaging; and UC end-user clients for multiple environments.
- Have a significant market presence in telephony that can be demonstrated by significant market share or differentiating innovation. Vendors must have minimum annual revenue from enterprise communications of $150 million.
- Offer systems in multiple global market regions, including North America, Europe, Central America, Latin America and Asia.
- Provide evidence of sales, revenue and operational investments that support market objectives. This research focuses on the large and very large enterprise markets. Vendors focused primarily on SMBs are not included.
- Provide multiple references for enterprise on-premises portfolios/products.
Evaluation Criteria
Ability to Execute
This research provides guidance for planners responsible for updating or replacing a telephony system. Gartner analysts evaluate corporate telephony solution vendors based on the breadth, quality and overall maturity of their applications, processes, tools and procedures that enhance individual, group and enterprise communications. Ultimately, these vendors are judged on their ability and success in capitalizing on their vision:
- Product/Service: Core products providing telephony capabilities, offered by vendors that compete in and serve the enterprise market segment. This category includes the vendors' current product capabilities as defined in the market definition, as well as the respective road maps that vendors offer that enable organizations to migrate to UC.
- Overall Viability: Includes an assessment of the organization's overall financial health, as well as the financial and practical success of the business unit, especially under current market conditions. Also included is the potential of the business unit to continue to invest in and offer the product, and advance the state of the art in the company's broader portfolio of products.
- Sales Execution/Pricing: The vendor and channel capabilities in all presales activities and the operational structure that supports them. This category includes deal management, value selling, pricing and negotiation, presales support, and the overall effectiveness of the sales channel (direct and indirect).
- Market Responsiveness/Record: The ability to respond to current market conditions and the disruptive influences of UC. This evaluation assesses how a vendor might change direction or modify its portfolio to achieve competitive success, as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of market responsiveness, as tracked in Gartner market share and sizing research.
- Marketing Execution: The clarity, quality, creativity and efficacy of marketing programs designed to deliver the organization's message to influence all markets, promote the brand and business, increase product awareness, and establish a positive identification with the product, the vendor and the channel among buyers. This mind share can be driven by a combination of publicity, promotions, thought leadership, word of mouth and sales activities, as well as Gartner's inquiry process.
- Customer Experience: Sales and support relationships, products and programs that enable customers to have a positive experience and achieve their respective goals for a corporate telephony implementation. This assessment includes the availability of technical and account support, and the number of channels through which this is available. Also included are customer support programs (and their quality), and the availability of user groups and SLAs. We include feedback from Gartner clients through the inquiry process in our analysis.
- Operations: The ability of the organization to meet its goals and commitments, especially in the current climate. Factors include the quality of the organizational structure, especially global operations, skills, experiences, programs, systems and other vehicles that enable vendors to operate effectively and efficiently on an ongoing basis (see Table 1).
Source: Gartner (October 2014)
Completeness of Vision
Gartner analysts evaluate telephony solution providers based on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and how well these map to Gartner's overall understanding of the marketplace (see Table 2). Ultimately, these providers are rated on their understanding of how market forces can be exploited to create opportunities for providers and their clients:
- Market Understanding: The vendor's understanding of how customer needs are changing (for users and the IT group responsible for managing telephony). It was especially important to see how vendors proposed to complement, or compete with, UC collaboration solutions.
- Marketing Strategy: A clear, differentiated set of messages for telephony and enhanced communication consistently delivered by executives and senior employees, and promoted through websites, advertising, customer programs and positioning statements.
- Sales Strategy: The strategy for selling telephony products that uses an appropriate and profitable balance of direct and indirect sales, marketing, service, and communications affiliates that extend the scope and depth of market reach to selective markets.
- Offering (Product) Strategy: The vendor's approach to telephony product development and delivery, with road maps for consolidation where necessary. Important factors include the migration to software, support for SIP and the ability to build scalable solutions that are consistent with the needs of target markets.
- Business Model: The logic of the vendor's underlying business proposition for the direction of the communications market.
- Vertical/Industry Strategy: Articulated as a specialization by leveraging intellectual capital, technology or products, as when a company manufactures its own integrated circuits for incorporation into electronic components or devices that it markets.
- Innovation: Demonstrating the necessary innovation to capture market share and grow in associated markets, with a combination of technology and services to grow revenue beyond the market average. The IP telephony market has reached maturity.
- Geographic Strategy: Demonstrating how the vendor directs resources, skills and product offerings to meet the needs of international clients, directly or through channels, to market to the needs of clients. The telephony market has historically been fragmented, with most players receiving income from their traditional home markets. The requirements of many of Gartner's end-user clients are global.
Source: Gartner (October 2014)
Quadrant Descriptions
Leaders
Leaders are high-viability vendors with broad portfolios, significant market shares, broad geographic coverage, a clear vision of how telephony needs will evolve and a proven track record for delivering telephony solutions. They are well-positioned with their current product portfolio and likely to continue delivering leading products. Leaders do not necessarily offer a best-of-breed solution for every customer requirement. However, overall, their products are strong and often have some exceptional capabilities. These vendors provide solutions that present relatively low risk for enterprise use.
Challengers
Challengers are vendors with strong market capabilities and good solutions for specific markets. However, overall, their products lack the breadth and depth of those in the Leaders quadrant. Challengers do not always communicate a clear vision of how the telephony market is evolving, and they are often less innovative or advanced than Leaders. Vendors in this quadrant often have excellent telephony functionality, but lack brand awareness in the market.
Visionaries
Visionaries demonstrate a clear understanding of the telephony market and provide key innovations that point to the market's future. However, these vendors may be relatively new to the telephony market, with the potential to grow while in the process of expanding their regional and global sales and support capabilities.
Niche Players
The vendors in this quadrant offer telephony solutions that focus on a segment or segments of the market, or a subset of telephony functionality. Customers aligned with the focus of a niche solution provider may find its offerings to be a good match for their limited needs. Niche Players often offer strong products for particular geographical or vertical-market subsets, but may have some weaknesses in one or more important areas.
Context
Companies are increasingly focusing their business strategies and acquisition decisions around unified communications and collaboration (UCC) technology; it is supplanting the historical domain of corporate telephony (see "Agenda Overview for Enterprise Communications Markets, 2014"). This shift presents IT planners with new user needs and technological integration challenges, especially as telephony applications become more mobile, and as knowledge workers increase their reliance on conferencing, video, IM and collaboration tools to fulfill group tasks.
Organizations will continue to invest in IP telephony platforms after having mapped out telephony's role in a clear UC strategy. As users' communication habits evolve, infrastructure and operations leaders should consider new telephony and UC vendor relationships, as well as the use of managed services, outsourcing, hosted and cloud-based solutions. Employment of IP-PBXs will vary according to current investments, maturity of an organization's network infrastructure, and incumbent vendor strategy.
Market Overview
Key trends in corporate telephony include:
- Uncertain economic conditions that persist globally are affecting the market share growth of most corporate telephony vendors.
- Growing vendor investment in cloud telephony portfolios, more-mature cloud offers, and increased acceptance of alternative acquisition models are increasing market awareness and the opportunities for acceptance of cloud telephony offers. An increasing number of IT decision makers are evaluating the potential value of cloud telephony in an enterprise communications strategy.
- Virtualized telephony has become increasingly popular among enterprises, with most vendors investing to meet this need, while also addressing IT leaders' needs to improve the enterprise's resiliency and disaster recovery capabilities, and to reduce server and operations costs (see "Communication Server Virtualization" — Note: This document has been archived; some of its content may not reflect current conditions).
- The bundling of communications licenses and capabilities includes voice, presence, IM, conferencing and mobility functionalities. While offers may look attractive and are often appropriate for some users, the added cost of software subscriptions means buyers likely will be overpaying for features that a minority of users access.
- Continued aggressive discounting (ranging from 50% to 65% for corporate telephony systems) has been ongoing since 2009, especially for large global telephony deals. This trend reinforces the need for buyers to use the RFP process and be strategic about vendor selection (see "Toolkit: Sample RFP for Unified Communications").
With users becoming more mobile, organizations are interested in connecting incoming corporate telephony calls at the desktop with mobile devices (see "Critical Capabilities for Corporate Telephony"). Enterprises are gaining buying power with mobile operators. They are able to negotiate on-net rates for lower-cost or flat-rate calling between mobile users and their enterprise networks. As IT welcomes mobile devices to the enterprise, organizations will demand solutions that integrate the mobile phone more tightly into the corporate telephony solution and employees' preferred smartphones.
The Future of Telephony Vendors
The enterprise voice market includes the provisioning of holistic voice communications for all wired and wireless users. Typically, architectures support distributed on-premises solutions, as well as centralized, virtualized and hosted platforms dedicated to a single organization.
Some technology providers may not meet all your organization's requirements as they refine their strategies for profitability and sustainability. Evaluate a telephony vendor's ability to support one or more of the following future directions and capabilities:
- Supports real-time voice, video and conferencing capabilities across the enterprise network, integrated with collaboration capabilities, such as IM, email and desktop sharing. Migrating between different communications channels should be seamless for users and offer a lower TCO for the IT group than managing separate communications channels.
- Demonstrates the value of session management and control, and supports policies for the ways that sessions are established between network endpoints across multiple technology platforms and managed for quality and cost controls. This approach elevates the role of the corporate communications platform to that of network and session manager. It is an alternative option to creating a homogeneous voice platform integrated with multiple communications channels across the business. Evaluate vendors with this approach for their ability to offer enhanced routing capabilities and to extend contact center technologies as a value-added component of communication beyond the customer service center.
- Offers an open telephony platform that supports integrations and partnerships with conferencing and collaboration applications from disparate vendors. Vendor solutions should focus on managing voice across wired and wireless endpoints.
- Enables system integration with and support for competitive UC products to complement and supplement their telephony solutions. Over time, enterprises will need a global capability to support knowledge worker groups in diverse geographies.
- Provides a scalable hosted alternative that supports capabilities for service providers to offer communications-as-a-service solutions.
- Includes established network and system management tools that leverage the efficiencies and opportunities for cost savings afforded by IP technology, such as managing voice and data communications through a common Web-based UI; remote provisioning of new extension users; and performing moves, adds and changes without relying on technicians.
Gartner 2014 Magic Contact Center Infrastructure
VIEW SUMMARY
As the contact center infrastructure market continues to consolidate, some lesser-known offerings may warrant strong consideration. Companies should evaluate vendors' technology and ability to deliver in relevant regions.
Market Definition/Description
Gartner defines contact center infrastructure (CCI) as the products (equipment, software and services) needed to operate call centers for telephony support and contact centers for multichannel support. This type of infrastructure is used by customer and employee service and support centers, inbound and outbound telemarketing services, help desk services, government-operated support centers, and other types of structured communications operations.
Contact center interactions can be people-assisted or automated self-service, using Web chat or interactive voice response (IVR) and speech recognition technologies, for example, or can be a combination of assisted service and self-service. These channels for interaction use both live agents and messaging technology and include voice, Web, email, instant messaging, Web chat, social media, video and mobile devices. Although there can be significant technology overlap between the CCI market and the CRM customer engagement center (CEC) market, the markets differ in three important ways:
- First, solutions in the CCI market are often an extension of the unified communications (UC) technology portfolio. While these solutions can route multichannel interactions, voice and telephony tend to play an important role.
- Second, while CCI solutions include the tools for integrating with CRM and other enterprise software packages, they do not inherently include them in their own solution stack.
- Third, network performance and cost issues are often key elements driving architecture and solutions.
In contrast, CEC solutions are an extension of the CRM market, and while they also route multichannel interactions, they tend to focus on channels other than voice, and they support a high degree of focus on leveraging existing customer data to optimize interactions based on the customer's apparent desired outcome. These differences are significant in that they tend to result in separate decision processes driven by different decision makers within organizations, and there is currently no overlap in the vendors appearing in the "Magic Quadrant for the CRM Customer Engagement Center" and those appearing in this document. Over time, it is expected that the two solution sets will merge; however, that merging appears to be several years away.
Contact centers require a wide range of functions, architectures, features and services to be effective. Three major architectural approaches that are common in the market are integrated "best-of-breed" components, all-in-one bundled suites and service-based solutions.
CCI includes a wide range of related technologies, some of which are core to vendors' offering sets and some that are integrated through OEM or partnership relationships with best-of-breed providers. This breadth of technologies can include:
- Telephony infrastructure
- Multimedia contact routing and prioritization engines with real-time and historical reporting
- IVR and voice portals for self-service applications, including speech-enabled self-service
- Outbound dialing/proactive contact
- Virtual routing applications for multisite and work-at-home scenarios
- Presence tools
- Tools for integration with CRM software
- Data mart and analytics systems
- Computer-telephony integration (CTI)/Web services interfaces
- Email response management
- Web chat
- Collaborative browsing
- Social media
- Live and prerecorded video
- Knowledge-based self-service
- Workforce management scheduling tools
- Session recording and quality monitoring, including speech analytics
- Workflow routing and management
- Mobile customer service applications
Increasingly, contact center managers prefer to purchase much, or all, of their CCI from a single source as a bundle in the pursuit of easier and enduring integration, cradle-to-grave integrated reporting, and easier system management. Therefore, leading CCI vendors offering complete portfolios of solutions, comprising their own products and those of partners and other strategic suppliers, are being favored.
The emerging contact center as a service (CCaaS) model — involving hosted, multitenant systems — is gaining attention as cloud approaches increase. There are no CCaaS-only providers that currently offer a substantial-enough global presence to warrant inclusion in this document; however, all vendors covered in this document now provide some form of a hosted or CCaaS offering.
Magic Quadrant
Source: Gartner (May 2014)
Vendor Strengths and Cautions
Alcatel-Lucent Enterprise
Alcatel-Lucent Enterprise is a verticalized division of Alcatel-Lucent that is headquartered in France. Alcatel-Lucent is currently in discussions with China Huaxin, a Chinese investor seeking to buy the majority share of the company's enterprise unit. Alcatel-Lucent Enterprise is condensing its contact center portfolio to two core platforms — OmniTouch Contact Center (OTCC) and OpenTouch Customer Service (OTCS), the latter a technology partnership with Altitude Software, whose products also form the foundation for Alactel-Lucent Enterprise's multichannel cloud platform for the contact center.
Organizations committed to the OpenTouch strategy should consider Alcatel-Lucent Enterprise's contact center portfolio, especially if they prefer to source a solution set from a single supplier, but a decision would be safer once the China Huaxin deal is closed.
Strengths
- Alcatel-Lucent Enterprise is an established brand for communications, especially in Europe, with a well-established channel partner program for selling and supporting a range of communications and contact center solutions.
- It has a strong professional services organization to support its channel partners and customers in implementing and managing contact center solutions.
- The pending acquisition by China Huaxin is positive in that its parent company has announced its intent to sell the enterprise business rather than let it linger as a less-strategic asset.
Cautions
- Alcatel-Lucent Enterprise's multichannel contact center and cloud strategy relies on a strategic partnership with Altitude, in which currently there is no direct financial investment. Partnerships can be readily disrupted as a result of an acquisition by a competitor.
- Sales of Genesys' contact center solutions still account for a sizable share of Alcatel-Lucent Enterprise's business. However, the company's trend toward consolidation with OTCC and OTCS would suggest customers looking to acquire a Genesys solution for the first time will, in most cases, find more value from a more direct supply chain between Genesys and Alcatel-Lucent Enterprise's channel partner. While Alcatel-Lucent Enterprise brings to bear strong Genesys system integration skills, Alcatel-Lucent Enterprise adds little value in the supply chain.
- Alcatel-Lucent Enterprise lacks significant presence in North America, limiting its appeal to multinational companies with a strong need to support this market. Furthermore, the impending purchase of a majority stake in Alcatel-Lucent Enterprise by China Huaxin could be negatively perceived by some of Alcatel-Lucent Enterprise's customers and prospect segments.
Altitude Software
Altitude Software is a Portugal-headquartered privately held company with majority interests from European investors. Altitude Unified Customer Interaction (uCI) is a platform-independent, multimedia contact center suite, and it is available as a premises-based or cloud offering. Altitude Software has customers across most vertical markets, and it has particular strengths in the business process outsourcing (BPO) and financial services markets. It has also entered into a strategic relationship with Alcatel-Lucent Enterprise, and Altitude Software provides the core software behind OTCS.
Organizations that desire a platform-independent contact center solution with integration and workflow needs should consider uCI as a potential solution.
Strengths
- Altitude Software is executing well on its program of expansion into European markets to complement its strength in the Iberian and South American markets.
- While the Alcatel-Lucent Enterprise partnership has yet to show any notable market growth for either vendor, there is good synergy between the two players, with minimal competitive overlap to minimize channel conflict for customers.
- Altitude Software has a pedigree of offering utility licensing as part of its solutions to the BPO sector, which positions it well commercially for the transition to Altitude Cloud for both BPO and enterprise customers.
Cautions
- The impending acquisition of the majority interest in Alcatel-Lucent Enterprise by Chinese investor Huaxin could be disruptive to the strategic relationship that broadens the market opportunity for Altitude.
- Despite investing in channels and growing management capabilities into European countries, Altitude Software lacks brand awareness of competitors to make the shortlist for new opportunities.
- Altitude Software's focus in BPO is a strength but overshadows opportunities in other vertical markets.
Aspect Software
Aspect Software, a U.S.-headquartered privately held company, is owned predominantly by Golden Gate Capital and Oak Investment Partners. In the past 18 months, Aspect has aggressively increased its size and solution portfolio through acquisitions and partnerships. These acquisitions and partnerships include the acquisition of Voxeo, providing enhanced IVR/voice portal capabilities; Bright Pattern, upon which Aspect's Zipwire cloud contact center offering is based; and Qivox for proactive notification applications and services. During the past 18 months, Aspect has also entered into several partnerships, including with Moxie Software to provide enhanced multimedia routing (for example, solutions for back-office and workflow software); and with Lithium for social media engagement solutions. Aspect's Unified IP offers a unified multimedia contact center application suite for midsize to large implementations, including several best-of-breed applications. The company has also recently introduced its cloud-based solution, Zipwire, targeting centers with fewer than 250 agents.
Consider Aspect when there is a need to integrate with multiple IP PBX telephony environments, or when seeking to decouple the timing of your contact center and telephony investment decisions.
Strengths
- Aspect's recent expansion of its size and solution portfolio shows a reinvigoration of the business after the insertion of a new senior management team over the past two years and following years of declining shipments and market influence.
- In the last year, Aspect has introduced several innovative contact center solution offerings, including Aspect Proactive Engagement Suite for proactive notification applications and services; Aspect Active Assignment for intraday operational optimization; and Aspect Mentor for real-time speech analytics and automated agent coaching.
- Aspect's considerable experience in contact center products and markets can be helpful to companies with complex requirements. Aspect also has good global reach for sales and support.
- Due in large part to its recent acquisitions, Aspect has aggressively grown its hosting and managed service revenue during the last 12 months in addition to entering the cloud contact center space with its Zipwire offering.
Cautions
- Aspect traditionally charges premium pricing for ongoing maintenance services, but its service team has received mixed reviews from Gartner clients for several years in succession. The company's investments in improving its service delivery are still in the early phases of deployment, and the company lacks a track record for improving those services. Aspect customers and prospects must evaluate the impact of this pricing on the solution's total cost of ownership (TCO) and check references to validate that the service team's skill level is commensurate with the service pricing.
- The company lacks an enterprise PBX installed base of its own into which to sell its products. As such, and in light of the lack of "greenfield" opportunities for large contact centers in North America and Western Europe, Aspect must attempt to sell into the PBX installed bases of other vendors, which is a challenging task. The company is attempting to overcome this challenge by enhancing its ability to integrate with corporate investments in Microsoft solutions, but this strategy is still in the early phases of execution and remains unproved.
- Aspect still has a large installed base of legacy Aspect "Call Center" and Rockwell "Spectrum" automatic call distributors (ACDs) that has yet to upgrade to the Unified IP platform. Although Aspect has done an admirable job of keeping customers using these products in the fold, as the installed base of products continues to age, Aspect becomes increasingly at risk of competitive displacement.
- New acquisitions and partnerships will require time to integrate into a cohesive application stack. The acquisition of Voxeo for IVR/voice portal and Zipwire cloud, along with the partnership with Moxie for enhanced nonvoice media routing capabilities, creates near-term uncertainties for integration and product support. The partnership with Moxie also takes development of critical functionality out of Aspect's direct control and places it potentially at risk, should Moxie get acquired by a third party.
Avaya
Avaya is a U.S.-headquartered privately held company with primary ownership by private equity firms TPG and Silver Lake Partners. Avaya offers a range of products targeting specific market segments:
- For midsize-to-large telephony-oriented call centers, Avaya offers its Avaya Aura Call Center Elite solution, which can be expanded using the Call Center Elite Multichannel Feature Pack for existing Call Center Elite users who require core multichannel capabilities, including Web, email, chat, SMS and CTI functionality.
- For midsize-to-large organizations with more advanced CRM and multichannel needs, the company offers Avaya Interaction Center and Avaya Aura Contact Center.
- For the small or midsize business (SMB) market, Avaya offers a software-only solution that can be run on a virtualized appliance.
- Avaya also offers managed services and cloud-based solutions hosted either by Avaya or through select channel partners.
Consider Avaya's call and contact center offerings when looking for solutions that include several best-of-breed applications for contact center environments with customer service requirements ranging from simple to complex.
Strengths
- Avaya continues to drive a multichannel strategy with its Call Center Elite Multichannel as a native multimedia enhancement to its Call Center Elite offer, along with additional features being added to Avaya's social media monitoring and automated chat platforms.
- Avaya's portfolio includes a broad set of applications for call routing, outbound, multichannel, self-service, workforce management and analytics. Avaya Aura Orchestration Designer provides a single application development environment spanning voice and multichannel self-service and assisted-service agent workflows. Avaya's Workforce Optimization suite offers a broad set of Avaya and third-party-developed workforce optimization (WFO) capabilities, including strong analytic capabilities when combined with the Avaya Aura Contact Center Performance Management reporting and analytic tools.
- Avaya Contact Center Control Manager (ACCCM) — which is based on technology from ITNavigator, a former OEM partner of Avaya that the company acquired in 2013 — offers a very strong set of system management and partitioning capabilities. It enables enterprises to support multiple contact center applications from a single environment, while enabling user groups to control their own routing rules and customer data. In addition, it allows operational groups to provide backup assistance to one another for disaster recovery purposes, or to support activity spikes. ACCCM also plays an important system management role in Avaya's hosted- and cloud-based offerings.
- Avaya has strong global coverage and holds the top market share position in contact center routing in terms of end-user revenue and agent shipments globally, with more than a 35% market share in both categories. This provides the stability associated with strong product and service revenue and a large installed base into which additional products and services can be sold.
Cautions
- Avaya holds a strong lead in global contact center market share; however, the company has seen that share erode in recent years, as its share has slipped in some other areas of its business. Avaya must reverse its recent track record of declining revenue and operating losses to prevent concerns about its financial stability. Avaya has refinanced some of its previous near-term debt — extending the servicing window by several years — which may assuage some of the concerns that Gartner has heard.
- Despite recent investments and efforts, Avaya's cloud strategy, both direct and through its partners, lags behind its competitors.
- The company's broad set of offerings includes several overlapping capabilities, resulting in confusion for some customers and increasing Avaya's cost to support and develop.
Cisco
Cisco is a U.S.-headquartered public company with shares traded on the Nasdaq stock exchange. Cisco's contact center offerings include: Unified Contact Center Enterprise (UCCE), targeting large enterprises with up to 12,000 agents and those requiring advanced functionality; Packaged Contact Center Enterprise (PCCE), targeting contact centers that have fewer than 1,000 agents and want a smaller IT footprint than the full UCCE solution; and Unified Contact Center Express (UCCX), targeting small to midsize centers with fewer than 400 agents, or fewer than 100 agents when sold as part of Cisco's Business Edition 6000 communications platform. A fourth offering, Cisco Unified Intelligent Contact Management (Unified ICM) Enterprise, provides network-level routing and can support multivendor environments. Cloud-based Cisco solutions are also available through select channel partners on the company's Hosted Collaboration Solution (HCS) platform.
Consider Cisco's contact center offerings if your company is committed to Cisco's Unified Communications Manager or prefers an end-to-end Cisco infrastructure.
Strengths
- Cisco's contact center portfolio supports a broad set of functionality, including call and third-party-developed multimedia routing, network-level routing, IVR/voice portal functions, and outbound dialing.
- Cisco's PCCE has seen strong acceptance by companies that do not require the scale or complexity of full UCCE solutions. PCCE was introduced in late 2011 and continues to be enhanced with simplified system design, implementation and management features. It offers call control, call routing, IVR and reporting on a single server, with optional functionality, such as multimedia routing and call recording on additional servers.
- Cisco's UCCX targeting the SMB market is gaining market share through its bundling with the Cisco Business Edition 6000 telephony solution and adding more features, such as browser-based administration, HTTP and REST APIs for desktop and third-party integration, and predefined real-time and historical reporting.
- Cisco has strong corporate brand recognition and respect among IT decision makers and influencers. The company offers broad global reach and highly scalable solutions, with key channel partners that have strong contact center consulting and system integration skills to deliver highly customized and complex contact center solutions.
Cautions
- Cisco's UCCE suite is the aggregation of multiple acquisitions and products, which inhibits the end-to-end administration and support from a common management interface. While Cisco has simplified the administration and support of its lower-end products and its PCCE offering, it still has a ways to go with its flagship UCCE suite.
- Cisco offers Web-centric communications channels (such as email, Web chat and co-browsing) and support for WFO capabilities through OEM agreements and through partnerships. This strategy can add support complexity, and it risks disruption to customer relationships if the partner is acquired by a competitor.
- Cisco contact center solutions work best in an all-Cisco environment. Enterprises wishing to separate their front-office contact center strategy from their back-office unified communications and collaboration (UCC) strategy, or those wishing to support work-at-home agents using home phone connections and handsets, should evaluate the impact on functionality and scalability of utilizing a third-party hard phone with the Cisco contact center suite.
Enghouse Interactive
Enghouse Interactive is a Canada-headquartered public company, with shares traded on the Toronto Stock Exchange. Enghouse Interactive has three distinct contact center offerings. Contact Center: Enterprise targets enterprise premises-based contact center environments and virtualized cloud environments. Contact Center: Service Provider targets service provider environments and very large enterprises (which use the product to offer contact center services to end users via the cloud). The third offering, Enghouse Interactive Communication Center (formerly Zeacom), targets small to midsize contact centers.
Consider Contact Center: Enterprise when looking for a premises-based or virtualized multimedia contact center routing solution that can leverage a variety of IP PBX and Microsoft Lync infrastructure environments.
Consider Contact Center: Service Provider when looking for a multitenant enterprise offering for "private cloud" environments, or when seeking a platform from which to offer cloud-based solutions as a communications service provider (CSP).
Consider Enghouse Interactive Communication Center when seeking a multichannel contact center solution for fewer than 100 agents.
Strengths
- Contact Center: Enterprise is a tightly integrated multimedia contact center application suite that uses CTI to connect to existing PBX investments to leverage existing telephony investments, as well as provides contact center applications for customers migrating to Microsoft Lync Enterprise Voice. This strategy works well for enterprises looking to separate their front-office contact center platform from their back-office UC and telephony platform. This offering has its strongest regional presence in North America, with increasing growth in Western Europe.
- Contact Center: Service Provider comprises a broad suite of highly scalable and fully featured CCI applications, including call and multimedia routing, contact recording, and outbound dialing. This offering, which is commonly sold into service provider environments, has its strongest regional presence in EMEA — particularly among telephone companies (telcos) and cable operators. It also has a growing presence in North America and the Asia/Pacific region.
- Enghouse Interactive Communication Center targets contact centers with fewer than 100 agents, and it supports IVR, workflow routing and a breadth of communications channels. The solution integrates with telephony systems from Microsoft, Avaya, Cisco and NEC. Enghouse Interactive Communication Center has its strongest presence in North America and the Asia/Pacific region and a growing presence in Western Europe.
- Enghouse offers computer-to-computer integration via Ajax, Microsoft Component Object Model (COM) objects, XML and Web services to provide tight integration into CRM suites and agent desktops. A plug-in has been prebuilt for integration with salesforce.com, along with a scripting library for creating customized applications.
Cautions
- Enghouse Interactive is a new brand and lacks significant brand recognition. Although the company wishes to use each of its formerly separate business units to sell its other offerings into geographies where it previously lacked strength, there is no guarantee that this approach will be successful — and in pursuing these multiple efforts, the company risks losing focus on doing any of them well.
- The company offers multiple, separate contact center products with separate development, marketing and support organizations, and the products serve distinct markets. Maintaining separate operations for each product line dilutes the company's investments in supporting its products and customers across these different markets.
- Enghouse Interactive's strategy for the SMB market has not been well-defined, and the number of channel partners is significantly smaller than its competitors.
- Enghouse Interactive's lack of a consistent product offering set and presence across all geographies makes it difficult for the company to meet the needs of large, global enterprises. Customers and prospects should verify that Enghouse Interactive can provide staff with installation and support capabilities and who are skilled in the specific products being considered in each relevant market.
Genesys
Genesys is a privately held company, with headquarters in the U.S. and with major private equity investment from Permira. Genesys supports three primary offerings based on its Customer Experience Platform. Genesys Premier Edition is a cloud-only offering targeting companies with fewer than 250 agents. Genesys Business Edition targets companies with up to 1,000 agents and is available as a cloud, premises or hybrid solution. Genesys Enterprise Edition targets companies of any size that require a rich feature set and strong levels of customization, and it is available as a cloud, premises or hybrid solution. Since being acquired by private equity investors, Genesys has expanded its solution capabilities through acquisitions and partnerships in a number of technology areas. These include acquisitions of Utopy in speech analytics, Angel in cloud IVR and SMB contact center, SoundBite Communications in proactive notification, Echopass in enterprise cloud contact center, and Solariat in social customer care and analytics. The company has also entered into a partnership with Zendesk for cloud customer service software.
Consider Genesys solutions for contact center solutions spanning a variety of levels of complexity and scalability, including those that require significant customization to address differentiated customer service needs. Because it is telephony-vendor-neutral, Genesys solutions should also be considered when there is a requirement to integrate with multiple IP PBX telephony environments, or when separating contact center and IP PBX telephony purchasing decisions.
Strengths
- The Genesys Customer Experience Platform and other components of its contact center portfolio support a broad suite of highly scalable and full-featured CCI applications. These include call and multimedia routing, network-level routing, voice response, contact recording and outbound dialing, and workforce management and analytics.
- The company has a strong vision for decoupling contact center applications from telephony infrastructure; for extending contact center capabilities into UC environments and enterprise workflow beyond the contact center; and for integrating social-media-based communications into structured contact center activities.
- Genesys can provide strong consulting and system integration services either directly or through its professional services partners. Genesys also has a good capability to support global customers.
- Genesys' "journey center" strategy of tracking a customer's entire interaction with an enterprise — from the marketing and sales to the customer service and support — and enabling all the associated interactions to be consistent and relevant is resonating in the market. Part of this strategy is enabling the customer to work with the same person as a journey specialist for every interaction within a specific customer journey.
Cautions
- In its second year of operations as a stand-alone company, Genesys appears so far to be meeting the growth expectations of its new owners; however, if Genesys cannot deliver the growth rates that its investors target, the investors' commitment to invest in the company and its product development and sales over the long term may wane. Genesys is facing strong competition from its direct competitors, along with CRM vendors providing more contact center capabilities.
- Genesys' solutions have often been seen as more costly to implement and maintain than those of its competitors. As these competitors increase the customizability of their solutions to more closely match that of Genesys' Enterprise Edition solutions, Gartner is seeing a trend among clients to question the value of Genesys' offerings relative to the cost.
- Genesys has made several past attempts to go "down market" in terms of solution size and complexity with very limited success. The difficulty was caused by several issues, including product prices and complexity and a lack of sales focus on the midmarket. While Genesys has made recent steps to address these issues, it remains to be seen whether these changes will be any more successful than past efforts.
Huawei
Huawei is a privately held China-headquartered company, with shares held primarily by company employees. Huawei's multimedia CCI portfolio centers on its UAP6600 platform for large-enterprise and CSP environments, U2990 for enterprises, and U2980 (which can be packaged as an all-in-one contact center appliance offer) for small and midsize contact centers.
Price-sensitive CSPs, enterprises and government agencies, particularly those in the Asia/Pacific region (especially China) and emerging economies, should consider Huawei when looking for cost-effective solutions — especially when part of a larger Huawei data infrastructure sale or environment.
Strengths
- Huawei has a very complete suite of enterprise contact center solutions for customers ranging from SMBs to large CSP and BPO installations. Its third-party partner ecosystem provides complementary contact center solutions for specific industry verticals and system integration projects — particularly in government organizations and large enterprises, such as telecommunications, finance and utilities companies.
- Huawei has made substantial investments in appointing master distributors worldwide, particularly in Africa, Brazil and China, and emerging economies in Asia/Pacific, Eastern Europe and Latin America — where it typically has well-developed relationships stemming from prior sales of telecom fixed and mobile network infrastructure.
- Contact center solutions are being sold through newly appointed distribution channel partners and CSPs worldwide. Huawei's contact center labs, development centers of excellence, R&D and distribution centers, and logistics have now been in place for a few years. More than half of Huawei's sales come from within its home market in China.
Cautions
- Huawei's contact center solution portfolio can be sourced as an "all-in-one box," but its solutions are not as tightly integrated as many competitors' all-in-one suites — even though Huawei's offerings may be preconfigured solutions for particular industry verticals and popular commercial applications. Its enterprise products are relatively stand-alone and best-suited to integration into a best-of-breed or do-it-yourself environment. This can add to solution cost and complexity.
- Huawei's investment and rapid channel expansion agenda in its global enterprise distribution channels will take several years to achieve critical mass for contact center sales. Markets in emerging countries may have stronger growth than more mature markets, but they have their own commercial complexities for multinational corporations planning contact center deployments.
- Huawei lacks contact center brand awareness in enterprises outside of the company's home market. Midmarket success can come only from persistent effort in mobilizing its sales channels, certified engineer training and the recruitment of effective network integrator partners, and the company is significantly challenged in supporting multinational companies with operations in mature markets, such as North America and Western Europe. Enterprise buyers need to evaluate Huawei's and its channel partners' readiness to serve their business in each country of operation.
Interactive Intelligence
Interactive Intelligence is a U.S.-headquartered public company, with shares traded on the Nasdaq stock exchange. Interactive Intelligence's Customer Interaction Center (CIC) offering provides an all-in-one suite of contact center applications across a wide range of scalability requirements. The company also is gaining market traction with its Communications as a Service (CaaS) cloud-based option.
Consider CIC when looking for a tightly integrated set of contact center applications or when wanting to decouple the timing of your contact center and telephony investment decisions.
Strengths
- The CIC suite uses Web services and provides a common set of application development, management and reporting tools across a range of its applications. Its efficient use of server resources and consistent administrative and management tools across applications make the system particularly appealing to IT decision makers.
- Interactive Intelligence continues to compete successfully for midsize and large contact center deals and to grow its installed base at a pace well above the market average. The company also continues to improve its brand recognition in North America, and it is making steady progress to increase its sales and marketing footprint globally.
- The company has a good ability to provide direct, in-region sales presence and to assist other channel partners where specific skill sets may be lacking.
- Interactive Intelligence is finding success in selling its CaaS offering in hosted and hybrid (on-premises and hosted) deployments in enterprises of various sizes. The company is finding strong adoption of its hosted offerings in the U.S., although significant growth is being seen in other regions, with data center locations in Europe, Australia, Japan and Latin America.
Cautions
- Despite making investments in its sales channel program to support enterprises outside North America, the company does not match the global coverage provided by some of its larger competitors. Companies should evaluate the ability of Interactive Intelligence and its channel partners to meet their needs in relevant geographies.
- Some of Interactive Intelligence's contact center applications are less feature-rich than competitive best-of-breed offerings.
- The company's lack of active/active georedundancy and reliance on Windows server platforms causes some large contact centers to shy away from Interactive Intelligence's premises-based solutions.
- Not all Interactive Intelligence's channel partners are strong in designing, installing and supporting contact center environments. Prospects should check channel partner references for environments that match their scalability and complexity needs.
Mitel
Mitel is a public company headquartered in Canada, with shares traded on the Nasdaq and Toronto stock markets. Mitel's acquisition of Aastra, increased scalability and range of solutions, and integration with Microsoft Lync have enabled significant growth. Mitel's MiContact Center Enterprise Edition supports a broad suite of CCI applications, including call and multimedia routing, voice response, outbound dialing, call recording, and workforce management. The MiContact Center Business Edition offers a subset of the features available in the MiContact Center Enterprise Edition, targeting contact centers with 25 or fewer agents. MiContact Center Enterprise Edition is also available as a hosted service from Mitel and as a platform-as-a-service offering for its service providers. The company also supports a CCaaS offering, labeled MiCloud Business Contact Center, through an OEM agreement with a third-party CCaaS provider. Solidus eCare, obtained through the Aastra acquisition, is a multichannel contact center platform that is tightly integrated with the Aastra MX-One IP telephony platform, and it also integrates with the rest of Aastra's IP PBX portfolio and operates as a stand-alone suite for multivendor environments. Cloud-based versions of Solidus eCare are available through select Aastra partners.
Consider Mitel and Aastra solutions when looking to support contact center functionality across a breadth of capabilities and sizes, particularly when integrating to Mitel, Aastra and Microsoft Lync UC environments.
Strengths
- Once focused almost exclusively on the "fewer than 100 agents" market, Mitel has increased the scalability and resiliency of MiContact Center Enterprise Edition to better address midsize- and large-enterprise markets. It has also charged its channel partners with pursuing SMB accounts, while Mitel's own direct sales organization focuses on large-enterprise and multinational accounts. Mitel is now a legitimate provider of solutions for environments with hundreds of agents, and the company reports that it has several customers supporting more than 1,000 concurrent agents.
- Mitel has a strong network of channel partners, particularly for SMBs in North America, with adequate coverage in Western Europe and the Asia/Pacific region. The company's recently increased contact center training and certification requirements and its direct support for its channel partners are leading to improvements in the overall skill level of its sales channels.
- Mitel's Aastra business brings a strong installed base globally of both MX-One and Solidus eCare systems, as well as an extensive channel partner network to resell its communications portfolio. Despite continuing to market additional call center offerings as tactical solutions in various geographic markets, the company has focused its sales, marketing and development efforts on Solidus eCare as its flagship enterprise contact center offering going forward.
- Mitel offers strong integration with Microsoft communications products and can deliver combined solutions to midsize contact center environments through channel partners certified to deliver both product sets.
Cautions
- Mitel has a limited track record of supporting very large contact center environments (such as those requiring more than 1,000 agents per system) and customers with multinational requirements. The company has limited brand awareness globally, and it has yet to show substantial investment to increase its brand recognition among contact center decision makers.
- Mitel's March 2014 acquisition of WFO vendor Oaisys greatly expands the company's capabilities in this space; however, customers and prospects should evaluate the extent to which these capabilities have been integrated into the core solution stack across the breadth of the company's contact center offerings.
- While the acquisition of Aastra helped Mitel grow its market share, the integration of the two companies' products, distribution and support may distract from providing new features and keeping up with the market.
NEC
NEC is a public company headquartered in Japan, with shares traded on the Tokyo Stock Exchange. NEC's flagship multimedia contact center offering, Univerge 3C, supports customers ranging from SMBs to companies with thousands of call center agents. NEC offers cloud-based contact center solutions as an add-on offering as part of its unified communications as a service (UCaaS) solution set. Currently, only a small percentage of NEC's contact center sales are based on its flagship Univerge 3C software. The majority of its deployments are based on system integration projects in large-enterprise environments, with the remainder of deployments on appliance-based solutions targeting deployments of fewer than 100 agents.
Consider NEC's Univerge 3C solution when your enterprise has a significant commitment to NEC telephony (regardless of whether you have, or plan to have, an NEC UC deployment). The scale and functionality of your contact center needs should be clearly known and deployed within the countries where NEC operates to avoid the integration limitations of NEC's country-specific product offerings.
Strengths
- NEC's Univerge 3C UCC architecture can run in conjunction with a variety of NEC's telephony offerings, providing a path to consolidating the company's contact center offerings for midsize and large contact center environments, which had been served by disparate offerings in the past.
- NEC has a large installed base of PBXs and contact centers that is amenable to upgrading with additional seats, contact center products and related services. It has particular strengths in the hospitality, government and health verticals, and it continues to experience sales increases.
- NEC has built on its previous investments in both appliance-based IP telephony and software-based UCC solutions in its Univerge 3C contact center solutions, reflecting the most popular approaches in the Asia/Pacific and North American markets that it addresses.
Cautions
- NEC's adoption of multimedia customer service functions within its contact center solutions — and its integration of popular tools, such as Microsoft Lync and customer-facing instant messaging and Web chat — has lagged behind that of its competitors (even though NEC's main role in contact centers remains that of a system integrator). Enterprises wishing to use Univerge 3C for multichannel contact routing should validate that the product's Web chat and social media routing capabilities can address their operational needs.
- Its contact center portfolio sales are primarily to enterprises with significant existing NEC telephony environments. Gartner sees limited results from NEC's attempts to broaden the appeal of its contact center solutions in order to displace other vendors.
- NEC operates mainly in the Asia/Pacific and North American markets. Its multiple contact routing products for different countries limit its ability to support multinational companies with a consistent contact center product set worldwide. Multinational corporations requiring uniform contact centers that can be installed and operated worldwide will need to evaluate NEC's Univerge 3C contact center solution, which has been developed as a consistent solution for global companies.
Presence Technology
Presence Technology is headquartered in Spain and is a privately funded company owned by the private equity division of Valora. Presence Suite is a portfolio of multimedia modular contact center applications that can be deployed as an adjunct to Avaya Aura Communication Manager or as a stand-alone platform with its own OpenGate Session Initiation Protocol (SIP) server. Presence Technology was created from a spinoff from the DTG IT Department, acquired by TeleTech in 2001. While Presence Suite is most referenceable in outbound environments, it is growing its capabilities in inbound and Web customer service.
Organizations looking for a platform-independent solution with particular strengths in scripting and workflow capabilities should consider Presence Suite as a contender.
Strengths
- Presence Technology is executing well on its planned growth and expansion initiatives into the Americas and Africa from its Iberian base.
- While renowned for integration with Avaya, Presence now has two-thirds of its customer base installed with OpenGate, its platform-independent solution.
- Scripting and workflow are strengths that Presence attained from its inception as part of DTG's IT operation.
Cautions
- Presence Technology's cloud development strategy has faltered following the acquisition of partner Voxeo by a competitor.
- While its expansion under challenging market conditions is impressive, Presence is smaller than most of its competitors and lacks broader brand awareness.
- Increasing its size through inorganic growth is challenging unless its owners are prepared to be more acquisitive.
SAP
SAP is headquartered in Germany and is a public company, with shares traded on the Frankfurt Stock Exchange. The company targets the CCI market as part of SAP Labs, a division through which SAP drives its R&D investments. The SAP software product has been renamed to SAP Contact Center to better align with SAP's portfolio for delivering omnichannel customer engagement as an integrated component of the broader set of SAP business applications and SAP Cloud offerings.
SAP Contact Center has a stronger fit with organizations committed to the SAP business application suite and SAP Cloud offering, while it is also a consideration for organizations looking for a stand-alone, multichannel contact center suite.
Strengths
- As part of SAP Labs, the contact center software division enjoys a level of autonomy to operate as an independent business while leveraging the brand of a leading business application software provider.
- The SAP Contact Center is a scalable suite with multitenant properties by way of virtual units, aligning it well with SAP Cloud that is based on the Hana platform.
- The continued development aligning SAP Contact Center with SAP's broader portfolio strengthens the CCI proposition.
Cautions
- As the contact center business unit is a part of SAP Labs, there is minimal external investment into expanding the contact center portfolio as a stand-alone capability, so it must rely almost wholly on organic growth as an attachment to business applications.
- Tighter integration with SAP for the omnichannel customer experience weakens the stand-alone proposition for partners and customers that are not committed to SAP for customer service.
- Software-only solutions rely on partners for hardware and connectivity. It's important for organizations to be offered complete contact center solutions with a calculable cost of ownership.
Unify
Unify (formerly Siemens Enterprise Communications) is a U.S.-headquartered privately owned joint venture between private investor The Gores Group and Siemens AG. OpenScape Contact Center Enterprise is the flagship, multichannel platform for midsize to large organizations. Unify also has a strategic partnership with inContact for its OpenScape Cloud Contact Center offering. OpenScape Contact Center Agile is positioned for small and midsize deployments of less than 100 agents, and OpenScape Contact Center Campaign Director is for outbound and telemarketing activities. The renaming of the company to "Unify" in October 2013 was followed by a new senior executive leadership team, and a renewed energy behind the new brand.
Organizations committed to, or considering, the Unify portfolio should consider OpenScape Contact Center as a contender for OpenScape Communications Platform and legacy HiPath infrastructures. OpenScape Cloud Contact Center is an option when seeking an independent CCaaS offering.
Strengths
- Unify demonstrates a strong vision for its next generation of customer experience solutions leveraging its Project Ansible development program.
- The renaming of Siemens Enterprise Communications to Unify, as well as the plan for communicating the new branding to the public, alleviates short-term concerns of disruptive consolidation with a competitor.
- Unify has a strong professional services team to implement and support its portfolio of contact center solutions.
Cautions
- The Unify contact center portfolio lacks prominence in the mindset of organizations because, in some cases, Unify marketed and sold a third party's offerings rather than marketing and selling its own products.
- OpenScape Contact Center has a dependency on the OpenScape Communications Platform infrastructure, which limits the scope of product positioning.
- While OpenScape Cloud Contact Center is an option for targeting new customers, migrating existing OpenScape Contact Center customers to the cloud is more challenging because of a different underlying software code set.
Vocalcom
Vocalcom is a France-headquartered privately owned company, with Apax Partners as a majority shareholder. Its Hermes.Net contact center suite solution is offered primarily as a cloud-based platform as well as a premises solution. Vocalcom's Cloud Edition is a visionary Amazon Web Services (AWS) deployment model. Furthermore, via salesforce.com's AppExchange, Vocalcom offers the Salesforce Edition, provided as a stand-alone salesforce.com product or for integration with Service Cloud and Sales Cloud. Vocalcom retains its strength in the BPO market, as an adjunct to Avaya Aura Communication Manager, but it is also spreading into new territories with channel expansion and new management.
Organizations looking for a platform-independent suite solution or for cloud deployment should consider Hermes.Net as a contender.
Strengths
- Vocalcom's Cloud Edition offering demonstrates Vocalcom's visionary and early-to-market approach for the next generation of cloud architecture.
- Vocalcom is executing against a program of expansion outside of its core markets of France, the Middle East and North Africa (MENA), Spain, and Brazil. In 2013, it signed with Westcon to distribute Hermes.Net for the Avaya architecture.
- Vocalcom's pedigree in offering solutions on a utility license basis to outsourcers positions the company well for transitioning its enterprise customer base to one of Vocalcom's cloud solutions.
Cautions
- Vocalcom's strength in the BPO market and its outbound dialing solutions overshadow awareness of inbound and multichannel capabilities.
- While Vocalcom's development focus on cloud is positive, it has been at the expense of capabilities more readily associated with competitor suite solutions, such as WFO and mobile self-service.
- The lack of marketing and communication of Vocalcom's cloud approach means the company's offerings are still largely perceived as a platform tied to the Avaya infrastructure. This limits the opportunity to secure mind share with a broader set of verticals and markets.
ZTE
ZTE, headquartered in China, is a public company trading on the Hong Kong Stock Exchange. ZTE's Next Generation Call Center (NGCC) suite supports highly scalable multimedia contact center capabilities, with strength in supporting both inbound and outbound operations in either cloud- or premises-based configurations. Its AnyService@ZXNGCC multimedia unified contact center product is based on its ZXMSQ10 SoftACD switch and system or its ZXNGCC all-IP-based contact center switching solution.
Consider ZTE's NGCC suite for deployments in China and in emerging economies, particularly when the requirement is for price-competitive solutions that scale to thousands of agents — for example, in CSP and contact center BPO environments. Contact center planners will need to evaluate how ZTE's contact center solutions apply to them in each country of their operations.
Strengths
- ZTE's NGCC suite is designed for CSPs to provide multiple multitenant virtual centers for their enterprise customers, especially for call center service outsourcing. It can support 134,400 agents in a single module, with 8.6 million busy-hour call attempts. Furthermore, developments slated for late 2014 are largely geared toward improving ease of use for telcos and outsourcers. NGCC can be deployed as an all-software solution running on a next-generation network softswitch or IMS network for greater efficiency in CSP environments.
- ZTE's recently established enterprise networking division represents a change to the company's approach, from marketing and selling contact center solutions almost exclusively through CSPs to leveraging other channel partners for sales and support. Execution on this strategy will enhance the company's ability to sell and support complex contact center solutions for enterprises around the world.
- Beyond its present strength in the domestic Chinese market, ZTE is increasing sales of its next-generation contact center offering in emerging markets globally. The company's strength in the contact center market lies in selling NGCC as a platform for CSPs, channel partners and network integrators to offer multitenant hosted or cloud services for enterprises and outsourcers.
Cautions
- ZTE continues to have limited ability and experience in providing enterprise contact center solutions outside of China, neighboring Asian countries, and parts of the Middle East, Africa and Latin America, where it is established. This limits its appeal to global enterprise customers but makes it attractive to CSPs, government agencies and enterprises needing contact center services in geographies that are not well-served by Western vendors.
- ZTE's brand recognition is low among multinational organizations in the global contact center market. ZTE has a limited number of enterprise customer-premises deployments.
- ZTE provides enterprise contact center solutions through multitenant CSP partners, as well as through its recently established enterprise business unit channel partners. It can be difficult to find enterprise-focused channel partners or CSP partners with a strong understanding of the best practices used in contact center environments, particularly in emerging countries. The company's enterprise channel sales program lacks a track record of success.
- ZTE does not provide an appliance-based, bundled contact center offering for small to midsize contact centers. Buyers in this space must evaluate ZTE's emerging channel partners' capabilities in integrating ZTE's virtual contact center deployment, CRM, CTI and multimedia Web services.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Added
- Presence Technology was added this year.
- Siemens Enterprise Communications changed its name to Unify in October 2013, and Gartner referred to it as Unify in this document.
Dropped
- Aastra was dropped from the Magic Quadrant this year following its acquisition by Mitel in January 2014.
Inclusion and Exclusion Criteria
To appear in this Magic Quadrant, vendors had to show all the following capabilities:
- Market share among the top performers in at least one geographic region (see "Market Share: Contact Centers, Worldwide, 2013") or, failing that, sufficient differentiation to obtain market presence.
- Sufficient sales and operational presence to support their market objectives.
- Demonstrable solutions in most CCI portfolio areas defined earlier. At a minimum, offerings must include multimedia contact routing and prioritization, IVR or voice portal capability, and CRM integration tools.
- Evidence of an ability to generate significant interest from leading client segments.
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate CCI technology providers based on the breadth, quality, and overall breadth and maturity of their applications, customer support capabilities, and ability to deliver solutions that enable contact center operations in formal contact centers in companies, outsourcers, and/or service providers. Ultimately, CCI technology providers are judged on their ability and success in capitalizing on their vision.
Source: Gartner (May 2014)
Completeness of Vision
Gartner analysts evaluate CCI technology providers based on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and how well these map to Gartner's overall understanding of the marketplace. Ultimately, CCI technology providers are rated on their understanding of how market forces can be exploited to create opportunities for providers and their clients.
Source: Gartner (May 2014)
Quadrant Descriptions
Leaders
Leaders are high-viability vendors with broad portfolios, significant market share, broad geographic coverage, a clear vision of how contact center needs will evolve and a proven track record of delivering contact center products. They are well-positioned with their current product portfolio and likely to continue delivering leading products. Leaders do not necessarily offer a best-of-breed solution for every customer requirement. However, overall, their products are strong and often have some exceptional capabilities. Additionally, these vendors provide solutions that present relatively low risk of deployment failure.
Challengers
Challengers are vendors with strong market capabilities and good solutions for specific markets. However, overall, their products lack the breadth and depth of those in the Leaders quadrant. Challengers do not always communicate a clear vision of how the contact center market is evolving, and they are often less innovative or advanced than the Leaders. Vendors in this quadrant often excel at selling contact center functionality to their installed base of PBXs or IP telephony.
Visionaries
Visionaries demonstrate a clear understanding of the contact center market and provide key innovations that point to the market's future. However, these vendors typically lack the ability to influence a large portion of the market, have not yet expanded their sales and support capabilities on a regional basis, or do not yet have the funding to execute with the same capabilities as the Leaders.
Niche Players
The vendors in this quadrant offer contact center products that focus on a segment of the market or a subset of its functionality. Customers aligned with the focus of a Niche Player may find its offerings to be a good "fit" for their needs.
Context
The CCI market continues to show consolidation among major vendors (such as Mitel's acquisition of Aastra in early 2014) and as these vendors enhance their overall solutions coverage by acquiring providers of point solutions. Examples of vendors expanding their solution breadth through acquisitions of point solution vendors include Aspect's acquisitions of Voxeo, Bright Pattern and Zipwire, and Genesys' acquisition of Echopass. Since the last iteration of this report, the market has also seen China-based conglomerate China Huaxin enter discussions to acquire Alcatel-Lucent's Enterprise business unit, which includes its contact center business.
Many vendors are finding continued growth in this market by employing a variety of strategies, including:
- Focusing on technology differentiated from competitors' offers for various enterprises' needs
- Offering solutions that target service providers
- Targeting innovation toward niche applications, such as dialer solutions
- Targeting emerging markets that may offer faster market growth rates and more greenfield opportunities than those in mature markets, such as North America, Western Europe and the developed portions of the Asia/Pacific region
Although some best-of-breed point solutions will remain relevant, customers are increasingly adopting broader contact center solutions as tightly integrated suites or more loosely integrated portfolios from "cornerstone" vendors. All vendors covered by this report offer significant functionality beyond basic phone call routing and prioritization. Furthermore, many enterprises are recognizing the potential synergies that their customer-facing CCI and software solutions can have with their current or planned investments in internal-facing UC architectures. These enterprises must consider how these investment strategies can coexist and potentially share communications and collaboration components, such as enterprise telephony, presence and conferencing applications.
The contact center market is also evolving from a focus on discrete, one-off customer interactions using a variety of communications silos, to a more integrated and holistic view of customer activities and workflows in recognition that a customer may take a variety of different activities (some but not all involving communications with the target company) in the course of completing a customer journey. The compilation of discrete interactions and customer journeys in turn impact a customer's overall experience of a company. This focus on context-aware, multichannel (including social media), reactive and proactive interactions are shaping the evolution of the "contact center" to the "customer engagement center." This change in focus, however, is in the early phases of adoption, and at present, there is more "vendor hype" around this trend than there is actual end-user company transformation taking place.
This research captures Gartner's view of the general state of the market and evaluates vendors' capabilities on a global basis. It is not intended as specific advice for any one user company's situation. Companies planning to acquire new or replacement CCI should contact Gartner analysts to discuss how this generalized model applies in their specific country, as well as how it applies to their specific business environment and needs.
Market Overview
The dynamics shaping the global CCI market vary by region. The market is largely mature in North America, Western Europe and portions of the Asia/Pacific region, where most sales involve expanding or replacing existing systems. The North American and Western European markets combined accounted for slightly more than 60% of agent shipments in 2013. However, CCI is still an emerging technology in many global regions. In many countries, this market is forecast to grow at double-digit rates, compounded annually, through 2018 (see "Forecast: Contact Centers, Worldwide, 2011-2018, 1Q14 Update"). Overall, contact center agent license shipments declined 3.3% in 2013 relative to the prior year. Regional performance varied widely, ranging from low single-digit growth in Latin America and North America, to a double-digit year-over-year decline in agent license shipments in Eastern Europe, and single-digit year-over-year shipment declines in other geographic regions.
The market has traditionally been dominated by the leading vendors in the enterprise telephony market — a market that has also experienced some consolidation in recent years. However, market barriers are not so high as to prevent other vendors from entering. Avaya, Cisco and Genesys accounted for more than 60% of global agent shipments in 2013, despite Avaya and Genesys showing shipment declines year over year. Huawei, Mitel and Enghouse are the next three largest global market share holders, respectively. These three account for a combined share of less than 13%, with only Enghouse showing strong year-over-year growth. Some smaller players continue to find defendable market niches through geographic or vertical market specialization, low price, or differentiating technologies (see "Market Share: Contact Centers, Worldwide, 2013").
CCI solutions have traditionally been hardware-centric, but most vendors' solutions are now shipped as software that the customer can run on properly configured commercial, off-the-shelf servers, although some still require proprietary components. The majority of shipped solutions are based on Internet standards, including TCP/IP and Session Initiation Protocol.
The market has been consolidating over time, and incumbent vendors are looking to expand their solution portfolios to incorporate additional capabilities that commonly play a role in contact center ecosystems. These capabilities include IVR, outbound dialers, contact center workforce management, recording, e-learning, Web chat, email response management, live and prerecorded video, desktop collaboration, analytics, workflow, and mobility. This creates challenges to vendors that grow through acquisition or that develop their offering sets as a collection of separate, point solution offerings, in that a portfolio approach (rather than a more tightly integrated suite approach) results in an environment in which customers must manage and administer component systems separately. We are seeing more vendors offer bundles intended to simplify the purchase, configuration and implementation of their offering sets for the benefit of their sales channels, customers and prospects.
In 2014, trends influencing the planning and deployment of enterprise CCI include:
- Continued infrastructure consolidation and centralization projects among companies that operate multiple contact centers — These companies want to leverage the location-independent nature of IP-based infrastructure to reduce duplication of infrastructure investments. In response to this trend, most vendor solutions now support VMware or Hyper-V for system virtualization.
- Momentum for multimedia routing and self-service, including email response management, Web chat and customer collaboration solutions — These solutions, traditionally purchased from best-of-breed or point solution providers, are now increasingly being evaluated within the portfolio of the traditional automated call distributor vendors.
- Increasing awareness and adoption of cloud-based CCI deployments — Gartner has seen a steady increase in client interest in cloud-based deployments, ranging from CCaaS solutions to company-dedicated hosted solutions. Once primarily the realm of deployments of 75 agents or fewer, these solutions are increasingly gaining adoption in environments with up to several thousand agents. These solutions have also evolved from providing only basic call routing to supporting complex customer routing schemes, including those supporting multiple media and sophisticated customer segmentation. Most vendors covered in this Magic Quadrant provide CCaaS or hosted contact center functionality, either directly or through partners.
- Contact center WFO functionality — Once almost solely limited to point solution providers, WFO functionality is now included in many CCI suites or portfolios. This functionality encompasses varying combinations of contact recording, agent evaluation, workforce management, coaching and e-learning tools, postcontact surveying, and agent performance speech analytics.
- Increasing awareness of social media's potential impact on contact center operations —Many companies are now considering the potential impact of social-media-based interaction on customer service activities, although actual adoption of social CRM solutions in contact centers remains limited to primarily companies that take a more aggressive approach to technology adoption.
- Leveraging the contact center routing capabilities to support back-office workflow —Organizations in vertical markets, such as insurance and government agencies in which customer contacts frequently initiate process-intensive workflows, are beginning to investigate how they can extend the prioritization, routing and tracking capabilities of their CCI. These capabilities can range from managing customer contacts to managing the follow-on tasks associated with those contacts, to ensure their completion within defined service-level agreements and targets.
- Growing interest in adding tighter linkage between customer service operations and mobile applications — Mobile applications can provide customers with easier access to self-service information by supporting a visual interface to option selections and data that previously was available only to those accessing the company using a more traditional computer interface. These solutions can also provide customers with additional information and options based on real-time information regarding contact center operations, such as expected wait times and callback options. Mobility can also be used for internal-facing applications, such as providing real-time and historical performance dashboards and access to staffing and monitoring capabilities, while the contact center manager or director is away from his or her desk.
- Evolution from contact center to customer engagement center orientation — For well over a decade, vendors and end-user companies have talked about the need to look at customer interactions from the customers' point of view and in context of the goals they were seeking to achieve through a broad set of activities. With the emphasis on sales and marketing activities, this thinking has evolved in large part due to the emergence of other trends, such as multimedia traction, integration with social media engagement tools, mobile device support, "big data" analytics, proactive communications, and workflow (among others), and has taken on the moniker of "customer engagement."
- Emerging interest in integration with Microsoft Lync — Many companies have significant investment in Microsoft Lync user licenses and IT support knowledge, and they are looking for ways to leverage these investments beyond their enterprise UCC deployments and into their contact center deployments. Despite vendor hype, few companies are integrating enterprise rich-presence capabilities in their contact centers, which would allow agents to pull non-contact-center subject matter experts into contact center customer interactions. Instead, many companies are focusing on the expected eventual maturity of Lync as an enterprise voice/IP telephony platform, at which point these companies foresee the potential for Lync to be the voice and multichannel routing infrastructure to which their contact center applications would need to integrate.
Many companies fitting a mainstream or conservative technology adoption profile have begun to embrace the use of multimedia customer communications. While email routing and response management has traditionally been companies' "nonvoice" channels of choice to add to their contact center, Gartner has noticed a recent increase in the rate of adoption for Web chat functionality in contact centers, particularly in mature regional markets such as North America and Western Europe, and in mature country markets such as Australia and China. Companies with more aggressive technology adoption profiles have begun to embrace rich presence to incorporate subject matter experts directly into customer service processes. Technologies such as video and desktop collaboration with customers remain niche functionalities in CCI, with limited and specialized commercial deployment. Regardless of their companies' technology adoption profiles, contact center planners should review Gartner's "Hype Cycle for Contact Center Infrastructure, 2013" to help develop road maps for the incorporation of new technologies into their environments to address customer relationship strategies. In some cases, this may involve evaluating the ability of a system to provide a wide breadth of functionality, not all of which may be implemented at the time of the system's initial deployment.
Gartner 2014 Magic Quadrant Infrastructure as a Service
VIEW SUMMARY
The market for cloud compute infrastructure as a service (a virtual data center of compute, storage and network resources delivered as a service) is still maturing and rapidly evolving. Strategic providers must therefore be chosen carefully.
Market Definition/Description
Cloud computing is a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using Internet technologies. Cloud infrastructure as a service (IaaS) is a type of cloud computing service; it parallels the infrastructure and data center initiatives of IT. Cloud compute IaaS constitutes the largest segment of this market (the broader IaaS market also includes cloud storage and cloud printing). Only cloud compute IaaS is evaluated in this Magic Quadrant; it does not cover cloud storage providers, platform as a service (PaaS) providers, software as a service (SaaS) providers, cloud services brokerages or any other type of cloud service provider, nor does it cover the hardware and software vendors that may be used to build cloud infrastructure. Furthermore, this Magic Quadrant is not an evaluation of the broad, generalized cloud computing strategies of the companies profiled.
In the context of this Magic Quadrant, cloud compute IaaS (hereafter referred to simply as "cloud IaaS" or "IaaS") is defined as a standardized, highly automated offering, where compute resources, complemented by storage and networking capabilities, are owned by a service provider and offered to the customer on demand. The resources are scalable and elastic in near real time, and metered by use. Self-service interfaces are exposed directly to the customer, including a Web-based UI and an API. The resources may be single-tenant or multitenant, and hosted by the service provider or on-premises in the customer's data center.
We draw a distinction between cloud infrastructure as a service, and cloud infrastructure as a technology platform; we call the latter cloud-enabled system infrastructure (CESI). In cloud IaaS, the capabilities of a CESI are directly exposed to the customer through self-service. However, other services, including noncloud services, may be delivered on top of a CESI; these cloud-enabled services may include forms of managed hosting, data center outsourcing and other IT outsourcing services. In this Magic Quadrant, we evaluate only cloud IaaS offerings; we do not evaluate cloud-enabled services. (See "Technology Overview for Cloud-Enabled System Infrastructure," "Technology Overview for Cloud-Enabled Managed Hosting" and "Don't Be Fooled by Offerings Falsely Masquerading as Cloud Infrastructure as a Service" for more on this distinction.)
This Magic Quadrant covers all the common use cases for cloud IaaS, including development and testing, production environments (including those supporting mission-critical workloads) for both internal and customer-facing applications, batch computing (including high-performance computing [HPC]) and disaster recovery. It encompasses both single-application workloads and "virtual data centers" (VDCs) hosting many diverse workloads. It includes suitability for a wide range of application design patterns, including both "cloud-native" application architectures and enterprise application architectures.
This Magic Quadrant primarily evaluates cloud IaaS providers in the context of the fastest-growing need among Gartner clients: the desire to have a "data center in the cloud," where the customer retains most of the IT operations responsibility. Gartner's clients are mainly enterprises, midmarket businesses and technology companies of all sizes, and the evaluation focuses on typical client requirements.
This Magic Quadrant strongly emphasizes self-service and automation in a standardized environment. It focuses on the needs of customers whose primary need is self-service cloud IaaS, although it may be supplemented by a small amount of colocation or dedicated servers. Organizations that need significant customization or managed services for a single application, or that are seeking cloud IaaS as a supplement to a traditional hosting solution ("hybrid hosting"), should consult the Magic Quadrants for Managed Hosting instead ("Magic Quadrant for Managed Hosting, North America," "Magic Quadrant for European Managed Hosting" and "Magic Quadrant for Cloud-Enabled Managed Hosting, Asia/Pacific"). Organizations that do not want self-service, but instead want managed services with an underlying CESI, should consult our Magic Quadrants for data center outsourcing and infrastructure utility services ("Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, North America," "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Europe" and "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Asia/Pacific").
This Magic Quadrant evaluates only solutions that are delivered in an entirely standardized fashion — specifically, public cloud IaaS, along with private cloud IaaS that uses the same or a highly similar platform. Although most of the providers in this Magic Quadrant do offer custom private cloud IaaS, we have not considered these offerings in our evaluations. Organizations that are looking for custom-built, custom-managed private clouds should use our Magic Quadrants for data center outsourcing and infrastructure utility services instead (see above).
Understanding the Vendor Profiles, Strengths and Cautions
IaaS providers that target enterprise and midmarket customers generally offer a high-quality service, with excellent availability, good performance, high security and good customer support. Exceptions will be noted in this Magic Quadrant's evaluations of individual providers. Note that when we say "all providers," we specifically mean "all the evaluated providers included in this Magic Quadrant," not all cloud IaaS providers in general. Keep the following in mind when reading the vendor profiles:
- All of the providers have a public cloud IaaS offering. Many also have an industrialized private cloud offering, where every customer is on standardized infrastructure and cloud management tools, although this may or may not resemble the provider's public cloud service in either architecture or quality. A single architecture and feature set and cross-cloud management, for both public and private cloud IaaS, make it easier for customers to combine and migrate across service models as their needs dictate, and enable the provider to use its engineering investments more effectively. All the providers also offer custom private clouds, unless otherwise noted.
- Most of the providers are oriented toward the needs of traditional IT operations, with an emphasis on control, governance and security, and the ability to run both new applications and legacy workloads. The providers that are oriented toward the needs of developers are noted as such; these providers typically emphasize easy access to infrastructure for individuals who are building new applications. Some developer-oriented offerings target small or midsize businesses (SMBs) and startups, and lack the features needed by enterprises and midmarket entities.
- Most of the providers have resilient infrastructure, achieved through redundant infrastructure in conjunction with virtual machine (VM) clustering, or the ability to rapidly detect VM failure and immediately restart it on different hardware. They are thus able to offer very high SLAs for infrastructure availability — sometimes as high as 99.999% (sometimes expressed as a 100% SLA with a 10-minute exclusion). Offerings without VM clustering or fast VM restart — which provide higher levels of infrastructure availability than can be expected from a single physical server — are noted as lacking autorestart.
- Most of the providers have maintenance windows that result in downtime of the control plane (including the GUI and API), and may require infrastructure downtime. Some offerings can utilize live migration of VMs, largely eliminating the need for downtime to perform host maintenance, but this does not eliminate maintenance windows in general.
- In general, monthly compute availability SLAs of 99.95% and higher are the norm, and they are typically higher than availability SLAs for managed hosting. Service credits for outages in a given month are typically capped at 100% of the monthly bill. This availability percentage is typically non-negotiable, as it is based on an engineering estimate of the underlying infrastructure reliability. Maintenance windows are normally excluded from the SLA.
- Some providers have a compute availability SLA that requires the customer to use compute capabilities in at least two fault domains (sometimes known as availability zones or availability sets); an SLA violation requires both fault domains to fail. Providers with an SLA of this type are explicitly noted as having a multi-fault-domain SLA.
- Very few of the providers have an SLA for compute or storage performance. However, most of the providers do not oversubscribe compute or RAM resources; providers that do not guarantee resource allocations are noted explicitly. Storage performance varies considerably between providers. Some providers can offer tiered storage with a solid-state drive (SSD) option.
- Many providers have additional SLAs, covering network availability and performance, customer service responsiveness and other service aspects.
- Infrastructure resources are not normally automatically replicated into multiple data centers unless otherwise noted; customers are responsible for their own business continuity. Some providers offer optional disaster recovery solutions.
- All providers offer, at minimum, per-hour metering of VMs, and some can offer shorter metering increments, which can be more cost-effective for short-term batch jobs. Providers charge on a per-VM basis unless otherwise noted. Some providers offer either a shared resource pool (SRP) pricing model or are flexible about how they price the service. In the SRP model, customers contract for a certain amount of capacity (in terms of CPU and RAM), but can allocate that capacity to VMs in an arbitrary way, including being able to oversubscribe that capacity voluntarily; additional capacity can usually be purchased on demand by the hour.
- Some of the providers allow customers to choose arbitrary-size VMs — any combination of virtual CPUs (vCPUs), RAM and VM storage, subject to some limits. Providers that do not allow this are explicitly noted as offering fixed-size VMs. Some providers with fixed-size VMs have a very limited range of VM sizes, while others have a wide variety of sizes and suit a broad range of use cases. Some providers who offer arbitrary-size VMs may enforce a maximum ratio between vCPUs and RAM.
- Most of the providers can resize an existing VM without needing to reprovision it; those that cannot are explicitly noted as offering nonresizable VMs. Some of the providers can resize an existing VM without needing to reboot it.
- Most of the providers can provision a basic Linux VM within 5 minutes (although this will increase with large OS images, and Windows VMs typically take somewhat longer). Those that cannot are noted as having slow provisioning. Most providers can do simultaneous provisioning of multiple VMs; for example, provisioning 20 VMs will finish about as quickly as one VM. Those that cannot are noted as such, and the degradation can be significant (some providers take over an hour to provision 20 VMs). Nonsimultaneous provisioning has a major negative impact in disaster recovery, instant high-scalability and batch-computing scenarios.
- Some of the providers are able to offer an option for single-tenant VMs within a public cloud IaaS offering, on a fully dynamic basis, where a customer can choose to place a VM on a host that is temporarily physically dedicated to just that customer, without the customer needing to buy a VM that is so large that it consumes the whole physical host. These VMs are typically more expensive than VMs on shared hosts. Providers that have this option are noted as such.
- Some of the providers are able to offer "bare metal" physical servers on a dynamic basis. Due to the longer provisioning times involved for physical equipment (two hours is common), the minimum billing increment for such servers is usually daily, rather than hourly. Providers with a bare-metal option are noted as such.
- All the providers offer an option for colocation, unless otherwise noted. Many customers have needs that require a small amount of supplemental colocation in conjunction with their cloud — most frequently for a large-scale database, but sometimes for specialized network equipment, software that cannot be licensed on virtualized servers, or legacy equipment. Colocation is specifically mentioned only when a service provider actively sells colocation as a stand-alone service; a significant number of midmarket customers plan to move into colocation and then gradually migrate into that provider's IaaS offering.
- Typically, the storage associated with an individual VM is persistent. However, some providers have ephemeral storage, where the storage exists only during the life of the VM; if the VM goes away unexpectedly (for instance, due to hardware failure), all data in that storage is lost. Ephemeral storage is always noted explicitly.
- All the providers offer VM-independent block storage unless otherwise noted. A few providers allow storage volumes to be mounted on multiple VMs simultaneously, although customers must correctly architect their solutions to ensure data integrity (just as they would with a traditional storage array).
- All the providers offer object-based cloud storage, unless otherwise noted. In many cases, this service is integrated with a content delivery network (CDN).
- All the providers have a private WAN that connects their data centers, unless otherwise noted. They offer an option for private network connectivity (usually in the form of Multiprotocol Label Switching [MPLS] or Ethernet purchased from the customer's choice of carrier), between their cloud environment and the customer's premises, unless otherwise noted. Providers for which we state "third-party connectivity is via partner exchanges" are ones where private connectivity is obtained via cross-connect in the data centers of select partners, such as Equinix; this also meets the needs of customers who require colocated equipment. Some carriers may also have special products for connecting to specific cloud providers — for example, AT&T NetBond and Verizon Secure Cloud Interconnect.
- Most of the providers support the use of Internet-based IPsec VPN (virtual private networking). All the providers allow customers to have VMs with only private Internet Protocol (IP) addresses (no public Internet connectivity), and also allow customers to use their own IP address ranges, unless otherwise noted. Some providers may enforce secure access to management consoles, restricting access to VPNs or private connectivity.
- All the providers claim to have high security standards. The extent of the security controls provided to customers varies significantly, though. All providers offer multifactor authentication (MFA), unless otherwise noted. Most providers offer additional security services. All the providers evaluated can offer solutions that will meet common regulatory compliance needs, unless otherwise noted. All the providers have SSAE 16 audits for their data centers (see Note 1), and some may have ISO 27001 audits for their cloud IaaS offering (see Note 2); audits should not be taken as indications of security.
- Most providers offer a firewall (intrusion detection system/intrusion prevention system) as part of their offering, although a few offer only access control lists (ACLs) and a few offer no self-service network security at all; this will always be explicitly noted. All providers provide distributed denial of service (DDoS) attack mitigation, unless otherwise noted.
- All the providers offer customers a self-service ability to create complex network topologies with multiple network segments and multiple virtual network interface cards (NICs), unless otherwise noted.
- All the providers allow customers to bring their own VM images, unless otherwise noted. This allows a customer to create snapshots of existing VMs within their own internal data center, and then directly import them via self-service into the provider's cloud, rather than having to start from the provider's own VM image library. This also allows the import of VM appliances and other prepackaged VM images from independent software vendors (ISVs). All providers allow storage snapshots and have the ability to turn the snapshot into a VM image, unless otherwise noted. All the providers have the ability to do bulk import and export of data on physical media, unless otherwise noted.
- Some providers allow customers to create provisioning templates that group multiple resources, including compute, storage and network elements, and allow them to be provisioned as a unit. Some of the providers also have post-provisioning hooks, allowing customers to run scripts after VM provisioning is complete but before the VM is available for login.
- All the providers offer self-service monitoring as an option, unless otherwise noted. A few offer trigger-based autoscaling, which allows provisioning-related actions to be taken based on a monitored event. Some providers offer schedule-based autoscaling, which allows provisioning-related actions to be executed at a particular time.
- All the providers offer self-service, front-end load balancing, unless otherwise noted. All also offer back-end load balancing (used to distribute load across the middle and back-end tiers of an application), unless otherwise noted.
- All the providers offer a portal and self-service mechanism that is designed for multiple users and that offers hierarchical administration and role-based access control (RBAC). However, the degree of RBAC granularity varies greatly. From most to least control, RBAC can be per element, tag, group or account. Unless stated otherwise, a provider's RBAC applies across the account. Providers typically predefine some roles; the ability to have customer-defined roles offers more control, and is noted where available. We strongly recommend that customers that need these features, but that want to use a provider that does not have strong support for them, evaluate a third-party management tool, such as Dell Cloud Manager (formerly Enstratius), RightScale or ServiceMesh (acquired by CSC).
- All providers log events such as resource provisioning and deprovisioning, VM start and stop, and account changes, and allow customers self-service access to those logs for at least 60 days, unless otherwise noted.
- All providers, unless otherwise noted, offer the ability to place metadata tags on provisioned resources, and to run reports based on them, which is useful for internal showback or chargeback. Some providers also offer cost control measures such as quotas (limits on what a user can provision) and leases (time-limited provisioning of resources).
- All providers offer enterprise-class support with 24/7 customer service, via phone, email and chat, along with an account manager. Most providers include this with their offering. Some offer a lower level of support by default, but allow customers to pay extra for enterprise-class support.
- All the providers will sign contracts with customers, can invoice, and can consolidate bills from multiple accounts. While some may also offer online sign-up and credit card billing, they recognize that enterprise buyers prefer contracts and invoices. Some will sign "zero dollar" contracts that do not commit a customer to a certain volume.
- All the providers evaluated are believed to be financially stable, with business plans that are adequately funded. Customers should not need to worry about them going out of business. However, many of the smaller providers are likely to be potential acquisition targets; an acquisition can cause significant changes in the strategy and direction of a business, and may result in a service transition period if the merged companies consolidate their platforms. Furthermore, small IaaS businesses within large vendors may be subject to turmoil if the vendor changes its overall cloud strategy.
- Many of the providers have white-label or reseller programs, and some may be willing to license their software. We mention software licensing only when it is a significant portion of the provider's business; other service providers, not enterprises, are usually the licensees. We do not mention channel programs; potential partners should simply assume that all these companies are open to discussing a relationship. (See "Infrastructure as a Service in the Cloud Services Value Chain" for details.)
- Most of the providers offer optional managed services on IaaS. However, not all offer the same type of managed services on IaaS as they do in their broader managed hosting or data center outsourcing services. Some may have managed services provider (MSP) or system integrator (SI) partners that provide managed and professional services.
- All the evaluated providers offer a portal, documentation, technical support, customer support and contracts in English. Some can provide one or more of these in languages other than English. Most providers can conduct business in local languages, even if all aspects of service are English-only. Customers who need multilingual support will find it very challenging to source an offering.
Format of the Vendor Descriptions
When describing each provider, we first briefly summarize the nature of the company and then provide information about its public cloud IaaS offerings (and any single-tenant offerings that are otherwise identical), in the following format:
Locations: Cloud IaaS data center locations by country, languages that the company does business in, and languages that technical support can be conducted in.
Compute, storage, network and security notes: Notes on the offering, including any missing core functionality or significant features, compared with the standard functionality discussed above.
Other notes: We list other capabilities of note, including important missing capabilities. We specifically note other cloud-related services, such as cloud storage (which all providers have, unless otherwise noted), as well as the availability of managed services, even though those service offerings are not specifically evaluated in the context of this Magic Quadrant, because they are capabilities frequently requested by customers in conjunction with cloud IaaS. (See "Market Insight: Customers Need Hybrid Cloud Compute Infrastructure as a Service" for details.)
In the compute notes, we state the basis of each provider's virtualization technology and, if relevant, its cloud management platform (CMP). We also state what APIs it supports — the Amazon Web Services (AWS), OpenStack and vCloud APIs are the three that have broad adoption, but many providers also have their own unique API. Note that supporting one of the three common APIs does not provide assurance that a provider's service is compatible with a specific tool that purports to support that API; the completeness and accuracy of API implementations vary considerably. Furthermore, neither the use of the same underlying CMP nor API compatibility indicates that two services are interoperable. Specifically, OpenStack-based clouds differ significantly from one another, limiting portability; the marketing hype of "no vendor lock-in" is, practically speaking, untrue.
For many customers, the underlying hypervisor will matter, particularly for those that intend to run commercial software on IaaS. Many ISVs support only VMware virtualization, and those vendors that support Xen may support only Citrix XenServer, not open-source Xen (which is often customized by IaaS providers and is likely to be different from the current open-source version).
Services that use VMware's virtualization technologies are labeled as follows:
- vCloud Datacenter Service. This service has been certified to meet VMware's globally consistent service definitions, security and regulatory compliance requirements, and requirements for availability and high performance. It is based on a prescriptive architecture intended to maximize portability between providers of vCloud Datacenter Service and a business's own VMware-virtualized data center infrastructure. Only 10 providers worldwide have such a service and most of them do not yet have a significant customer base on this platform. These providers also meet the requirements for being vCloud Powered.
- vCloud Powered. These providers are part of VMware's service provider partner program. The service is based on VMware's vSphere and vCloud Director (vCD), exposes the vCloud API, and supports the Open Virtualization Format (OVF) for image upload and download. Unless otherwise stated, these providers expose the vCD UI to customers. Because the vCD features exposed can be customized by the service provider, and the service provider typically needs to provide an array of features not included in vCD (such as monitoring), there is still significant differentiation between vCloud Powered providers. In a vCloud Powered offering with the vCD UI exposed, vCD is used to drive self-service management and provide a service catalog. vCD is a key part of VMware's strategy for driving adoption of hybrid internal-external cloud IaaS, and facilitates interoperability between VMware-virtualized infrastructures, regardless of whether they are internal to a business or offered by a service provider. vCD provides the capability to manage very complex infrastructure needs, but also requires a greater investment in training and setup time from an IT administrator in order to facilitate easier self-service for users.
- vCloud Express. vCloud Express is a VMware-defined offering aimed at developers and small businesses, with online sign-up, credit card payment, self-service and by-the-hour service.
- VMware-virtualized. This service uses VMware's hypervisor, but is not a vCloud Datacenter, vCloud Powered or vCloud Express service. Many such offerings are high-quality services from early, market-leading innovators; these providers typically entered the market before vCD became available and have elected to continue to develop their own technology.
We summarize all of the provider descriptions, including a comparison of their capabilities against our baseline expectation of capabilities, in tabular format in "Toolkit: Comparison Matrix for Cloud Infrastructure-as-a-Service Providers, 2014."
We provide a detailed list of evaluation criteria in "Evaluation Criteria for Cloud Infrastructure as a Service." Our "Critical Capabilities for Public Cloud Infrastructure as a Service" provides a use-case-focused technical evaluation of the public cloud IaaS offerings of the included providers.
Recommended Uses
For each vendor, we also provide recommendations for use. The most typical recommended uses are:
- Cloud-native applications. These are applications specifically architected to run in a cloud IaaS environment, using cloud transaction processing (TP) principles.
- E-business hosting. These are e-marketing sites, e-commerce sites, SaaS applications, and similar modern websites and Web-based applications. They are usually Internet-facing. They are designed to scale out and are resilient to infrastructure failure, but they might not use cloud TP principles.
- General business applications. These are the kinds of general-purpose workloads typically found in the internal data centers of most traditional businesses; the application users are usually located within the business. Many such workloads are small, and they are often not designed to scale out. They are usually architected with the assumption that the underlying infrastructure is reliable, but they are not necessarily mission-critical. Examples include intranet sites, collaboration applications such as Microsoft SharePoint, and many business process applications.
- Enterprise applications. These are general-purpose workloads that are mission-critical, and they may be complex, performance-sensitive or contain highly sensitive data; they are typical of a modest percentage of the workloads found in the internal data centers of most traditional businesses. They are usually not designed to scale out, and the workloads may demand large VM sizes. They are architected with the assumption that the underlying infrastructure is reliable and capable of high performance.
- Development environments. These workloads are related to the development and testing of applications. They are assumed not to require high availability or high performance. However, they are likely to require governance for teams of users.
- Batch computing. These workloads include high-performance computing (HPC), "big data" analytics and other workloads that require large amounts of capacity on demand. They do not require high availability, but may require high performance.
For all the vendors, the recommended uses are specific to self-managed cloud IaaS. However, many of the providers also have managed services, as well as other cloud and noncloud services that may be used in conjunction with cloud IaaS. These include hybrid hosting (customers sometimes blend solutions, such as an entirely self-managed front-end Web tier on public cloud IaaS, with managed hosting for the application servers and database), as well as hybrid IaaS-PaaS solutions. Even though we do not evaluate managed services, PaaS and the like in this Magic Quadrant, they are part of a vendor's overall value proposition and we mention them in the context of providing more comprehensive solution recommendations.
Magic Quadrant
Source: Gartner (May 2014)
Vendor Strengths and Cautions
Amazon Web Services
AWS, a subsidiary of Amazon.com, is a cloud-focused service provider with a very pure vision of highly automated, cost-effective IT capabilities, delivered in a flexible, on-demand manner.
Locations: AWS has groups of data centers, which it calls "regions," on the East and West Coasts of the U.S., and in Ireland, Japan, Singapore, Australia, Brazil, and (in preview) China. It also has one region dedicated to the U.S. federal government. It has global sales. Support is provided in English, Japanese and Portuguese. Technical account managers can also provide support in German, Spanish, Hindi, Korean and Mandarin. The portal and documentation are available in English, Dutch, French, German, Portuguese, Spanish, Japanese, Korean and Mandarin.
Compute: Elastic Compute Cloud (EC2) offers multitenant, fixed-size and nonresizable, Xen-virtualized VMs without autorestart. Single-tenant VMs are available via Dedicated Instances. There are special options for HPC, including graphics processing units (GPUs). AWS does not have any formal private cloud offerings, though it is willing to negotiate such deals (such as its deal for the U.S. intelligence community cloud).
Storage: VM storage is ephemeral. Persistence requires VM-independent block storage (Elastic Block Store). There is an option for SSDs, as well as storage performance guarantees (Provisioned IOPS). Object-based storage (Simple Storage Service [S3]) is integrated with a CDN (CloudFront), there is an option for long-term archive storage (Glacier), and AWS offers its own cloud storage gateway appliance.
Network: AWS offers a full range of networking options. Complex networking and IPsec VPN is done via Amazon Virtual Private Cloud (VPC). Third-party connectivity is via partner exchanges (AWS Direct Connect).
Security: RBAC is per-element, with customer-defined roles and exceptional control over permissions. AWS has obtained many security and compliance-related certifications and audits.
Other notes: Enterprise-grade support is extra. The SLA is multi-fault-domain, but does not have any exclusion for maintenance; AWS also offers continuous availability on its portal and API. Notable capabilities include orchestration (CloudFormation and OpsWorks), autoscaling, database as a service (Relational Database Service [RDS]), Hadoop as a service (Elastic MapReduce), data warehousing as a service (Redshift), and desktop as a service (WorkSpaces). AWS does not offer colocation; a partner exchange must be used instead. We provide purchasing guidance in "What Managers Need to Know About Amazon Web Services" and a detailed technical evaluation in "Amazon Web Services (AWS): In-Depth Assessment."
Recommended uses: All use cases that run well in a virtualized environment, although highly secure applications, strictly compliant or enterprise applications (especially complex ones such as SAP business applications) require special attention to architecture.
Strengths
- AWS has a diverse customer base and the broadest range of use cases, including enterprise and mission-critical applications. It is the overwhelming market share leader, with more than five times the cloud IaaS compute capacity in use than the aggregate total of the other 14 providers in this Magic Quadrant. It is a thought leader; it is extraordinarily innovative, exceptionally agile, and very responsive to the market. It has the richest array of IaaS features and PaaS-like capabilities, and continues to rapidly expand its service offerings. It is the provider most commonly chosen for strategic adoption.
- AWS has a very large technology partner ecosystem. Many software vendors have specially licensed and packaged their software to run on EC2, either independently or via the AWS Marketplace, which eases deployment and eliminates some of the challenges associated with licensing software to run in the cloud. Its API is supported by many third parties that provide associated management tools, and many open-source and commercial CMPs are compatible with its API. Although AWS is not directly involved in the hybrid on-premises cloud business, it has partners that can offer such solutions.
- AWS has an extensive network of partners that can offer assistance with adopting its platform. It is increasingly targeting mainstream enterprises and the midmarket via go-to-market partnerships with SIs (such as Capgemini, Cognizant and Wipro) that provide application development expertise, managed services and professional services such as data center migration, although such providers do not necessarily deliver solutions that are optimal for the cloud environment. There are also many consulting and managed services partners that offer a cloud-native approach, such as Datapipe and 2nd Watch.
- AWS has multiple "availability zones" (AZs) within its regions. These AZs are effectively multiple data centers in close proximity to one another. AWS's services are designed to make it easier to run applications across multiple AZs; customers are responsible for architecting their applications for high availability. However, new capabilities are rolled out incrementally, region by region, so newer capabilities are not necessarily available in every region.
Cautions
- AWS is a price leader, but it charges separately for optional items that are sometimes bundled with competitive offerings. This increases the complexity of understanding and auditing bills. Prospective customers should be careful to model the costs accurately, especially for network-related charges, and to compare the costs of reserved and unreserved capacity, as well as AWS's "spot pricing" market.
- AWS's support offerings are tiered based on the level of support that a customer purchases, rather than on a "relationship" or size-of-spend basis; the quality of support differs materially between tiers. AWS does not include enterprise-grade support by default; customers will need to buy Business tier support for this. Its Enterprise tier support offers a dedicated technical account manager and other "platinum" capabilities, providing a higher degree of support than most of its competitors offer without managed services, but it carries up to a 10% premium on the customer's overall AWS spend.
- AWS has field sales, solutions engineering and professional services organizations, but the rapid growth of AWS's business means that sales capacity is insufficient to consistently satisfy prospective customers who need consultative sales. For better terms and conditions, customers should sign an Enterprise Agreement, which is typically a zero-dollar contract. Invoicing is available on request.
- AWS is beginning to face significant competition — from Microsoft in the traditional business market, and from Google in the cloud-native market. So far, it has responded aggressively to price drops by competitors on commodity resources. However, although it is continuously reducing its prices, it does not commodity-price services where it has superior capabilities. AWS currently has a multiyear competitive advantage, but is no longer the only fast-moving, innovative, global-class provider in the market.
CenturyLink
CenturyLink acquired Savvis, a Web hoster with a long track record of leadership in the hosting market, in 2011. It acquired Tier 3, a pure-play cloud IaaS provider, in November 2013, and merged it into Savvis to create the CenturyLink Technology Solutions business unit. It has a broad suite of offerings, including colocation, managed hosting, data center outsourcing, and PaaS (via its acquisition of AppFog). Its public cloud IaaS offering, CenturyLink Cloud, uses the newly acquired Tier 3 platform. The former Savvis public and private cloud IaaS offerings, which were under the Symphony brand, and are now known as Cloud Data Center and Cloud Servers, are no longer being actively marketed to new customers, although CenturyLink will still provide these solutions if appropriate.
Locations: CenturyLink Cloud (CLC) is available in multiple data centers across the U.S., along with Canada, Germany and the U.K. CenturyLink's private cloud offerings are available in a broad range of data centers globally. CenturyLink has global sales, and business is conducted in local languages, but the service is offered only in English.
Compute: CLC is a multitenant, paid-by-the-VM, VMware-virtualized offering. The legacy Cloud Data Center 2 service (CDC2, the successor to Savvis Symphony VPDC) is a multitenant, paid-by-the-VM, VMware-virtualized offering. The Cloud Servers service (originally offered under the Symphony Open and Dedicated brands) is VMware-virtualized, with varying pricing models, and does not have an API. All offerings lack simultaneous provisioning.
Storage: CLC has persistent local storage with an SSD option, as well as VM-independent block storage that is integrated with rolling backups and disaster recovery options. The other offerings only have local storage.
Network: There is no back-end load balancing. None of the offerings support the ability to use customer-supplied IP addresses, nor do they fully support self-service complex network topologies. Most of the CLC data centers are not yet privately connected via the CenturyLink network.
Security: CLC's RBAC is per element. CDC2's RBAC is per group. CLC does not support MFA. CLC can support PCI requirements, but other compliance requirements require noncloud elements or managed services.
Other notes: CLC's Blueprints can be used to script the provisioning of complex, multi-data-center infrastructure configurations. CLC supports leases. Managed services for the guest OS layer are optional in CLC and CDC2. The full range of managed services are available in CenturyLink's private cloud IaaS offerings. CenturyLink also offers database as a service.
Recommended uses: General business applications, enterprise applications, development environments, cloud-native applications, e-business hosting.
Strengths
- CenturyLink has a compelling and distinctive vision of application-fluent infrastructure that spans network, compute and storage capabilities. With the acquisition of Tier 3, it has obtained an IaaS offering that combines an excellent, differentiated set of features on a well-engineered platform with an easy-to-use self-service portal. It is one of the few services with both cloud-native capabilities that are attractive to developers and the governance and management features needed by large enterprises.
- CenturyLink has a well-established track record of delivering enterprise cloud services for production and mission-critical needs, including addressing the needs of customers with extensive security and compliance requirements. However, many of CenturyLink's capabilities are delivered as managed services, rather than true cloud services.
- While CenturyLink is increasingly focused on using the cloud as a means to enter the data center outsourcing market, it nevertheless has a competitive feature set for self-service, and successfully blends the self-service and managed services models across a hybrid solution portfolio. The existing CenturyLink base of managed hosting, colocation and network customers provides it with cross-selling opportunities.
Cautions
- While CenturyLink has an ambitious vision and road map, it will be challenged to muster the resources and agility of the leading providers in this market. CenturyLink will need to focus on midmarket and enterprise customers who need tailored solutions and managed services.
- CenturyLink is consolidating all of its IaaS platforms. Previously, it had multiple types of single-tenant and multitenant IaaS. This means that existing customers will eventually have to migrate to the new CLC offering; the older offerings are still being supported but no longer being improved. However, CLC is currently only multitenant, so CenturyLink continues to sell its previous single-tenant offerings, and in some cases, may also sell its other legacy offerings. Current and prospective customers who do not intend to use CLC should consider what they will do over the long term.
- CenturyLink is still learning to deliver solutions on the CLC offering, which creates challenges for sales, solution engineering, installation and delivery. Customers who are not simply using self-service on the standard multitenant CLC offering should take extra care to understand how CenturyLink intends to architect and deliver their solution. Furthermore, over the past two years, Savvis customers have reported customer service challenges.
CSC
CSC is a large, traditional IT outsourcer with a broad range of data center outsourcing capabilities.
Locations: CSC has multiple cloud data centers in the U.S., as well as in Canada, Brazil, Germany, Luxembourg, the Netherlands, Switzerland, the U.K., Australia, Malaysia and Singapore. It has global sales. Support is provided in English, French, German, Italian, Spanish and Mandarin. The portal and documentation are available only in English.
Compute: CSC offers a vCloud Datacenter Service, a VCE Vblock-based cloud IaaS architecture in different tenancy models — public multitenant in a CSC data center (CloudCompute), single-tenant compute with a multitenant back-end (BizCloud Virtual Private Edition [VPE]), and private single-tenant in a CSC data center or in the customer's own data center (BizCloud) — and optional managed services. It offers both paid-by-the-VM and SRP pricing, but requires annual contracts. Because features are introduced into BizCloud before being rolled into CloudCompute, the latter contains a subset of BizCloud features; furthermore, it lacks autorestart. While customers can access vCloud Director if they prefer, CSC has built its own, more user-friendly portal.
Storage: VM-independent block storage can be SSD-accelerated. CSC does not offer object-based cloud storage.
Network: CSC has the full range of networking options.
Security: RBAC is per element. There is no DDoS mitigation.
Other notes: Managed services are optional. CSC also has significant additional software capabilities supporting IT operations management, along with trigger-based and schedule-based autoscaling, and quotas and leases for resource management. It also offers database as a service (CloudDB) and Hadoop as a service (via its acquisition of Infochimps).
Recommended uses: Cloud-enabled data center transformation for all workloads that run well in a virtualized environment, excluding batch computing.
Strengths
- Unlike most other traditional data center outsourcers, CSC has fully embraced the highly standardized, highly automated cloud model, successfully blending the benefits of a true cloud service into an enterprise-ready offering. It has a solid platform that is attractive to traditional IT operations organizations that still want to retain control, but need to offer greater agility to the business and are willing to embrace data center transformation.
- CSC has a strong road map focused on bringing enterprise-class IT operations management (ITOM) tools, including automated managed services, to cloud IaaS. It is trying to integrate not just traditional ITOM tools, but also DevOps tools; for example, it offers CA LISA Release Automation (formerly Nolio) as part of its platform. Its November 2013 acquisition of ServiceMesh has brought significant additional capabilities, including multicloud management. It is also building infrastructure utility services for specific applications on top of the platform.
- CSC is one of the few providers to have a standardized architecture across both public and private cloud offerings, as well as a single rate card across all these offerings — although the pricing is the same, the minimum commitments vary. CSC's pricing for infrastructure resources is very competitive.
- CSC has developed a portfolio of cloud-related professional services, including Smart Start, a proof-of-concept program intended to help a customer achieve a "quick win" in moving an application onto IaaS, and then methodically migrating other workloads over time. In general, CSC is generous about offering trials to prospective customers.
Cautions
- Since acquiring ServiceMesh, CSC has reduced its focus on developing its own cloud IaaS offering, in favor of becoming a cloud services brokerage that can capably manage multiple clouds, including AWS and Microsoft Azure. CSC now leads sales with ServiceMesh's Agility Platform capabilities, and then helps the customer choose the appropriate IaaS offering, which might or might not be CSC's own. This may impact CSC's willingness to invest in its own cloud IaaS platform.
- Cloud computing is driving a radical reinvention of the way in which CSC delivers services, including significantly broadening the range of companies that CSC targets with its offerings. The cloud division is run as its own business unit, which gives it greater agility but also sometimes brings it into conflict with its slower-moving and more conservative parent company. At present, however, CSC is investing heavily in its cloud business.
- Prospective CSC customers should be careful to understand the distinction between CSC's outsourcing business and its cloud offerings; in particular, they should be sure to understand what is and isn't within the scope of a particular tier of managed services. Existing CSC outsourcing customers report challenges in getting CSC to engage in cloud opportunities.
- CSC's focus has been on enabling traditional IT operations organizations to make the transition to cloud infrastructure, and this remains true as it expands to managing multiple cloud IaaS offerings. CSC is trying to increase its traction with developer audiences, but will find this challenging, given the positioning of the broader CSC brand.
Dimension Data
Dimension Data, an NTT Group company, is a large SI and value-added reseller. It entered the cloud IaaS market by acquiring OpSource in 2011.
Locations: Dimension Data has data centers on the East and West Coasts of the U.S., plus the U.K., Netherlands, Australia, Hong Kong, Japan, Brazil and South Africa. Local-language sales and support is provided in 51 countries, with cloud-specialized support provided from its regional service centers. The portal is available only in English. Documentation is available in English and Japanese.
Compute: Dimension Data offers paid-by-the-VM public and private cloud IaaS. The former is VMware-virtualized; the latter can be Hyper-V or VMware-virtualized. Provisioning is nonsimultaneous.
Storage: VM-independent block storage has tiered performance, including SSD-accelerated tiers.
Network: Dimension Data has a full range of networking options. All traffic between its data centers is WAN-optimized.
Security: RBAC permissions are across the whole account, but customers can define their own roles.
Other notes: Monitoring is not self-service. There are two tiers of optional managed services, which include improved SLAs.
Recommended uses: E-business hosting, cloud-native applications and general business applications.
Strengths
- Dimension Data's Managed Cloud Platform (MCP) is a single unified architecture across its public and private cloud offerings; it is one of the few providers to provide such an architecture. It is pursuing a federated model, whereby service provider partners offer MCP-based services via resale or white label, but Dimension Data provides one consistent, unified service globally. It also provides sales and marketing enablement to its OneCloud Alliance members.
- OpSource had a long history as a SaaS hoster, and Dimension Data has retained these capabilities. Its rich suite of offerings for that market includes not only infrastructure, but also an on-demand billing platform, custom application management and help desk support. However, its previously excellent SLAs have been significantly weakened in the past year.
- Dimension Data has launched Cloud Software, a set of partnerships with ISVs. It offers Dimension Data-tested and -licensed software from those ISVs, on demand, priced by the hour. However, there is little software available in this model.
Cautions
- While Dimension Data's offering is VMware-virtualized, it is not vCloud Powered. Instead, Dimension Data is doing extensive software development of its own, in hopes of driving a faster pace of innovation and controlling its costs better. Although it has consistently rolled out incremental improvements in a continuous delivery model, it has not been able to keep up with the pace of innovation in the overall market. It is now focusing primarily on deals that include managed services.
- Although Dimension Data has a capable basic cloud IaaS offering, it needs value-added capabilities, whether delivered through its own services or via an ecosystem of partners. It has tried to differentiate based on its network model, but such capabilities are now "table stakes."
- Dimension Data is owned by NTT Group. While NTT has deliberately chosen Dimension Data to be its most agile business, with minimal interference from the parent, Dimension Data's future ability to move quickly is likely to depend on continued support and noninterference.
Fujitsu
Fujitsu is a large diversified technology company. It has a range of cloud IaaS offerings, including Fujitsu Cloud IaaS Trusted Public S5 (formerly the Fujitsu Global Cloud Platform), multiple regional offerings based on a global reference architecture (Fujitsu Cloud IaaS Private Hosted, formerly known as Fujitsu Local Cloud Platform), and multiple private cloud offerings. Although Fujitsu has received vCloud Datacenter Service Provider partner status, it has not yet launched this offering.
Locations: S5 is available in data centers in the U.S. (West Coast), Germany, the U.K., Australia, Japan and Singapore. Fujitsu has global sales, and provides support in 34 languages; the S5 portal and documentation are available in English, German and Japanese. The regional offerings have their own capabilities and locations, which are different from those of S5.
Compute: S5 is a multitenant, fixed-size and nonresizable, paid-by-the-VM, Xen-virtualized offering; it is also available in a single-tenant version (S5 Dedicated). There is no autorestart. Provisioning is nonsimultaneous.
Storage: Block storage is persistent and VM-independent. Although S5 has storage snapshots, snapshots cannot be used as VM images. Customers cannot import their own VM images.
Network: Although S5 supports private connectivity and private-IP-only VMs, it cannot use customer-provided IP addresses. It does not fully support complex network topologies.
Security: RBAC is per element. There is no DDoS mitigation. Fujitsu's cloud IaaS offerings cannot meet common compliance requirements.
Other notes: There is no metadata tagging of assets, but user quotas are supported. Managed services are optional.
Recommended uses: General business applications, and test and development.
Strengths
- Fujitsu has a long history in IT services and data center outsourcing. It has a large global sales force, is the leader in IT outsourcing in Asia/Pacific and has a strong European presence. This gives it a large existing base of captive customers into which it can sell cloud services, and it has been successful at extending existing Fujitsu relationships into cloud deals. It has very responsive support and good account management.
- Fujitsu is a vendor with a broad product portfolio of hardware and software, and it is developing most of its own technology for its cloud offerings, across IaaS, PaaS and SaaS. It is using its existing technology, including its ITOM software, to accelerate the pace of its cloud business. Fujitsu's ServerView Resource Orchestrator Cloud Edition software is used to provide the visual designer used in its IaaS user interfaces, as well as significant depth of portal features.
- Fujitsu's previous strategy of allowing its regions to pursue their own cloud strategies has enabled certain regions, such as Australia, to develop offerings tailored to the needs of their local markets, at a faster pace than Fujitsu has been able to do so as a global entity. Fujitsu has begun an "offering standardization process" intended to bring the regional offerings in line with the global ones, but it may be a few years before this is accomplished.
- Fujitsu rolls out S5 features first in Japan, then extends them to its other regions. Furthermore, Fujitsu in Japan offers additional cloud capabilities — Japan-based organizations or projects targeted at the Japanese market should investigate what capabilities are specifically available in Japan, such as object-based storage, database as a service and Hadoop as a service.
Cautions
- Fujitsu's cloud IaaS capabilities lag significantly behind those of the market leaders, and the gap is increasing, not narrowing, although Fujitsu is actively investing in new capabilities and has been highly responsive to customer requests. Customers are likely to be able to meet a broader range of needs by combining multiple Fujitsu offerings. The multitenant S5 offering is significantly more expensive than competing offerings.
- Fujitsu's previous strategy of allowing regional control means that development efforts have been fragmented across the globe. As such, the private hosted service offerings may differ in each region, making it difficult for Fujitsu to capitalize fully on engineering resources and achieve economies of scale, although Fujitsu has recently strengthened its global cloud strategy and management.
- Although Fujitsu can sell its IaaS platform on a stand-alone basis, and it can be purchased without the need for a long-term contract, it is most often combined with managed services or a broader outsourcing relationship. Fujitsu is not focused on self-managed cloud IaaS.
GoGrid
GoGrid is a small, independent cloud-IaaS-focused provider.
Locations: GoGrid's data centers are on the East and West Coasts of the U.S., and in the Netherlands. It has local sales in its San Francisco and Amsterdam offices. The service is provided only in English.
Compute: GoGrid offers fixed-size, paid-by-the-VM, Xen-virtualized IaaS in both multitenant and single-tenant variants. RAM is resizable, but CPU is not.
Storage: Customers cannot import their own VM images. Object-based cloud storage is integrated with a CDN (via a partnership with EdgeCast).
Network: Customers cannot bring their own IP addresses. There is no back-end load balancing.
Security: There is no MFA. Changes to network perimeter security configurations are not logged.
Other notes: RBAC permissions are whole-account. There is no metadata tagging of assets. Managed services are optional.
Recommended uses: Cloud-native applications and e-business hosting, with an emphasis on big data.
Strengths
- GoGrid has repositioned itself as a provider of "open data services." Its "1-Button Deploy" enables quick provisioning of complex deployments of Hadoop and NoSQL technologies. GoGrid is engaging in active partnerships with relevant software vendors, building validated architectures with partners such as Cloudera, DataStax, Hortonworks and MongoDB. It is focusing its infrastructure options on those suitable for running big data workloads, including VMs with large amounts of RAM and high I/O performance.
- GoGrid has broad and aggressive SLAs that include 100% availability and cover compute, storage and networking elements. It is one of the few providers that has a standard architecture across its public and private cloud offerings.
- The GoGrid Exchange enables software vendors to license and package their software to run on GoGrid, easing deployment and eliminating some of the headaches associated with licensing software to run in the cloud. It has a unique multipartner compensation model that enables partners to build on top of each other's software stacks.
Cautions
- GoGrid's feature set is limited, compared with the current state of the market. GoGrid's software is developed entirely in-house, which has created significant long-term challenges in terms of its ability to compete against providers that can devote significant resources to research and development, but its shift to focus on big data solutions should allow it to target engineering investments where they will be most effective.
- GoGrid has its own API, which is supported by a limited number of third-party tools. GoGrid is pursuing a strategy of broader interoperability, and its future success will depend on ensuring that the company can partake in one or more of the emerging platform ecosystems.
Google is an Internet-centric provider of technology and services. Google Cloud Platform combines an IaaS offering (Google Compute Engine [GCE]), an application PaaS offering (Google App Engine) and a range of complementary services. Google has been operating App Engine since 2008, but did not enter the IaaS market until the general-availability launch of GCE in December 2013.
Locations: Google groups its GCE data centers into "regions," each of which contains at least two availability zones. There is a central U.S. region, a European region (located in Belgium), and an Asia region (located in Taiwan). It has global sales. Support is available in English and Japanese. The portal is available in English, Spanish, Portuguese, Japanese and Mandarin. Documentation is available in those languages, plus French, German, Russian, Cantonese and Korean.
Compute: GCE offers multitenant, fixed-size and nonresizable, KVM-virtualized VMs, metered by the minute. Provisioning is exceptionally fast (typically under 1 minute).
Storage: VM storage is persistent, and there is also VM-independent block storage. All block storage is encrypted.
Network: Third-party private connectivity is not supported. Customers cannot bring their own private IP addresses (although this need may possibly be addressed by GCE's Advanced Routing features). There is no back-end load balancing.
Security: RBAC permissions apply to the whole account.
Other notes: Enterprise-grade support is extra. The SLA is multi-fault-domain, and excludes maintenance in Europe (where Transparent Maintenance is not available yet). Google cannot address the need for colocated equipment. Autoscaling capabilities (Replica Pools) are in preview (beta).
Recommended uses: Cloud-native applications and batch computing, as well as projects leveraging Google Cloud Platform as a whole.
Strengths
- Google's strategy for Google Cloud Platform centers on the concept of allowing other organizations to "run like Google" by taking Google's highly innovative internal technology capabilities and exposing them as services that other companies can purchase. Consequently, although Google is a late entrant to the IaaS market, it is primarily productizing existing capabilities, rather than having to engineer those capabilities from scratch. It will therefore be able to advance its offering more rapidly than most competitors.
- Google has a comprehensive vision for, and extensive experience with, how cloud-native applications are developed and managed through the life cycle. It has a fluid notion of the boundaries between IaaS and PaaS that will, over time, enable customers to choose their trade-offs between control and automated management.
- Google, as an overall corporate entity, has a very broad global data center footprint, an enormous amount of existing infrastructure capacity, and its own high-capacity global network. It is extremely efficient at operations. GCE represents little incremental cost to Google, which means it can price aggressively and emphasize the value of high performance for the money. Over time, though, Google will differentiate itself with platform and manageability features, not prices.
Cautions
- GCE is brand-new and consequently lacks an operational track record, though it has suffered several small operational glitches since it entered general availability. Its feature set is nascent. However, Google's road map is innovative and aggressive, and it is rapidly introducing new capabilities. Its short-term focus is on better enabling new cloud-native applications, with less attention being paid to capabilities needed for other workloads. It has no hybrid cloud strategy.
- Although Google has significant appeal to technology-centric businesses, it is still learning to engage with enterprise and midmarket customers, and needs to expand its sales, solutions engineering and support capabilities. Furthermore, Google needs to earn the trust of businesses. Google also lacks many capabilities important to businesses that want to migrate legacy workloads to the cloud.
- Google needs to build an ecosystem around GCE (and, more broadly, Google Cloud Platform), and its partner program is nascent. However, Google is perceived as a likely future market leader, and cloud management tool vendors and other software companies, along with system integrators, are rapidly adding support for GCE.
HP
HP is a large diversified technology company with a range of cloud-related products and services. Its only true cloud IaaS offering is the HP Public Cloud, although it has some cloud-enabled infrastructure services, such as the HP Helion Managed Virtual Private Cloud (formerly HP Enterprise Cloud Services). It also has a Cloud Foundry-based PaaS in private beta.
Location: HP's Public Cloud data centers are in the eastern and western U.S. Although it has global sales, the service is offered in English only.
Compute: HP Public Cloud is a multitenant, fixed-size and nonresizable, KVM-virtualized, OpenStack-based offering.
Storage: VM storage is ephemeral. There is an option for persistent, VM-independent block storage. There is object-based storage with an integrated CDN (via a partnership with Akamai).
Network: The load-balancing service is currently in private beta.
Security: RBAC permissions are group-based. Common compliance requirements cannot be supported. Audit logs for noncompute elements are available only via a support request. There is no MFA.
Other notes: The SLA is multi-fault-domain, but does not have any exclusion for maintenance. The monitoring service is in private beta.
Recommended uses: Development environments for existing HP customers, or those who specifically want to explore an OpenStack-based cloud offering.
Strengths
- HP has an ambitious and comprehensive vision of interoperable public and private cloud infrastructure, integrating HP's hardware capabilities, ITOM tools, outsourcing capabilities and partner ecosystem.
- HP has a large global sales force and marketing budget, and has been willing to offer extraordinary discounts to prospective customers in order to bring them onto its service. However, HP Public Cloud has data centers only in the U.S., which limits its attractiveness to global customers, and such discounts may not be sustainable.
Cautions
- Although HP has invested significant engineering resources into its Public Cloud over a multiyear period, the service, which entered general availability in December 2012, still has a nascent feature set, and important capabilities remain in a lengthy beta period. HP is focused on hybrid cloud, including private cloud enablement and cloud-enabled managed services, and its cloud IaaS business is simply a component of that overall strategy, not a business that HP is aggressively pursuing on a stand-alone basis.
- Although HP's public cloud offering is based on OpenStack, as is HP Cloud OS (the platform for HP Converged Cloud and part of the HP CloudSystem CMP), there is limited interoperability between the Public Cloud and private clouds based on HP CloudSystem. HP Public Cloud's inability to export VM images on a self-service basis means that customers cannot directly transfer workloads from this service to their private cloud, even if their private cloud is based on OpenStack.
IBM (SoftLayer)
IBM is a large diversified technology company with a range of cloud-related products and services. In July 2013, it acquired SoftLayer, an independent Web hoster with a focus on SMBs, and in January 2014, shut down its own SmartCloud Enterprise cloud IaaS offering, after migrating its existing customers to SoftLayer. IBM's related non-IaaS portfolio includes IBM Cloud Managed Services (cloud-enabled managed services, formerly called SmartCloud Enterprise+), as well as Codename: BlueMix (a Cloud Foundry-based PaaS, currently in beta).
Locations: SoftLayer has multiple data centers in the U.S., along with data centers in the Netherlands and Singapore. It has global sales. It offers support in English, Dutch, German, and Spanish. The portal and documentation are available in English only.
Compute: SoftLayer's cloud IaaS offering was formerly known as CloudLayer, but SoftLayer has stopped distinguishing this offering from its dedicated hosting options. SoftLayer's IaaS is paid-by-the-VM, Citrix-Xen-virtualized, and available as a single-tenant or multitenant offering. There is an option for single-tenant VMs within SoftLayer's multitenant public cloud. There is also an option for "bare metal" (nonvirtualized) servers, by the hour.
Storage: Storage is persistent and VM-independent block storage is available. There is OpenStack object-based storage with an integrated CDN (via a partnership with Internap).
Network: SoftLayer supports a full range of networking options.
Security: SoftLayer supports only grouping, not full metadata tagging, and RBAC permissions are per-group.
Other notes: SoftLayer has an extensive dedicated server business, although these bare-metal custom configurations require monthly commitments. Managed services are available through IBM. There is no support for colocation.
Recommended uses: E-business hosting, general business applications, large-scale use cases such as gaming where bare metal is desirable, and infrastructure for IBM outsourcing deals.
Strengths
- IBM's cloud vision encompasses public and private clouds at both the system and application infrastructure levels. IBM's portfolio of products and services has IaaS, PaaS and SaaS elements, along with hardware, ITOM software, middleware and database software, and comprehensive consulting and outsourcing capabilities. SoftLayer will be the common hosting platform for IBM's services in the future.
- IBM has a strong vision for how the shift to cloud will radically transform its business over time, including altering its go-to-market strategy, with an increasing focus on online sign-up and self-service. SoftLayer is one of its first forays into self-service and serving SMB customers. IBM has a strong brand and existing customer relationships across the globe, and its base of strategic outsourcing customers will help drive a cloud-enabled data center outsourcing business on top of SoftLayer.
- IBM intends to make local presence one of its competitive differentiators, taking advantage of SoftLayer's relatively small-scale "pod" architecture to expand the service from three countries to 15, over the course of 2014. However, in the near future, IBM will continue to be a hosting-scale provider, which may make it difficult for it to match the cost economics of the hyperscale market leaders.
- SoftLayer has a particularly clean service composition, with a range of options that can be added on a per-instance, paid-by-the-hour basis, including aspects such as the type of monitoring and the automated response to a failure detected by monitoring. Instances can be VMs or dedicated servers, and SoftLayer emphasizes that bare-metal physical servers can be managed with the same elasticity as VMs, and that single-tenant and multitenant infrastructure can be seamlessly mixed within the same solution.
Cautions
- Although IBM has set out a broad vision for cloud services, it lacks integrated IaaS and PaaS capabilities; IBM's PaaS (Codename: BlueMix) is simply hosted on SoftLayer. It has not articulated a vision for how SoftLayer itself will be differentiated, beyond the availability of bare-metal servers and future in-country presence. We believe it is more likely that customers who pursue strategic adoption of IBM cloud services will do so for the managed services and other higher-level capabilities, than for the core SoftLayer capabilities.
- SoftLayer has historically been strongly focused on self-service for SMB customers. The acquisition by IBM has brought enterprise sales capabilities, including channel capabilities, to the SoftLayer business, as well as the higher-level IBM managed services. However, customers report that SoftLayer services still feel like a small-business experience, not an enterprise experience, particularly with regard to the portal, sales and support. We recommend that customers engage with SoftLayer through an IBM sales channel, rather than through SoftLayer's own direct sales mechanisms.
- IBM is "cloudwashing" SoftLayer's dedicated server business, applying a "cloud IaaS" label to what is actually simply dedicated hosting. While SoftLayer has significant automation, as well as a customer-accessible API, for this portion of its business, customers should be sure to understand the technical and business differences between SoftLayer's dedicated hosting (customized bare-metal servers by the month) and cloud IaaS (fully automated, by-the-hour compute in the form of VMs or bare metal).
- Although IBM has an OpenStack-based strategy for its private cloud business, SoftLayer's compute infrastructure is not OpenStack-based. Customers who want OpenStack or other CMPs on SoftLayer must obtain them as custom, hosted, managed services. SoftLayer has a proprietary API that has not yet gained widespread third-party tool support, although IBM is working to build the necessary ecosystem, and has also begun a project called Jumpgate, to provide an OpenStack-to-SoftLayer API translation gateway.
Joyent
Joyent is a small, independent service provider that focuses solely on cloud services and software.
Joyent did not respond to requests for supplemental information or to review the draft contents of this document. Gartner's analysis is therefore based on Joyent's previous-year responses, public information, use of Joyent's service, and discussions with Joyent's existing and prospective customers.
Locations: Joyent has data centers in the eastern and western U.S., along with a data center in the Netherlands. It has local sales in the U.S. and U.K. Support is provided in English and Spanish. The portal and documentation are in English only.
Compute: Joyent offers fixed-size, paid-by-the-VM public cloud IaaS (SmartMachines), and private cloud services in a variety of pricing models. The host OS is Joyent's own SmartOS, an open-source derivative of OpenSolaris, managed by the illumos community. Customers have a choice between OS virtualization in a SmartOS Container and KVM virtualization on a SmartOS Container for Linux and Windows guests.
Storage: VM storage is persistent, but there is no VM-independent block storage. There is an SSD option. Joyent's S3-compatible object-based cloud storage (Manta) has a unique architecture designed for batch jobs that require high-performance access to large amounts of storage, with an in-place batch compute service separate from Joyent's main compute service.
Network: Joyent has a full range of networking options.
Security: Joyent has a single-account model, although an account can have multiple API keys. Its RBAC is whole-account.
Other notes: Enterprise-grade support is extra. Joyent's Content Delivery Cloud, which utilizes Riverbed Stingray Traffic Manager, offers functionality akin to a private CDN.
Recommended uses: Cloud-native applications and e-commerce sites where visibility into application performance is crucial; batch computing on large datasets.
Strengths
- Joyent has a unique vision for cloud IaaS and is exceptionally innovative from a technology perspective. It is developing an integrated technology stack and its infrastructure offerings verge on the platform space. It is making deep investments in fundamental technologies, including its own SmartOS operating system, based on illumos Solaris and its x86 hypervisor. Joyent's cloud uses SmartOS Containers (originally known as Solaris Zones). KVM runs natively within a container, thus providing additional security, resource control and resource visibility within the virtualization layer.
- Joyent has a pure focus on new, cloud-native applications, including mobile applications, as well as, with its newly-launched Manta service, big data applications and massively parallel data analytics. Joyent is the sponsor of Node.js. It offers commercial support for Node.js, as well as proprietary tools focused on Node.js operations within its platform.
- Joyent places strong emphasis on application performance and takes a holistic approach to its delivery, including integrating network-based acceleration. It has particularly deep portal-based performance analytics, which use the DTrace framework for application instrumentation. It has an excellent cost-performance ratio.
- Joyent intends to derive its future revenue by offering cloud services directly and selling its SmartDataCenter CMP software (including via OEM partners such as Dell), which is fully compatible with its own public cloud IaaS offering. It has launched the Global Cloud Network, a cloud federation alliance focused on mobile carriers; its strategic carrier partners include Telefonica and Bharti Airtel.
Cautions
- Joyent focuses on developing its own technology, and has a track record of releasing innovative capabilities. However, it faces a long-term challenge to compete against providers with greater development resources. That said, it has chosen to focus its efforts on particular areas, leaving certain capabilities, notably enterprise management features, to partners such as Dell (via its acquisition of Enstratius).
- Joyent's feature set is strongly oriented toward cloud-native use cases, and it is highly developer-centric. It emphasizes API capabilities and the enablement of third-party tools, rather than portal capabilities of its own.
- The unique nature of Joyent's offering makes it crucial for the company to develop an ecosystem around its platform; it must attract ISVs and third-party tool vendors, along with MSPs and SIs that can provide managed and professional services. Joyent has begun to build this ecosystem, focused on cloud-native vendors, but it is not yet mature.
Microsoft
Microsoft is a large and diversified technology vendor that is increasingly focused on delivering its software capabilities via cloud services. Its Azure business was previously strictly PaaS, but Microsoft launched Azure Infrastructure Services (which include Azure Virtual Machines and Azure Virtual Network) into general availability in April 2013, thus entering the cloud IaaS market.
Locations: Azure Infrastructure Services are available in multiple data centers in the U.S., as well as in Ireland, the Netherlands, Hong Kong, Japan, Singapore, China and (in preview) Brazil. Microsoft has global sales, and Azure support is provided during local business hours in English, French, German, Italian, Spanish, Japanese, Korean, Mandarin and Portuguese; 24/7 support is provided in English and Japanese only. The portal and documentation are available in those languages, as well as Russian.
Compute: Azure VMs are fixed-size, paid-by-the-VM, and Hyper-V-virtualized; they are metered by the minute.
Storage: Block storage ("virtual hard disk") is persistent and VM-independent. Object-based cloud storage is integrated with a CDN.
Network: There is no support for complex network topologies. Third-party connectivity is via partner exchange (Azure ExpressRoute).
Security: Virtual network topology limitations prevent useful deployment of most security-related virtual appliances, such as a perimeter intrusion detection/prevention system (IDS/IPS). RBAC uses Azure Active Directory, but permissions are whole-account.
Other notes: Enterprise-grade support costs extra. The SLA is multi-fault-domain, but does not have any exclusion for maintenance. Additional significant capabilities include orchestration (Azure Automation), scheduling, autoscaling and Hadoop as a service (HDInsight). Microsoft does not offer colocation; a partner exchange must be used instead. We provide a detailed technical evaluation in "Microsoft Windows Azure Infrastructure Services: In-Depth Assessment."
Recommended uses: General business applications and development environments for Microsoft-centric organizations; cloud-native applications; use as part of an overall Microsoft Azure solution.
Strengths
- Microsoft has a vision of infrastructure and platform services that are not only leading stand-alone offerings, but that also seamlessly extend and interoperate with on-premises Microsoft infrastructure (rooted in Hyper-V, Windows Server, Active Directory and System Center) and applications, as well as Microsoft's SaaS offerings. Its vision is global, and it is aggressively expanding into multiple international markets.
- Microsoft's brand, existing customer relationships, history of running global-class consumer Internet properties, deep investments in engineering, and aggressive road map have enabled it rapidly to attain the status of strategic cloud IaaS provider. It is second in terms of cloud IaaS market share — albeit a distant second — but far ahead of its smaller competitors. Microsoft has pledged to maintain AWS-comparable pricing for the general public, and Microsoft customers who sign a contract can receive their enterprise discount on the service, making it highly cost-competitive. Microsoft is also extending special pricing to Microsoft Developer Network (MSDN) subscribers.
- The broader Microsoft Azure service is a full-featured PaaS offering with significant complementary capabilities; the Virtual Machines are integrated into the overall offering. The IaaS and PaaS components within Microsoft Azure feel and operate like part of a unified whole, and Microsoft is making an effort to integrate them with Visual Studio, Team Foundation Server, Active Directory, System Center and PowerShell. Conversely, Windows Azure Pack offers an Azure-like user experience for on-premises infrastructure. Microsoft has built an attractive, modern, easy-to-use UI that will appeal to Windows administrators and developers. The integration with existing Microsoft tools is particularly attractive to customers who want hybrid cloud solutions.
Cautions
- Azure Infrastructure Services are relatively new. Although Microsoft rolled out an array of new features throughout 2013, and continues rapidly to release both "catch-up" capabilities and fresh innovations, many enterprises will still find significant capability gaps, especially in networking and security. Many features are in "preview" (beta) or "coming soon," and it is not always obvious to customers which features are still in preview. Customers who intend to adopt Azure strategically and migrate applications over a period of two years or more (finishing in 2016 or later) can begin to deploy some workloads now, but those with a broad range of immediate enterprise needs are likely to encounter challenges.
- Microsoft is in the midst of a multiyear initiative to make its on-premises software "cloud first," rather than trying to scale software originally built for on-premises single-enterprise use. It now faces the challenges of getting its core infrastructure technology to operate at cloud scale, managing that infrastructure at cloud scale, and facilitating the ability of customers to move toward more highly automated infrastructure.
- Microsoft has just begun to build an ecosystem of partners around Azure Infrastructure Services, and it does not yet have a software licensing marketplace. Furthermore, it has little in the way of enterprise Linux options. Consequently, the offering is currently very Microsoft-centric and appeals primarily to .NET developers, although customers do run heterogeneous environments in Azure.
Rackspace
Rackspace is an independent Web hoster with a long track record of leadership in the managed hosting market. It is one of the founders of OpenStack. Its Rackspace Private Cloud business provides traditional commercial open-source support and professional services around it. In addition to its public cloud IaaS offerings, Rackspace can support custom OpenStack-based private clouds in its own data centers or in customer data centers. It also owns numerous related businesses; some, such as SaaS email, are part of Rackspace itself, while others, such as Jungle Disk, are subsidiaries.
Locations: Rackspace Public Cloud is located in data centers in the central and eastern U.S., the U.K., Australia and Hong Kong. However, accounts are region-specific; Europe is a separate region from the rest of the world. Rackspace has sales in the U.S., along with the U.K., the Netherlands, Switzerland, Hong Kong and Australia. Support is provided in English only. The portal and documentation are available in English and Spanish.
Compute: Rackspace Public Cloud is a multitenant, fixed-size, Citrix Xen-virtualized, OpenStack-based public cloud IaaS offering. It lacks autorestart.
Storage: VM storage is persistent, but there is also optional persistent VM-independent block storage. There is an option for SSDs. There is object-based storage (Cloud Files) with an integrated CDN (via a partnership with Akamai).
Network: There is no self-service network security. Private connectivity requires use of the RackConnect service.
Security: RBAC permissions are whole-account. There is no MFA. There are no audit logs. There is no support for most common compliance requirements without the use of hybrid hosting.
Other notes: In-depth support requires managed services, which are optional. Additional capabilities include autoscaling and database-as-a-service offerings (MySQL, MongoDB and Redis). We provide a detailed technical evaluation in "Rackspace Public Cloud: In-Depth Assessment."
Recommended uses: Cloud IaaS as part of a hybrid hosting solution with DevOps-oriented managed services; hybrid hosting where cloud IaaS is supplementary to a primarily dedicated infrastructure; development environments where simplicity and ease of use are crucial.
Strengths
- Rackspace has a coherent vision of cloud-enabled managed services that utilize automation and a DevOps philosophy, and that blend bare-metal and virtualized environments. Although it sells self-managed cloud IaaS, Rackspace does not focus on customers who want to exclusively self-manage.
- Rackspace has a large base of existing managed hosting customers to which it can sell cloud services. Its high-touch Fanatical Support approach is attractive to customers who want the flexibility of a self-managed offering but who may not want to do day-to-day management themselves. Rackspace is increasingly focused on selling solutions, not just infrastructure.
- Rackspace has been instrumental in evangelizing OpenStack as a key future infrastructure ecosystem (competing against Amazon, Microsoft and VMware). Its "open cloud" message resonates with buyers. However, its Public Cloud has limited interoperability with other OpenStack-based clouds, and customers may not be able to transfer images from other OpenStack-based clouds without modification. Although its cloud IaaS offerings are currently OpenStack-based, Rackspace is introducing more VMware-based offerings to its portfolio, in response to customer demand.
Cautions
- Rackspace Public Cloud is a developer-centric offering, and has appealed primarily to small businesses seeking a replacement for low-cost mass-market hosting. Although Rackspace now delivers a solid set of basic features, it has not been able to keep up with the pace of innovation of the market leaders, nor maintain a competitive price. Rackspace is refocusing its business upon customers that need expert managed services for mission-critical needs, rather than trying to compete directly for self-managed cloud IaaS against hyperscale providers that can rapidly deliver innovative capabilities at very low cost, or against established IT vendors that have much greater resources and global sales reach.
- Rackspace is focused on a hybrid cloud strategy, for customers who want managed cloud infrastructure both in their internal data centers and in Rackspace data centers. Increasingly, it will compete against large IT outsourcers that are moving down-market with lighter-weight managed services offerings that use the customer's choice of a best-in-class cloud IaaS offering and are facilitated by inexpensive, offshore labor.
- Rackspace has made many cloud-related acquisitions, in order to enhance its cloud capabilities and rapidly expand the number of developers it employs. However, Rackspace has not integrated these acquisitions into a cohesive whole. Many of these acquisitions actually can manage or operate with multiple cloud IaaS providers. While this potentially positions Rackspace for future multicloud management, and enables it to take advantage of the growth of competitors, it does not create a compelling value proposition for using Rackspace's own cloud IaaS offerings.
Verizon Terremark
Verizon Terremark encompasses Verizon's data center, cloud and security businesses. Its Enterprise Cloud brand encompasses multiple VMware-virtualized offerings: the standard Enterprise Cloud (public cloud from the original Terremark) and its Private Edition (public cloud with single-tenant compute) and Public Sector Edition (U.S. federal government community cloud) variants, along with three other platforms, namely Enterprise Cloud Managed Edition ([ECME], formerly the Verizon Computing as a Service public cloud offering), vCloud Express (paid-by-the-VM public cloud, which is being retired) and the new Verizon Cloud (in beta).
Locations: Enterprise Cloud is available in multiple data centers in the U.S., as well as the Netherlands and Brazil; support, the portal and documentation are provided in English, Dutch and Portuguese. ECME is available in East and West Coast data centers in the U.S., along with the U.K., the Netherlands and Hong Kong; the service is provided in English only. Verizon Terremark has global sales.
Compute: The Enterprise Cloud is available in both single-tenant and multitenant variants, including single-tenant compute with a multitenant back end. It is VMware-virtualized. Both paid-by-the-VM and SRP billing models are available. Bare-metal servers, on daily metering, are available in ECME. ECME lacks autorestart capability. Provisioning is nonsimultaneous.
Storage: Enterprise Cloud storage is persistent and VM-independent. Although storage snapshots are supported, they cannot be used as VM images (but VM images can be copied directly into the image catalog). ECME lacks image customization capabilities, and customers cannot import their own images. Object-based cloud storage is in beta.
Network: There is no back-end load balancing. ECME does not fully support complex network topologies and cannot use customer-provided IP addresses; additionally, VMs cannot have only private IP addresses.
Security: Enterprise Cloud RBAC permissions are per-group. ECME has neither RBAC nor MFA. There is no DDoS mitigation. Only Enterprise Cloud supports most common compliance requirements.
Other notes: The monitoring service only collects metrics. Managed services are normally bundled with ECME, but are not otherwise an option.
Recommended uses: Development environments and general business applications.
Strengths
- Verizon Terremark, via its standard Enterprise Cloud service, has the longest track record in the market for VMware-virtualized enterprise-class public cloud IaaS. It can address hybrid hosting use cases via ECME, which bundles in managed services but has fewer self-service capabilities. However, Verizon Terremark's competitive differentiators have eroded over time as competitors have caught up and, in some cases, surpassed it in feature development.
- Verizon Terremark introduced the beta of a next-generation, unified platform, called Verizon Cloud, in late 2013. This new platform will enable it to address a much broader range of use cases, and consolidates its development efforts onto a single hypervisor-neutral platform. However, although the Verizon Cloud has an innovative architecture, it needs to deliver more than a capable cloud IaaS platform and associated network services in order to realize its cloud ambitions.
- Verizon Terremark has begun to build an ecosystem around Verizon Cloud, primarily with ISVs and hardware vendors whose technology can be delivered as a virtual appliance. However, it does not have a software marketplace.
Cautions
- Until Verizon Terremark launches its new unified platform, customers must be careful to match the service they choose to their particular use case. They should also be aware that while Verizon Terremark is continuing to enhance existing cloud offerings, its engineering focus has shifted to the new platform.
- Although Verizon Terremark has always done a significant amount of software development for its cloud offerings, rather than being wholly reliant on VMware, it is staking its future success on rapid innovation driven by agile development. This is an unusual strategy for a company owned by a telecom carrier, and it is highly dependent on Verizon's willingness to interfere minimally with management. It is also competing with providers that have much greater engineering resources and a much faster pace of innovation.
- Verizon's sales organization does not often have a relationship with the decision makers and influencers who select cloud IaaS providers, since they are different from the people who control network procurement. Verizon needs to become relevant to business managers and application development leaders, in order for Verizon Terremark to achieve its potential.
Virtustream
Virtustream is a small, independent service provider focused solely on cloud services. In addition to its cloud IaaS offering, it sells the software for its platform, which is called xStream.
Locations: Virtustream has data centers in the eastern and western U.S., and in the U.K. and Netherlands. It has sales in the U.S., along with London and Dubai sales offices. The service is provided in English only.
Compute: xStream is hypervisor-neutral but typically supports VMware and KVM. It is offered in both single-tenant and multitenant variants; it can support single-tenant VMs in its public cloud, as well as bare metal. VMs are available by the hour, bare metal is available by the month, and both paid-by-the-VM and SRP models are available.
Storage: Block storage is VM-independent, with SSD and encryption options. While storage snapshots are supported, they cannot be used as VM images. There is no object-based storage.
Network: Virtustream supports a full range of networking options, although it does not have back-end load balancing.
Security: RBAC is per-element and very configurable. Virtustream embeds a tool for governance, risk management and compliance (GRC). In February 2014, Virtustream acquired ViewTrust Technology, and it is integrating this company's capabilities as a service.
Other notes: There is no self-service monitoring, although Virtustream provides monitoring as a service. Managed services are optional.
Recommended uses: Enterprise applications, general business applications, e-business hosting and cloud-native applications.
Strengths
- Virtustream's founders have backgrounds in VMware and SAP consultancies, as well as system integration, and the company has a strongly consultative approach, as well as particular expertise in SAP; in 2013, Virtustream received a direct investment from SAP America. Its cloud is targeted primarily at production applications, but, in an unusual approach, it is targeting both traditional enterprise workloads, including ERP applications, and cloud-native applications. It has been successful at winning large-scale enterprise deals, particularly those focused on SAP and that require managed services capabilities.
- Virtustream has developed its own cloud platform technology, and uses a single unified architecture across public and private offerings, within both its own data centers and customers' data centers, enabling federation across multiple clouds. Although much of its infrastructure is VMware-virtualized, it can also support other hypervisors. It has divided its portal into an administrative UI and an end-user UI, to address some ease-of-use issues.
- Virtustream's micro-VM technology enables it to charge for resources consumed, rather than resources allocated, and to offer policy-based service-level management and application performance SLAs. It has focused on meeting enterprise security and compliance needs, and has some unique capabilities, such as support for Intel's Trusted Execution Technology (TXT) and trust framework.
Cautions
- Although Virtustream supports a solid set of self-service features, it primarily targets complex, mission-critical applications where it is likely that the customer will purchase professional services assistance for implementation, and managed services on an ongoing basis. It does not have the resources to compete for all workloads against providers whose greater resources allow development of much broader product portfolios. Rather, it provides deep and differentiated capabilities in its focus areas.
- Virtustream is a compelling and unique provider for particular enterprise application use cases, but it is better suited to implementations where an environment will be carefully and consultatively tuned for the needs of particular applications, rather than general-purpose environments where workloads are deployed without oversight.
- Virtustream is a small but innovative service provider, and may be an attractive target for acquisition. Its strategy will require it to attract and retain significant engineering talent as well as application expertise. It will be challenged to grow its brand awareness and to manage the lengthy sales cycles that will be common in its targeted use cases.
VMware
VMware has historically been a software vendor focused on virtualization technologies. It entered the cloud IaaS market when it launched the VMware vCloud Hybrid Service (vCHS) into general availability in September 2013. It is a subsidiary of EMC.
Locations: vCHS is available in multiple data centers in the U.S., as well as in the U.K. VMware has global sales. Support is available in English, French, German, Portuguese, Spanish, Hindi, Japanese, and Mandarin. The portal and documentation are available in English only.
Compute: vCHS is a public cloud IaaS offering available in two variants, Virtual Private Cloud (multitenant compute and storage) and Dedicated Cloud (single-tenant compute and multitenant storage). It most closely resembles a vCloud Datacenter Service. Both offerings use SRP pricing; only Dedicated Cloud allows the customer to oversubscribe the resources.
Storage: VM storage is persistent, but there is also VM-independent block storage.
Network: vCHS supports a full range of networking options. Third-party connectivity is via exchange (VMware Direct Connect). Traffic between vCHS data centers transits the Internet, as VMware lacks an inter-data-center private WAN.
Security: RBAC permissions are per group. There is no MFA. Some logs are only available via customer service request. VMware is still in the process of obtaining compliance-related audits and certifications.
Other notes: The monitoring service does not generate alerts to customers. There is no colocation; a partner exchange must be used instead.
Recommended uses: Development environments, general business applications, supplementing existing VMware-virtualized environments, and disaster recovery for customers seeking a VMware-based solution.
Strengths
- VMware is the market share leader and thought leader in virtualization. It has a strong brand, global sales reach, and a broad base of existing customers that are deeply committed to its technologies. Its strategy for vCHS is to offer hybrid cloud options to existing VMware customers, reinforcing its position in internal data centers, and expanding its total addressable market. It wants to offer customers a consistent experience across VMware-based infrastructure, whether delivered as an on-premises virtualized environment or delivered as a cloud service.
- vCHS has the solid set of basic features and pure infrastructure focus that is typical of vCloud Datacenter Service offerings. It does not use the vCD portal, although vCD is available to customers if they want to access it. The notion of "single pane of glass" manageability appeals to many IT administrators, although vCHS does not yet deliver on this promise. However, the vCHS Disaster Recovery service may be attractive to customers with on-premises VMware. VMware also possesses a suite of ITOM tools that could, in the future, be used to enhance vCHS manageability.
- VMware possesses deep engineering expertise, which could potentially allow it to innovate at the infrastructure level; vCHS development is not tied to the general VMware release cycles, but VMware is changing the way it develops its core software to deliver into vCHS first. However, VMware lacks service operations experience and vCHS lacks an operational track record; VMware might find it challenging to scale the service. Furthermore, VMware focuses primarily on infrastructure, and lacks clear plans for offering additional value-added services.
Cautions
- vCHS has limited appeal to the business managers and application development leaders who are typically the key decision makers for cloud IaaS sourcing. VMware administrators in IT operations are the most likely champions of vCHS within a business, but they often prefer to build an internal private cloud, and they are also often the people that the business is trying to bypass by going to cloud IaaS. VMware needs to win over these administrators with regard to vCHS, but it also needs to develop a compelling value proposition for developers. Although EMC also owns Pivotal, and Cloud Foundry-based PaaS can be hosted on vCHS, VMware is also in the process of independently building developer-oriented capabilities.
- VMware has previously used service providers as its channel to market, but none of those service providers attained true scale and they were not able to maintain the level of innovation necessary in this market. VMware is now directly competing with this channel, but it faces the same technical challenges, and many of the same business challenges, as those service providers. vCHS is a new offering, and has not yet established an operational track record.
- VMware needs to build an ecosystem around vCHS. It has launched a software marketplace, but the software available via the vCHS service catalog currently only includes operating systems and Microsoft SQL Server. VMware does have a strong channel in its broader business, but SIs, MSPs and value-added resellers need to learn to sell vCHS effectively and deliver value on top.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Added
- VMware
Dropped
SoftLayer. SoftLayer was acquired by IBM in July 2013, and is now evaluated under IBM (SoftLayer).
Savvis and Tier 3. Tier 3 was acquired by CenturyLink in November 2013. It was merged into Savvis (already owned by CenturyLink), and the combined companies were rebranded as CenturyLink Technology Solutions. Savvis and Tier 3 are now one entity, evaluated under CenturyLink.
Inclusion and Exclusion Criteria
To be included in this 2014 Magic Quadrant, vendors had to demonstrate the following, as of February 2014:
- Market participation. They must sell public cloud IaaS as a stand-alone service, without the requirement to use any managed services (including guest OS management), or to bundle it with managed hosting, application development, application maintenance, or other forms of outsourcing. They may, optionally, also sell a private version of this offering that uses the same architecture but is single-tenant.
- Market traction and momentum. They must be among the top 15 providers for the relevant segments (public and standardized private cloud IaaS, excluding small deployments of one or two VMs), based on Gartner-estimated market shares and client inquiry service data.
- Business capabilities relevant to Gartner clients. They must offer the public cloud IaaS service globally, be able to invoice, offer consolidated billing, and be willing to negotiate customized contracts. They must have 24/7 customer support (including phone support).
- Technical capabilities relevant to Gartner clients. The public cloud IaaS service must be suitable for supporting production workloads, whether enterprise or cloud-native. Specific service features must include:
- Data centers in at least two metropolitan areas, separated by a minimum of 250 miles, on separate power grids, with SSAE 16, ISO 27001 or equivalent audits.
- Real-time provisioning (small Linux VM in 10 minutes).
- The ability to scale an application beyond the capacity of a single physical server.
- An allowable VM size of at least eight vCPUs and 32GB of RAM.
- An SLA for compute, with a minimum of 99.9% availability.
- The ability to securely extend the customer's data center network into the cloud environment.
- Access to a Web services API.
Vendors Considered, but Not Included
This Magic Quadrant is global in scope, but most of the providers are based in the U.S. This is a reflection of the way the market is evolving. The market has matured more quickly in the U.S. and the bulk of revenue comes from U.S.-based customers and flows to U.S.-based companies — U.S.-based IaaS providers typically derive 20% or more of their revenue from customers outside the U.S. However, all the providers in this Magic Quadrant offer their services on a global basis, and most have at least one data center in North America, Western Europe and Asia/Pacific.
Significant Europe-based providers not in this Magic Quadrant include arsys, CloudSigma, Colt, Gigas, Orange Business Services, OVH and Skyscape. Providers with significant presence in the Asia/Pacific region that are not in this Magic Quadrant include Datapipe, NTT and Tata Communications.
In the evaluations for this Magic Quadrant, we considered a variety of interesting cloud IaaS providers that did not meet the criteria for inclusion. The more distinctive ones, by use case, include:
- Development: Skytap, which has deep self-service "lab management" capabilities and features that support collaboration between developers, using either its own infrastructure or AWS.
- Disaster Recovery: Hosting and iland, which offer disaster recovery as a service on their cloud IaaS platforms.
- Enterprise applications: NaviSite, a Time Warner Cable Company, whose cloud IaaS platform is suitable for hosting Oracle e-Business Suite and other complex applications.
- HPC: CloudSigma, Peer 1 Hosting and ProfitBricks, which offer configurations and pricing models that are attractive for HPC.
There are also many cloud IaaS providers that specialize in serving small businesses that typically use just one or two VMs; examples are DigitalOcean, ElasticHosts and Linode. These low-cost providers are often used as an alternative to mass-market hosting. Gartner clients typically have needs beyond what such providers can fulfill.
Even though some businesses may use PaaS in a very IaaS-like manner, we excluded PaaS providers from this Magic Quadrant, with the exception of those PaaS providers that also have a qualifying IaaS offering. PaaS offerings do not allow customers to obtain raw VMs that can be loaded with arbitrary operating systems, middleware and applications, which is a requirement for being considered as IaaS. For PaaS providers, see "Magic Quadrant for Enterprise Application Platform as a Service" and "Magic Quadrant for Enterprise Integration Platform as a Service."
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate technology vendors on the quality and efficacy of the processes, systems, methods or procedures that enable IT providers' performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Ultimately, technology providers are judged on their ability to capitalize on their vision, and on their success in doing so.
We evaluated vendors' Ability to Execute in this market by using the following criteria:
- Product/Service: Service providers were evaluated on the capabilities of their cloud IaaS offering to support the four use cases being evaluated. We evaluated the breadth and depth of the feature set, self-service capabilities, automated system management and suitability to run a broad range of workload types. This criterion is important to buyers who want to purchase the most capable, feature-rich service.
- Overall Viability (Business Unit, Financial, Strategy, Organization): Providers were evaluated on the success of their cloud IaaS business, as demonstrated by current revenue and revenue growth since the launch of their service; their financial wherewithal to continue investing in the business and to execute successfully on their road maps; and their organizational commitment to this business, and its importance to the company's overall strategy. This criterion is important to buyers who prefer to purchase services from large vendors with ample financial resources, or from vendors that have a position of market leadership and are continuing to invest aggressively in the business, or who are concerned about their long-term strategic investment in a particular vendor.
- Sales Execution/Pricing: Providers were evaluated on their ability to address the range of buyers for IaaS, including developers and business managers, as well as IT operations organizations; adapt to "frictionless selling" with online sales, immediate trials and proofs of concept; provide consultative sales and solutions engineering; be highly responsive to prospective customers; and offer value for money. This criterion is important to buyers who value a smooth sales experience, the right solution proposals and competitive prices.
- Market Responsiveness and Track Record: This market is evolving extremely quickly and the rate of technological innovation is very high. Providers were evaluated on how well they have historically been able to respond to changing buyer needs and technology developments, rapidly iterate their service offerings, and deliver promised enhancements and services by the expected time. This criterion is important to buyers who value rapid delivery of cutting-edge capabilities.
- Marketing Execution: Providers were evaluated on their mind share and brand awareness in the market; their ability to convey marketing messages based on their ability to deliver real business value, not empty hype or misleading "cloudwashing;" and the clarity and accuracy of their marketing messages, compared with their actual service offering. This criterion is important to buyers who prefer to buy from well-known vendors.
- Customer Experience: Providers were evaluated on the quality and responsiveness of their account management and technical support; the ease of use of their self-service functionality; the capabilities of their customer portal (additional functionality such as monitoring, reporting and trouble ticketing); the usefulness of their documentation and customer communications; the quality of their SLAs; the ease of doing business with them; and overall customer satisfaction. This criterion is important to buyers who value the aspects of the vendor relationship and capabilities beyond the IaaS platform itself.
- Operations: Providers were evaluated on their ability to meet their goals and commitments, including their track record of service delivery; the quality of their response to outages; and their ability to meet timelines that are communicated to customers and to the market. This criterion is important to buyers who want a reliable, predictable service experience.
Our evaluation of a service provider's Ability to Execute remains similar to that of the 2012 and 2013 Magic Quadrants. We have continued to raise our expectations of a provider's feature set, and we have further increased the weighting of Overall Viability, reflecting our belief that even though some providers can accomplish great things with relatively few resources, long-term success in this market will require substantial investment, as well as the ability to attract an ecosystem.
Source: Gartner (May 2014)
Completeness of Vision
Gartner analysts evaluate technology vendors on their ability to articulate logical statements convincingly about current and future market direction, innovation, customer needs and competitive forces, as well as how they map to Gartner's position. Ultimately, technology providers are assessed on their understanding of the ways in which market forces can be exploited to create opportunities.
We assessed vendors' Completeness of Vision in this market by using the following criteria:
- Market Understanding: Providers were evaluated on their understanding of the wants and needs of three different buying constituencies in this market — enterprises, midmarket businesses and technology companies of all sizes — both currently and in the longer term as the use of IaaS matures. This criterion is important to buyers who value a provider's understanding of the market's evolution and broader business trends, which impact a provider's ability to plan a successful long-term strategy.
- Marketing Strategy: Providers were evaluated on their ability to articulate their position in the market and their competitive differentiation, and to communicate these messages clearly and consistently, both internally and externally. This criterion is important to buyers who believe that providers should have a clear focus and direction.
- Sales Strategy: Providers were evaluated on their understanding of the buying centers for the market, and the way that these different buying centers want to engage with sales, as well as their strategy for adapting their sales force, online channel and partner channels to the IaaS market. This criterion is important to buyers who value a provider's ability to grow its business over the long term.
- Offering (Product) Strategy: Providers were evaluated on the breadth, depth, quality and differentiation of their service road maps, as relevant to the four use cases under evaluation, with an emphasis on self-service, automated ITOM and overall feature set. This criterion is important to buyers who want a provider who will lead the market in service capabilities.
- Business Model: Providers were evaluated on their overall value proposition and their strategy for providing solutions for the use cases under consideration, not just raw infrastructure elements. This included evaluating how IaaS fits into their broader product portfolio and product strategy. This criterion is important to buyers who view IaaS as part of an integrated set of solutions from a particular provider.
- Vertical/Industry Strategy: Providers were evaluated on their ability to offer targeted services for particular vertical markets, such as government, biotechnology, media and entertainment, and retail. This includes sales and marketing to such verticals, their ability to meet specialized compliance needs, and vertical-specific solutions. This criterion is not directly important to most buyers, except to the extent that a provider has a vertical-specific offering that is relevant to them.
- Innovation: Providers were evaluated on the level of investment in the future of their business, and the quality of those investments, whether financial or human capital; this includes aspects such as the deployment of engineering resources, investments in new technology, mergers and acquisitions, and partnerships and alliances. This criterion is important to buyers who care about leading-edge capabilities, and the strength of a provider's ecosystem.
- Geographic Strategy: Providers were evaluated on their ability to expand their offering beyond their home region, serving the needs of multinational businesses, as well as adapting their offerings to other geographies. In particular, this included their strategy for international sales and support, as well as their data center footprints and internationalization efforts. This criterion is important to buyers who want to use a global vendor.
Our evaluation of Completeness of Vision remains similar to that of the 2012 and 2013 Magic Quadrants. However, we have continued to increase our expectations for the breadth and depth of a provider's vision. We believe that a comprehensive vision must encompass the ambition to run any workload, at anytime, anywhere in the world, with the appropriate availability, performance, security and isolation — including the ability to self-service all of the necessary compute, storage, network and management capabilities — in cooperation with an ecosystem of supporting partners.
Source: Gartner (May 2014)
Quadrant Descriptions
Leaders
Leaders distinguish themselves by offering a service suitable for strategic adoption and having an ambitious road map. They can serve a broad range of use cases, although they do not excel in all areas, may not necessarily be the best providers for a specific need, and may not serve some use cases at all. They have a track record of successful delivery, significant market share and many referenceable customers.
Challengers
There are no Challengers in this Magic Quadrant. Challengers are well-positioned to serve some current market needs. They deliver a good service that is targeted at a particular set of use cases, and they have a track record of successful delivery. However, they are not adapting to market challenges sufficiently quickly, or do not have a broad scope of ambition.
Visionaries
Visionaries have an ambitious vision of the future, and are making significant investments in the development of unique technologies. Visionaries may be new market entrants, or they may be existing providers who are reinventing their business. Their services are still emerging, and they have many capabilities in development that are not yet generally available. While they may have many customers, they might not yet serve a broad range of use cases well.
Niche Players
Niche Players may be excellent providers for the use cases in which they specialize, but may not serve a broad range of use cases well, or have a broadly ambitious road map. They may be relatively new entrants to this market, or may not yet have gained significant market share. Some may have solid leadership positions in markets adjacent to this market, but are still in the relatively early stages of developing capabilities in cloud IaaS. Providers that specialize in managed services on top of a "good enough" IaaS platform may be in this category. The more highly targeted your needs, the more likely it is that there will be a Niche Player ideal for your needs.
Context
When people think about "cloud computing," cloud IaaS is often one of the first things that comes to mind. It's the "computing" in cloud computing — on-demand compute, storage and network resources, delivered on-demand, in near-real-time, as a service. There has been tremendous hype about these services, but there are also a number of use cases for which cloud IaaS delivers excellent business value. Although the market is immature, it is evolving rapidly; it has begun its journey up the Slope of Enlightenment on Gartner's "Hype Cycle for Cloud Computing, 2013." Unfortunately, there is a great deal of market confusion and many providers articulate their offerings poorly. Therefore, care should be taken when sourcing these services.
The common use cases for cloud IaaS are development and testing environments; HPC and batch processing; Internet-facing websites and Web-based applications (which may or may not have architectures specifically designed for the cloud); and non-mission-critical internal business applications. An increasing number of organizations now run mission-critical business applications on cloud IaaS, and a significant number of organizations are in the midst of migrating most or all of their infrastructure to cloud IaaS. Migrations are most frequently done to avoid major capital expenditure, such as a hardware refresh or the construction of a data center.
Initially, most businesses choose use cases that are peripheral to their organization's IT needs, but, over time, they adopt cloud IaaS for mainstream business applications as well, including mission-critical applications, mirroring the past decade's adoption pattern of virtualization in the data center. Many businesses, especially in the midmarket, will eventually migrate away from running their own data centers in favor of relying primarily on infrastructure in the cloud. Gartner's 2013 CIO Priorities Survey indicates that 28% of CIOs expect to source all critical applications and operations via the cloud by 2016, and 55% expect to do so by 2020 (see "Hunting and Harvesting in a Digital World: The 2013 CIO Agenda").
Although some organizations still source cloud IaaS in a tactical, per-project fashion, most organizations are now looking for long-term strategic partners. This 2014 Magic Quadrant focuses on evaluating providers through the lens of their suitability for strategic adoption. We believe that while the market is still relatively immature, customers may reasonably begin making strategic choices, based on their own speed of adoption. Customers who will not have the majority of their workloads on cloud IaaS until 2016 or later may choose strategic providers whose offerings are still substantively incomplete, if they are confident that those providers will have the necessary capabilities by the time they need them. We recommend that prospective customers with immediate needs focus on finding the cloud provider that matches their anticipated use cases for the next year. In some cases, businesses may have to use multiple cloud IaaS providers to meet the needs of diverse use cases.
Market Overview
Cloud IaaS is a computing resource, along with associated storage and network resources, offered to the customer via self-service in a highly automated way, on-demand and in near real time. In IaaS, the provider manages the data center facilities, hardware and virtualization, but everything above the hypervisor layer — the operating system, middleware and application — is managed by the customer, or is an add-on managed service from the provider or another third party. This market is wholly separate and distinct from cloud PaaS and SaaS.
Cloud IaaS is owned, built and operated by a service provider, but it may be delivered on-premises within a customer's data center or hosted in the provider's data center. It may be "public" (multitenant) or "private" (single-tenant), although, in practice, there is no consistency in the application of these labels to varying degrees of resource isolation, and most hosted offerings use some degree of shared resources in services labeled "private."
Cloud IaaS is not a commoditized service, and even providers with very similar offerings and underlying technologies often have sufficiently different implementations that there is a material difference in availability, performance, security and service features. See "Evaluating Cloud Infrastructure as a Service" and its related reports to understand the range of options available in this market.
What Types of Workload Are Being Placed on Cloud IaaS?
There are three broad categories of customer needs in cloud IaaS:
- The hosting of a single application, or a closely related group of applications
- A VDC that will serve a broad range of different workloads
- Batch computing
Hosting is the most common need. For instance, a media company with a marketing microsite for a movie, a software company offering SaaS and a retailer needing a lightweight version of its e-commerce site for disaster-recovery purposes are examples of customers with hosting needs that can be fulfilled by IaaS. These are generally production applications, although there is some test and development as well. Some of these customers have mission-critical needs, while others do not.
Customers with a broad range of unrelated workloads are less common, but are growing in importance, particularly in the midmarket, where IaaS is gradually replacing or supplementing traditional data center infrastructure. The VDC is typically used very similarly to the organization's internal virtualization environment — primarily for less mission-critical production applications, or test and development environments — but is increasingly being used to run more mission-critical applications.
The least common need, but one that nevertheless generates significant revenue for the small number of providers that serve this portion of the market, is batch computing. For these customers, IaaS serves as a substitute for traditional HPC or grid computing. Customer needs include rendering, video encoding, genetic sequencing, modeling and simulation, numerical analysis and data analytics. Other than the need to access large amounts of commodity compute at the lowest possible price, with little concern for infrastructure reliability, these customers typically have needs very similar to those of VDC customers, although some HPC use cases benefit from specialized hardware such as GPUs and high-speed interconnects.
Cloud IaaS can now be used to run most workloads, although not every provider can run every type of workload well. Service providers are moving toward infrastructure platforms that can offer physical (nonvirtualized) and virtual resources, priced according to the level of availability, performance, security and isolation that the customer selects. This allows customers to run both "cloud native" applications that have been architected with cloud transaction processing principles in mind (see "From OLTP to Cloud TP: The Third Era of Transaction Processing Aims to the Cloud"), as well as to migrate existing business applications from their own virtualized servers in internal data centers into the cloud, without changes. Cloud IaaS is best used to enable new IT capabilities, but it has become a reasonable alternative to an internal data center.
What Key Market Aspects Should Buyers Be Aware Of?
Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost and business terms. Although in theory, cloud IaaS has very little lock-in — a VM is just a VM, in the end — in truth, cloud IaaS is not merely a matter of hardware rental, but an entire data center ecosystem as a service. This encompasses the entirety of the ITOM stack, including traditional IT service management capabilities, DevOps-oriented capabilities, and new forms of automation, analytics and insight, including "smart" infrastructure capabilities that take advantage of the unique perspective offered by the delivery of integrated compute, storage and networking resources. The more you use those capabilities, the more value you will receive from the offering, but the more you will be tied to that particular service offering. The dynamics of this market resemble a software market, not a traditional IT services market. Providers are in a race to deliver features, and the "winners" are likely to be those that are highly innovative and that have the most resources to invest in the breadth and depth of capabilities development.
The market is in a transition phase. The first phase of the market's development, from 2006 to 2013, was marked by the gradual maturation of the ability to offer infrastructure resources on a self-service basis. By the end of this phase, customers could expect reasonably good delivery of these capabilities from a large number of providers. But the most visionary providers tried to provide customers with capabilities beyond mere infrastructure rental, reinventing the relationship between infrastructure, applications, and management. In 2013, incumbent IT vendors began acting aggressively to counter the threat of cloud computing to their businesses. We have now entered a second phase in which providers will invest tremendous resources in developing cloud services. There are promising new entrants. Furthermore, providers that did well in the market's early years but have not kept up with the pace of innovation are getting a second chance to pursue new strategies and reinvest in engineering. Most such providers are likely to need two years to develop truly competitive capabilities. During this transition phase, market share is likely to continue to consolidate, but by the third phase of the market, in 2016 and beyond, new strong competitors may emerge.
There are many providers, but they vary widely in quality and capabilities. There are many competitors in this market; new entrants continue to launch offerings and existing providers are expanding the market segments they serve. Many of the newer market entrants are very large IT companies with considerable sales reach, which could potentially accelerate their growth; however, burdened by their legacy offerings, they might not develop superior offerings. Broadly, providers can be divided into two categories — those that are investing deeply in engineering in order to provide a rich suite of features and extensive automation for self-service enablement, and those that will provide only a basic set of IaaS features but intend to differentiate in some other way, such as via managed services, PaaS or SaaS capabilities.
The market's growth disproportionately favors the market leaders, and the market is consolidating. Many providers have solid offerings that encompass the most fundamental capability in this market — the ability to provision VMs rapidly on-demand, coupled with storage and an Internet connection. But most are finding it challenging to move beyond this point, and are finding it increasingly difficult to grow or even maintain their customer base. Customers' expectations are increasing, use cases are broadening, and many providers have neither the ambition nor the resources to compete across the full breadth of the addressable market.
Providers' size and scale matter. While scale does impact operational efficiency to some degree, more importantly, it impacts engineering efficiency — the ability to leverage an investment in developers as well as partner capabilities across as large a customer base as possible. Software requires a large upfront investment, but each incremental customer adds comparatively little cost, and software markets tend to become "winner takes all" arenas, where a small number of vendors command dominant market shares. Scale also matters because the ability to deliver a broad range of integrated capabilities will become increasingly crucial. A provider's size, its existing customer relationships, and the strength of its brand have an enormous impact on its ability to gain market share and traction, especially on a global basis. Furthermore, the solution ecosystem is rapidly consolidating around a small number of market leaders.
Customers are choosing IaaS platforms first, managed services second. To deliver greater value to customers, cloud IaaS providers must improve the quality and efficiency with which customers can manage their infrastructure. They must find ways to reduce the burden of operational chores such as patch management and backups. While manual managed services are frequently used to substitute for automated offerings, efficiency demands automation instead of operators. Consequently, the choice of an IaaS offering ultimately impacts the quality of the customer's IT operations. Customers who want to outsource the management of their infrastructure will increasingly adopt a best-in-class IaaS offering, and then seek a managed services provider to manage it, rather than choosing to adopt a "managed cloud" offering from a managed services provider that can offer only basic IaaS capabilities on its own platform. Customers may extend existing outsourcing relationships to include management of a third-party cloud IaaS offering.
Public and private cloud IaaS are converging. Service providers are increasingly using dynamic physical and logical isolation mechanisms to create "private" infrastructure within a shared, multitenant capacity pool. This allows for economies of scale, while enabling customers to meet a broader range of security and compliance requirements. See "Best Practice: Evaluate Isolation Mechanisms in Public and Private Cloud IaaS" for details on this convergence and how to choose the level of isolation you need. We believe that, over time, the leading providers will offer a single, highly flexible platform across both their own data centers and customers' data centers. As a result, this Magic Quadrant covers not only public cloud IaaS, but standardized private cloud IaaS as well.
Hybrid cloud is not yet a reality. While it is relatively straightforward to move VM images from one cloud to another, truly hybrid multicloud scenarios are rare. The tools to enable true "single pane of glass" management and seamless movement across infrastructure platforms are not mature, and there are significant differences in cloud IaaS implementations, even between providers using the same underlying CMP. Note that the claim that an ecosystem is "open" has nothing to do with actual portability. The organizations that use cloud IaaS most effectively will embrace cloud-native management, rather than allow the legacy enterprise environment to dictate their choices.
IaaS and PaaS capabilities will overlap. Cloud IaaS providers are increasingly offering middleware capabilities as a service, and are likely to add capabilities such as the provisioning and orchestration of application containers. Many leading providers will offer both IaaS and PaaS, and in many cases will blend IaaS and PaaS capabilities. The spectrum of services allows customers to decide on a trade-off between control and convenience. Customers want to develop, deploy and manage applications efficiently, and will choose the combination of capabilities that best suits their needs.
The software-defined data center is the center of a partner ecosystem. Programmatic (API) access to infrastructure is crucial, as it enables customers, as well as third parties, to build management tools for their platforms, and to enable applications to take maximum advantage of the infrastructure environment. Providers need to foster rich ecosystems of capabilities. While the leading providers are likely to build a substantial number of capabilities themselves, partners will extend the range of their capabilities, provide overlays for complex heterogeneous multivendor environments, and add "stickiness" to these platforms by offering tight integrations between applications, middleware and infrastructure.
Buying centers for IaaS are diverse. The early adopters in the IaaS market were developers. As the market matures, developers remain an important audience, because a great deal of IaaS adoption is business-led — driven by business managers who hold the budget, need greater agility and have shorter time frames than IT operations are able to accommodate, and who therefore turn to application developers and enterprise architects for a solution. This is particularly true for the single-application, "hosting" side of the market. IT operations is, however, increasingly involved in IaaS sourcing, and is likely to be the primary buying center for multiple-application needs. IaaS providers vary in their ability to target these different buying centers. Furthermore, most providers focus on either a developer audience or an IT operations audience, and their feature set and style of service are oriented accordingly, although leading providers will increasingly offer capabilities attractive to both audiences.
Local sourcing matters to some customers. Customers normally prefer to keep data in-region for reasons of network latency. However, regulatory concerns that require keeping data in-country, as well as revelations about foreign intelligence agencies obtaining access to private data, have heightened the desire of non-U.S.-based customers to purchase cloud IaaS from local providers. Unfortunately, local providers typically lack the scale and capabilities of the global providers, and may focus primarily on small businesses, not enterprises. Furthermore, keeping data local is no guarantee of freedom from either domestic or foreign surveillance. It is nevertheless possible that the cloud IaaS markets in Europe and Asia will become highly fragmented, which may result in only basic, commodity capabilities being available to customers that cannot use a foreign provider (even when that provider has local presence).
Public cloud IaaS provides adequate security for most workloads. Although many security controls are the responsibility of the customer, not the provider, most major cloud IaaS providers offer a high degree of security on the underlying platform. Transparent encryption of LAN, WAN and storage will become increasingly commonplace as a bundled element of cloud IaaS offerings, as providers react to defend themselves against intrusion from government entities.
Customers do not always save money by using cloud IaaS. Although many customers first investigate using IaaS to achieve cost savings, most customers buy IaaS to achieve greater business agility or access infrastructure capabilities that they do not have within their own data center. IaaS can drive significant cost savings when customers have short-term, seasonal, disaster recovery or batch-computing needs. It can also be a boon to companies with limited access to capital and to small companies, especially startups, that cannot afford to invest in infrastructure (see "Cloud Computing Can Be the Singular Solution for at Least Five Use Cases"). For larger businesses with existing internal data centers, well-managed virtualized infrastructure, efficient IT operations teams and a high degree of automation, IaaS for steady-state workloads is often no less expensive, and may be more expensive, than an internal private cloud. The less efficient your organization, the more likely you are to save money by using a cloud provider, especially if you take advantage of this opportunity to streamline and automate your operations. The largest-scale providers are continually lowering their prices, and automated managed services will substantially drive down the cost of infrastructure management over time, so cost advantages will continue to accrue to the providers.
Gartner 2014 Magic Quadrant for UC as a Service
VIEW SUMMARY
Selecting the right UCaaS provider can improve your company's communication productivity and cost structure. The 21 providers evaluated vary in terms of geographic coverage, richness of services and scalability. Each provider supports UCaaS in North America and at least one other global region.
Market Definition/Description
This document was revised on 4 September 2014. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.
Unified communications as a service (UCaaS) supports the same functions as its premises-based unified communications (UC) counterpart. Only the delivery model is altered. Therefore, Gartner uses the same six broad communications functions for both (see Note 1 for detailed definitions):
- Voice and telephony, including mobility support
- Conferencing — Audioconferencing, videoconferencing and Web conferencing
- Messaging — Email with voice mail and unified messaging (UM)
- Presence and instant messaging (IM)
- Clients — Including desktop clients and thin browser clients
- Communication applications — For example, integrated collaboration and contact center applications
There are two types of architectures deployed in the UCaaS market. The first is multitenant, in which all users share a common (single) software instance. The second is virtualized, in which each user receives its own software instance. Both the multitenant and virtualized architectures possess cloud characteristics of shared infrastructure (for example, data centers, racks, common equipment and blades), per-user-per-month pricing, and elasticity to dynamically add and subtract users.
Users (particularly larger businesses with more than 1,000 employees) in general prefer a separate software instance — sometimes marketed as "private cloud" — because of perceived security, integration and customization benefits. However, most implementations to date are with the multitenant architecture because it is typically easier to support, manage and deliver. In contrast, it takes more administration to manage each user's separate software instance in the virtualized architecture.
Mobility, through both smartphones and tablets, plays an increasingly prominent role in the UCaaS ecosystem. UC clients that are downloaded to mobile smartphones (or tablets) can have a business-grade PBX feature set. Businesses are now starting to deploy location-based services (LBSs) and contextual information on the mobile devices to develop communications-enabled business processes (CEBPs). There is also increasing demand for disparate businesses (for example, businesses in a supply chain) to federate with one another.
Magic Quadrant
Source: Gartner (August 2014)
Vendor Strengths and Cautions
8x8
Northern California-based 8x8 is a UCaaS specialist with more than 10 years of experience, and it provides cloud voice over IP (VoIP), UC and contact functionality. Its UCaaS offering is branded as "Virtual Office," and it is delivered via a homegrown, multitenant platform. 8x8's core market is North America (the U.S. and Canada). In the past year, 8x8 has marketed its services to U.K.-headquartered businesses (and also supports the European offices [in approximately 20 other countries] of the U.K.-headquartered companies). A Hong Kong data center was added in the first quarter of 2014 to support regional Asia/Pacific offices. Gartner estimates that 8x8 is one of the largest UCaaS providers, with more than 350,000 employees supported, mainly in North America.
8x8 has historically focused on the small or midsize business (SMB) market (less than 1,000 employees), but it has gradually added a higher proportion of smaller enterprises (1,000 to 2,000 employees) each year. Evidence of enterprise commitment includes certifications for E-Rate, Federal Information Security Management Act (FISMA), Health Insurance Portability and Accountability Act (HIPAA) and Payment Card Industry (PCI). The company recently added project management and customer service staff to better support accounts above 500 employees. 8x8 is also expanding its channel base to complement its traditional direct sales force.
8x8 is well-positioned for SMBs seeking a cost-effective UCaaS solution. 8x8 is also well-suited for U.S. and U.K.-based businesses with regional offices in Europe and Asia/Pacific.
Strengths
- 8x8 provides a rich set of UC and contact center capabilities at a competitive price. Many 8x8 users leverage a broad mix of UC functions, including VoIP, UM, mobility, IM and presence.
- The company has a good pace of innovation, with recent developments emphasizing APIs (such as those from salesforce.com, Zendesk, Google and Facebook), improved branch office support, and an enhanced contact center experience (for example, Teleopti for workforce management).
- Users report that 8x8 has good customer service and a proven, intuitive customer portal.
- The company is increasingly global, with local infrastructure in North America, Europe and Asia/Pacific.
Cautions
- 8x8 is still new to the enterprise market, and it does not have accounts above 2,000 employees.
- The Virtual Office video is weak in terms of resolution, endpoints supported and ease of use. Similarly, some users report that the Web conferencing capability is only adequate (but this capability is getting a late third-quarter refresh that is now being tested by selected partners).
- 8x8's cloud contact center and UCaaS solutions are not fully integrated and presently require parallel user sign-ons and separate clients (8x8 announced plans to improve this integration, along with single sign-on, in the fourth quarter of 2014).
- Gartner is concerned about whether 8x8's historically strong customer support can be maintained, given last year's global expansion on top of next year's planned expansion. Customer support in the newly entered European market is a step lower than in North America.
Arkadin
Arkadin is a Paris-based global provider with a background in audioconferencing, Web conferencing and videoconferencing services, with redundant points of presence, in North America, South America, Europe and Asia/Pacific. During the past year, Arkadin added support for Lync UCaaS. Arkadin was acquired by the Japanese telecommunications firm NTT Communications in the first quarter of 2014. Arkadin is operated as an independent business unit of NTT Communications, which enables it to leverage capabilities of Dimension Data.
Arkadin's core conferencing business is stronger in Europe than in North America. But Arkadin introduced Lync UCaaS in both North America and Europe (the U.K. and France) in 2013. Arkadin is rolling out 10 additional Lync UCaaS country deployments in 2014, and it plans a rollout in Japan for 2015.
The Arkadin Total Connect brand is made up of several Lync UCaaS offerings, including multitenant Lync, private cloud Lync, Office 365 integration and related professional services. These offers can include public switched telephone network (PSTN) and PBX integrations.
Arkadin UCaaS is a good fit for small and midsize deployments seeking Lync technology tied to related Microsoft applications, led by Exchange and SharePoint.
Strengths
- Arkadin leverages its existing global network, operational infrastructure, related service offerings and experience (from conferencing services) for the broader UCaaS offering.
- Feedback from Arkadin users is that customer support is good.
- Arkadin partners with Clarity Connect for contact center as a service (CCaaS). The Clarity Connect software is run by Arkadin in Arkadin data centers and integrated with Lync.
- Arkadin has strong brand recognition in Europe, Asia/Pacific and Japan for conferencing services.
Cautions
- Arkadin is new to UCaaS and, in particular, the Lync market, and it is still maturing its processes and skills.
- The company offers many parallel conferencing services — Arkadin (internal), Adobe Connect and Cisco WebEx — which can potentially limit Arkadin's ability to scale UCaaS.
- Arkadin's acquisition by NTT Communications is very recent, and it will require significant management attention as Arkadin adjusts to working with its new parent firm.
- Arkadin has limited presence and visibility in North America, compared with Europe. Many of Arkadin's North American telephony customers are accounts with fewer than 250 employees.
AT&T
AT&T is a global communications service provider (CSP) headquartered in Dallas, Texas. While its UC services are strongest in North America, AT&T has global operations and a global footprint, and it continues to expand its UC capabilities, including with European accounts. However, enterprises expecting AT&T services outside of North America should verify that AT&T is capable of supporting all required country markets.
AT&T Unified Communications Services includes virtualized cloud-based solutions and hybrid cloud-premises deployments. The AT&T UC Voice offering is a cloud solution based on either Microsoft Lync or Cisco Hosted Collaboration Solution (HCS), accessed via the Microsoft Lync client or the Cisco Jabber client, respectively. Functionality supported includes presence, IM, conferencing and UM. In addition, AT&T offers a range of its own native audioconferencing, Web conferencing and videoconferencing services. AT&T also markets hosted, managed and premises-based services for Lync, Cisco and Avaya UC solutions, as well as UC integrations to Google and IBM Sametime.
AT&T's UCaaS solutions suit midsize to large enterprises that have an existing strong relationship with the service provider and desire a cloud UC solution based on Microsoft or Cisco technology.
Strengths
- AT&T's UCaaS benefits from the firm's strong brand-name recognition, global networks, security services and global data centers.
- AT&T has developed a strong suite of UC solutions based on Cisco's and Microsoft's UC that leverage AT&T's conferencing (audio, Web and video) and professional services, including AT&T's UC consulting practice.
- A recently announced offering that combines Microsoft Office 365 with AT&T IP Flexible Reach. This includes committed quality of service (QoS) and availability SLAs for Lync voice, video and conferencing when operated by AT&T.
- AT&T is developing a UC federation service to enable disparate organizations (such as partners, suppliers and customers) with dissimilar UC tools (from such vendors as Cisco, Microsoft and IBM) to interoperate. AT&T has yet to announce further details.
Cautions
- AT&T has previously experienced delays when bringing its UCaaS offerings to market. It is currently entering the market with an aggressive deployment agenda, but must prove that it is able to advance its portfolio in a timely manner.
- Some customers report that billing and service problems with AT&T can be difficult to resolve. In addition, some customers report that final costs are higher than planned costs because of unanticipated requirements (which carry additional fees).
- Gartner believes that the majority of current deployments is VoIP-focused (AT&T UC Voice), rather than on the broader UC solution set.
- The impact of the proposed $48.5 billion acquisition of DIRECTV (presuming this is approved by the regulators) will have on AT&T's product enhancement investments in UCaaS is unclear.
Avanade
Avanade, a global system integrator headquartered in Seattle, Washington, was founded by Accenture and Microsoft. The company provides Microsoft-focused managed, cloud and consulting services. The UCaaS offering emphasizes Microsoft-focused messaging, collaboration and UC services. In the past 12 months, Avanade has retooled its UCaaS offering to focus on large accounts. Avanade has UCaaS infrastructure in North America and Europe, targeting both North America- and Europe-headquartered companies. There are also gateways in Asia/Pacific to support the Asia/Pacific offices of North American and European accounts.
Avanade's go-to-market UCaaS strategy centers on virtualized Microsoft Lync, with Lync replacing the client's PBX infrastructure. Proprietary management and virtualization tools are used to cloud-enable Lync in Avanade data centers. Customers not seeking PBX replacement can be ported to Lync Online (part of Microsoft Office 365).
Avanade is suited for large North America- or Europe-headquartered enterprises seeking a Microsoft-based UCaaS offering.
Strengths
- Avanade has extensive Microsoft IT experience and has homegrown tools that can cloud-enable Lync, Exchange and SharePoint. Avanade can also integrate with Microsoft Office 365.
- Avanade has improved its Lync cloud UC reference architecture in the past year to include network performance, session border controllers (SBCs), headsets, room video systems and network services.
- The company has strong consulting and professional services that leverage Lync UCaaS to improve business processes. Avanade is especially strong in Lync-enabled business process improvement in the healthcare and transportation sectors.
- Avanade is particularly strong with large-enterprise accounts in the 10,000-plus-employee range.
Cautions
- Avanade does not target small and midsize UCaaS accounts that lack complex environments. Most Avanade UCaaS customers are above 10,000 employees.
- The company's UC skill set is Microsoft-centric, with limited expertise in offerings from such vendors as Avaya, Cisco and Unify (formerly Siemens Enterprise Communications). Similarly, Avanade does not possess a broad package of APIs to third-party IT software.
- The Avanade UCaaS portal is not mature, and it does not enable users to automatically make most IT change requests (instead, it relies on traditional service requests or customized integration between Avanade and the customer provisioning toolset).
- Avanade does not support a complementary CCaaS offering. It does, however, support integrations with contact centers from Aspect, Clarity and ComputerTalk.
- Some customers report that the Avanade's contracting and legal departments can be bureaucratic and time-consuming to deal with.
CSC
CSC is a system integrator headquartered in the Washington, D.C. metro area, with a deep base of large public-sector and private accounts. The company has completed a transformation of its business model, with the objective of becoming more efficient and profitable by streamlining its product offerings, data centers and service management centers. CSC MyWorkStyle is the brand name under which CSC's workplace offerings are marketed and includes UCaaS. Delivery can be via the cloud, on-premises or hybrid.
The CSC MyWorkStyle UCaaS offering centers on virtualized Microsoft and virtualized Cisco technologies, complemented by Polycom video and Cisco CCaaS. CSC has been investing heavily in Microsoft Lync technology during the past 18 months. The objective of MyWorkStyle is to offer a cost-competitive UCaaS offering based on branded solutions, complemented with CSC's security, service management and service startup services. CSC has a global reach, with UCaaS marketed to North American, European and Asia/Pacific businesses. While the CSC target market has traditionally been above 5,000 employees, the industrialization of MyWorkStyle now enables CSC to target accounts down to 1,000 employees. All sales are direct.
CSC UCaaS is well-suited for large enterprises seeking a cloud solution based on Cisco or Microsoft technology.
Strengths
- CSC has a cloud-centric, go-to-market vision for industrializing IT services, including UCaaS (with customer premises equipment [CPE] delivery serving as the backup).
- The CSC MyWorkStyle offering has an ambitious road map centered on Cisco and Microsoft solutions. This road map includes semiannual product releases for additional functionality.
- Users can now acquire Cisco-based HCS UCaaS that is packaged with Cisco WebEx and Cisco contact center (Unified Contact Center Enterprise).
- CSC has approximately 10 large UCaaS customers (a combination of U.S.-only and multiregional) in the 5,000-employee range.
- CSC is strong in the public sector, and it understands the public-sector culture and regulatory environment.
Cautions
- Developing and launching CSC MyWorkStyle has taken a long time to roll out. In the meantime, CSC lost momentum signing up new UCaaS customers.
- CSC has not traditionally targeted the sub-5,000-employee market space (although the new MyWorkStyle model seeks to expand target accounts down to 1,000 employees).
- Some clients report that it can take CSC a long time (roughly a month) to onboard subject matter experts for a project, particularly for high-demand skill sets such as Microsoft Lync.
- Some enterprise accounts have a negative perception of CSC. In most cases, these are former CSC customers that experienced a CSC-led IT project that did not meet expectations.
- The UCaaS portal is still maturing. Some users report that they do not have all of the automated administrative capabilities that they would like.
Google is based in Northern California and provides a broad base of consumer, and now business, IT tools. Gartner believes that the business market is an important, strategic cog to Google's future growth. Google has UCaaS infrastructure in North America, Europe, Asia/Pacific and Latin America. It actively targets accounts in each of these markets.
Google provides multitenant cloud delivery of such UC functions as email, UM, IM/presence, videoconferencing and Web conferencing, and mobility. Cloud IT offerings beyond UC include Google Docs (spreadsheets, documents and presentations), Google Calendar, and Google Drive (storage). The majority of Google's sales are direct, complemented with sales from an expanding base of channels. Most Google customers use a broad set of these UCaaS and IT services, and they report that the Google UC suite is intuitive for their user base to deploy.
Google's UCaaS provides an intuitive, cost-effective solution, and users are likely to leverage the full UC suite. However, Google customers must have alternative methods of securing enterprise voice.
Strengths
- Google's prices are very competitive, with annual fees ranging from $50 to $120 per user (the higher levels include enhanced security, administrative tools and e-discovery features).
- Google continues to innovate in UCaaS and tangentially related capabilities. Notable recent enhancements include integration with UberConference for PSTN audioconferencing, Chromebox for meetings (for high-resolution video devices [for example, those of Polycom]), Google Drive, and Vidyo and InterCall integration.
- Customers range from very small businesses all the way up to multinational corporations of 50,000 employees or more.
- Google has a rich community of partners and developers that provide value-added functionality. Google offers APIs from which partners can develop mashups for telephony, video, social, business analytics and so forth. The Google Apps Marketplace is a tool for connecting users with the Google partners.
- Companies leverage Google UCaaS for cost-efficient business productivity improvements (for example, using a Google Hangouts video to troubleshoot a malfunctioning gas pump).
Cautions
- Some IT managers would like Google to enhance its reporting capabilities. Similarly, Google should educate IT managers on the available provisioning tools to help them operate more efficiently.
- Some IT departments have difficulty adapting to the pace of change and innovation offered by Google. They also report that they do not get sufficient visibility into the road map of future Google development (Google is attempting to address this concern via its quarterly Google Enterprise Connect program).
- Google does not support enterprise voice. The Google Voice offering is a consumer service that is available only in North America and that Gartner believes is being integrated into Google Hangouts. Enterprise voice can be supported via middleware solutions from Esna and gUnify, but we have yet to see significant adoption among Gartner's clients.
- Google Hangouts is insufficient for large meetings or formal meetings with external partners. Currently, Google Hangouts can support only 15 simultaneous sessions (although an individual session can be a large video monitor viewed by many employees).
- The Google service-level agreement (SLA) for availability is 99.9%, with network connectivity provided over the top (OTT), which does not provide a QoS guarantee.
HP
HP Enterprise Services is the multinational IT infrastructure and service business unit part of HP, which is headquartered in Palo Alto, California. The company uses a standard reference architecture with a structured approach to project management that is designed for large enterprises and global-scale projects. HP Enterprise Services has seven practice areas, and while UC is related to many of them, organizationally, the core UCC functionality is part of the Mobility and Workplace Services practice. HP has UCaaS capabilities in the four main global regions (North America, Europe, Asia/Pacific and Latin America), and it is registered as a telecom provider in more than 20 countries; it continues to add countries through an ongoing telecom registration program.
HP offers cloud, premises and hybrid configurations of UC. All sales are direct. HP offers virtualized Lync, Lync Online and related Microsoft solutions. In addition, HP offers Avaya UC integrations, security, mobility, analytics and identity management, as well as other functions into a UC offering. HP also has strong UC professional services, consulting, and service desk practices, as well as a full set of HP network management tools.
HP UCaaS is well-suited for midsize to large organizations that have complex integration requirements and global UC deployment plans. While HP supports multiple UC and telephony environments, its primary UCaaS offering relies on Microsoft Lync.
Strengths
- HP UCaaS is available globally and is capable of addressing complex enterprise deployment and integration issues. The company already has more than 10 multinational corporation (MNC) UCaaS accounts.
- HP offers a broad spectrum of UC services that includes private cloud UCaaS, professional services, network management and application integration with UC.
- HP offers centralized Session Initiation Protocol (SIP) trunking management, voice routing for global numbering plans and in-region disaster recovery.
- UCaaS deployments usually come with consulting services to promote mobility, improved business productivity and CEBP.
Cautions
- HP focuses on large and global enterprises, in which UC is part of a broader professional services and IT project. Small and midsize accounts are not actively targeted.
- The HP approach to UCaaS (promoting consulting, integration and network QoS) leads to a premium solution, at an associated higher price, compared with some competing options (promoting standardization).
- Some users report difficulty resolving complex problems that require coordination across the multiple HP lines of business used to fulfill Lync UCaaS.
- HP is comparatively new to the UCaaS market. The offering has been generally available for roughly two years at the time of publication.
iCore
iCore is a privately held network and UCaaS provider headquartered in the Washington, D.C., metro area. Founded in 2001, the company originally offered cloud VoIP based on the BroadSoft platform (multitenant) delivered over an internally provisioned IP Multiprotocol Label Switching (MPLS) network. During the past three years, iCore has been extending its communications offering to include contact center, video, mobility, audioconferencing and video conferencing. iCore has been investing in Microsoft Lync expertise since 2013. The vast majority of iCore business is in the United States, although iCore has recently added channels for Asia/Pacific clients.
In addition to UCaaS and network services, iCore provides complementary IT services tailored to the midmarket, including security, hosted Exchange, hosted SharePoint and virtual desktop. However, Gartner believes that the majority of iCore's revenue is derived from core network and cloud VoIP services. iCore's sales activities are led by an internal account team, although iCore has been developing a channel sales effort in the past 15 months.
iCore is well-suited to small and midsize enterprises with significant operations in the eastern half of the U.S.
Strengths
- iCore can support UCaaS accounts in the 1,000- to 5,000-employee range. Gartner estimates that iCore's revenue has been growing above 20% for the past two years.
- iCore has an agile business model that enables it to perform basic customizations for its midsize and larger accounts. Customers report that iCore's pricing is very competitive.
- iCore offers a cloud contact center offering based on a combination of BroadSoft technology and proprietary solutions developed by iCore.
- The company offers a good mix of tangentially related IT services, such as security, well-suited to midmarket accounts.
Cautions
- iCore's business base and brand recognition are skewed to the U.S. Mid-Atlantic region (although it does market to the broader North American market). iCore international support is nascent.
- iCore is one of the smaller UCaaS providers in terms of number of employees and revenue. iCore will require stellar execution to stay a viable player as the UCaaS market matures, scales and consolidates during the next three years.
- iCore is still maturing its project management and change management processes. Some customers indicate that iCore has difficulty quickly resolving complex issues.
- To scale and effectively deliver all the IT services that iCore now offers its customers (including UCaaS, contact centers, networks, security and virtual desktops), iCore needs continued focus on project management, implementation and customer support capabilities.
Intermedia
Intermedia, based in Northern California, provides a broad suite of cloud services with a strong combination of Microsoft products, proprietary products and third-party products. Until 2013, Intermedia's UC solution was based on Microsoft Exchange, Lync and SharePoint, all integrated with a proprietary Hosted PBX (multitenant) product. In 2013, Intermedia acquired Telanetix and replaced its homegrown Hosted PBX with the acquired AccessLine Hosted PBX platform. It also expanded its voice portfolio capabilities to include SIP trunking and related voice services. Intermedia has an installed base of more than 1 million subscribers and offers the full UC solution in the U.S. and Canada. It recently extended UCaaS support to the U.K. (a new market), although telephony is not yet available in the U.K.
Intermedia's Office in the Cloud includes email, voice, file sharing, security, and access management. The UCaaS portion is based on hosted email for Exchange Unified Messaging, Intermedia telephony and audioconferencing, as well as Lync-based IM, presence, videoconferencing and Web conferencing. All of Intermedia's services are integrated into a single control panel for easier client administration.
Intermedia is well-positioned for businesses looking for a UCaaS solution based on a combination of Microsoft applications and Intermedia's enhanced telephony (North America only) and IT capabilities. Compare Intermedia's offering with those from other Microsoft Office 365 partners.
Strengths
- Intermedia provides a deep portfolio of IT services beyond UCaaS that includes security, storage, SIP trunking, file sharing and mobile device management, as well as identity and access management.
- Intermedia receives favorable client satisfaction ratings and has a good reputation for responsiveness.
- The Intermedia customer portal is an effective tool for delegating decision making and changes to account administrators and channel partners.
- Intermedia builds its UC competency from significant Microsoft Exchange and Lync experience, as well as from recently acquired telephony capabilities.
Cautions
- Although Intermedia has some clients in the midsize range (1,000 or more employees), the vast majority of its clients are enterprises with less than 250 employees.
- Some users report that the recently introduced cloud VoIP offering (the Telanetix acquisition) is not well-integrated with the Lync client experience.
- The IT portal for end users (as opposed to IT administrators) does not enable the degree of control that some users would like.
- Intermedia does not currently offer a cloud contact center service or high-end video solution.
- Intermedia may have trouble maintaining long-term differentiation against Microsoft Office 365 in terms of price, services and performance.
Microsoft
Microsoft is based in Redmond, Washington, and it provides a broad base of IT applications used by businesses, educational establishments and consumers. Key to Microsoft's cloud strategy is Office 365 (which is multitenant), and it includes Lync Online, Exchange Online, SharePoint Online and Office Professional. Office 365 is supported in 127 markets worldwide and 97 languages. Microsoft has two or more data centers in the North American, European and Asia/Pacific regions, as well as one in South America. Microsoft actively targets customers in each of these four regions.
This evaluation focuses specifically on Microsoft's Lync Online UCaaS offering; the service is operated by Microsoft out of Microsoft's global data centers. It also includes the UM capabilities of Exchange Online. Both Lync Online and Exchange Online are part of Microsoft's Office 365 suite of cloud-based IT applications. While Microsoft Office 365 does experience isolated service incidents, customers report overall good service availability, and the Office 365 user base is growing fast in the midsize- and large-enterprise segments. Users report an improved IT portal for Lync Online administration and management.
Lync Online offers strong presence, IM and Web conferencing capabilities, along with more limited videoconferencing, audioconferencing and telephony capabilities (relative to on-premises Lync). While Microsoft intends to maintain the cloud and premises versions at the same release level, the functionality between the offers differ significantly. Lync Online offers only Lync-to-Lync, Lync-to-Skype and, recently, limited PSTN voice calling. Most enterprises will need to work with a Lync partner to obtain their required telephony functionality. Gartner expects continued improvements to Lync Online's native telephony and interoperability with on-premises video equipment; so far, however, improvements have been slow to emerge.
The Microsoft Office 365 UCaaS solution is suitable for organizations of all sizes seeking cost-effective IM, presence and Web conferencing. Most Lync Online users also have Exchange Online and other elements of Office 365. Enterprises that wish to accelerate telephony or video functionality must use a Microsoft Lync Online partner.
Strengths
- Lync Online gained market momentum through 2014 as Microsoft expanded its marketing, technical and channel resources, with particular focus on partners augmenting telephony, including those for midsize and large enterprises.
- Improved hybrid options (between the cloud and on-premises infrastructure), including support for on-premises Lync Server with Exchange Online, split user domains between Lync Server and Lync Online, and integration with standards-based video endpoints.
- Office 365 and Lync Online are low cost, easy to administer (for example, with Active Directory), and possess a deep base of employees familiar with the applications.
- Businesses are attracted to the Lync federation and Skype integration capabilities — both those that are available now and those that are announced.
Cautions
- Enterprises planning to deploy Lync Online should carefully evaluate the features, functions, support and road maps of the partner offerings because the capabilities, costs and regional coverage vary significantly.
- The Lync Online audioconferencing and Web conferencing capabilities do not always provide robust performance because they do not go over WAN networks with class-of-service support.
- Connectivity from the user to Lync Online data centers is over the Internet, which does not provide QoS. This is usually not a problem in North America, but some users report performance degradations in Europe, Asia/Pacific and Latin America.
- While Microsoft does have a set of APIs for developers to use to build applications, customers are asking for more integration options to services such as WhatsApp.
- An SMB business-grade telephony feature set for Lync Online has been delayed until 2015.
Mitel
Mitel, based in Ottawa, Ontario (Canada), markets its MiCloud UC suite based on the virtualization of its premises-based platform. Key elements of MiCloud include MiVoice (telephony), MiCollab (collaboration) and MiContact Center. In the first quarter of 2014, Mitel acquired UC supplier Aastra and European cloud UC supplier Telepo, which will enhance Mitel's European brand awareness. In addition, Mitel acquired call recording provider Oaisys to buttress its contact center capability.
MiCloud is offered directly by Mitel in the U.S. and Canada (its two core markets), and it has since expanded to the U.K. (newer market). Mitel can also support remote offices in approximately 10 other country markets. Gartner expects Mitel to expand UCaaS support to three or four additional country markets per year. UCaaS is a strategic Mitel service (with a separate financial reporting structure), with UCaaS revenue nearly doubling during the past year.
In addition, Mitel has global partners that operate and market MiCloud technology on their own. These channel partners extend Mitel's UCaaS availability across Europe and Asia/Pacific.
The MiCloud solution is well-positioned for midsize UCaaS deployments in the U.S., Canada, and the U.K.
Strengths
- Mitel's UCaaS business has made strides during the past 12 months in terms of increased RFP activity, channel partner expansion and even enterprise deployment.
- Mitel R&D enhancements in the past year include a stronger Oria portal, Vidyo partnership for video, API mashups (for example, with Google) and LiveOps partnership for complex CCaaS requirements (there is also the internally supported MiContact Center for simpler requirements).
- The cloud and premises-based UC functionalities offered by Mitel are nearly identical. This provides users with greater choice, along with the option for hybrid delivery (whereby some users are in the cloud, and others are on-premises).
- Mitel has industrialized its UCaaS delivery approach in terms of R&D, sales and customer support.
Cautions
- The rationalization and integration of the Aastra and Telepo offerings will most likely require management and investment resources, which Gartner believes could potentially impact UCaaS investment.
- Users purchasing Mitel UCaaS via channel partners spanning North America, Europe and Asia/Pacific can expect varying service levels. Some partners host Mitel's infrastructure internally, while others integrate value-added services, and yet others are resellers. Obtaining truly global UCaaS from Mitel is possible but also complex because it requires the integration of multiple MiCloud partners, each of which has specific countries it supports.
- Some users reveal that the MiCloud offering and its new portal is not intuitive.
- The MiCloud customer service and support is not as strong in Europe (which it entered only recently) as it is in North America.
Orange Business Services
Orange Business Services is a global service provider based in Paris, France. The company brands its UCaaS offering as Business Together as a Service, which can be delivered via Cisco HCS infrastructure or Microsoft private cloud Lync (both of which are virtualized). Orange has developed a reference architecture for its UCaaS offerings with a defined set of SBCs, gateways, headsets, handsets, routers, video endpoints and switches. UCaaS is a core business for Orange, and the company has spent significant resources industrializing the processes, R&D and customer support. Business Together as a Service UCaaS is sold primarily via direct sales, complemented with a limited number of channels.
Orange now has seven UCaaS data centers, with three added in the past year. This includes a new Washington, D.C., data center to mirror the existing Atlanta, Georgia, data center. As a global CSP, Orange complements its UCaaS offering with network services, SIP trunks, managed services, mobility, security, data storage, and billing and number portability. The Cisco version of Business Together as a Service can now be integrated with Google and Jive. Europe is Orange's primary market, but it has numerous accounts and a proven offering in North America and Asia/Pacific.
Orange is well-positioned for midsize or larger enterprises seeking UCaaS support across two or more global regions. Orange does not generally target customers based solely in North America.
Strengths
- Orange provides both Cisco and Microsoft UCaaS offerings. In the past 18 months, Orange has significantly invested in its Microsoft UCaaS offering.
- Orange can support UCaaS customers with global needs, including those with sites in Latin America, Asia/Pacific, the Middle East, and Africa. Services are available in more than 55 countries, with support for 29 languages.
- Orange has demonstrated success in supporting highly branded MNCs (that have more than 1,000 employees) with UCaaS. Gartner believes that Orange supports more than 40 Cisco UCaaS enterprise accounts and 10 Microsoft UCaaS enterprise accounts. Many of these accounts deploy a deep base of UC services (including UM, IM, presence and conferencing, as opposed to just VoIP).
- Orange's UCaaS can be integrated with Orange CCaaS (two versions are available — one based on Cisco Unified Contact Center Express and one based on an internal branded solution).
Cautions
- Orange has limited brand and marketing resources in North America compared with its capabilities in Europe and Asia/Pacific.
- Orange does not pursue smaller and midmarket accounts. The company's emphasis is for larger accounts with 1,000 employees and above.
- Some customers report that Orange can be bureaucratic to work with and does not have all of its workgroups well-aligned. It can also take a long time (multiple weeks) to get the required subject matter expert (for engineering and design) onto a particular account.
- Orange offers minimal customization with its UCaaS deployments, with the view that customization negatively impacts Orange's ability to scale and keep prices competitive (customers requiring customization are instead steered to dedicated managed and hosted offerings).
RingCentral
Northern California-based RingCentral is a UCaaS application specialist with a legacy in SMB telephony and mobility. The U.S. is RingCentral's core market, and it has expanded to Canada and the U.K. during the past 18 months (platform infrastructure is located in the U.S. and U.K. as well). RingCentral has industrialized processes for inside sales, customer support and technical support. Gartner believes that RingCentral is one of the largest global UCaaS providers with more than 300,000 companies (many are small) supported.
The company uses a homegrown, multitenant solution branded as "RingCentral Office." In the second half of 2013, RingCentral expanded its platform functionality to include Web conferencing and videoconferencing, aided by a technology partnership with Zoom. RingCentral succeeds at getting its customer base to use the full suite of UC functions, as opposed to just VoIP. Increasingly, RingCentral has expanded its use of channel partners to AT&T, BT and Telus. The U.K. market is served both directly and via channels. Most customers connect via broadband, for which RingCentral has invested in significant OTT QoS performance management capabilities.
RingCentral is a strong option for SMBs seeking cost-effective UCaaS optimized for mobility. RingCentral currently supports North America- and, more recently, U.K.-headquartered businesses, along with regional office support of roughly 40 countries.
Strengths
- RingCentral has significant capital and personnel resources devoted solely to UCaaS. It is now expanding its customer support and sales support office in Denver, Colorado.
- The company is a market leader in mass-market advertising and branding. Few UCaaS providers have the resources and priority to make such a commitment.
- RingCentral is aggressive in supporting APIs (to such IT applications as salesforce.com, Marketo, Google, Box and Zendesk). Channel partners can also leverage these APIs to develop custom capabilities.
- The RingCentral Office offering is intuitive and well-suited to mobility (iPhone and Android smartphones) and bring your own device (BYOD) environments. It also supports separate smartphone and tablet visual experiences.
Cautions
- RingCentral is new to the enterprise market, and it lacks accounts with more than 2,000 employees.
- Some midsize customers report that RingCentral should mature its processes, project management capabilities and toolset capabilities for larger deployments.
- RingCentral does not have an internal contact center capability but, instead, relies on partnerships with Five9 and inContact. These contact center solutions are capable, but they are not tightly integrated and will result in a higher total price point.
- The company has experienced occasional difficulties keeping up with its high growth (Gartner estimates its revenue grew by about 40% in 2013), as evidenced by some users' reports of occasional slow portal response and customer service glitches.
ShoreTel
ShoreTel is a publicly held company based out of Northern California. The firm's cloud UC offering, ShoreTel Sky, was acquired from M5 Networks in 2012. There is a separate CPE-based UC platform well-established in the midsize market, with a reputation for being simple to deploy and manage. Currently, the CPE and cloud offerings run on separate platforms. However, ShoreTel announced that it will consolidate the two platforms, including the contact center, by mid-2015.
The ShoreTel Sky offering is offered both directly and via channel partners in North America. Customers in Europe and Asia/Pacific secure the service via channel partners. But businesses seeking support across multiple global regions must deal with two or more ShoreTel Sky service providers. Through 2013, there was significant management turnover in ShoreTel, although this turnover appears to have stabilized in 2014.
ShoreTel Sky is a viable alternative for small to midsize enterprises of up to 5,000 employees seeking a combined cloud UC and contact center capability. Most ShoreTel Sky users will be focused on the cloud VoIP, UM and mobility components.
Strengths
- ShoreTel's UCaaS revenue growth surpassed 25% in the past year, possesses a top 10 North American market share position, and has a solid brand in a fragmented UCaaS market.
- The company continues to add accounts with more than 1,000 employees. Gartner estimates that 10% of the ShoreTel Sky endpoints are for customers with more than 1,000 employees.
- ShoreTel Sky's sales distribution base expanded in 2014. More ShoreTel CPE representatives and third-party channels are now equipped to sell ShoreTel Sky.
- The UCaaS offering is strong in mobility, has APIs to CRM and HR applications, and supports an integrated (VoIP-focused) contact center functionality.
Cautions
- The pace of product innovation in the past year for ShoreTel Sky was limited. Its IM/presence, Web conferencing and videoconferencing capabilities are not feature-rich (although a video client update is expected in the fourth quarter of 2014).
- Future ShoreTel Sky innovation is predicated on ShoreTel successfully executing on its announced cloud and premises-based UC platform integration.
- The ShoreTel Sky client for the Apple Mac has limited functionality. The portal is not as automated as IT administrators would like.
- Customer support has dropped slightly in the past year. It is still good, but no longer excellent.
Sprint
Sprint is based in Overland Park, Kansas. The company brands its UCaaS offering as Sprint Complete Collaboration, supporting the two leading UC vendor solutions — from Cisco and Microsoft (both versions are virtualized) — and packaged with integrated SIP trunks. The Cisco HCS UCaaS version has been available for roughly two years, while the private cloud Lync offering became available in the first quarter of 2014. As a CSP, Sprint can add wireless and wired network services, security and managed mobility. Sprint's target market is businesses with between 250 and 5,000 employees (three years ago, Sprint was still marketing heavily to accounts with more than 5,000 employees). All Sprint Complete Collaboration UCaaS sales are direct.
The majority of Sprint UCaaS customers are located in North America. Sprint has started to target European Cisco UCaaS accounts with North American operations, following the deployment of European infrastructure in the first quarter of 2014.
Japan-based SoftBank made a $21.6 billion investment in Sprint in third quarter of 2013, and it now has an established Silicon Valley (Northern California) presence focused on strategic planning. Gartner believes that SoftBank invested in Sprint in pursuit of a long-term global wireless offering. A new CEO, Marcelo Claure, was appointed in the third quarter of 2014 to replace Dan Hesse.
Sprint is a viable option for midsize businesses with a mobile workforce that seeks a strong wireless integration. A minority of North American accounts are opting for purely wireless deployment.
Strengths
- Sprint's UCaaS differentiator is mobility. Sprint enables combined wireless and wireline procurements.
- Sprint has largely completed a significant 4G LTE wireless upgrade, which should address quality issues that some users have reported.
- Sprint has improved its UCaaS project management, processes, portal and road map.
- UCaaS services are now available in 12 Western European markets.
Cautions
- Sprint is a comparative newcomer to the UCaaS market, with services available since the first half of 2012. It is still therefore maturing its sales, marketing, engineering and customer support execution in comparison with the market leaders.
- The Sprint UCaaS offering is just starting to offer APIs to third-party software (such as from salesforce.com). However, Google Apps integration is planned in the fourth quarter of 2014.
- Many Sprint UCaaS users just deploy VoIP and UM. Sprint has been slow in getting its customers to deploy the broader suite of UC functions.
- Sprint's wireline business, of which its UCaaS offering is a part of, has experienced annual revenue decreases of about 10%. While many CSPs are experiencing revenue attrition, Sprint's attrition is above the market norm (Sprint's planned migration away from wholesale voice services contributes to this revenue attrition).
- Sprint's Cisco HCS platform does not have in-region geographical redundancy yet (however, geographical redundancy is planned for the first quarter of 2015).
Star2Star Communications
Star2Star Communications, based in Sarasota, Florida, uses channel partners to sell its UCaaS solution across its core markets of U.S. and Canada. It added European infrastructure in the second quarter of 2014, and it now targets Europe-based accounts via channel partners. Star2Star's European support is therefore nascent.
Star2Star's UCaaS solution is well-suited to organizations with multiple distributed sites. The architecture combines a centralized multitenant UCaaS service with a survivable appliance installed at each site. The on-premises portion of Star2Star's solution, the StarBox Cloud Connection Manager, comes in multiple sizes, depending on the number of users and trunks to be supported locally. If the network becomes unavailable, the StarBox can continue to provide full functionality. When connected to the centralized services, more advanced (including dynamic) routing can be supported. The solution also includes an inbound contact center capability.
Star2Star is well-suited to small and midsize organizations with multiple sites looking for a cost-effective UCaaS solution. Star2Star is also well-suited to large retail deployments that are VoIP-centric.
Strengths
- Star2Star provides a highly reliable offering with strong local survivability and a protocol optimized to work well over networks with limited broadband, which is well-suited to highly distributed organizations.
- Star2Star has a cost-effective solution and some significant brand-name customers, including well-established retail chains (some with more than 10,000 employees).
- The company has found its business niche with distributed environments, and it has experienced more than 40% revenue growth in the past 12 months, supporting multithousand-employee accounts. Star2Star's account base is loyal and provides favorable customer support reviews.
Cautions
- The UC feature set has numerous limitations, lacking Android support and screen sharing. The Web conferencing and video capabilities (no support for high-end endpoints such as those from Cisco, Polycom and Lifesize) are behind those of competing UCaaS providers. Many installations are VoIP- and contact-center-centric.
- Customer service and support can get stretched at times, given the growth that Star2Star has experienced.
- Star2Star is a company with limited brand recognition and visibility, which will pose a challenge as it competes with the megavendors in this market.
- The "galaxy" branding is complicated to understand; example product names include StarSIP, Galaxy, StarBox, StarContact, StarRecovery, StarSystem, StarVideo, StarView, StarPhone and Starlets.
Telefonica
Telefonica, a global CSP headquartered in Madrid, Spain, has operations in Europe, Asia/Pacific, North America and South America. It is the world's sixth-largest communications network provider, with significant MNC clients. Other services that can be bundled with Telefonica UCaaS include IP MPLS networks, security and managed mobility. Most MNC and corporate sales are via a direct sales force.
Telefonica's core UCaaS business is in Europe and Latin America. It also targets U.S.-based corporations with significant operations in these regions.
Telefonica's approach to UC is based on managed telephony over IP (ToIP), enhanced with its network and communication application services. Its main UCaaS offering is based on virtualized Cisco HCS and Unify (formerly Siemens Enterprise Communications). But Telefonica also supports UCaaS and managed UC in selected country markets with Microsoft, BroadSoft, Alcatel-Lucent and Avaya platforms. Additionally, Telefonica offers IM services based on Genband and IBM Sametime. Telefonica complements its UCaaS offering with a variety of premises-based and cloud contact center services.
Telefonica's UCaaS solutions are good for enterprises with a strong presence in Latin America or Europe. North American locations are supported via UCaaS infrastructure in Miami. The specific focus of Telefonica's solution varies by region, so organizations should understand the specific UCaaS capabilities in their target countries.
Strengths
- Telefonica has a proven ability to support UCaaS accounts with more than 10,000 employees spanning multiple global regions.
- Telefonica is a major provider of UCaaS, telecom and mobility services across Latin America.
- Telefonica supports a broad range of UC vendors and related offerings, including contact center, mobility and telepresence video.
Cautions
- Telefonica has limited brand awareness in North America, particularly in the western half. Its North American UCaaS offering is still maturing.
- Telefonica is still maturing its UCaaS reporting and change management capabilities.
- Gartner is concerned about Telefonica's ability to support so many different cloud and premises-based UC platforms as this can result in users receiving a less-unified experience. In contrast, most UCaaS providers focus on one, or possibly two, platforms so that they can master them, support APIs and even develop CEBPs.
- The backup UCaaS platform may be located in a different geographic region from the primary UCaaS platform (for example, the North American backup platform for Cisco HCS is in Brazil).
- Telefonica did not provide the required number of references to describe their UCaaS experience, although it did provide customer case studies. Telefonica cited that potential customer references had already been used for other industry research. Customer references contribute to Gartner's assessment of a provider's Ability to Execute, and Telefonica's rating reflects its inability to provide sufficient references.
Telesphere
Telesphere is headquartered in Phoenix, Arizona, and during the past 10 years, it has built its own private IP MPLS network to deliver bundled VoIP, contact center, conferencing (audio, Web and video), contact center and CRM integrations. The Telesphere solution supports the two lead mobile platforms — iPhone and Android. Telesphere operates throughout North America, its core market. Support has expanded to include European accounts in the second quarter of 2014, following the deployment of U.K. infrastructure. European account support, available both directly and through channels, is nascent.
The Telesphere UCaaS solution is based on multitenant BroadSoft technology, to which it adds proprietary capabilities, such as Microsoft Lync integration. Telesphere has developed a partner provisioning portal and a role-based customer self-management and reporting portal. Telesphere sells both through channel partners and direct. Telesphere reports that the majority of its accounts are in the sub-250 subscriber range, but that it has larger accounts as well, including some in the 5,000-plus subscriber range.
Telesphere is suitable for North American enterprises looking for a cost-effective UCaaS offering that includes bundled network services.
Strengths
- Telesphere provides a cost-effective cloud solution supported via its Zeus portal, with particular emphasis on telephony, contact center and IP MPLS network services.
- The company has strong technical and operational expertise, and it receives good customer support reviews.
- Telesphere has won multiple enterprise UCaaS accounts with more than 1,000 employees. Many of its accounts are multisite and supported over a carrier-grade, MPLS network.
Cautions
- Telesphere has limited brand recognition and competes in an increasingly crowded market. It will have to scale its business quickly to flourish in the long term.
- Telesphere will have to manage its growth as it expands to support its broad array of services in both North America and Europe.
- Much of Telesphere's business is centered in the Western United States, with customers that are VoIP- and network-centric. Many Telesphere customers do not use the broader set of UC functions, such as mobility, Web conferencing and videoconferencing.
- The Zeus portal is capable, but IT administrators may require some training to fully understand and leverage the portal.
Thinking Phone Networks
Thinking Phone Networks is a privately held UCaaS provider based in Cambridge, Massachusetts. It uses a proprietary multitenant platform that includes open-standards-based Web APIs to facilitate UC application integration. Thinking Phone Networks' UCaaS offering is branded as "ThinkingSuite."
North America is the core UCaaS market for Thinking Phone Networks. In the past year, data centers have been added in the U.K., Germany and the Netherlands to support European accounts. European service coverage includes North American accounts with European locations, as well as businesses headquartered in the U.K. Through 2014 and 2015, Thinking Phone Networks plans to target a broader set of Europe-headquartered companies via channel partners. Thinking Phone Networks does particularly well in the high-end retail and realty sectors, and with businesses that use UC to track employees' productivity. The company has invested in stronger security processes, including PCI compliance, to support retail accounts.
Thinking Phone Networks is well-suited to midsize UCaaS deployments, which are open to using an internally developed platform, spanning North America and Europe.
Strengths
- Thinking Phone Networks has three years of experience supporting enterprises with more than 1,000 employees, and it continues to win additional enterprise contracts.
- Thinking Phone Networks provides a fast pace of innovation that includes an outbound contact center, strong mobility experience, employee productivity analytics, and expanded API integration (including Lync and Google).
- Thinking Phone Networks has a reputation for solid customer service. However, this customer experience is not as strong in Europe, where the company is still ramping up its business.
- IT administrators and end-user employees praise the intuitiveness of the UCaaS workflow.
- Many customers opt for Thinking Phone Networks because of its combined cloud UC and contact center functionality. The analytics capabilities enable businesses to evaluate employee productivity and best practices.
Cautions
- Thinking Phone Networks is one of the smaller UCaaS providers, with approximately 200 employees. At this size, it will be difficult to keep pace with the breadth of larger competitors.
- Thinking Phone Networks continues to struggle with brand awareness in a highly fragmented market.
- Thinking Phone Networks does not have an internal Web conferencing capability. Integrations with third-party tools, such as Citrix GoToMeeting, Cisco WebEx and PGi iMeet, require a secondary purchase.
- The complementary CCaaS capability lacks the features and functions required by some bigger accounts. There is no separate mobility interface for tablets, which instead use the smartphone interface (a tablet interface is expected in the fourth quarter of 2014).
Verizon
Verizon is a global CSP, headquartered in New York City, that supports two UCaaS offerings. The lead UCaaS offering is based on the virtualized Cisco HCS platform and marketed to customers with more than 500 employees. This Cisco cloud offering is available in North America, and in the first quarter of 2014, it was introduced to Europe (including in-region infrastructure located in the U.K.). All Cisco HCS sales are via a direct sales force.
Verizon's second UCaaS offering, Virtual Communications Express (VCE), is based on the multitenant BroadSoft platform, and it focuses on the SMB market below 1,000 employees. Sales are supported directly via Verizon and through channels. VCE is available only in North America. There is an option to integrate VCE with Google Apps.
In the first quarter of 2014, Verizon acquired full ownership of Verizon Wireless from Vodafone. This acquisition has the potential to enable Verizon to provide more integrated wireline/wireless UCaaS solutions. However, it is too early to speculate on Verizon's commitment and ability to exploit this opportunity.
Verizon's UCaaS is a viable option for enterprises seeking a cloud UC offering with strong mobility capabilities. Services are available for both North America- and Europe-based customers.
Strengths
- Verizon has enhanced its UCaaS project management, pricing models, consulting services and sales support. It has also added integrated wireline/wireless project management.
- Verizon possesses a strong brand across the enterprise sector and often appears on UCaaS RFI shortlists. Verizon also wins its fair share of bids, including wins with large enterprises with more than 5,000 employees.
- As a global CSP, Verizon is well-positioned to complement UCaaS with related offerings in SIP trunks, wireless, security, managed WAN/LAN and data center services. These bundles can result in a reduced total cost of ownership for the combined service.
- Verizon has expanded its UCaaS to include APIs to salesforce.com, Google and Jive.
Cautions
- Some end-user feedback reveals pockets of midsize and even larger businesses have a negative perception of Verizon, often due to unsatisfactory customer service.
- The IT management portal (Cisco-based) is still catching up with all the new capabilities Verizon has added to its UCaaS offering, and does not yet support full self-service (the end-user portal does, however, support self-administration).
- Some customers reveal that Verizon has struggled to integrate its BroadSoft offering with Google Apps.
- The Verizon UCaaS offering still does not fully maximize all Verizon's assets in terms of global coverage, wireless infrastructure, security, consulting services and financial strength. For example, some users report an inability to secure combined wireline/wireless bills.
West
West, based in Omaha, Nebraska, offers two UCaaS solutions across a common delivery platform. Marketing is focused on the midsize- to small-enterprise market, typically with 500 to 5,000 employees. Services are now available in Western Europe. In addition to UCaaS, West offers a range of communication and network infrastructure solutions, including conferencing and collaboration, public safety, telecom and agent services, CCaaS, interactive voice response (IVR), and notifications/mobile solutions.
West's lead UCaaS offering, VoiceMaxx CE, is based on virtualized Cisco HCS for businesses wanting the full UC suite. In the past year, West has expanded its base of Cisco HCS channel partners (some of which were planning to manage their own HCS platforms but have partnered with West instead). North America is the core Cisco UCaaS market for West. In 2013, it added European infrastructure and is now targeting European accounts. West also has a Microsoft Lync practice (the Lync offering is not delivered as UCaaS and therefore not evaluated in this Magic Quadrant) that provides integration with VoiceMaxx and VoiceMaxx CE.
West's legacy UCaaS offering, VoiceMaxx, is based on the company's acquisition of Smoothstone IP Communications in 2011. This multitenant offering is marketed to West's smaller customers, which focus on telephony and low price. It is available only in North America.
West is an established UCaaS provider for midsize enterprises of up to 5,000 employees. West can support North American, European and Asia/Pacific sites.
Strengths
- West has the tools, processes, experience and infrastructure to consistently deliver a UCaaS solution. West possesses a deep base of well-known, midsize UCaaS customers.
- West has finally allowed its InterCall (conferencing services) sales team to pursue UCaaS opportunities. This has the potential to significantly accelerate awareness of its UCaaS offering.
- West continues to augment its UCaaS solution, most recently in the areas of high-end videoconferencing and Lync integration.
- West's reference customers report good customer service. West is also known for its willingness to provide limited UCaaS customizations for simpler client requirements.
- Many of West's UCaaS customers value its integrated CCaaS and IVR offerings (Gartner estimates that 70% of UCaaS customers take such adjunct services).
Cautions
- West does not maximize the collection of corporate communications capabilities that it owns (because many divisions are run separately and are not well-integrated). This reduces West's ability to deliver more complex UCaaS solutions that include CEBP and industry-specific solutions.
- West lacks a strong UCaaS brand. Many prospective UCaaS customers are not familiar with West, even though it is a strong UCaaS provider in the 500- to 5,000-employee space.
- West does not typically pursue installations for more than 10,000 employees, as such deployments have long sales cycles and require significant customization.
- Some customers report that the new staff hired to support recent UCaaS growth do not yet provide the same high level of support as the core team.
- West offers many parallel CCaaS and IVR offerings (from Genesys, Smoothstone and Interactive Intelligence as well as homegrown ones). Gartner is concerned about West's ability to support so many platforms.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
Added
The following vendors were added to the 2014 Magic Quadrant.
- Arkadin
- HP
- iCore
- RingCentral
- Star2Star Communications
- Telefonica
- Telesphere
Dropped
The following vendors were dropped from the 2014 Magic Quadrant.
- Broadview Networks
- Evolve IP
Inclusion and Exclusion Criteria
For inclusion in this Magic Quadrant, solution providers must support the following capabilities:
- The UCaaS delivery model. Typical characteristics include a shared multitenant or virtualized (aka multi-instance) UC infrastructure that is owned, maintained and hosted by the provider. Users then purchase a flexible service (paid via the SaaS model) that is typically based on a per-user, per-month fee.
- A UCaaS offering that includes VoIP, with integrated conferencing (audio, video and Web), IM/presence, UM, and mobility.
- The UC functions must be well-integrated with a consistent interface; specifically, VoIP-centric solutions are not considered.
- Related capabilities, including support for cloud contact center and collaboration, will be considered, but they are not a prerequisite.
- The UCaaS solution must be offered in North America and at least one other major region (for example, Europe, Asia/Pacific or Latin America):
- The support must include in-region infrastructure and active selling to regional accounts (that is, active customers in Europe, Asia/Pacific or Latin America by the first half of 2014).
- Support for three or more regions will be considered favorably.
- A significant panregional market presence (including North America). This can be demonstrated in one or more of the following ways:
- UCaaS annual revenue exceeding $35 million
- Ability to generate significant interest by leading client market segments
- Demonstrated ability to support customers above 1,000 employees.
- Demonstrable UCaaS portfolio with five references.
- References should use a broad set of UC capabilities.
- References should be from at least two of the global regions.
- References for larger customers of more than 1,000 employees utilizing the full UC portfolio will be given extra weight.
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate UCaaS providers based on the breadth, quality and overall maturity of their applications, processes, tools and procedures that enhance individual, group and enterprise communications. Ultimately, UCaaS providers are judged on their Ability to Execute in capitalizing on their vision.
Source: Gartner (August 2014)
Completeness of Vision
Gartner analysts evaluate UCaaS providers based on their ability to convincingly articulate logical statements on current and future market directions, innovations, customer needs and competitive forces and how well these map to Gartner's overall understanding of the marketplace. Ultimately, UCaaS providers are rated on their understanding of how market forces can be exploited to create opportunities for providers and their clients.
Source: Gartner (August 2014)
Quadrant Descriptions
Leaders
Vendors in the Leaders quadrant have been delivering complete UCaaS solutions for multiple years, have clients with more than 1,000 employees supported and have more than 200,000 total employees supported. These vendors have their accounts implementing a comprehensive and integrated UCaaS solution set that addresses the full range of market needs, along with the proven ability to service large accounts. These vendors have defined migration and evolution plans for their products in core UCaaS areas and are using their solution sets to acquire new clients, as well as to expand their footprints in their client bases to new functional areas.
Challengers
Vendors in the Challengers quadrant have the potential to deliver to large national enterprises, and they are poised to move into the Leaders quadrant but have not yet done so. They have yet to bridge this gap because their UCaaS solution is missing selected elements, they are unable to provide references on the full suite, they are still evolving their customer support, or the majority of their users deploy only a segment of UC.
Visionaries
Vendors in the Visionaries quadrant are close to, or are already, delivering differentiating UC functionality or services but have not yet established themselves in the enterprise market (for example, they may not yet have numerous accounts above 1,000 employees supported). For instance, a Visionary may offer useful social or collaboration functionality to its portfolio, APIs for third-party applications (such as CRM), unique mobile UC capabilities, superior video integration capabilities or exceptional customer service.
Niche Players
Vendors may be in the Niche Players quadrant for different reasons. Some may have elements of their portfolio not unified or may lack important functionality in their solution. Others may be in the Niche Players quadrant because they are an on-premises UC vendor that is largely unproven in the UCaaS market. Finally, some vendors are in the Niche Players quadrant because, despite their full UC solution, they do not have the brand recognition or marketing ability to sell regionally (that is, beyond their core territory), their UCaaS offerings are still maturing, or they have inconsistent customer service.
Context
2014 is the first year in which North American MNCs should consider UCaaS as a mainstream, viable alternative for UC deployment. Multiple UCaaS providers support North America, Europe and, more recently, Asia/Pacific (Gartner expects Asia/Pacific coverage to expand in 2015 as more UCaaS providers build in-region network operation centers). Some providers even support Latin America as well. Enterprise planners must, however, perform due diligence with their UCaaS provider to ensure that the service can be delivered in all of their critical office locations.
Larger enterprises, particularly those with more than 5,000 employees, have a preference toward branded solutions from Cisco, Microsoft and Google. UCaaS market interest with Microsoft Lync picked up substantially in 2014, with the belief that Lync UCaaS telephony is "good enough," given Lync's strengths in IM, presence, mobility, Web conferencing and ease of use. Note that Lync telephony is viable only from partnerships with providers such as CSC, HP, Orange and Arkadin. Users opting for Lync Online (direct from Microsoft) will not have telephony support for now.
Enterprises continue to adopt Cisco HCS technology as well. AT&T, CSC, Orange, Sprint, Telefonica, Verizon and West are all picking up new accounts. Users seeking a strong voice offering are the major adopters of Cisco HCS. Gartner is starting to see greater Cisco HCS demand now that providers are packaging it with a cloud contact center offering. Nonetheless, Cisco HCS demand is reduced because users have not embraced the Cisco Jabber client (especially when compared with the Microsoft Lync client). We may see improved acceptance of the Cisco Jabber client now that it is easier to provision and use on mobile devices.
Businesses of all sizes, including larger enterprises, are adopting Google as well. Google UCaaS is strong in IM, presence, UM and mobility. Google also works well for internal workgroup Web conferencing and videoconferencing. However, enterprise telephony is not supported, and businesses seeking robust large-scale Web conferencing and videoconferencing must procure separate services.
SMBs, and even smaller enterprises (1,000 to 3,000 employees) should carefully consider UCaaS from application specialists, such as 8x8, RingCentral and Thinking Phone Networks. These platforms are easy to deploy and are cost-effective. In most cases, users leverage the full UC functionality. Customer service is usually strong, and in many cases, the application specialists will provide a limited amount of customization for the end user. Midtier premises-based UC providers such as Mitel and ShoreTel now offer cloud solutions direct to customers as well. While the majority of Mitel and ShoreTel customers are SMBs, they have multiple accounts in the 3,000-employee range as well.
The 2014 requirement for panregional UCaaS support resulted in the loss of last year's Magic Quadrant participant Evolve IP (based in the Philadelphia, Pennsylvania, metro region), although Evolve IP is strong in the midmarket sector with a combination UCaaS/CCaaS offering. In 2015, we may consider BT and Dimension Data as UCaaS Magic Quadrant participants now that they are maturing their cloud Cisco and Microsoft UCaaS offerings.
Market Overview
There are four types of providers from which enterprises can secure UCaaS. They are:
- CSPs — These include companies such as AT&T, Orange Business Services, Sprint, Telefonica and Verizon. These are the legacy telecom providers, with core strength in voice and data services.
- Technology vendors — These include companies such as Google, Microsoft, Mitel and ShoreTel. All these well-established vendors now provide a UCaaS offering that they market directly to end users. Note that this vendor-direct model is occurring on the contact center side as well, with both Genesys and Interactive Intelligence providing CCaaS.
- Application specialists — These include companies such as 8x8, Star2Star Communications, Thinking Phone Networks and RingCentral that are both the platform provider and the service provider. Gartner also groups companies such as iCore and Telesphere, which append their own value-added functionality onto the BroadSoft platform, into this group.
- System integrators — These include companies such as Avanade, Arkadin, CSC, HP, Intermedia and West. System integrators usually provide UCaaS via running commercial UC applications (often Cisco or Microsoft) out of their own data centers.
In some cases, a given company may have attributes that fit into multiple types of UCaaS providers. Gartner categorizes such companies in the group that they are most correlated to.
The four key trends identified in this research were mobile-only deployments, improved customer service, fuller UC adoption and channel expansions.
Mobile-only deployments — The biggest trend identified by UCaaS vendors, as well as the references, was the adoption of pure mobile solutions. There are now isolated cases in which an entire company will not procure a hard phone and, instead, will rely solely on wireless and softphones. This situation, however, is more the exception than the rule. More often than not, it will be a certain percentage of employees, or perhaps a certain business function (for example, sales), which does not procure a hard phone. Lync UCaaS deployments are noted for having a disproportionate number of mobile-only deployments. Whether users choose to adopt a mobile-only deployment depends on a number of factors, including employee age, business vertical and geographic location. Employees who are younger (below 40), who are in verticals such as high tech, realty and entertainment, and who work on the East Coast or West Coast of the United States are statistically stronger mobile adopters. Gartner expects the mobile-only trend to increase.
Improved customer service — The customer references were stronger in 2014 than in past years. Gartner attributes the improved customer scorecards to greater UCaaS maturity. It usually takes at least three years for a provider to get competent with UCaaS, and five years to get really good. We did note, however, that UCaaS providers expanding into a new region score lower in the new region while ironing out the kinks. For example, 8x8, RingCentral, Thinking Phone and West, all have a strong reputation for good customer service. However, now that they are all in Europe, it takes time to bring the European customer service to the North American level.
Fuller UC deployment — Another key trend identified in this research is the greater deployment of the UC suite. Increasingly, Gartner sees users deploy not only VoIP and UM, but also mobility, Web conferencing and videoconferencing. Companies providing Lync UCaaS and the application specialists have had the most success in securing wide-scale UC adoption. Some UCaaS providers are even working on CEBP, whereby UC is used to make the business run more efficiently. On a related note, UCaaS with integrated cloud contact centers resonates well with businesses with less than 3,000 employees (and, particularly, less than 1,000 employees).
Channel expansion — The UCaaS market is now highly fragmented with more than 100 providers. As some providers merge (for example, Fusion acquiring Broadvox), even more new ones enter the market (for example, Dimension Data and SendHub). Many UCaaS providers (and their investors) believe that market share is critical to long-term sustainability. They are increasingly looking to third-party distribution channels as their vehicle to greater market share. Notable examples of UCaaS providers promoting channel partners include Mitel, ShoreTel, RingCentral and Thinking Phone Networks. In most cases, the UCaaS provider runs and operates the platform, with the channel partner focusing on sales, marketing and, sometimes, customer service. These offerings can be "white labeled," making it difficult for the end user to identify who is actually running the platform.
Channel partners are quite often used when a UCaaS provider enters a new region. Mitel, ShoreTel, RingCentral and Thinking Phone Network leverage channels in Europe.
July 29, 2014
September 19, 2013
Gartner's 2013 Magic Quadrant for Unified Communications
31 July 2013 ID:G00251797
VIEW SUMMARY
The enterprise UC market continued to mature over the past 12 months and is now considered by Gartner to be entering the early mainstream adoption phase. Products and best practices both for deployment and increasing end-user adoption will continue to mature during the next several years.
Market Definition/Description
The primary goal of unified communications (UC) is to improve user productivity and to enhance business processes. Gartner defines UC products (equipment, software and services) as those that facilitate the use of multiple enterprise communications methods to obtain that goal. This can include the control, management and integration of these methods. UC products integrate communications channels (media), networks and systems, as well as IT business applications and, in some cases, consumer applications and devices.
UC offers the ability to significantly improve how individuals, groups and companies interact and perform. The UC products may be composed of a single vendor (stand-alone) suite, or customers may deploy a portfolio of integrated applications and platforms spanning multiple vendors. In many cases, UC is deployed to extend and add functionality to established communications investments.
UC products are used by people to facilitate personal communications and by enterprises to support workgroup and collaborative communications and business workflows. Some UC products may extend UC outside company boundaries to enhance communications among organizations, support interactions among large public communities or for personal communications. UC applications are increasingly being integrated or offered in concert with collaboration applications to form unified communications and collaboration (UCC) and, in some cases, are being integrated with business applications and workflows, something Gartner calls communications-enabled business processes (CEBPs).
It is useful to divide UC into six broad communications product areas:
- Voice and telephony — This area includes fixed, mobile and soft telephony, as well as the evolution of PBXs and IP PBXs. This category includes options for voice and video that bypass traditional connectivity methods, such as direct Internet-based connections.
- Conferencing — This area includes voice (audio) conferencing, videoconferencing, Web conferencing that includes document and application sharing capabilities, and various forms of unified conferencing capabilities.
- Messaging — This area includes email, which has become an indispensable business tool, voice mail and various approaches to unified messaging (UM).
- Presence and IM — These will play an increasingly central role in the next generation of communications. Presence services, in particular, are expanding to enable the aggregation and publication of presence and location information between (from and to) multiple sources. This enhanced functionality is sometimes called rich presence.
- Clients — Unified clients enable access to multiple communications functions from a consistent interface. These may have different forms, including thick desktop clients, thin browser clients and clients for mobile devices, such as smartphones and tablets, as well as specialized clients embedded within business applications.
- Communications-enabled applications — This broad group of applications has directly integrated communications functionality. Key application areas include collaboration applications, contact center applications, notification applications, and consolidated administration, reporting and/or analytics tools. Eventually, other applications that support business processes will be communications-enabled; these might include integrating UC with hospital applications to improve doctor-nurse transaction processing workflows or to improve doctor-doctor collaboration activities, or adding communications to purchasing/order processing applications to improve the accuracy and speed of those processes. When business applications are integrated with communications applications to improve operations, Gartner calls them CEBPs.
The stakes for vendors in the enterprise UC market are exceedingly high and, in some cases, existential. The stakes for enterprise decision makers are also high due to the significant costs, visibility and business impacts of their choice. Five UC characteristics will have an important effect on the success of a UC product and the satisfaction of users:
- User experience (UX) — The quality and effectiveness of the overall user experience (UX) across all devices will heavily influence the effectiveness of the solution, its adoption rate and, ultimately, enterprise productivity. While consolidated administration and management are important characteristics of a successful solution, it is the high-quality end-user experience that will drive adoption and productivity.
- Mobility — User expectations of how UC solutions leverage mobility continue to escalate. In addition to demanding full UC functionality on mobile devices, users are starting to expect mobile devices to be integrated with desktop devices to allow for a more powerful work environment and to integrate UC with mobile consumer applications. In this year's Magic Quadrant evaluation, we again place extra weight on mobility as it remains a key differentiator and requirement.
- Interoperability — Enterprises wish to avoid "closed gardens" and vendor lock-in, while enabling intercompany B2B, business-to-partner (B2P) and business-to-consumer (B2C) federation. Additionally, many enterprises will find their needs best served by using several vendors, either because of legacy investments or to enable a best-of-breed configuration. This research considers how vendors address these critical emerging interoperability requirements.
- Cloud and hybrid — Integration of on-premises UC with cloud and hybrid UC services continues to play an increasingly important role as these options mature. While these options are considered in this Magic Quadrant's evaluations, "Critical Capabilities for Unified Communications" provides a more specific review of these capabilities.
- Broad solution appeal — Successful UC solutions must be attractive to a broad and diverse audience of enterprise decision influencers. In addition to the end users, enterprise decision influencers span such diverse groups as IT, telecom, data communications, the audio-visual video group and members of the executive suite.
Magic Quadrant
Source: Gartner (July 2013)
Vendor Strengths and Cautions
Aastra Technologies
Aastra Technologies is using BluStar as a client to integrate UC functionalities with its multiple call managers. MX-One is the primary enterprise call manager and is sold across markets as Aastra's UC offering; however, in addition to MX-One, BluStar also supports functions on other Aastra telephony platforms, including Aastra 5000 and Aastra Clearspan which are offered in specific verticals and regions. All UC applications now operate with VMware. Additionally, these include the high availability (HA) and fault tolerance (FT) functions, enabling warm or hot standby redundancy. The BluStar client operates on PCs, iPads and iPhones, and has added additional video capabilities this year.
Consider the Aastra suite if your organization is primarily focused on lower-cost telephony and UC functionality, and you are located in a region with Aastra partners. Enterprises should also ensure that the UC functionality they need is included, since some functions (such as Web conferencing) are not offered. Enterprises wishing to migrate existing Aastra telephony platforms toward UC should understand how their current environment fits the broader Aastra direction, including the BluStar client.
Strengths
- Aastra is able to leverage its installed base, especially in Europe, and generally has a lower total cost of ownership (TCO) offering relative to other vendors.
- Aastra leverages open standards to support integration with other vendors' UC solutions and a broad range of SIP endpoints.
Cautions
- Although Aastra is adding new channel partners, the market share for its UC product in key markets such as North America remains limited. Some partners may have limited experience supporting UC functionality.
- Aastra faces several financial challenges during the next few years. First, it must deal with lagging economies in countries where it has a significant presence, such as Italy, Spain, Benelux and the Nordic region. Second, Gartner believes that Aastra's strategy of growth through acquisition requires relatively larger R&D expenses to integrate the varied solutions.
Alcatel-Lucent
The OpenTouch Suite is a fully unified and integrated UC suite. In addition, elements of the UC portfolio are offered separately for scaling purposes or when desired as stand-alone solutions. Elements include OpenTouch Multimedia Services, providing the modular communications application capabilities, and the OmniPCX Enterprise (OXE) Communication Server for analog, digital and SIP-based telephony functions. The suite operates on virtualized servers and supports a range of hard, soft and SIP-based clients, the functionality of which is also available on a range of mobile devices. Among other improvements, in the past year, Alcatel has significantly expanded its video capabilities, its mobile UC functionality support and the flexibility of transparently moving conversations (Session Shift) between devices in real time. Additionally, Alcatel-Lucent has increased the ability to overlay OpenTouch on third-party switches, providing a migration path for new customers.
Evaluate the OpenTouch Suite if you are looking for a complete software UC suite; however, ensure that Alcatel-Lucent has sufficient service and support presence in your market.
Strengths
- OpenTouch offers a full multiparty, multidevice and multimedia UC suite with a competitive TCO that can operate as a complete solution, or as part of a multivendor UC solution.
- The vendor's enterprise products can span provider and enterprise physical or virtual environments, which may prove useful for cloud-based, on-premises and hybrid offerings, and for penetrating existing markets where its on-premises sales are not well-established (for example, in the North American market).
Cautions
- While Alcatel-Lucent Enterprise has benefited from stability in its management team, and the Enterprise division itself is profitable, the commitment by the parent company is again under question as it is now managed as a subset of the Focused Business segment, diluting the visibility of Enterprise as a core and strategic business unit.
- Alcatel-Lucent's overall financial performance reflects the challenging environment we have seen in the past 12 months (declining revenue, reduced gross and operating profitability, and negative cash flows). To its credit, Alcatel-Lucent has refinanced its debt and is undertaking a restructuring program with the goal of reducing costs by €1.25 billion by the end of 2013. Still, the company's financial progress bears monitoring because it has (as of 31 March 2013) total debt of about €6.7 billion and its credit metrics remain challenged as compared to its peers.
Avaya
The Avaya UC solution for midsize to large enterprises is based on the Avaya Aura solution set and includes several client and application integration options. Key Aura components include Session Manager, a full conferencing suite with both Web and video in addition to audio, several messaging options, and avatar-based collaboration and presence services. Application integration with business applications is supported via the Agile Communication Environment (ACE) Toolkit, the Avaya DevConnect partner option and, more recently, via the introduction of the Avaya Aura Collaboration Environment. Avaya is extending its cloud capabilities and offers leading contact center solutions that leverage its UC solution. During the past year, Avaya has expanded its portfolio, continued to improve the integration across its elements and simplified its pricing model.
Consider Avaya Aura if you need to bring together heterogeneous environments (systems, services and devices) or have significant investments in Avaya that you wish to migrate toward a next-generation UC solution.
Strengths
- Telephony and contact center remain central elements in Avaya's portfolio: Avaya's strength and brand recognition in this area help it retain market visibility while it continues to strengthen its overall UC portfolio.
- Avaya continues to improve its offerings and ability to compete in the evolving software and cloud markets.
- The vendor is expanding its portfolio in key ways, including Avaya Aura Collaboration Environment for enabling a broader ecosystem of partner applications and Aura Cloud Enablement for a partner-led cloud offering.
- Avaya's integration capabilities have been expanded, allowing for stronger multivendor UC integration options, including integration with Microsoft Lync.
Cautions
- Avaya receives mixed to unfavorable ratings from some customers for channel partner support. As the vendor increasingly moves to an indirect channel model, it will need to improve its channel presales and postimplementation support to prevent lags in addressing customer issues and concerns.
- Avaya must continue to demonstrate that it has increased adoption and market momentum for its broader UC portfolio, rather than solely for its telephony and contact center solutions.
- The vendor must execute on its plans to consolidate its Flare Experience, Scopia, Aura Conferencing and Avaya one-X clients across the various fixed and mobile platforms to improve the consistency of the user experience and quality.
- Avaya is challenged from a revenue standpoint, with revenue declines in each of the last four quarters. Margins have remained relatively stable, as the vendor has reduced costs to maintain profitability ratios. Debt levels remain high at $6.1 billion, but Avaya did successfully refinance its debt to push out debt maturities to a later period.
Cisco
Cisco offers a full UC suite, as well as a broad range of additional communications functions. Key parts of the UC suite include Cisco Unified Communications Manager; Cisco Jabber, which includes the desktop client; Cisco Unity Connection; Cisco WebEx, which is now also available as an on-premises server; multiple video options; and a broad range of fixed and mobile client and device options. The vendor offers significant portions of its software on VMware, which can now operate on both the Cisco Unified Computing System (UCS) servers and other qualified servers. Cisco addresses email requirements via integrations with Exchange, Gmail and Zimbra. It offers several virtual desktop integration (client virtualization) options, and offers additional integrated communications and collaboration functionality, including its contact center, Cisco WebEx conferencing and WebEx Social (formerly Quad) products. The vendor leverages its UC software into a cloud portfolio branded Hosted Collaboration Solution (HCS), which allows Cisco HCS partners to create UC as a service (UCaaS) offerings. The vendor made progress this year in simplifying and unifying its pricing model and massive communications portfolio. Cisco also offers a useful service to assist enterprises in measuring and increasing end-user adoption of UC tools, and in developing best practices called Collaboration Change Management Services (CCMS).
Evaluate the Cisco UC solutions when you are committed to using a comprehensive networking solution that includes the UCC suite. Cisco is also attractive for large and multinational corporations requiring strong voice and video capabilities, as well as for firms that require full UC client support on leading mobile platforms.
Strengths
- Cisco offers a full UC suite with strong, globally scalable support for IM/presence, video, telephony and multiple conferencing options. Additionally, full UC functionality is available on leading mobile platforms.
- Prime Collaboration offers detailed monitoring, diagnostics and change management for voice over Internet Protocol and video in a single platform with a scale to 150,000 endpoints.
- Cisco's large data infrastructure client base, along with its strong global channel, services and system integration (SI) partners, position it well within enterprise UC buying and decision-making groups, including many IT and operations departments.
- Through carrier and service provider partners, Cisco is advancing attractive hybrid on-premises and cloud options. HCS is based on the same software as Cisco's on-premises offering, and both support the same Jabber client. Additionally, Cisco has agreements for transferring licenses from on-premises to hosted environments.
Cautions
- Clients report that elements of Cisco's portfolio remain complex to understand and manage. One effect of the complexity is that obtaining clear configuration and price quotes can be difficult, and understanding the various Jabber client and WebEx integration options can be challenging.
- Gartner clients regularly report that they are pressured to use Cisco data communications network infrastructure, and, in some cases, even the Cisco data center solution (UCS), to achieve an optimal UC deployment.
- Cisco's Unified Workspace Licensing (CUWL) is a useful package to profile user requirements. It offers attractive discounting, compared with buying UC components separately. However, it's important to size requirements accurately based on user needs. Unless you have a clear road map for CUWL as your primary UC solution, Gartner advises against the five-year Cisco Unified Communications Software Subscription term, because the three-year term better fits most enterprises' planning and upgrade cycles.
- The vendor's large networking business remains a hardware-based business model, which impacts the ability of Cisco Collaboration Technology Group to compete as a software application provider.
Huawei
Headquartered in China, Huawei offers a broad portfolio of communications products and services. It completed the reorganization of its networking division and is now increasing its marketing focus, including increasing its partner sales and support channels globally. The Huawei eSpace Unified Communications solution is made up of a broad set of applications, telephony, presence, messaging, multiple conferencing options, video, collaboration and contact center. The vendor has expanded its mobile client offerings and has improved the usability of its soft clients. The solution runs on Huawei servers, standard servers and virtualized platforms. eSpace also offers software APIs for integration with business applications and a Microsoft Lync integration.
Consider Huawei when looking for a comprehensive networking solution that includes the UCC functionality. Ensure that any needed local support is available. Huawei's strongest areas of support are China and some countries in the Asia/Pacific region, Middle East, Eastern Europe, Africa and South America. Support in other regions should be validated.
Strengths
- Huawei had $35 billion in revenue in 2012, is continuing its rapid growth, has a large base of clients, and can leverage its strengths in the network and server business. Its solutions span the carrier, large enterprise and small or midsize business (SMB) markets across the globe.
- The vendor continues to grow its enterprise network and mobile device divisions and presence. It has also made progress in expanding its presence and partners in EMEA and North America.
Cautions
- The capabilities of Huawei's broad communications portfolio and its support model can be challenging to understand. This difficulty can be compounded by cultural differences that occur for non-Chinese-based organizations, because most global regions are managed directly from China. Engagements requiring extensive professional services can be particularly challenging.
- Huawei faces political, trade and intellectual property trust issues in some regions. Additionally, as a private company, the financial transparency makes deeper analysis difficult. To succeed in those markets, the vendor needs to increase the confidence of decision makers globally.
IBM
IBM's Unified Communications core solution is based on IBM Sametime, which offers presence and IM, audioconferencing, videoconferencing, Web conferencing, and peer-to-peer voice and video. IBM also offers mobile clients on all the leading devices/OSs. Sametime Unified Telephony (SUT) provides a telephony middleware layer that can connect to peer PBX or IP PBX providers, such as Siemens and Avaya. IBM Sametime desktop video and videoconferences can operate with meeting room systems through partnerships with leading video providers, such as Cisco and Polycom. IBM approaches UC from a collaborative and social perspective; this includes IBM Social Business Enterprise Strategy Accelerator and IBM Connections Suite, which bundles the Sametime UC platform with IBM's Social, Analytics and Content Management capabilities into one offering. Similarly, IBM has a range of cloud-based UC and social offerings that fall under its SmartCloud brand. For example, IBM SmartCloud Unified Communications Dedicated is a private cloud offering for UC as a service.
Enterprises should consider IBM Sametime products if they have investments in IBM products or professional services that they wish to leverage or if they are committed to the IBM social business strategy. Enterprises that must operate in multivendor telephony environments and want a consolidated UC client should consider Sametime Unified Telephony. Enterprises that want to leverage Sametime for use with a standards-compliant telephony server should consider the Sametime Unified Telephony Lite client option.
Strengths
- IBM has leading social software, Web conferencing, portals, business analytics and content management solutions. Together, these provide IBM the opportunity to integrate its UC solutions into a broad range of environments.
- The IBM brand, partner network and professional services organization assist Sametime in obtaining account visibility and marketing presence in executing custom integrations, and for delivering vertical-specific solutions.
- IBM's vision for collaboration and social business, as well as its emerging cloud options, provide the vendor with a direction for a next generation of UCC.
Cautions
- IBM's UC deployments, especially those involving telephony, remain limited. IBM Notes email has not generated significant Sametime telephony pull-through, and the plan to integrate on-premises Sametime with cloud-based IBM SmartCloud for Social Business has not yet established itself as an attractive offer.
- Although Sametime's PBX-neutral strategy has good points, the leading UC suites in the market all now incorporate fully integrated telephony functionality. This leaves IBM at a disadvantage with enterprises that want to consider single-vendor solutions for the entire suite. In addition, most of IBM's Sametime telephony partners now offer competing full UC suites.
Interactive Intelligence
Interactive Intelligence's Customer Interaction Center (CIC) is an all-in-one software solution that offers both contact center and UC functionality. The solution is particularly attractive to enterprises focused on contact centers that also wish to offer integrated UC functionality enterprisewide for back-office and support functions. The solution includes telephony, audioconferencing, UM, rich presence with IM, and a range of client and device options. The solution also integrates with leading third-party Web conferencing and video solutions, as well as with Microsoft and IBM UC environments. The solution is offered on-premises, in a cloud configuration or as a managed service. Interactive Intelligence also offers an integrated, but stand-alone, business process automation solution called Interaction Process Automation (IPA).
Enterprises should evaluate the CIC solution when seeking to integrate UC with contact center functionality, or when looking to augment Microsoft Lync with telephony or contact center functionality.
Strengths
- Interactive Intelligence has shown strong and consistent financial growth during the past 10 years, and has an established record for delivering successful products and innovations in the UC market.
- The vendor has seen success with its innovative and attractive hybrid offering, which allows enterprises to convert on-premises deployments to cloud-based deployments, or vice versa. This flexibility eliminates many perceived risks of either approach, and can be conducted with minimal disruption to users.
Cautions
- The vendor and its UC product have limited visibility in a market that is increasingly dominated by larger vendors. Additionally, availability in some global regions, such as parts of Eastern Europe and Asia, may be limited.
- CIC is best-suited for enterprises with the contact center as their primary need, but that also wish to have integrated, enterprisewide UC.
- The CIC mobile clients are limited and based on mobile Web access, rather than on more capable native clients.
Microsoft
The Lync 2013 release offers several significant improvements over its Lync 2010 predecessor, including broader mobile client capabilities, improvements to its telephony and video functionality, and partial Skype integration. Lync offers a full suite of UC functionality that Microsoft continues to improve with each release. Lync integrates with Office, SharePoint and Exchange, and the Lync partner ecosystem continues to grow at a rapid pace. For cloud delivery, Microsoft offers Lync Online as part of the Office 365 suite. Lync Online allows users access to a subset of the on-premises Lync solution, notably with limited external telephony and video access.
Enterprises that wish to align closely with the Microsoft Office product family should consider the Lync solution and understand how it might change their business processes and worker productivity. Enterprises considering deploying Lync telephony and video should understand the limitations and infrastructure requirements, how they will support branch offices, and how they will obtain global third-party support if needed.
Strengths
- Microsoft Lync continues to make significant gains in the market and is attractive to a broad range of enterprises. In many cases, it is initially deployed for the IM, presence and Web conferencing functionality, with gradual incremental deployments of telephony and video added as follow-on phased deployments for specifically targeted groups or regions.
- Microsoft integration of Skype with Lync will enable an attractive model for B2B and business-to-consumer collaboration.
- Companies report that, once deployed, Lync functions can be readily integrated into business processes and applications, providing new, different and effective ways to perform tasks. Often, these new functions are achieved by deploying Lync enhancements from a growing list of ecosystem partners.
Cautions
- Few IT managers report that they have completely eliminated their PBXs in Lync implementations. Typically, Lync telephony is deployed for a subset of employees, while IM/presence and Web conferencing is deployed across the broader employee base. This scenario, coupled with an unclear Lync Online telephony road map and weak branch survivability offering, suggests that most enterprises should plan for a hybrid Lync plus traditional IP PBX deployment.
- While some Microsoft partners are starting to offer a comprehensive one-stop shop for all Lync-related equipment and services, these offers are still emerging. As a result, Gartner clients often report that multiple partners are required to obtain a complete deployment, which can be difficult (e.g., different partners for telephones, gateways, servers and video multiprotocol conferencing units [MCUs]). This difficulty also extends to identifying, evaluating and obtaining pricing from Lync service and support.
- Some enterprises express concern that Microsoft's bundling, combined with proprietary protocols, will leave them locked in a closed circle of choices and few non-Microsoft options in the future. Bundling includes Exchange, Lync, SharePoint, Office, Skype and Yammer.
Mitel
Mitel has recently rebranded its offerings, simplifying how customers understand and buy the solutions. Mitel now delivers three solutions: MiVoice, which offers call control platforms and endpoints (formerly Mitel Communications Director, UC360 and Mitel Desktop); MiCollab, which delivers all UC functionality that enables collaboration, including UC client; presence; IM; audio, Web and video collaboration; and UM (formerly Mitel Applications Suite, Unified Communicator Advanced, Mitel Collaboration Advanced and NuPoint UM); and MiContact Center, which provides a contact center solution. All three solutions can be deployed in various cloud configurations — private cloud, public cloud and hybrid cloud — using a single software stream. The vendor was an early leader in both UC server and client virtualization. The solutions support integrated provisioning, administration and maintenance functionality.
Organizations looking for a fully integrated UC approach at an attractive price, those looking for flexible cloud options and those evaluating telephony communications functionality to integrate with Microsoft Lync should evaluate Mitel's UC solution.
Strengths
- Mitel offers a mature and comprehensive UC software suite. It is based on software that can be distributed or centralized in a data center. The solution runs on industry-standard servers, and is certified on VMware virtualized environments. The same solution is also available as a cloud offering. Mitel is also offering a UC desktop that can run with multiple desktop virtualization options.
- Mitel's product rebranding and bundling should make the solution more attractive to, and easier to sell into, the broader market.
- The solution incorporates comprehensive single-point administration and capable mobile client options, including GPS location service integration.
Cautions
- Although Mitel has developed a strong product and market approach, in order to succeed, it must establish awareness of its new brand against strong competition, and must ensure that its channel partners are selling the full UC solution set.
- Prospects should confirm that Mitel channel partner references match the architecture and geographical requirements that they intend to deploy. While the Mitel product works well in a data center configuration, not all channel partners have the skills needed to work with larger data center architectures.
- Mitel's financial picture has improved since last year's Magic Quadrant research. While the vendor has posted revenue declines in each of the last three quarters, its profitability ratios are stable and cash from operations has improved in the last two quarters. Also, Mitel recently refinanced its outstanding debt, pushing debt repayments to February 2019.
NEC
NEC's Univerge 3C software offers a fully integrated, complete UC suite. It is based on a Web and service-oriented architecture (SOA), on open standards (SIP, XMPP) and centralized administration. The suite functionality encompasses telephony, video, all forms of conferencing, presence, IM and messaging. It includes multiple client options, such as hard phones, softphones and SIP phones, as well as a full set of mobile capabilities for a broad range of mobile devices. The broader NEC portfolio includes integrated support for contact centers and business application integration. Univerge 3C operates on VMware and on Microsoft Hyper-V Server virtualization software.
Consider the NEC Univerge 3C solution if you want a complete software UC suite based on SOA that can be extended with the broader portfolio offered by a major global telecommunications infrastructure provider.
Strengths
- NEC is a financially strong, global firm with an established UC sales and support channel in multiple regions.
- The vendor has developed a forward-looking UCC architecture that includes a rich set of UC functions in a standards-based SOA environment, backed by a broad communications portfolio. The platform's virtualization capabilities and software architecture make it a good fit for data center environments, and the API and software development kits make it suitable for integration with business applications.
Cautions
- NEC's UC solutions have limited brand recognition, compared with the leading competitors in the North American and European markets; as a result, NEC is often not included for consideration in these markets. To succeed, the vendor needs to advance its brand marketing for Univerge 3C as a full UC suite.
- Some of NEC's channel partners in the North American and European markets for the Univerge 3C product lack the experience and skills needed to sell and deliver this broader product. To succeed, NEC needs to continue to expand its partner training programs. Buyers interested in Univerge should contact NEC to ensure that they are aligned with a partner that has the needed competencies.
ShoreTel
ShoreTel positions a UC portfolio in an appliance architecture that is particularly well-suited to distributed organizations. The solution is known for its simplicity of installation and administration. Survivability is provided via ShoreTel's N+1 switch failover capability; in this configuration, a switch can fail over to another switch anywhere in the network. UC services, such as IM, conferencing, application sharing and mobility, are provided by ShoreTel's Service Appliances and Mobility Router, integrated with its switch-based IP voice services. All switches and application appliances operate independently, but are configured from a single ShoreTel Director Web application. The ShoreTel Communicator desktop client provides integrated IP and UC applications for users, including peer-to-peer video and support for communications to room-based systems from strategic partners. The vendor supports its own IP phones and the ShoreTel Dock for iPad and iPhone users, as well as SIP phones, SIP trunking and a full set of mobile options. The vendor offers basic and advanced contact center functionality, as well as Google Gmail and Microsoft Exchange UM integrations.
In 2012, ShoreTel acquired M5 Networks, a UCaaS provider, now branded as ShoreTel Sky. The ShoreTel Sky solution is not integrated with the on-premises offering, although some functions, such as ShoreTel Mobility and ShoreTel Dock, are available for both.
Consider the ShoreTel offering if your company is a geographically distributed organization with multiple small or midsize locations and wants a cost-effective, basic set of UC functions, with a reputation for both simplicity and ease of use.
Strengths
- ShoreTel offers a full UC suite in a distributed appliance architecture. The enhancements in 2013 include new IM, conferencing and collaboration software, desktop docking stations for iPad and iPhone users, and support for smartphones and tablets.
- The vendor continues to experience impressive above-industry-average market growth. While ShoreTel's international business makes up only 12% of overall sales, the vendor is demonstrating strong international revenue growth in EMEA and the Asia/Pacific region.
- Users report high customer satisfaction because the solution is easy to use, has intuitive user and management interfaces, and has simple, transparent pricing and licensing structures.
Cautions
- Although ShoreTel is experiencing strong growth, it is a relatively small vendor, with $300 million in revenue in 2012, competing in a market increasingly dominated by the behemoths. This can make it difficult to gain visibility and sustain growth.
- ShoreTel sales to large enterprises are primarily sold indirectly through its national and global account resellers program. Many of its other resellers are new to ShoreTel and new to UC, and so may not have experience with users' requirements in the broader UC market, nor with large enterprises.
- The vendor does not have enterprise visibility outside the telecommunications area. This requires ShoreTel resellers to offer integrated solutions from HP and other networking and video equipment partners, making it difficult for ShoreTel to gain acceptance in larger enterprises as a full UCC provider.
- ShoreTel continues to operate at a loss, but with break-even cash flow.
Siemens Enterprise Communications
The Siemens Enterprise Communications OpenScape portfolio offers a full and integrated suite of UC functionality meeting enterprise requirements, and OpenScape Cloud Services for SaaS UC deployments. These can be licensed in several profile-based bundles. Functionality includes telephony, an integrated suite of conferencing options, IM and presence, video, and UM. Siemens also offers a broad range of hard, soft and SIP-based clients, the functionality of which is available on leading mobile devices, including dual-mode handsets. The OpenScape Fusion integration allows the client to be imbedded within other application environments, including business applications, Google Applications and social media tools (such as LinkedIn, Facebook and Twitter). The OpenScape Mobile Call Swipe option provides transparent real-time transfer of ongoing voice or video sessions among different devices. Siemens is demonstrating a next-generation UC platform, currently called Project Ansible, which includes an advanced user experience and strong integration options, and is scheduled for general availability in 2014.
Evaluate the OpenScape UC suite if your company is looking for a standards-based, complete and cost-effective UC software suite that can, as needed, be extended via integration with third-party solutions.
Strengths
- OpenScape is a mature, fully functional, all-software, all-SIP UC solution; elements of the portfolio are also offered as stand-alone capabilities.
- The suite offers multiple integration options; it can be integrated with leading collaboration and business applications, such as those from IBM, Microsoft and Google, and it supports a range of client integrations.
- As an early entrant into the all-software UC suite market, the OpenScape portfolio has been proven to be effective as a complete and scalable software-based solution for several years. The vendor continues to expand its offering with innovative and differentiating functionality.
Cautions
- Siemens Enterprise Communications' lack of visibility in the large North American market has resulted in slow adoption and acceptance of the OpenScape portfolio in that region. However, the vendor is investing in new channels and marketing programs, which are improving its visibility and penetration.
- The vendor's recent UCaaS offering, which can be a hybrid complement to the on-premises offering, is intended to assist the vendor in entering the North American market. It must prove itself and prove effective, as it is entering a market that is rapidly being filled with large, established cloud vendors and disruptive alternatives.
Toshiba
Toshiba's UC solution is based on the IPedge, which is a fully bundled and inclusive suite. It also supports the Strata CIX family of IP business telephone systems allowing support and migration of existing customers. In addition to telephony, Toshiba has leveraged technology partners to create a solution that includes several variations of UM: audioconferencing and Web collaboration with up to 49 users, videoconferencing (up to eight parties), and XMPP and telephone status presence and IM. Toshiba offers UC-integrated contact center functionality with CRM integration, as well as a range of fixed and mobile client options. Toshiba has added the VIPedge Cloud-based Telephone Solution, which will provide both cloud and hybrid options, as well as plug-in integration for Microsoft Lync.
North American SMBs looking for a cost-effective, telephony-centric, basic UC solution should consider Toshiba's on-premises and cloud offerings.
Strengths
- Toshiba has an established reputation for reliable and cost-effective IP telephony solutions. Although the Toshiba UC solution scales up to 1,000 users, it does particularly well with small businesses of fewer than 500 users, partly because the vendor is especially cost-effective in this range.
- Toshiba is developing an attractive hybrid on-premises and cloud offering.
Cautions
- The IPedge solution provides less UC functionality than many competitors. For example, conferencing functions do not integrate with third-party solutions, so separate investments are needed if larger or more-extensive capabilities are required.
- Most of Toshiba's sales efforts are concentrated in North America. The references provided for this research were all focused on using the basic telephony functions, not the fuller UC suite.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.
Added
No vendors were added this year.
Dropped
Digium was dropped from this year's Magic Quadrant. The Switchvox UC product is intended for the SMB market, thus does not qualify for inclusion. The Digium Asterisk solution, which can be customized to create a UC solution, is not included in the evaluation because it is not available as an off-the-shelf solution.
Inclusion and Exclusion Criteria
To be included in this Magic Quadrant, solution providers must meet the following criteria:
- Offer a unified solution in all six core communications areas defined in Gartner's UC model. Briefly stated, the six areas are: (1) telephony; (2) conferencing (including audio, Web and video, which can be offered via partnerships); (3) IM and presence; (4) messaging (which can be offered via integration with email, voice mail and various forms of UM); (5) clients for multiple environments; and (6) the ability to be integrated with other business and communications applications, such as collaboration software, contact centers, and CEBPs.
- Integrate the UC functionality in each area into a complete solution presented via a consistent interface; nonintegrated functionality is not considered part of a unified solution.
- Have a significant market presence in telephony and in three or more of the six core communications areas defined in Gartner's UC model; market presence can be demonstrated by significant market share or differentiating innovation. Vendor must have a minimum revenue of $150 million from enterprise communications.
- Offer the UC solution in multiple global market regions, including North America, Europe and Asia.
- Provide evidence of sales, revenue and operational investments that support market objectives — this research focuses on the large and very large enterprise market (vendors focused primarily on SMBs are not included).
- Provide five references (three end users, two distribution partners) for enterprise on-premises UC portfolio/products. These references should involve the complete portfolio; references for portions of the UC portfolio are considered, but do not carry as much weight as references with complete solutions.
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate UC product providers based on the quality, efficacy and overall maturity of the products, systems, tools and procedures that enhance individual, group and enterprise communications. Ultimately, UC providers are judged on their ability and success in capitalizing on their vision (see Table 1).
Source: Gartner (July 2013)
Completeness of Vision
Gartner analysts evaluate UC product providers on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and how well these map to Gartner's overall evaluation of the market. Ultimately, UC product providers are rated on their understanding over a multiyear time frame of how market forces can be exploited to create opportunities for providers and their clients (see Table 2).
Source: Gartner (July 2013)
Quadrant Descriptions
Leaders
Leaders have a full UC offering, strong market presence and demonstrate success in the field. They have a strong presence in related markets to expand their footprint in UC. These vendors and their channel partners have experience delivering UC to a broad range of enterprise types and into most geographic regions.
Challengers
Vendors in the Challengers quadrant offer solutions and capabilities with the potential to move into a leadership position, but are lacking in one or more critical areas. Typically, this lack is in the area of market presence or in not being successfully sold in key regions. In other cases, the vendor is strong in all regions, but has elements of their portfolio that are not selling.
Visionaries
Vendors in the Visionaries quadrant offer a strong and differentiating approach to one or more core areas. However, these vendors have limited ability to execute across the entire set of requirements and markets, or have marketing and distribution limits to their ability to challenge the leading providers.
Niche Players
Vendors in the Niche Players quadrant offer solutions that are particularly strong in some, but not all, UC areas, or they have a solution that has limited market reach or appeal.
Context
The enterprise UC market continued to mature during the past 12 months and is now considered by Gartner to be entering the early mainstream adoption phase. This means that products are available, but may lack features or capabilities. This also means that the best practices for users, administrators and system integrators have not yet matured. Key product deficiencies include lack of important features, lack integration options or lack of scaling for more demanding environments. Key best practices that are still maturing include those for selecting, pricing and deploying solutions, and those practices needed for increasing end-user adoption. Gartner believes it will take several years of incremental improvements to address these early mainstream issues.
An important issue that remains to be addressed is intervendor UC federation, which would enable companies to more easily work with partners, suppliers, distributors and customers who are using a different vendor's UC solution. While most products offer support for basic IM federation based on XMPP and SIMPLE, deeper rich federation is lacking. While there are technical challenges to federation, the major barrier is vendor competition; leading vendors wish to differentiate themselves by offering strong federation between companies that use their own products. There are, however, some solutions, such as NextPlane, that offer UC federation brokerage services. Gartner expects intercompany federation to improve over the next two years, as this is an important opportunity for business productivity improvements.
The past year saw the continued maturation of most vendor solutions in key areas:
- Hybrid and cloud UC (UCaaS) deployment options — Although these lag on-premises deployment maturity by one to two years, this remains a strong area of user interest and potential value.
- Mobility — A wide range of mobile technologies are having a significant effect on UC; these include full UC functionality, such as real-time media, on mobile platforms, fixed-mobile convergence and voice over wireless LAN (VoWLAN), as well as the displacement of desk phones by integrated mobile phones.
- Video — UC solutions are increasingly able to integrate multiple video options, including desktop, meeting room and video content management.
- Administration and management — Integrated tools to assist in traffic and network monitoring and control are now considered essential, as are tools for usage reporting, consolidated provisioning and even analytics. These are particularly important to users who are integrating the communications traffic with application traffic on the enterprise WAN, and for those who are using UC to produce measurable change, including both user productivity gains and CEBP-based transformation.
- Pricing and bundling improvements — Many vendors modified their UC bundles and market offers and now offer role-based pricing and bundles. These bundles allow enterprises to expand functionality based on more-targeted requirements of different types of workers (e.g., traveling workers versus desk-bound workers). Also, many, but not all, have simplified their pricing models.
An area with mixed progress during the past year was support for standards. While most UC vendors offer standards-based capabilities, some clearly deprecate public standards in favor of proprietary variations of software, hardware or networks. Conversely, other vendors clearly work hard to support the most public versions of standards and environments. This is a strategic issue for enterprise planners, because proprietary approaches often result in limited and more expensive options. For example, fixed and mobile clients supporting HTML5, Web Real-Time Communication (WebRTC) or all-software video MCUs that support public scalable video codecs will offer significant price, performance and choice advantages. Similarly, support for SIP, SIMPLE and HTTP also allow more and better options.
In larger organizations, UC should be perceived as a process of continuous improvement. Gartner recommends that enterprises prepare their UC plans so that they know where and how they might evolve their environment and what the benefits would be. Planners should take a long-term view of their UC solution and expect considerable evolution during the next three years as the market responds to new technology influences. Key market influences include new mobile capabilities, consumer-based offerings, integrated cloud offerings and new standards based on HTML5.
Market Overview
Enterprises continue to struggle to define UC road maps that accommodate conflicting goals, including UC portfolio consolidation, best-of-breed functionality, vendor lock-in avoidance, legacy investment optimization and user demand for advanced functionality. UC road map definition is further complicated by the emerging UCaaS options. Vendor solutions attempt to address these goals with varying degrees of success.
From a competitive perspective, the relative positioning of the vendors changed very little this year, as all vendors made incremental improvements to their offerings. Cisco and Microsoft maintained their strong leads. Both these vendors have large installed bases into which they can sell UC functionality; Cisco leverages its position in network infrastructure, while Microsoft leverages its email and Office suite base. These two vendors compete fiercely in the market and both made significant advances during the past year. Cisco advanced client capabilities based on the Jabber client, including video, and now offers fully capable mobile client options. Cisco also continued aggressive marketing and sales programs. Microsoft advanced Lync's capabilities, including stronger mobile support and the integration of Lync with Skype in the Lync 2013 release. Microsoft's relative positioning was hurt this year by their slow progress in addressing enterprise telephony requirements, or at least in defining pragmatic telephony advice.
Other Leaders were Avaya and Siemens Enterprise Communications. Avaya consolidated its Aura UC solution and improved its video, IM/presence and Web conferencing capabilities through acquisitions. It has also advanced a stronger market and support initiative, allowing it to regain credibility in its customer and distribution bases. Siemens Enterprise Communications advanced the standards-based and open-integration focus of its OpenScape product, created stronger marketing and sales programs in North America, and is introducing a new UC client.
The vendors in the Challengers quadrant each pose threats to the Leaders, and all are large, established global companies. NEC, Alcatel-Lucent and Huawei all have complete UC solutions; to advance competitively, they need to increase their visibility and sales in key markets. IBM approaches UC from a collaborative and social software perspective, and generally has high visibility globally. To advance in the UC market, IBM needs to increase the adoption of its complete UC portfolio, including Sametime Unified Telephony, which can be delivered as a component of the IBM Connections business social platform.
Mitel is the sole vendor in the Visionaries quadrant. It offers a full UC suite, a broad range of mobile and integration options, and a leading approach to client and server virtualization. It has recently rebranded its offering and has pursued a more aggressive marketing program.
The Niche Players quadrant has vendors that offer strong solutions for some areas or regions. The Interactive Intelligence UC solution is particularly effective for enterprises with both contact center and UC requirements. ShoreTel, Aastra Technologies and Toshiba remain better-known for telephony than for a broader UC portfolio.
As part of this research, vendors were asked to estimate the costs of several different configurations, including a 1,000-subscriber centralized deployment, a 5,000-subscriber distributed deployment and a 30,000-subscriber multinational deployment. They were also asked to detail what they were including in their estimates and how they handled support. In general, server and user license pricing varied from a low end of $200 to $350 per subscriber to a high end of $350 to $450; these were estimates for a full UC suite without messaging, which means telephony, IM and presence, and conferencing. This included server hardware, but not telephone handsets. Installation and professional services were often $75 to $100 per user. However, vendors are often prepared to offer significant discounts, which vary according to the competitiveness of the bidding process; discounting of 40% to 50% is common. Vendors offered support in several forms, making direct comparisons difficult; however, the most common response was that service costs average 12% to 15% of the purchase price, excluding the cost of software assurance or license upgrade contracts.
Several vendors offer strong UC functionality in specific areas, but were not included in this Magic Quadrant, because the inclusion criteria required that vendors have strong on-premises solutions in at least four of the UC technology areas. In the area of conferencing, Polycom and several other vendors offer strong solutions, but were not included because they do not offer solutions in other technology areas. In the area of UM, AVST offers a best-of-breed solution. Esna offers a useful middleware approach for integrating disparate UC environments, including the integration of Google with enterprise telephony and video. Finally, UC service providers (e.g., AT&T, Google, Verizon and CSC) were not included in this research, because they do not offer on-premises solutions, but offer UCaaS or UC on a leased basis; those types of UC service solutions are described in "Magic Quadrant for Unified Communications as a Service, North America."
August 24, 2013
Gartner's Magic Quadrant for Cloud Infrastructure as a Service
VIEW SUMMARY
The market for cloud compute infrastructure as a service (a virtual data center of compute, storage and network resources delivered as a service) is still maturing and rapidly evolving. As each provider has unique offerings, the task of sourcing their services must be handled with care.
Market Definition/Description
Cloud computing is a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service using Internet technologies. Cloud infrastructure as a service (IaaS) is a type of cloud computing service; it parallels the infrastructure and data center initiatives of IT. Cloud compute IaaS constitutes the largest segment of this market (the broader IaaS market also includes cloud storage and cloud printing). Only cloud compute IaaS is evaluated in this Magic Quadrant; it does not cover cloud storage providers, platform as a service (PaaS) providers, software as a service (SaaS) providers, cloud services brokerages or any other type of cloud service provider, nor does it cover the hardware and software vendors that may be used to build cloud infrastructure. Furthermore, this Magic Quadrant is not an evaluation of the broad, generalized cloud computing strategies of the companies profiled.
In the context of this Magic Quadrant, cloud compute IaaS (hereafter referred to simply as "cloud IaaS" or "IaaS") is defined as a standardized, highly automated offering, where compute resources, complemented by storage and networking capabilities, are owned by a service provider and offered to the customer on demand. The resources are scalable and elastic in near-real-time, and metered by use. Self-service interfaces are exposed directly to the customer, including a Web-based UI and, optionally, an API. The resources may be single-tenant or multitenant, and hosted by the service provider or on-premises in the customer's data center.
We draw a distinction between cloud infrastructure as a service, and cloud infrastructure as a technology platform; we call the latter cloud-enabled system infrastructure (CESI). In cloud IaaS, the capabilities of a CESI are directly exposed to the customer through self-service. However, other services, including noncloud services, may be delivered on top of a CESI; these cloud-enabled services may include forms of managed hosting, data center outsourcing and other IT outsourcing services. In this Magic Quadrant, we evaluate only cloud IaaS offerings; we do not evaluate cloud-enabled services. (See "Technology Overview for Cloud-Enabled System Infrastructure" and "Don't Be Fooled by Offerings Falsely Masquerading as Cloud Infrastructure as a Service" for more on this distinction.)
This Magic Quadrant covers all the common use cases for cloud IaaS, including development and testing, production environments (including those supporting mission-critical workloads) for both internal and customer-facing applications, batch computing (including high-performance computing [HPC]) and disaster recovery. It encompasses both single-application workloads and "virtual data centers" (VDCs) hosting many diverse workloads. It includes suitability for a wide range of application design patterns, including both "cloud-native" application architectures and enterprise application architectures.
This Magic Quadrant primarily evaluates cloud IaaS providers in the context of the fastest-growing need among Gartner clients: the desire to have a "data center in the cloud," where the customer retains most of the IT operations responsibility. Gartner's clients are mainly enterprises, midmarket businesses and technology companies of all sizes, and the evaluation focuses on typical client requirements.
This Magic Quadrant strongly emphasizes self-service and automation in a standardized environment. It focuses on the needs of customers whose primary need is self-service cloud IaaS, although it may be supplemented by a small amount of colocation or dedicated servers. Organizations that need significant customization or managed services for a single application, or that are seeking cloud IaaS as a supplement to a traditional hosting solution ("hybrid hosting"), should consult the Magic Quadrants for Managed Hosting instead ("Magic Quadrant for Managed Hosting, North America," "Magic Quadrant for European Managed Hosting" and "Magic Quadrant for Cloud-Enabled Managed Hosting, Asia/Pacific"). Organizations that do not want self-service, but instead want managed services with an underlying CESI, should consult our Magic Quadrants for data center outsourcing and infrastructure utility services instead ("Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, North America" and "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Europe").
This Magic Quadrant evaluates only solutions that are delivered in an entirely standardized fashion — specifically, public cloud IaaS, along with private cloud IaaS that uses the same or a highly similar platform. Although most of the providers in this Magic Quadrant do offer custom private cloud IaaS, we have not considered these offerings in our evaluations. Organizations that are looking for custom-built, custom-managed private clouds should use our Magic Quadrants for data center outsourcing and infrastructure utility services instead (see above).
Understanding the Vendor Profiles, Strengths and Cautions
IaaS providers that target enterprise and midmarket customers generally offer a high-quality service, with excellent availability, good performance, high security and good customer support. Exceptions will be noted in this Magic Quadrant's evaluations of individual providers. Note that when we say "all providers," we specifically mean "all the evaluated providers included in this Magic Quadrant," not all cloud IaaS providers in general. Keep the following in mind when reading the vendor profiles:
- All of the providers have a public cloud IaaS offering. Many also have a "cookie cutter" private cloud offering, where every customer is on standardized infrastructure and cloud management tools, although this may or may not resemble the provider's public cloud service in either architecture or quality. A single architecture and feature set and cross-cloud management, for both public and private cloud IaaS, make it easier for customers to combine and migrate across service models as their needs dictate, and enable the provider to leverage its engineering investments more effectively. All of the providers also offer custom private clouds, unless otherwise noted.
- Most of the providers are oriented toward the needs of traditional IT operations, with an emphasis on control, governance and security, and the ability to run both new applications and legacy workloads. The providers that are oriented toward the needs of developers are noted as such; these providers typically emphasize easy access to infrastructure for individuals who are building new applications. Some developer-oriented offerings target small or midsize businesses (SMBs) and startups, and lack the features needed by enterprises and midmarket entities.
- Most of the providers have a "reliable cloud," achieved through redundant infrastructure in conjunction with virtual machine (VM) clustering, or the ability to rapidly detect VM failure and immediately restart it on different hardware. They are thus able to offer very high SLAs for infrastructure availability — sometimes as high as 99.999% (sometimes expressed as a 100% SLA with a 10-minute exclusion). Offerings without VM clustering or rapid VM restart — which provide higher levels of infrastructure availability than can be expected from a single physical server — are referred to as "best-effort."
- Most of the providers have maintenance windows that result in downtime of the control plane (including the GUI and API), and may require infrastructure downtime. Some offerings can utilize live migration of VMs, largely eliminating the need for downtime to perform host maintenance, but this does not eliminate maintenance windows in general.
- In general, monthly compute availability SLAs of 99.95% and higher are the norm, and they are typically higher than availability SLAs for managed hosting. Service credits for outages in a given month are typically capped at 100% of the monthly bill. This availability percentage is typically non-negotiable, as it is based on an engineering estimate of the underlying infrastructure reliability. Maintenance windows are normally excluded from the SLA.
- Some providers have a compute availability SLA that requires the customer to use compute capabilities in at least two fault domains (sometimes known as availability zones or availability sets); an SLA violation requires both fault domains to fail. Providers with an SLA of this type are explicitly noted as having a multi-fault-domain SLA.
- Very few of the providers have an SLA for compute or storage performance. However, most of the providers do not oversubscribe compute or RAM resources; providers that do not guarantee resource allocations are noted explicitly. Storage performance varies considerably between providers. Some providers can offer tiered storage with a solid-state drive (SSD) option.
- Many providers have additional SLAs, covering network availability and performance, customer service responsiveness and other service aspects.
- Infrastructure resources are not normally automatically replicated into multiple data centers unless otherwise noted; customers are responsible for their own business continuity. Some providers offer optional disaster recovery solutions.
- Most of the providers offer either a shared resource pool (SRP) pricing model or are flexible about how they price the service. In the SRP model, customers contract for a certain amount of capacity (in terms of CPU and RAM), but can allocate that capacity to VMs in an arbitrary way, including being able to oversubscribe that capacity voluntarily; additional capacity can usually be purchased on demand by the hour. Providers that are paid by the VM, rather than on an SRP model, are noted as such. All the providers offer per-hour metering.
- Most of the providers allow customers to choose arbitrary-size VMs — any combination of virtual CPUs (vCPUs), RAM and VM storage, subject to some limits. Providers that do not allow this are explicitly noted as offering fixed-size VMs.
- Most of the providers can resize an existing VM without needing to reprovision it; those that cannot are explicitly noted as offering nonresizable VMs. Some of the providers can resize an existing VM without needing to reboot it.
- Some of the providers are able to offer an option for single-tenant VMs within a public cloud IaaS offering, on a fully dynamic basis, where a customer can choose to place a VM on a host that is temporarily physically dedicated to just that customer, without the customer needing to buy a VM that is so large that it consumes the whole physical host. These VMs are typically more expensive than VMs on shared hosts. Providers that have this option are noted as such.
- Some of the providers are able to offer "bare metal" physical servers on a dynamic basis. Due to the longer provisioning times involved for physical equipment (two hours is common), the minimum billing increment for such servers is usually daily, rather than hourly. Providers with this option are noted as such.
- All the providers offer an option for colocation, unless otherwise noted. Many customers have needs that require a small amount of supplemental colocation in conjunction with their cloud — most frequently for a large-scale database, but sometimes for specialized network equipment, software that cannot be licensed on virtualized servers, or legacy equipment. Colocation is specifically mentioned only when a service provider actively sells colocation as a stand-alone service; a significant number of midmarket customers plan to move into colocation and then gradually migrate into that provider's IaaS offering.
- Typically, the storage associated with an individual VM is persistent. However, some providers have ephemeral storage, where the storage exists only during the life of the VM; if the VM goes away unexpectedly (for instance, due to hardware failure), all data in that storage is lost. Ephemeral storage is always noted explicitly.
- All the providers offer VM-independent block storage unless otherwise noted. A few providers allow storage volumes to be mounted on multiple VMs simultaneously, although customers must correctly architect their solutions to ensure data integrity (just as they would with a traditional storage array).
- All the providers offer object-based cloud storage, unless otherwise noted. In many cases, this service is integrated with a content delivery network (CDN).
- All the providers have a private WAN that connects their data centers, unless otherwise noted. They offer an option for private network connectivity (usually in the form of Multiprotocol Label Switching [MPLS] or Ethernet purchased from the customer's choice of carrier), between their cloud environment and the customer's premises, unless otherwise noted. Most of the providers support the use of Internet-based IPsec VPN (virtual private networking). All the providers allow customers to have VMs with only private Internet Protocol (IP) addresses (no public Internet connectivity), and also allow customers to use their own IP address ranges, unless otherwise noted. Some providers may enforce secure access to management consoles, restricting access to VPNs or private connectivity.
- All the providers claim to have high security standards. The extent of the security controls provided to customers varies significantly, though. All providers offer multifactor authentication, unless otherwise noted. Most providers offer additional security services. All the providers evaluated can offer solutions that will meet common regulatory compliance needs, unless otherwise noted. All the providers have SSAE 16 audits for their data centers (see Note 1), and some may have ISO 27001 audits for their cloud IaaS offering (see Note 2); audits should not be taken as indications of security.
- Most providers offer a firewall (intrusion detection system/intrusion prevention system) as part of their offering, although a few offer only access control lists (ACLs) and a few offer no self-service network security at all; this will always be explicitly noted. All providers offer customers a self-service ability to create complex network topologies with multiple network segments and multiple virtual network interface cards (NICs), unless otherwise noted.
- All the providers allow customers to bring their own VM images, unless otherwise noted. This allows a customer to create snapshots of existing VMs within their own internal data center, and then directly import them into the provider's cloud, rather than having to start from the provider's own VM image library. This also allows the import of VM appliances and other prepackaged VM images from independent software vendors (ISVs). All providers allow storage snapshots and have the ability to turn the snapshot into a VM image, unless otherwise noted.
- All the providers have the ability to do bulk import and export of data on physical media, unless otherwise noted. The few providers that can cooperate with third-party off-site data-archiving services, such as Iron Mountain, to deliver them backups on physical media, are noted as such.
- Except where noted, all the providers allow customers to create provisioning templates that group multiple resources, including compute, storage and network elements, and allow them to be provisioned as a unit. Some of the providers also have post-provisioning hooks, allowing customers to run scripts after VM provisioning is complete but before the VM is available for login.
- All the providers offer monitoring as an option, unless otherwise noted. A few offer trigger-based autoscaling, which allows provisioning-related actions to be taken based on a monitored event. Some providers offer schedule-based autoscaling, which allows provisioning-related actions to be executed at a particular time.
- All the providers offer self-service, front-end load-balancing, unless otherwise noted. All also offer back-end load balancing (used to distribute load across the middle and back-end tiers of an application), unless otherwise noted.
- All the providers offer a portal and self-service mechanism that is designed for multiple users and that offers hierarchical administration and role-based access control (RBAC). However, the degree of RBAC granularity varies greatly. We strongly recommend that customers that need these features, but that want to use a provider that doesn't have strong support for them, evaluate a third-party management tool, such as Enstratius (recently acquired by Dell), RightScale and ServiceMesh.
- All providers log events such as resource provisioning and deprovisioning, VM start and stop, and account changes, and allow customers self-service access to those logs for at least 60 days, unless otherwise noted.
- All providers, unless otherwise noted, offer the ability to place metadata tags on provisioned resources, and to run reports based on them, which is useful for internal showback or chargeback. Some providers also offer cost control measures such as quotas (limits on what a user can provision) and leases (time-limited provisioning of resources).
- All providers offer enterprise-class support with 24/7 customer service, via phone, email and chat, along with an account manager. Most providers include this with their offering. Some offer a lower level of support by default, but allow customers to pay extra for enterprise-class support.
- All the providers will sign contracts with customers, can invoice, and can consolidate bills from multiple accounts. While some may also offer online sign-up and credit card billing, they recognize that enterprise buyers prefer contracts and invoices. Some will sign "zero dollar" contracts that do not commit a customer to a certain volume.
- All the providers evaluated are believed to be financially stable, with business plans that are adequately funded. Customers should not need to worry about them going out of business. However, many of the smaller providers are likely to be potential acquisition targets; an acquisition can cause significant changes in the strategy and direction of a business, and may result in a service transition period if the merged companies consolidate their platforms.
- Many of the providers have white-label or reseller programs, and some may be willing to license their software. We mention software licensing only when it is a significant portion of the provider's business; other service providers, not enterprises, are usually the licensees. We do not mention channel programs; potential partners should simply assume that all these companies are open to discussing a relationship. (See "Infrastructure as a Service in the Cloud Services Value Chain" for details.)
- Most of the providers offer optional managed services on IaaS. However, not all offer the same type of managed services on IaaS as they do in their broader managed hosting or data center outsourcing services. Some may have managed services provider (MSP) or system integrator (SI) partners that provide managed and professional services.
- All the evaluated providers offer a portal, documentation, technical support, customer support and contracts in English. Some can provide one or more of these in languages other than English. Most providers can conduct business in local languages, even if all aspects of service are English-only. Customers who need multilingual support will find it very challenging to source an offering.
Format of the Vendor Descriptions
When describing each provider, we first briefly summarize the nature of the company and then provide information about its public cloud IaaS offerings (and any single-tenant offerings that are otherwise identical), in the following format:
Locations: Cloud IaaS data center locations by country, languages that the company does business in, and languages that technical support can be conducted in.
Compute, storage and network notes: Notes on the offering, including any missing core functionality or significant features, compared with the standard functionality discussed above.
Other notes: We list other capabilities of note, including important missing capabilities. We specifically note other cloud-related services, such as cloud storage (which all providers have unless otherwise noted), as well as the availability of managed services, even though those service offerings are not specifically evaluated in the context of this Magic Quadrant, because they are capabilities frequently requested by customers in conjunction with cloud IaaS. (See "Market Insight: Customers Need Hybrid Cloud Compute Infrastructure as a Service" for details.)
In the compute notes, we state the basis of each provider's virtualization technology and, if relevant, its cloud management platform (CMP). We also state what APIs it supports — the Amazon Web Services (AWS), OpenStack and vCloud APIs are the three that have broad adoption, but many providers also have their own unique API. Note that supporting one of the three common APIs does not provide assurance that a provider's service is compatible with a specific tool that purports to support that API; the completeness and accuracy of API implementations vary considerably. Furthermore, neither the use of the same underlying CMP nor API compatibility indicates that two services are interoperable. Specifically, OpenStack-based clouds differ significantly from one another, limiting portability; the marketing hype of "no vendor lock-in" is, practically speaking, untrue.
For many customers, the underlying hypervisor will matter, particularly for those that intend to run commercial software on IaaS. Many ISVs support only VMware virtualization, and those vendors that support Xen may support only Citrix XenServer, not open-source Xen (which is often customized by IaaS providers and is likely to be different from the current open-source version).
Services that use VMware's virtualization technologies are labeled as follows:
- vCloud Datacenter Service. This service has been certified to meet VMware's globally consistent service definitions, security and regulatory compliance requirements, and requirements for availability and high performance. It is based on a prescriptive architecture intended to maximize portability between providers of vCloud Datacenter Service and a business's own VMware-virtualized data center infrastructure. Only eight providers worldwide have such a service and several of them do not yet have a significant customer base on this platform. These providers also meet the requirements for being vCloud Powered.
- vCloud Powered. These providers are part of VMware's service provider partner program. The service is based on VMware's vSphere and vCloud Director (vCD), exposes the vCloud API, and supports the Open Virtualization Format (OVF) for image upload and download. Unless otherwise stated, these providers expose the vCD UI to customers. Because the vCD features exposed can be customized by the service provider, and the service provider typically needs to provide an array of features not included in vCD (such as monitoring), there is still significant differentiation between vCloud Powered providers. In a vCloud Powered offering with the vCD UI exposed, vCD is used to drive self-service management and provide a service catalog. vCD is a key part of VMware's strategy for driving adoption of hybrid internal-external cloud IaaS, and facilitates interoperability between VMware-virtualized infrastructures, regardless of whether they are internal to a business or offered by a service provider. vCD provides the capability to manage very complex infrastructure needs, but also requires a greater investment in training and setup time from an IT administrator in order to facilitate easier self-service for users.
- vCloud Express. vCloud Express is a VMware-defined offering aimed at developers and small businesses, with online sign-up, credit card payment, self-service and by-the-hour service.
- VMware-virtualized. This service uses VMware's hypervisor, but is not a vCloud Datacenter, vCloud Powered or vCloud Express service. Many such offerings are high-quality services from early, market-leading innovators; these providers typically entered the market before vCD became available and have elected to continue to develop their own technology.
We summarize all of the provider descriptions, including a comparison of their capabilities against our baseline expectation of capabilities, in tabular format in "Toolkit: Comparison Matrix for Cloud Infrastructure as a Service Providers, 2013."
Recommended Uses
For each vendor, we also provide recommendations for use. The most typical recommended uses are:
- Cloud-native applications. These are applications specifically architected to run in a cloud IaaS environment, using cloud transaction processing (TP) principles.
- E-business hosting. These are e-marketing sites, e-commerce sites, SaaS applications, and similar modern websites and Web-based applications. They are usually Internet-facing. They are designed to scale out and are resilient to infrastructure failure, but they might not use cloud TP principles.
- General business applications. These are the kinds of general-purpose workload typically found in the internal data centers of most traditional businesses; the application users are usually located within the business. Many such workloads are small, and they are often not designed to scale out. They are usually architected with the assumption that the underlying infrastructure is reliable, but they are not necessarily mission-critical. Examples include intranet sites, collaboration applications such as Microsoft SharePoint, and many business process applications.
- Enterprise applications. These are general-purpose workloads that are mission-critical, and they may be complex, performance-sensitive or contain highly sensitive data; they are typical of a modest percentage of the workloads found in the internal data centers of most traditional businesses. They are usually not designed to scale out, and the workloads may demand large VM sizes. They are architected with the assumption that the underlying infrastructure is reliable and high-performance.
- Test and development. These workloads are related to the development and testing of applications. They are assumed not to require high availability or high performance.
- Batch computing. These workloads include high-performance computing (HPC), "big data" analytics and other workloads that require large amounts of capacity on demand. They do not require high availability, but may require high performance.
For all the vendors, the recommended uses are specific to self-managed cloud IaaS. However, many of the providers also have managed services, as well as other cloud and noncloud services that may be used in conjunction with cloud IaaS. These include hybrid hosting (customers sometimes blend solutions, such as an entirely self-managed front-end Web tier on public cloud IaaS, with managed hosting for the application servers and database), as well as hybrid IaaS-PaaS solutions. Even though we do not evaluate managed services, PaaS and the like in this Magic Quadrant, they are part of a vendor's overall value proposition and we mention them in the context of providing more comprehensive solution recommendations.
Magic Quadrant
Source: Gartner (August 2013)
Vendor Strengths and Cautions
Amazon Web Services
AWS is a cloud-focused service provider with a very pure vision of highly automated, cost-effective IT capabilities, delivered in a flexible, on-demand manner.
Locations: AWS has groups of data centers, which it calls "regions," on the East and West Coasts of the U.S., and in Ireland, Japan, Singapore, Australia and Brazil. It also has one region dedicated to the U.S. federal government. It has global sales, including local offices where it has regions. Support is provided in English, Japanese and Portuguese. Technical account managers can also provide support in German, Hindi and Korean.
Compute: Elastic Compute Cloud (EC2) is multitenant, best-effort, fixed-size and nonresizable, paid-by-the-VM, and Xen-virtualized. Single-tenant VMs are available via Dedicated Instances. There are special options for HPC, including graphics processing units (GPUs). AWS does not have any formal private cloud offerings, though it might be willing to negotiate such deals.
Storage: VM storage is ephemeral. Persistence requires VM-independent block storage (Elastic Block Store). There is an option for SSDs, as well as storage performance guarantees (Provisioned IOPS). Object-based storage (Simple Storage Service [S3]) is integrated with a CDN (CloudFront), there is an option for long-term archive storage (Glacier), and AWS offers its own cloud storage gateway appliance.
Network: AWS offers a full range of networking options. Complex networking and IPsec VPN is done via Amazon Virtual Private Cloud (VPC). Private connectivity can be obtained via cross-connect in the data centers of select partners such as Equinix (Amazon Direct Connect); this also meets the needs of customers who require colocated equipment.
Other notes: Enterprise-grade support is extra. The SLA, which was significantly improved in June 2013, is multi-fault-domain, but does not have any exclusion for maintenance; AWS also offers continuous availability on its portal and API. AWS offers a particularly broad array of IaaS features and PaaS-like services. Notable capabilities include trigger-based and schedule-based autoscaling, database as a service (Relational Database Service [RDS]), Hadoop as a service (Elastic MapReduce), and data warehousing as a service (Redshift). We provide purchasing guidance in "What Managers Need to Know About Amazon Web Services" and a detailed technical evaluation in "Amazon Web Services (AWS): In-Depth Assessment."
Recommended uses: Cloud-native applications, batch computing, e-business hosting, general business applications, and test and development.
Strengths
- AWS is the overwhelming market share leader, with more than five times the compute capacity in use than the aggregate total of the other fourteen providers in this Magic Quadrant. It is a thought leader; it is extraordinarily innovative, exceptionally agile and very responsive to the market. It has the richest IaaS product portfolio, and is constantly expanding its service offerings and reducing its prices. It has by far the largest pool of capacity, which makes its service one of the few suitable for batch computing, especially for workloads that require short-term provisioning of hundreds of servers at a time.
- AWS has a very large technology partner ecosystem. Many software vendors have specially licensed and packaged their software to run on EC2, either independently or via the AWS Marketplace, which eases deployment and eliminates some of the challenges associated with licensing software to run in the cloud. Its API is supported by many third parties that provide associate management tools, and many open-source and commercial CMPs are compatible with its API. Although AWS is not directly involved in the hybrid on-premises cloud business, it has partners that can offer such solutions.
- AWS has a diverse customer base and the broadest range of use cases, including enterprise and mission-critical applications. It is increasingly targeting the mainstream market by both broadening its technical capabilities and increasing its go-to-market partnerships with SIs (such as Capgemini, Cognizant and Wipro) that provide both application development expertise and managed services. It has obtained many security and compliance-related certifications and audits. Customers may be able to access these audits under a nondisclosure agreement, but cannot conduct their own independent audits.
- AWS has multiple "availability zones" (AZs) within its regions. These AZs are effectively multiple data centers in close proximity to one another. AWS's services are designed to make it easier to run applications across multiple AZs; customers are responsible for architecting their applications for high availability. However, new capabilities are rolled out incrementally, region by region, so newer capabilities are not necessarily available in every region.
Cautions
- AWS is a price leader, but it charges separately for optional items that are often bundled with competitive offerings. This increases the complexity of understanding and auditing bills. Prospective customers should be careful to model the costs accurately, especially for network-related charges, and to compare the costs of reserved and unreserved capacity, as well as AWS's "spot pricing" market.
- AWS has multiple generations of compute instance "families" — for instance, the m1, m2, and m3 families. Each of these represents different levels of performance, and you must take this into account when choosing what instance type to use, and determine which offers the lowest cost for your particular workload. When comparing AWS's performance with that of other providers, ensure that you are making an accurate, normalized comparison; do not equate an AWS EC2 Compute Unit (ECU) with a modern physical core.
- AWS's support offerings are tiered based on the level of support that a customer purchases, rather than on a "relationship" or size-of-spend basis; the quality of support differs materially between tiers. AWS does not include enterprise-grade support by default; customers will need to buy Business tier support for this. Its Enterprise tier support offers a dedicated technical account manager and other "platinum" capabilities, providing a higher degree of support than most of its competitors offer without managed services, but it carries up to a 10% premium on the customer's overall AWS spend.
- AWS has field sales, solutions engineering and professional services organizations, but the rapid growth of AWS's business means that sales capacity is insufficient to consistently satisfy prospective customers who need consultative sales. For better terms and conditions, customers should sign an Enterprise Agreement, which is typically a zero-dollar contract. Invoicing is available on request.
CSC
CSC is a large, traditional IT outsourcer with a broad range of data center outsourcing capabilities.
Locations: CSC has multiple cloud data centers in the U.S., as well as in Canada, Brazil, Germany, Luxembourg, the Netherlands, Switzerland, the U.K., Australia, Malaysia and Singapore. It has global sales. Support is provided in English, French, German, Italian, Spanish and Mandarin.
Compute: CSC offers a vCloud Datacenter Service, a VCE Vblock-based cloud IaaS architecture in different tenancy models — public multitenant in a CSC data center (CloudCompute), single-tenant compute with a multitenant back-end (BizCloud Virtual Private Edition [VPE]), and private single-tenant in a CSC data center or in the customer's own data center (BizCloud) — and optional managed services. It offers both paid-by-the-VM and SRP pricing. Because features are introduced into BizCloud before being rolled into CloudCompute, the latter contains a subset of BizCloud features; furthermore, it is best-effort and lacks API access. While customers can access vCloud Director if they prefer, CSC has built its own, more user-friendly portal.
Storage: Block storage is persistent and independent of the VM. There is an option for SSDs. Storage snapshots are not supported. CSC does not offer object-based cloud storage.
Network: CSC has the full range of networking options.
Other notes: Managed services are optional. CSC also has significant additional software capabilities supporting IT operations management, along with trigger-based and schedule-based autoscaling, and quotas and leases for resource management. It also offers database as a service (CloudDB) and Hadoop as a service.
Recommended uses: General business applications, test and development, cloud-enabled data center transformation.
Strengths
- Unlike most other traditional data center outsourcers, CSC has fully embraced the highly standardized, highly automated cloud model, successfully blending the benefits of a true cloud service into an enterprise-ready offering. It has a solid platform that is attractive to traditional IT operations organizations that still want to retain control, but need to offer greater agility to the business and are willing to embrace data center transformation.
- CSC has a strong road map focused on bringing enterprise-class IT operations management (ITOM) tools, including automated managed services, to cloud IaaS. It is trying to integrate not just traditional ITOM tools, but also DevOps tools; for example, it offers Nolio's application deployment tool as part of its platform. It is also building infrastructure utility services for specific applications on top of the platform. In addition, it has begun to blend PaaS-layer services into its IaaS offerings.
- CSC is one of the few providers to have a standardized architecture across both public and private cloud offerings, as well as a single rate card across all of these offerings — although the pricing is the same, the minimum commitments vary. CSC's pricing for infrastructure resources is very competitive.
- CSC has developed a portfolio of cloud-related professional services, including Smart Start, a proof-of-concept program intended to help a customer achieve a "quick win" in moving an application onto IaaS, and then methodically migrating other workloads over time. In general, CSC is generous about offering trials to prospective customers.
Cautions
- Cloud computing is driving a radical reinvention of the way in which CSC delivers services, including significantly broadening the range of companies that CSC targets with its offerings. The cloud division is run as its own business unit, which gives it greater agility but also sometimes brings it into conflict with its slower-moving and more conservative parent company. At present, however, CSC is investing heavily in its cloud business.
- Prospective CSC customers should be careful to understand the distinction between CSC's outsourcing business and its cloud offerings; in particular, they should be sure to understand what is and isn't within the scope of a particular tier of managed services. Existing CSC outsourcing customers report challenges in getting CSC to engage in cloud opportunities.
- Although CSC has a vCloud Datacenter Service, it has been gradually reducing its dependence upon VMware, in favor of integrating best-of-breed third-party ITOM tools, as well as developing its own software. While this improves CSC's overall competitive position, it may be challenged to compete with other organizations that can invest heavily in cloud development and have their own large engineering teams.
- CSC's focus has been on enabling traditional IT operations organizations to make the transition to cloud infrastructure, resulting in a distinctive feature set. It is trying to increase its traction with developer audiences, but will find this challenging, given the positioning of the broader CSC brand.
Dimension Data
Dimension Data is a large SI and value-added reseller. It entered the cloud IaaS market through the 2011 acquisition of OpSource.
Locations: Dimension Data has data centers on the East and West Coasts of the U.S., plus the Netherlands, Australia, Hong Kong, Japan and South Africa. Local-language sales and support is provided in 51 countries, with cloud-specialized support provided from its regional service centers.
Compute: Dimension Data offers VMware-virtualized paid-by-the-VM public cloud IaaS, as well as SRP-priced private cloud IaaS, with optional managed services.
Storage: There is persistent block storage with an optional SSD-accelerated tier, but it is not VM-independent.
Network: Dimension Data has a full range of networking options.
Other notes: There are two tiers of optional managed services, which include improved SLAs. There is no multifactor authentication. There is no colocation.
Recommended uses: E-business hosting, cloud-native applications, general business applications, and test and development.
Strengths
- Dimension Data's Managed Cloud Platform (MCP) is a single unified architecture across its public and private cloud offerings; it is one of the few providers to provide such an architecture. It is pursuing a federated model, whereby service provider partners offer MCP-based services via resale or white label, but Dimension Data provides one consistent, unified service globally. It also provides sales and marketing enablement to its OneCloud Alliance members.
- OpSource had a long history as a SaaS hoster, and Dimension Data has retained these capabilities. Its rich suite of offerings for that market includes not only infrastructure, but also an on-demand billing platform, custom application management and help desk support. It has excellent SLAs, including 100% availability, and even stronger SLAs are available to customers who buy managed services.
- Dimension Data has launched Cloud Software, a set of partnerships with ISVs. It offers Dimension Data-tested and -licensed software from those ISVs, on demand. Depending on the software, the price may be hourly or monthly. However, there is little software available in this model.
Cautions
- While Dimension Data's offering is VMware-virtualized, it is not vCloud Powered. Instead, Dimension Data is doing extensive software development of its own, allowing it to drive a faster pace of innovation and control it costs better. Although it is able to invest in the necessary engineering resources, and has consistently rolled out incremental improvements in a continuous delivery model, this also represents a new way of doing business for Dimension Data, which has historically been an integrator of technology, not a developer of technology.
- Although Dimension Data has a capable basic cloud IaaS offering, it needs value-added capabilities, whether delivered through its own services or via an ecosystem of partners. It has tried to differentiate based on its network model, but such capabilities are increasingly "table stakes."
- Dimension Data is owned by NTT Group. While NTT has deliberately chosen Dimension Data to be its most agile business, with minimal interference from the parent, Dimension Data's future ability to move quickly is likely to depend on continued support and noninterference.
Fujitsu
Fujitsu is a large diversified technology company. It has a range of cloud IaaS offerings, including the Fujitsu Cloud IaaS Trusted Public S5 (formerly the Fujitsu Global Cloud Platform), multiple regional offerings based on a global reference architecture (Fujitsu Cloud IaaS Private Hosted, formerly known as Fujitsu Local Cloud Platform), and multiple private cloud offerings. Although Fujitsu has received vCloud Datacenter Service Provider partner status, it has not yet launched this offering.
Locations: S5 is available in data centers in the U.S. (West Coast), Germany, the U.K., Australia, Japan, and Singapore. Fujitsu has global sales, and provides support in 34 languages; the S5 portal is available in English and Japanese. The regional offerings have their own capabilities and locations, which are different from those of S5.
Compute: S5 is a multi-tenant, best-effort, fixed-size and non-resizable, paid-by-the-VM, Xen-virtualized offering; it is also available in a single-tenant version (S5 Dedicated).
Storage: Block storage is persistent and VM-independent. Although S5 has storage snapshots, snapshots cannot be used as VM images. Customers cannot import their own VM images.
Network: Although S5 supports private connectivity and private-IP-only VMs, it cannot use customer-provided IP addresses. It does not fully support complex network topologies.
Other notes: There is no metadata tagging of assets, but user quotas are supported. Managed services are optional.
Recommended uses: General business applications, and test and development.
Strengths
- Fujitsu has a long history in IT services and data center outsourcing. It has a large global sales force, is the leader in IT outsourcing in Asia/Pacific and has a strong European presence. This gives it a large existing base of captive customers into which it can sell cloud services, and it has been successful at extending existing Fujitsu relationships into cloud deals. It has very responsive support, and good account management.
- Fujitsu is a global vendor of hardware and software, and it is developing most of its own technology for its cloud offerings, across IaaS, PaaS, and SaaS. It is leveraging its existing technology, including its ITOM software, to accelerate the pace of its cloud business. Fujitsu's Resource Orchestrator — Cloud Edition software is used to provide the visual designer used in its IaaS user interfaces, as well as significant depth of portal features.
- Fujitsu's previous strategy of allowing its regions to pursue their own cloud strategies has enabled certain regions, such as Australia, to develop offerings tailored to the needs of their local markets, at a faster pace than Fujitsu has been able to do so as a global entity. Fujitsu has begun an "offering standardization process" intended to bring the regional offerings in line with the global ones, but it may be a few years before this is accomplished.
- Fujitsu rolls out S5 features first in Japan, then extends them to its other regions. Furthermore, Fujitsu in Japan offers additional cloud capabilities — Japan-based organizations or projects targeted at the Japanese market should investigate what capabilities are specifically available in Japan, such as object-based storage, database as a service, and Hadoop as a service.
Cautions
- Although Fujitsu has been rapidly improving S5's capabilities, and has been highly responsive to customer requests, its feature set lags the market leaders. Its VM provisioning times are lengthy compared to other providers. It cannot meet common compliance requirements.
- Fujitsu's previous strategy of allowing regional control means that development efforts are fragmented across the globe. As such, the private hosted service offerings may differ in each region, making it difficult for Fujitsu to capitalize fully on engineering resources and achieve economies of scale, although Fujitsu has recently strengthened its global cloud strategy and management.
- Although Fujitsu can sell its IaaS platform on a stand-alone basis, it is most often combined with managed services or a broader outsourcing relationship.
GoGrid
GoGrid is a small, independent cloud-IaaS-focused provider.
Locations: GoGrid's data centers are on the East and West Coasts of the U.S., and in the Netherlands. It has local sales in its San Francisco and Amsterdam offices. Support is officially provided only in English.
Compute: GoGrid offers fixed-size, paid-by-the-VM, Xen-virtualized IaaS in both multitenant and single-tenant variants. RAM is resizable but CPU is not.
Storage: VM storage is persistent, and there is an option for persistent, VM-independent file storage. Customers cannot import their own VM images. Object-based cloud storage is integrated with a CDN (via a partnership with Edgecast).
Network: GoGrid has a full range of networking options.
Other notes: There is no metadata tagging of assets or granular RBAC. Managed services are optional.
Recommended uses: Cloud-native applications, e-business hosting, and test and development for individuals or small teams.
Strengths
- Although GoGrid has a competitively priced, best-effort, developer-centric IaaS offering, it has broad and aggressive SLAs that include 100% availability and cover compute, storage and networking elements. It is one of the few providers that has a standard architecture across its public and private cloud offerings.
- The GoGrid Exchange enables software vendors to license and package their software to run on GoGrid, easing deployment and eliminating some of the headaches associated with licensing software to run in the cloud. It has a unique multipartner compensation model that enables partners to build on top of each other's software stacks.
Cautions
- GoGrid's software is developed entirely in-house. This enables it to innovate quickly and to drive down its costs, but also provides significant long-term challenges to competing against providers that can devote significant resources to R&D. Enterprise customers will find that its feature set lags behind the market leaders.
- GoGrid has its own API, which is supported by a limited number of third-party tools. GoGrid is pursuing a strategy of broader interoperability, and its future success will be dependent on ensuring that the company can partake in one or more of the emerging platform ecosystems.
HP
HP is a large diversified technology company with a range of cloud-related products and services. Its only true cloud IaaS offering is the HP Public Cloud, although it has some cloud-enabled infrastructure services, such as the HP Enterprise Services Virtual Private Cloud.
Location: HP's Public Cloud data centers are in the eastern and western U.S. Although it has global sales, the service is offered only in English.
Compute: HP Public Cloud is a multitenant, best-effort, fixed-size, KVM-virtualized, OpenStack-based offering.
Storage: VM storage is ephemeral. There is an option for persistent, VM-independent block storage. Customers cannot import their own VM images. There is object-based storage with an integrated CDN (via a partnership with Akamai).
Network: Although private connectivity is supported, all VMs must have Internet connectivity and customers cannot use their own IP addresses. The load-balancing service is currently in private beta.
Other notes: The SLA is multi-fault-domain, but does not have any exclusion for maintenance. Multifactor authentication is not supported. There are no audit logs. The monitoring service is currently in private beta. User quotas are supported.
Recommended use: Test and development for existing HP customers, or those who specifically want to explore an OpenStack-based cloud offering.
Strengths
- HP has an ambitious and comprehensive vision of interoperable public and private cloud infrastructure, integrating HP's hardware capabilities, ITOM tools, outsourcing capabilities and partner ecosystem.
- HP has a large global sales force and marketing budget. It has been successful at attracting a global customer base for its public cloud, despite currently having data centers only in the U.S.
Cautions
- Although HP has invested significant engineering resources into its Public Cloud over a multiyear period, its Public Cloud compute offering was not generally available until December 2012. It is therefore a new entrant, with a limited track record, and its feature set is nascent.
- Although HP's public cloud offering is based on OpenStack, as is HP Cloud OS (the platform for HP Converged Cloud and part of the HP CloudSystem CMP), there is limited interoperability between the Public Cloud and private clouds based on HP CloudSystem. HP Public Cloud's inability to import VM images on a self-service basis means that customers cannot currently directly transfer workloads from their private cloud to HP Public Cloud, even if their private cloud is based on OpenStack.
- HP has been willing to offer extraordinary discounts to prospective customers in order to bring them onto its Public Cloud. Such discounts may not be sustainable, so prospective customers should be cautious when evaluating the solution's long-term costs
IBM
IBM is a large diversified technology company with a range of cloud-related products and services. IBM's only true cloud offering is SmartCloud Enterprise (SCE), although it also has a cloud-enabled infrastructure service called IBM SmartCloud Enterprise+, as well as PaaS services.
Locations: SCE's data centers are in the eastern and western U.S., as well as Canada, France, Germany, Australia, Japan, Singapore and Brazil. IBM has global sales. Support for SCE is provided in English, French, German, Italian, Spanish, Japanese, Korean, Mandarin and Portuguese.
Compute: SCE is a multitenant, best-effort, fixed-size and nonresizable, paid-by-the-VM, KVM-virtualized offering.
Storage: VM storage is ephemeral. There is an option for persistent, VM-independent block storage. Although storage snapshots are supported, they cannot be used as VM images. There is no support for bulk import/export of data. Object-based storage is supported through a partnership with Nirvanix.
Network: Third-party private connectivity is not supported. Inter-data-center SCE traffic goes over the Internet, not an IBM private network. There is no network security as a service. Only front-end load-balancing is supported.
Other notes: Multifactor authentication is not supported, and RBAC is limited. There is no monitoring service and no general autoscaling service. Enterprise-grade support costs extra, and while OS support may be added to premium support, it is not equivalent to a managed service.
Recommended use: Test and development or batch computing for existing IBM customers, or those who want to use the related PaaS capabilities.
Strengths
- IBM's cloud vision encompasses public and private cloud at both the systems and application infrastructure levels. IBM's portfolio of products and services has IaaS, PaaS and SaaS elements, along with hardware, ITOM software, middleware and database software, and comprehensive consulting and outsourcing capabilities. However, IBM has not brought together these disparate elements in a way that motivates customers to use SCE instead of competing, non-IBM services.
- IBM's PaaS, in the form of SmartCloud Application Services, can easily be used to enhance SCE's capabilities. IBM also has a software marketplace for SCE. However, in both cases, this is primarily useful for customers running IBM software on SCE, as there is very limited support for third-party software.
Cautions
- Although IBM has improved the speed of its development cycle for SCE, its feature set still lags significantly behind those of its competitors. Enterprises are likely to be especially concerned by the weaknesses in security capabilities and the inability to meet regulatory compliance requirements.
- IBM's SLA is weak, and it excludes maintenance; IBM typically has more maintenance-related downtime than its competitors. It also has a more complicated sign-up and contracting process than most of its public cloud competitors.
- While IBM has a stated commitment to OpenStack, SCE is not currently based on OpenStack. Moreover, on 8 July 2013, IBM acquired SoftLayer, which has its own proprietary cloud IaaS platform. This creates uncertainty about the future direction of IBM's cloud infrastructure platforms and portfolio, including the future of the SCE offering as the platforms are reconciled. Prospective customers should ask IBM about its SoftLayer integration plans.
Joyent
Joyent is a small, independent service provider that is solely focused on cloud services and software.
Locations: Joyent has data centers in the eastern and western U.S., along with a data center in the Netherlands. It has local sales in the U.S. and U.K. Support is provided in English and Spanish.
Compute: Joyent offers fixed-size, paid-by-the-VM public cloud IaaS (SmartMachines), and private cloud in a variety of pricing models. The host OS is Joyent's own SmartOS, an open-source derivative of OpenSolaris, managed by the Illumos community. Customers have a choice between OS virtualization in a SmartOS Container and KVM virtualization on a SmartOS Container for Linux and Windows guests.
Storage: VM storage is persistent, but there is no VM-independent block storage. There is an SSD option. Joyent's S3-compatible object-based cloud storage (Manta) has a unique architecture designed for batch jobs that require high-performance access to large amounts of storage, with an in-place batch compute service separate from Joyent's main compute service.
Network: Joyent has a full range of networking options.
Other notes: Joyent has a single-account model, although an account can have multiple API keys. Its RBAC is very limited.
Recommended use: Cloud-native applications where visibility into application performance is crucial; batch computing on large datasets.
Strengths
- Joyent has a unique vision for cloud IaaS and is exceptionally innovative from a technology perspective. It is developing an integrated technology stack and its infrastructure offerings verge into the platform space. It is making deep investments in fundamental technologies, including its own SmartOS operating system, based on Illumos Solaris and its x86 hypervisor. Joyent's cloud uses SmartOS Containers (originally known as Solaris Zones). KVM runs natively within a container, thus providing additional security, resource control and resource visibility within the virtualization layer.
- Joyent has a pure focus on new, cloud-native applications, including mobile applications, as well as, with its newly-launched Manta service, big data applications and massively parallel data analytics. Joyent is one of the top-five public cloud IaaS providers by VM count. It is the sponsor of Node.js, and it offers proprietary tools focused on Node.js operations within its platform.
- Joyent places strong emphasis on application performance and it takes a holistic approach to its delivery, including integrating network-based acceleration. It has particularly deep portal-based performance analytics, which uses the DTrace framework for application instrumentation. It has an excellent cost-performance ratio.
- Joyent intends to derive its future revenue from a mix of offering cloud services directly and selling its SmartDataCenter CMP software (including via OEM partners such as Dell), which is fully compatible with its own public cloud IaaS offering. It has launched its Global Cloud Network, a cloud federation alliance focused on mobile carriers; its strategic carrier partners include Telefonica and Bharti Airtel.
Cautions
- Joyent's feature set is strongly oriented toward cloud-native use cases, and it is highly developer-centric. It emphasizes API capabilities and the enablement of third-party tools, rather than portal capabilities of its own.
- The unique nature of Joyent's offering makes it crucial for the company to develop an ecosystem around its platform; it must attract ISVs and third-party tools vendors, along with MSPs and SIs that can provide managed and professional services. Joyent has begun to build this ecosystem, focused on cloud-native vendors, but it is not yet mature.
- Joyent is focused on developing its own technology, which creates long-term challenges in competing against providers with greater development resources. That said, it has chosen to focus its efforts on particular areas, leaving certain capabilities, notably enterprise management features, to partners such as Enstratius (recently acquired by Dell).
Microsoft
Microsoft is a large ISV with a diverse array of related technology businesses; it is increasingly focused on delivering its software capabilities via cloud services. Its Windows Azure business was previously strictly PaaS, but Microsoft launched Windows Azure Infrastructure Services (which include Virtual Machines and Virtual Networks) into general availability in April 2013, thus entering the cloud IaaS market.
Locations: Windows Azure Infrastructure Services are available in data centers on the East and West Coasts of the U.S., as well as in Ireland, the Netherlands, Hong Kong and Singapore. Microsoft has global sales, and Windows Azure support is provided during local business hours in English, French, German, Italian, Spanish, Japanese, Korean, Mandarin and Portuguese; 24/7 support is provided only in English.
Compute: Windows Azure VMs are fixed-size, paid-by-the-VM, and Hyper-V-virtualized; they are metered by the minute.
Storage: Block storage ("virtual hard disk") is persistent and VM-independent. There is no support for bulk import/export. Object-based cloud storage is integrated with a CDN.
Network: Third-party private connectivity is not supported. Inter-data-center Azure traffic goes over the Internet, not a Microsoft private network. There is no network security as a service.
Other notes: Enterprise-grade support costs extra. The SLA is multi-fault-domain, but does not have any exclusion for maintenance. There is no granular RBAC. Although audit logs are kept, they are retained for less than 60 days. The broader Windows Azure service is a full-featured PaaS offering with significant complementary capabilities, such as database as a service; the Virtual Machines are integrated into the overall offering. Trigger-based autoscaling is in beta.
Recommended use: Test and development for Microsoft-centric organizations; cloud-native applications; use as part of an overall Windows Azure solution.
Strengths
- Microsoft has a vision of infrastructure and platform services that are not only leading stand-alone offerings, but also seamlessly extend and interoperate with on-premises Microsoft infrastructure (rooted in Hyper-V, Windows Server, Active Directory and System Center) and applications, as well as Microsoft's SaaS offerings. Its vision is global, and it is aggressively expanding into multiple international markets.
- Microsoft has built an attractive and easy-to-use UI that will appeal to Windows administrators and developers. The IaaS and PaaS components within Windows Azure feel and operate like part of a unified whole, and Microsoft is making an effort to integrate them with Visual Studio and System Center.
- Microsoft's brand, existing customer relationships and history of running global-class consumer Internet properties have made prospective customers and partners confident that it will emerge as a market leader in cloud IaaS. The number of Azure VMs is growing very rapidly. Microsoft customers who sign a contract can receive their enterprise discount on the service, making it highly cost-competitive. Microsoft is also extending special pricing to Microsoft Developer Network (MSDN) subscribers.
Cautions
- Windows Azure Infrastructure Services are brand-new and consequently lack an operational track record. The feature set is limited and the missing features are ones that are critical to most enterprises. Many features are in "preview" (beta), or "coming soon," and it is not always obvious to the customer which features are still in preview. Although Microsoft has a generally good uptime record with Azure PaaS components, it will be challenged to scale its IaaS business rapidly.
- Microsoft is in the midst of a multiyear initiative to make its on-premises software "cloud first," rather than trying to scale software originally built for on-premises single-enterprise use. It now faces the challenges of getting its core infrastructure technology to operate at cloud scale, managing that infrastructure at cloud scale, and facilitating the ability of customers to move toward more highly automated infrastructure.
- Microsoft has just begun to build an ecosystem of partners around Windows Azure Infrastructure Services, and does not yet have a software licensing marketplace. Furthermore, it has little in the way of enterprise Linux options. Consequently, the offering is currently very Microsoft-centric and appeals primarily to .NET developers.
Rackspace
Rackspace is an independent Web hoster with a long track record of leadership in the managed hosting market. It is one of the founders of OpenStack. Its Rackspace Private Cloud business provides traditional commercial open-source support and professional services around it. In addition to its public cloud IaaS offerings, Rackspace can support custom OpenStack-based private clouds in its own data centers or in customer data centers. It also owns numerous related businesses; some, such as SaaS email, are part of Rackspace itself, while others, such as Jungle Disk, are subsidiaries.
Locations: Rackspace Cloud Servers are located in data centers in the central and eastern U.S., the U.K. and Australia. However, accounts are region-specific; Europe is a separate region from the rest of the world. Rackspace has sales in the U.S., along with London, Amsterdam, Hong Kong and Sydney. Support is officially provided only in English.
Compute: Rackspace Cloud Servers is a multitenant, best-effort, fixed-size, Xen-virtualized, OpenStack-based public cloud IaaS offering.
Storage: VM storage is persistent, but there is also optional persistent VM-independent block storage. There is an option for SSDs. There is object-based storage (Cloud Files) with an integrated CDN (via a partnership with Akamai). Customers cannot import their own VM images.
Network: Private connectivity requires use of the RackConnect service. Cloud Servers cannot use customer-provided IP addresses. Use of many networking features, such as network ACLs, requires Cloud Networks to be enabled for the account, or requires RackConnect. Inter-data-center Cloud Servers traffic goes over the Internet, not a Rackspace private network.
Other notes: There is no multifactor authentication or RBAC. There is no support for provisioning templates. Full audit logs are not kept. Significant additional capabilities include database as a service and a PaaS offering (Cloud Sites). Managed services (at the guest OS level) are optional. We provide a detailed technical evaluation in "Rackspace Public Cloud: In-Depth Assessment."
Recommended uses: Hybrid hosting where cloud IaaS is supplementary to a primarily dedicated infrastructure; and test and development for individual developers and small teams, where simplicity and ease of use are crucial.
Strengths
- Rackspace has a large base of existing managed hosting customers into which it can sell cloud services. Although most such customers currently opt for VMware-virtualized dedicated servers rather than using Cloud Servers, and Rackspace does not offer the full range of its managed services on Cloud Servers, the RackConnect hybrid offering is attractive to both existing and new customers who want the greater predictability and potentially lower costs associated with a blend of dedicated and on-demand capacity.
- Rackspace Cloud Servers is an easy-to-use service with excellent customer support. It has one of the lowest entry price points, making it attractive for initial experimentation with cloud IaaS.
- Rackspace has outstanding marketing. It has been instrumental in evangelizing OpenStack as a key future infrastructure ecosystem (competing against Amazon, Microsoft and VMware). Its "open cloud" message resonates with buyers. However, Cloud Servers has limited interoperability with other OpenStack-based clouds, and its inability to import VM images means that customers cannot directly transfer workloads from other OpenStack-based clouds.
- Rackspace has made a number of acquisitions, such as the portfolio of companies that were part of Exceptional, that are intended to enhance its cloud capabilities and rapidly expand the number of developers it employs. Rackspace still faces significant challenges integrating these acquisitions into a cohesive whole.
Cautions
- Rackspace Cloud Servers is a developer-centric, best-effort IaaS, with limitations that are likely to frustrate enterprise customers. Although it has the second-largest market share in public cloud IaaS, it has appealed primarily to small businesses seeking a replacement for low-cost mass-market hosting. Although it has enabled Rackspace to introduce service enhancements at an improved pace and expand third-party management tool support, Rackspace's feature set still lags behind those of the market leaders.
- Rackspace is focused on a hybrid cloud strategy, for customers who want OpenStack both in their internal data centers and in Rackspace data centers, with a managed services emphasis. Increasingly, it will compete against large IT outsourcers that are moving down-market with lighter-weight managed services offerings facilitated by cloud-enabled infrastructure and inexpensive, offshore labor.
- Rackspace has relinquished control over OpenStack, which is now under the stewardship of the independent OpenStack Foundation, of which Rackspace remains a platinum sponsor. OpenStack's evolution may not necessarily align closely with Rackspace's needs; it is possible that OpenStack could succeed without this leading to Rackspace's success, and indeed, that its success could enable others to compete more effectively against Rackspace.
- Rackspace is currently in a transitional stage in which it is running two public cloud IaaS technology platforms simultaneously — the previous proprietary platform derived from its acquisition of Slicehost, and the new OpenStack-based platform launched in August 2012. Some features are available on only one of these platforms. Previous customers will be transitioned to the new OpenStack control plane, but will not need to migrate their VMs.
- Rackspace has a diverse set of cloud-related businesses and will be challenged to manage the broad range of demands upon its management team and its engineering resources. It must devote significant resources to OpenStack development, while also investing in its own proprietary, differentiated capabilities. It must now compete against companies that can make substantially larger investments in development and partnerships, and that have existing customer relationships and very large global sales forces.
Savvis
Savvis, a CenturyLink company, is a Web hoster with a long track record of leadership in the hosting market. It has a broad suite of offerings, including colocation, managed hosting and data center outsourcing. It has both public and private cloud IaaS offerings under the Symphony brand, as well as a public cloud IaaS offering, SavvisDirect, that is sold through CenturyLink.
Locations: The Symphony Virtual Private Data Center (VPDC) public cloud offering is available in East and West Coast U.S. data centers, along with Canada, Germany, the U.K., Hong Kong and Singapore. SavvisDirect is available on the East and West Coasts of the U.S., as well as the U.K. Savvis's private cloud offerings are available in a broad range of data centers globally. Savvis has global sales, and business is conducted in local languages, but support is officially offered only in English.
Compute: Symphony VPDC is a multitenant, paid-by-the-VM, vCloud Powered offering; it offers both Savvis's own portal and the option to use vCD. Other Symphony offerings are VMware-virtualized, with varying pricing models. SavvisDirect is a multitenant, paid-by-the-VM, Xen-virtualized offering based on CA's AppLogic; it does not expose an API to customers, although it is a developer-centric offering.
Storage: Symphony VPDC storage is persistent, and there is an option for VM-independent block storage; customers can opt for third-party off-site data archiving. SavvisDirect storage is persistent but there is no VM-independent block storage option, it does not support storage snapshots, customers cannot import their own VM images, and there is no support for bulk import/export.
Network: Symphony VPDC has a full range of networking options. SavvisDirect lacks support for private connectivity, VMs with private-only IP addresses and back-end load-balancing.
Other notes: Symphony VPDC supports both quotas and leases. Managed services for the guest OS layer are optional in Symphony VPDC and SavvisDirect. The full range of managed services are available in Savvis's private cloud IaaS offerings. Savvis also offers database as a service. CenturyLink acquired AppFog, a PaaS provider, in June 2013; it will be added to Savvis's portfolio of cloud services.
Recommended uses: General business applications, enterprise applications, and test and development.
Strengths
- Savvis, together with CenturyLink, has a compelling and distinctive vision of application-fluent infrastructure that spans network, compute and storage capabilities. Savvis already has a very broad, multitiered IaaS product portfolio that can address a diverse range of customer needs, and a well-established track record of delivering enterprise cloud services for production and mission-critical needs. It has a particular emphasis on broad and deep security features.
- Most Web hosters do not offer their managed hosting customer portal to self-service, cloud-only customers. Savvis is one of the few that does. Its customer portal has one of the most comprehensive feature sets in the hosting industry and is, consequently, exceptional for the cloud IaaS market.
- While Savvis is increasingly focused on using the cloud as a means to enter the data center outsourcing market, it nevertheless has a competitive feature set for self-service, and successfully blends the self-service and managed services models across a hybrid solution portfolio. The existing Savvis base of managed hosting and colocation customers, along with the CenturyLink customer base, provides Savvis with cross-selling opportunities.
Cautions
- Savvis has an extremely diverse product portfolio, with multiple types of single-tenant and multitenant IaaS. This can be confusing to prospective customers, and it can be difficult to decide which solution or combination of solutions is right for one's needs. It also proliferates narrow "point" solutions, rather than creating a unified platform that can be used to deliver a variety of flexible solutions.
- Savvis has chosen to split its midmarket and enterprise solutions (under the Symphony brand), which primarily target traditional IT operations buyers, from its small business solutions (under the SavvisDirect brand), which primarily target developers. However, because many midmarket entities and enterprises initially adopt cloud IaaS through their development organization, this creates a potential mismatch of solutions.
- Savvis has chosen to develop much of its own technology, or obtain it through acquisitions, although it is also leveraging commercial software. It must make very large investments in order to realize its vision, and will need to compete against highly capable engineering organizations at competing vendors. It also needs to build a compelling ecosystem of partners.
- Customers indicate that the quality of customer service is declining across Savvis's lines of business, including the cloud IaaS business. While this is primarily of concern to customers engaging Savvis for managed services on top of a cloud IaaS platform, it also impacts customer account management and cloud technical support.
SoftLayer
SoftLayer is an independent Web hoster with a focus on SMBs. It was acquired by IBM in July 2013, but the two providers are considered entirely independently in this Magic Quadrant.
Locations: SoftLayer has multiple data centers in the U.S., along with data centers in the Netherlands and Singapore. Its sales locations are similar to its data center locations. It officially offers support only in English.
Compute: SoftLayer's cloud IaaS offering is CloudLayer; it is paid-by-the-VM, Citrix-Xen-virtualized, and available as a single-tenant or multitenant offering. There is an option for single-tenant VMs within SoftLayer's multitenant public cloud. There is also an option for "bare metal" (nonvirtualized) servers, by the hour.
Storage: Storage is persistent and VM-independent block storage is available. Customers cannot import their own VM images, and bulk import/export is not supported. There is OpenStack object-based storage with an integrated CDN (via a partnership with Internap).
Network: SoftLayer supports a full range of networking options.
Other notes: SoftLayer has an extensive dedicated server business. Managed services are available, but are not a focus for SoftLayer.
Recommended uses: E-business hosting, general business applications, self-managed hybrid hosting, batch computing and large-scale use cases such as gaming where bare metal is desirable.
Strengths
- SoftLayer is a thought leader in automated, highly standardized infrastructure services, provisioned on demand. It has an excellent portal that offers integrated management across all its offerings. However, SoftLayer's breadth of capabilities has not grown as quickly as companies that have been able to make broader and deeper engineering and partnership investments.
- CloudLayer has a particularly clean service composition, with a range of options that can be added on a per-instance, paid-by-the-hour basis, including aspects such as the type of monitoring and the automated response to a failure detected by monitoring. Instances can be VMs or dedicated servers, and SoftLayer emphasizes that bare-metal physical servers can be managed with the same elasticity as VMs. SoftLayer is highly cost-competitive, especially when combining bare-metal dedicated servers and CloudLayer resources.
- CloudLayer has an array of paid-by-the-hour, per-instance security options, including the option to integrate with third-party authentication (such as Verisign Identity Protection). SoftLayer also offers free vulnerability scanning and payment card industry (PCI) compliance scans (in partnership with McAfee).
Cautions
- SoftLayer is strongly focused on self-service for SMB customers. However, its capabilities are an excellent match for organizations that need very large amounts of self-service infrastructure. Consequently, it has begun to attract large-scale enterprise deals that need more consultative sales, a deeper level of support and greater flexibility from the service provider. The acquisition by IBM will bring enterprise sales capabilities, including channel capabilities, to the SoftLayer business, as well as the higher-level IBM managed services.
- Although SoftLayer has historically targeted technology businesses, it has principally targeted IT administrators, rather than developers. It now has active developer outreach efforts, but its proprietary API has not gained widespread third-party tool support.
- SoftLayer was acquired by IBM on 8 July 2013. Although IBM has announced a general directional intent to continue to support and enhance SoftLayer's technologies, and has begun sales and marketing integration, the SoftLayer business is very different from IBM's existing cloud infrastructure business, and reconciling the two will take time.
Tier 3
Tier 3 is a small, independent service provider focused solely on cloud services. In addition to its cloud IaaS offering, it has Web Fabric, a CloudFoundry-based PaaS. It is responsible for Iron Foundry, the .NET extension of Cloud Foundry.
Locations: Tier 3 has multiple data centers in the U.S., Canada, the U.K. and Germany; some of these locations are in partnership with Peer 1 Hosting. It has U.S. sales, and relies on partners for international sales. Support is officially provided only in English.
Compute: Tier 3 offers multitenant, paid-by-the-VM, vCloud Powered cloud IaaS. However, it does not expose vCD; instead, it has its own portal.
Storage: Block storage is persistent, VM-independent, and integrated with rolling backups and disaster recovery options. An SSD option is available. Third-party off-site data archiving is supported. Object-based storage is integrated with a CDN (via partnerships with Internap and Limelight Networks).
Network: Tier 3 supports a full range of networking options.
Other notes: There is no multifactor authentication. Both quotas and leases are supported. There is both trigger-based and scheduled autoscaling, and the autoscaling can resize VMs without rebooting (where supported by the OS). It has a sophisticated self-service OS patching capability. Managed services are optional..
Recommended uses: E-business hosting, cloud-native applications, general business applications, and test and development.
Strengths
- Tier 3 combines an excellent, highly differentiated set of features on a well-engineered platform with an easy-to-use self-service portal. It is one of the few services with both cloud-native capabilities that are attractive to developers and the governance and management features needed by large enterprises. Although it is a vCloud Powered offering, its core architecture and software platform contain substantial custom engineering of its own. Tier 3 has an innovative and ambitious road map, and it is agile in responding to customer requests. It can offer a "premium" tier of VMs that are automatically replicated into a second data center — a unique feature.
- Tier 3 has a scriptable templating feature called Cloud Blueprints that can be used to provision complex, multi-data-center infrastructure configurations incorporating VMs, network elements and applications. For instance, one of its provided Blueprints can provision highly available Microsoft Exchange Server using data availability groups. It has a marketplace for Blueprints.
- Tier 3 is becoming a hypervisor-agnostic provider and intends to provide a unified interface to clouds that are built using multiple different CMPs. It is emphasizing white-label and reseller capabilities, and the ability to federate between different Tier 3-based clouds.
Cautions
- Although Tier 3's offering is vCloud Powered, it does not expose the vCD UI. Consequently, customers do not receive the full extent of vCD's self-service capabilities. However, Tier 3 offers many additional features that are not part of vCD, and it is trying to strategically reduce its dependence on VMware.
- Tier 3 has limited brand awareness, marketing budget and sales capacity. It will be challenged to grow its business in an increasingly noisy, crowded market, and its global expansion will be highly dependent on partners.
- Tier 3 is a small but innovative service provider with a pure cloud IaaS business, which makes it a highly attractive target for acquisition. Although Tier 3 has a capable, leading-edge feature set, it will be challenged to match the engineering resources available to the market leaders, and therefore challenged to maintain its platform lead.
Verizon Terremark
Verizon Terremark encompasses Verizon's data center, cloud and security businesses. Its Enterprise Cloud brand encompasses multiple VMware-virtualized offerings — the standard Enterprise Cloud (public cloud from the original Terremark), Private Edition (public cloud with single-tenant compute), Managed Edition (formerly the Verizon Computing as a Service public cloud offering), Express Edition (vCloud Express-based paid-by-the-VM public cloud) and Public Sector Edition (U.S. federal government community cloud).
Locations: The Enterprise Cloud is available in multiple data centers in the U.S., as well as the Netherlands, the U.K. and Brazil. Terremark has global sales. Support is officially provided only in English.
Compute: The Enterprise Cloud is available in both single-tenant and multitenant variants, including single-tenant compute with a multitenant back-end. It is VMware-virtualized. Both paid-by-the-VM and SRP billing models are available. Bare-metal servers, on daily metering, are available in the Managed Edition.
Storage: Block storage is persistent and VM-independent. Although storage snapshots are supported, they cannot be used as VM images (but VM images can be copied directly into the image catalog). There is no object-based cloud storage.
Network: Terremark has a full range of networking options.
Other notes: Only the Managed Edition has a monitoring service. Managed services are bundled with the Managed Edition, but are not otherwise an option.
Recommended uses: General business applications, and test and development.
Strengths
- Terremark, via the standard Enterprise Cloud service, is the market share leader in VMware-virtualized public cloud IaaS. It has the longest track record in the market for enterprise-class public cloud IaaS. It can address hybrid hosting use cases via the Enterprise Cloud Managed Edition, which bundles in managed services but has fewer self-service capabilities.
- Terremark is developing a next-generation, unified platform that will launch in late 2013. This new platform will enable Terremark to address a much broader range of use cases, and consolidates its development efforts onto a single hypervisor-neutral platform.
- The acquisition of CloudSwitch gives the company a tool that can be used to facilitate migration from, and interoperability with, other cloud environments, including AWS. It is using management talent acquired from CloudSwitch to drive its future strategy.
Cautions
- Until Terremark launches its new unified platform, customers must be careful to match the service they choose to their particular use case. They should also be aware that while Terremark is continuing to enhance existing offerings, its engineering focus has shifted to the new platform. Terremark's competitive differentiators have eroded over time as competitors have caught up and, in some cases, surpassed it in feature development.
- Terremark needs to deliver more than a capable cloud IaaS platform and associated network services in order to realize its cloud ambitions. It needs complementary value-added capabilities, along with a compelling ecosystem of partners.
- Although Terremark has always done a significant amount of software development, rather than being wholly reliant on VMware, it is staking its future success on rapid innovation driven by agile development. This is an unusual strategy for a company owned by a telecom carrier, and it is highly dependent on Verizon's willingness to interfere minimally with management.
Virtustream
Virtustream is a small, independent service provider focused solely on cloud services. In addition to its cloud IaaS offering, it sells the software for its platform, which is called xStream.
Locations: Virtustream has data centers on the East and West Coasts of the U.S., and in the U.K. It has sales in the U.S., along with London and Dubai sales offices. Support is officially provided only in English.
Compute: xStream is hypervisor-neutral. It is offered in both single-tenant and multitenant variants; it can support single-tenant VMs in its public cloud.
Storage: Block storage is persistent and VM-independent. While storage snapshots are supported, they cannot be used as VM images. Third-party off-site data archiving is supported.
Network: Virtustream supports a full range of networking options, although it does not have back-end load-balancing.
Other notes: Quotas are supported. Although Virtustream supports audit logs, it retains those logs for less than 60 days. Managed services are optional.
Recommended uses: Enterprise applications, general business applications, e-business hosting and cloud-native applications.
Strengths
- Virtustream's founders have backgrounds in VMware and SAP consultancies, as well as system integration, and the company has a strongly consultative approach, as well as particular expertise in SAP. Its cloud is targeted primarily at production applications, but in an unusual approach, it is targeting both traditional enterprise workloads, including ERP applications, as well as cloud-native applications. It has been successful at winning large-scale enterprise deals, particularly those focused on SAP and that require managed services capabilities.
- Virtustream has developed its own cloud platform technology, and uses a single unified architecture across public and private offerings, both within its own data centers and within customers' data centers. Although much of its infrastructure is VMware-virtualized, it can also support other hypervisors, and it is compatible with the AWS API. It has divided its portal into an administrative UI and an end-user UI, to address some ease-of-use issues.
- Virtustream's micro-VM technology enables it to charge for resources consumed, rather than resources allocated, and to offer policy-based service-level management and application performance SLAs. It has focused on meeting enterprise security and compliance needs, and has some unique capabilities, such as support for Intel's Trusted Execution Technology (TXT) and trust framework.
Cautions
- Although Virtustream supports a solid set of self-service features, it primarily targets complex, mission-critical applications where it is likely that the customer will purchase professional services assistance for implementation, and managed services on an ongoing basis.
- Virtustream is a compelling and unique provider for particular enterprise application use cases, but it is better suited to implementations where an environment will be carefully and consultatively tuned for the needs of particular applications, rather than general-purpose environments where workloads are deployed without oversight.
- Virtustream is a small but innovative service provider, and may be an attractive target for acquisition. Its strategy will require it to attract and retain significant engineering talent as well as application expertise. It will be challenged to grow its brand awareness and to manage the lengthy sales cycles that will be common in its targeted use cases.
Vendors Added and Dropped
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.
Added
- HP
- IBM
- Microsoft
Dropped
- Bluelock: Bluelock no longer meets the inclusion criteria for market presence. It is, however, a very capable U.S.-based vCloud Datacenter Service provider with a solid track record of successfully serving production use cases, including complex, mission-critical needs.
- Dell: Dell has withdrawn its vCloud Datacenter Service public cloud IaaS offering from the market. At present, Dell is encouraging customers to use its Dell Cloud Partner Program for these services.
- OVH: OVH does not meet the inclusion criteria for business and technical capabilities. It is a France-based provider that primarily targets SMBs, with a paid-by-the-VM, VMware-virtualized public cloud IaaS offering, as well as a particularly innovative vCloud Datacenter Service private cloud that offers economics and flexibility comparable to those of a public cloud.
Inclusion and Exclusion Criteria
To be included in this 2013 Magic Quadrant, vendors had to demonstrate the following, as of May 2013:
- Market participation. They must sell public cloud IaaS as a stand-alone service, without the requirement to use any managed services (including guest OS management), or to bundle it with managed hosting, application development, application maintenance, or other forms of outsourcing. They may, optionally, also sell a private version of this offering that uses the same architecture but is single-tenant.
- Market traction and momentum. They must be global providers, with no more than 85% of their cloud IaaS business in their home region. They must be among the top 15 providers by Gartner-estimated market share for the relevant segments (public and standardized private cloud IaaS, excluding small deployments of one or two VMs).
- Business capabilities relevant to Gartner clients. They must offer the public cloud IaaS service globally, be able to invoice, offer consolidated billing, and be willing to negotiate customized contracts. They must have 24/7 customer support (including phone support).
- Technical capabilities relevant to Gartner clients. The public cloud IaaS service must be suitable for supporting production workloads,
whether enterprise or cloud-native. Specific service features must include:
- Data centers in at least two metropolitan areas, separated by a minimum of 250 miles, on separate power grids, with SSAE 16, ISO 27001, or equivalent audits.
- Real-time provisioning (small Linux VM in 10 minutes).
- The ability to scale an application beyond the capacity of a single physical server.
- An allowable VM size of at least eight vCPUs and 24GB of RAM.
- An SLA for compute, with a minimum of 99.9% availability.
- The ability to securely extend the customer's data center network into the cloud environment.
- Access to a Web services API.
Vendors Considered, but Not Included
This Magic Quadrant is global in scope, but most of the providers are based in the U.S. This is a reflection of the way the market is evolving. The market has matured more quickly in the U.S. and the bulk of revenue comes from U.S.-based customers and flows to U.S.-based companies — U.S.-based IaaS providers typically derive 20% or more of their revenue from customers outside the U.S. However, all the providers in this Magic Quadrant offer their services on a global basis, and generate a minimum of 15% of their revenue outside their home region; most have at least one data center in North America, Western Europe and Asia/Pacific.
Significant European-based providers not in this Magic Quadrant include Arsys, CloudSigma, Colt, Gigas, Orange Business Services, OVH and Skyscape Cloud Services. Providers with significant presence in the Asia/Pacific region that are not in this Magic Quadrant include Datapipe, NTT and Tata Communications.
Two offerings that are currently in beta, and therefore could not be included in this evaluation, may be of considerable interest to many prospective customers. They are:
- Google Compute Engine (GCE). Although Google has previously introduced a PaaS offering (Google App Engine), it is still in the midst of the beta ("open preview") of its IaaS offering. GCE's model is most similar to Amazon EC2's, and we believe that it will initially primarily serve ephemeral workloads (such as batch computing); as it grows more capable, the next-most-common use case will be cloud-native applications that do not need infrastructure resilience.
- VMware vCloud Hybrid Service (vCHS). VMware has previously participated in the cloud IaaS market solely by enabling its service provider partners. It is currently in the midst of a beta ("vCHS") for its public cloud IaaS offering, which competes directly against them, and is sold both directly to customers and through VMware's partner channel. vCHS is a full-featured offering with more functionality than is offered by a vCloud Datacenter Service. VMware's strategy is to emphasize easy interoperability with existing on-premises VMware deployments, including the ability to move workloads easily between internal data centers and vCHS.
In the evaluations for this Magic Quadrant, we considered a variety of interesting cloud IaaS providers that did not meet the criteria for inclusion. The more distinctive ones include:
- CloudSigma, which has a very capable platform, along with a unique pricing model with five-minute billing increments and programmatically accessible, demand-based, dynamic pricing.
- FireHost, which specializes in managed, compliant cloud solutions, especially for PCI.
- NaviSite, a Time Warner Cable Company, which has a broad and innovative feature set, and is one of the most capable platforms for enterprise applications.
- Peer 1 Hosting, whose Zunicore cloud IaaS offering has HPC options, including nVidia GPUs in "bare metal" physical servers.
- ProfitBricks, which emphasizes high-performance infrastructure, and offers some of the largest available VM configurations.
We excluded PaaS providers from this Magic Quadrant, even though some businesses may use PaaS in a very IaaS-like manner. PaaS offerings do not allow customers to obtain raw VMs that can be loaded with arbitrary OSs, middleware and applications, which is a requirement for being considered as IaaS. For PaaS providers, see "Platform as a Service: Definition, Taxonomy and Vendor Landscape, 2012."
Evaluation Criteria
Ability to Execute
Gartner analysts evaluate technology vendors on the quality and efficacy of the processes, systems, methods or procedures that enable IT providers' performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Ultimately, technology providers are judged on their ability to capitalize on their vision, and on their success in doing so.
We evaluated vendors' Ability to Execute in this market by using the following criteria:
- Product/Service: Service providers were evaluated on the capabilities of their cloud IaaS offering to support the four use cases being evaluated. We evaluated the breadth and depth of the feature set, self-service capabilities, automated system management and suitability to run a broad range of workload types. This criterion is important to buyers who want to purchase the most capable, feature-rich service.
- Overall Viability (Business Unit, Financial, Strategy, Organization): Providers were evaluated on the success of their cloud IaaS business, as demonstrated by current revenue and revenue growth since the launch of their service; their financial wherewithal to continue investing in the business and to execute successfully on their road maps; and their organizational commitment to this business, and its importance to the company's overall strategy. This criterion is important to buyers who prefer to purchase services from large vendors with ample financial resources, or from vendors that have a position of market leadership and are continuing to invest aggressively in the business, or who are concerned about their long-term strategic investment in a particular vendor.
- Sales Execution/Pricing: Providers were evaluated on their ability to address the range of buyers for IaaS, including developers and business managers, as well as IT operations organizations; adapt to "frictionless selling" with online sales, immediate trials and proofs of concept; provide consultative sales and solutions engineering; be highly responsive to prospective customers; and offer value for money. This criterion is important to buyers who value a smooth sales experience, the right solution proposals and competitive prices.
- Market Responsiveness and Track Record: This market is evolving extremely quickly and the rate of technological innovation is very high. Providers were evaluated on how well they have historically been able to respond to changing buyer needs and technology developments, rapidly iterate their service offerings, and deliver promised enhancements and services by the expected time. This criterion is important to buyers who value rapid delivery of cutting-edge capabilities.
- Marketing Execution: Providers were evaluated on their mind share and brand awareness in the market; their ability to convey marketing messages based on their ability to deliver real business value, not empty hype or misleading "cloudwashing;" and the clarity and accuracy of their marketing messages, compared with their actual service offering. This criterion is important to buyers who prefer to buy from well-known vendors.
- Customer Experience: Providers were evaluated on the quality and responsiveness of their account management and technical support; the ease of use of their self-service functionality; the capabilities of their customer portal (additional functionality such as monitoring, reporting and trouble ticketing); the usefulness of their documentation and customer communications; the quality of their SLAs; the ease of doing business with them; and overall customer satisfaction. This criterion is important to buyers who value the aspects of the vendor relationship and capabilities beyond the IaaS platform itself.
- Operations: Providers were evaluated on their ability to meet their goals and commitments, including their track record of service delivery; the quality of their response to outages; and their ability to meet timelines that are communicated to customers and to the market. This criterion is important to buyers who want a reliable, predictable service experience.
Our evaluation of a service provider's Ability to Execute remains similar to that of the 2012 Magic Quadrant. We have, however, significantly raised our expectations of a provider's feature set, reflecting an overall significant improvement in capabilities across the market. A side effect of this is that many providers that used to have differentiating capabilities no longer do, as others have added the same capabilities; since providers are rated relative to one another, this has flattened the Product/Service scores across the market. We have also heavily increased the weighting of Overall Viability, reflecting our belief that even though some providers can accomplish great things with relatively few resources, long-term success in this market will require substantial investment, as well as the ability to attract an ecosystem.
|
Criteria |
Weight |
|---|---|
|
Product or Service |
High |
|
Overall Viability |
High |
|
Sales Execution/Pricing |
Medium |
|
Market Responsiveness/Record |
High |
|
Marketing Execution |
Medium |
|
Customer Experience |
Medium |
|
Operations |
Medium |
Source: Gartner (August 2013)
Completeness of Vision
Gartner analysts evaluate technology vendors on their ability to articulate logical statements convincingly about current and future market direction, innovation, customer needs and competitive forces, as well as how they map to Gartner's position. Ultimately, technology providers are assessed on their understanding of the ways in which market forces can be exploited to create opportunities.
We assessed vendors' Completeness of Vision in this market by using the following criteria:
- Market Understanding: Providers were evaluated on their understanding of the wants and needs of three different buying constituencies in this market — enterprises, midmarket businesses and technology companies of all sizes — both currently and in the longer term as the use of IaaS matures. This criterion is important to buyers who value a provider's understanding of the market's evolution and broader business trends, which impact a provider's ability to plan a successful long-term strategy.
- Marketing Strategy: Providers were evaluated on their ability to articulate their position in the market and their competitive differentiation, and to communicate these messages clearly and consistently, both internally and externally. This criterion is important to buyers who believe that providers should have a clear focus and direction.
- Sales Strategy: Providers were evaluated on their understanding of the buying centers for the market, and the way that these different buying centers want to engage with sales, as well as their strategy for adapting their sales force, online channel and partner channels to the IaaS market. This criterion is important to buyers who value a provider's ability to grow its business over the long term.
- Offering (Product) Strategy: Providers were evaluated on the breadth, depth, quality and differentiation of their service road maps, as relevant to the four use cases under evaluation, with an emphasis on self-service, automated IT operations management and overall feature set. This criterion is important to buyers who want a provider who will lead the market in service capabilities.
- Business Model: Providers were evaluated on their overall value proposition and their strategy for providing solutions for the use cases under consideration, not just raw infrastructure elements. This included evaluating how IaaS fits into their broader product portfolio and product strategy. This criterion is important to buyers who view IaaS as part of an integrated set of solutions from a particular provider.
- Vertical/Industry Strategy: Providers were evaluated on their ability to offer targeted services for particular vertical markets, such as government, biotech, media and entertainment, and retail. This includes sales and marketing to such verticals, their ability to meet specialized compliance needs, and vertical-specific solutions. This criterion is not directly important to most buyers, except to the extent that a provider has a vertical-specific offering that is relevant to them.
- Innovation: Providers were evaluated on the level of investment in the future of their business, and the quality of those investments, whether financial or human capital; this includes aspects such as the deployment of engineering resources, investments in new technology, mergers and acquisitions, and partnerships and alliances. This criterion is important to buyers who care about leading-edge capabilities, and the strength of a provider's ecosystem.
- Geographic Strategy: Providers were evaluated on their ability to expand their offering beyond their home region, serving the needs of multinational businesses, as well as adapting their offerings to other geographies. In particular, this included their strategy for international sales and support, as well as their data center footprint and internationalization efforts. This criterion is important to buyers who want to use a global vendor.
Our evaluation of Completeness of Vision remains similar to that of the 2012 Magic Quadrant. However, we have significantly increased our expectations for the breadth and depth of a provider's vision. We believe that a comprehensive vision must encompass the ambition to run any workload, at any time, anywhere in the world, with the appropriate availability, performance, security and isolation — including the ability to self-service all of the compute, storage, network, and management capabilities necessary — in cooperation with an ecosystem of supporting partners.
|
Evaluation Criteria |
Weighting |
|---|---|
|
Market Understanding |
High |
|
Marketing Strategy |
Medium |
|
Sales Strategy |
Medium |
|
Offering (Product) Strategy |
High |
|
Business Model |
Medium |
|
Vertical/Industry Strategy |
Low |
|
Innovation |
High |
|
Geographic Strategy |
Low |
Source: Gartner (August 2013)
Quadrant Descriptions
Leaders
Leaders distinguish themselves by offering an excellent service and having an ambitious future road map. They are likely to excel in a particular use case, and can serve a broad range of use cases, although they do not excel in all areas, may not necessarily be the best providers for a specific need, and may not serve some use cases at all. They have a track record of successful delivery, significant market share and many referenceable customers.
Challengers
Challengers are well-positioned to serve current market needs. They deliver a good service that is targeted at a particular set of use cases, and they have a track record of successful delivery. They may have significant market share, and are likely to have many referenceable customers. Nevertheless, they are likely to be making significant investments in the business, with long-term plans that may enable them to become market leaders, but the scope of their short-term ambitions is not as broad.
Visionaries
Visionaries have an ambitious vision of the future, and are making significant investments in the development of unique technologies. Their services are still emerging, and they have many capabilities in development that are not yet generally available. While they may have many customers, they do not yet serve a broad range of use cases well.
Niche Players
Niche Players may be excellent providers for the use cases in which they specialize, but may not serve a broad range of use cases well, or have a broadly ambitious road map. They may be relatively new entrants to this market, or may not yet have gained significant market share. Some may have solid leadership positions in other markets that are adjacent to this market, but are still in the relatively early stages of developing capabilities in cloud IaaS.
Context
When people think about "cloud computing," cloud IaaS is often one of the first things that comes to mind. It's the "computing" in cloud computing — on-demand compute, storage and network resources, delivered on-demand, in near-real-time, as a service. There has been tremendous hype about these services, but there are a number of use cases for which cloud IaaS delivers excellent business value. Although the market is immature, it is evolving rapidly; it is beginning the journey up the Slope of Enlightenment on Gartner's "Hype Cycle for Cloud Computing, 2012." Unfortunately, there is a great deal of market confusion and many providers articulate their offerings poorly. Therefore, care should be taken when sourcing these services.
The common use cases for cloud IaaS are development and testing environments; high-performance computing and batch processing; Internet-facing websites and Web-based applications (which may or may not have architectures specifically designed for the cloud); and non-mission-critical internal business applications. Furthermore, some organizations now run mission-critical business applications on cloud IaaS, although this is less common.
Initially, most businesses choose use cases that are peripheral to their organization's IT needs, but, over time, adopt cloud IaaS for mainstream business applications as well, including mission-critical applications, mirroring the past decade's adoption pattern of virtualization in the data center. Many businesses, especially in the midmarket, will eventually migrate away from running their own data centers in favor of relying primarily on infrastructure in the cloud. Gartner's 2013 CIO Priorities Survey indicates that 28% of CIOs expect to source all critical applications and operations via the cloud by 2016, and 55% expect to do so by 2020 (see "Hunting and Harvesting in a Digital World: The 2013 CIO Agenda").
Although, at present, sourcing cloud IaaS is typically a tactical decision, many organizations are also looking for long-term strategic partners. However, we believe that the market is too immature for strategic choices to be made at this stage, and we recommend that prospective customers focus on finding the cloud provider that matches their specific use case, and probably their anticipated use cases for the next year. In many cases, businesses may have to use multiple cloud IaaS providers to meet the needs of diverse use cases.
Market Overview
Cloud IaaS is computing resources, along with associated storage and network resources, offered to the customer via self-service in a highly automated way, on-demand and in near-real-time. In IaaS, the provider manages the data center facilities, hardware and virtualization, but everything above the hypervisor layer — the OS, middleware and application — is managed by the customer, or is an add-on managed service from the provider or another third party. This market is wholly separate and distinct from cloud PaaS and SaaS.
Cloud IaaS is owned, built and operated by a service provider, but it may be delivered on-premises within a customer's data center or hosted in the provider's data center. It may be "public" (multitenant) or "private" (single-tenant), although, in practice, there is no consistency in the application of these labels to varying degrees of resource isolation, and most hosted offerings use some degree of shared resources in services labeled "private."
Cloud IaaS is not a commoditized service, and even providers with very similar offerings and underlying technologies often have sufficiently different implementations that there is a material difference in availability, performance, security and service features. See "Evaluating Cloud Infrastructure as a Service" and its related reports to understand the range of options available in this market.
What Types of Workload Are Being Placed on Cloud IaaS?
There are three broad categories of customer need in cloud IaaS:
- The hosting of a single application, or a closely related group of applications
- A VDC that will serve a broad range of different workloads
- Batch computing
Hosting is the most common need. For instance, a media company with a marketing microsite for a movie, a software company offering SaaS and a retailer needing a lightweight version of its e-commerce site for disaster-recovery purposes are examples of customers with hosting needs that can be fulfilled by IaaS. These are generally production applications, although there is some test and development as well. Some of these customers have mission-critical needs, while others do not.
Customers with a broad range of unrelated workloads are less common, but are growing in importance, particularly in the midmarket, where IaaS is gradually replacing or supplementing traditional data center infrastructure. The VDC is typically used very similarly to the organization's internal virtualization environment — primarily for less mission-critical production applications, or test and development environments — but is increasingly being used to run more mission-critical applications.
The least common need, but one that nevertheless generates significant revenue for the small number of providers that serve this portion of the market, is batch computing. For these customers, IaaS serves as a substitute for traditional HPC or grid computing. Customer needs include rendering, video encoding, genetic sequencing, modeling and simulation, numerical analysis and data analytics. Other than the need to access large amounts of commodity compute at the lowest possible price, with little concern for infrastructure reliability, these customers typically have needs very similar to those of VDC customers, although some HPC use cases benefit from specialized hardware such as GPUs and high-speed interconnects.
What Key Market Aspects Should Buyers Be Aware Of?
Cloud IaaS is not a commodity. Providers vary significantly in their features, performance, cost and business terms. Although in theory, cloud IaaS has very little lock-in — a VM is just a VM, in the end — providers are increasingly seeking to offer additional value-added capabilities to customers, such as monitoring, automated service management and orchestration. The more you use those capabilities, the more value you will receive from the offering, but the more you will be tied to that particular service offering.
Hybrid cloud is not yet a reality. While it is relatively straightforward to move VM images from one cloud to another, truly hybrid multicloud scenarios are rare. The tools to enable true "single pane of glass" management and seamless movement across infrastructure platforms are not mature, and there are significant differences in cloud IaaS implementations, even between providers using the same underlying CMP. Note that the claim that an ecosystem is "open" has nothing to do with actual portability.
One size does not fit all. As the IaaS market matures, clarity is emerging about the range of different customer needs. Workloads vary in their availability and performance needs, and in the general complexity of the overall application infrastructure. Customers vary in the importance that they place on security, customer service and ease of use. Customers also vary in how much they want to manage themselves, versus how much they want the IaaS provider to manage for them. While some providers are beginning to address differentiated customer needs in a targeted fashion, most service providers still take a "one size fits all" approach, which can make it difficult to determine if a particular provider is the right one for a particular set of business and technical needs.
IaaS can be used to run a broadening range of workloads. Service providers are moving toward infrastructure platforms that can offer physical (nonvirtualized) and virtual resources, priced according to the level of availability, performance, security and isolation that the customer selects. This allows customers to run both "cloud native" applications that have been architected with cloud transaction processing principles in mind (see "From OLTP to Cloud TP: The Third Era of Transaction Processing Aims to the Cloud"), as well as to migrate existing business applications from their own virtualized servers in internal data centers into the cloud, without changes.
Public and private cloud IaaS are converging. Service providers are increasingly using dynamic physical and logical isolation mechanisms to create "private" infrastructure within a shared, multitenant capacity pool. This allows for economies of scale, while enabling customers to meet a broader range of security and compliance requirements. See "Best Practice: Evaluate Isolation Mechanisms in Public and Private Cloud IaaS" for details on this convergence and how to choose the level of isolation you need. We believe that, over time, the leading providers will offer a single, highly flexible platform across both their own data centers and customer data centers. As a result, this Magic Quadrant covers not only public cloud IaaS, but standardized private cloud IaaS as well.
Buying centers for IaaS are diverse. The early adopters in the IaaS market were developers. As the market matures, developers remain an important audience, because a great deal of IaaS adoption is business-led — driven by business managers who hold the budget, need greater agility and have shorter time frames than IT operations is able to accommodate, and who therefore turn to application developers and enterprise architects for a solution. This is particularly true for the single-application, "hosting" side of the market. IT operations is, however, increasingly involved in IaaS sourcing, and is likely to be the primary buying center for multiple-application needs. IaaS providers vary in their ability to target these different buying centers. Furthermore, most providers focus on either a developer audience or an IT operations audience, and their feature set and style of service are oriented accordingly.
Customers do not usually save money by using cloud IaaS. While many customers first investigate using IaaS to achieve cost savings, most customers buy IaaS to achieve greater business agility or access infrastructure capabilities that they do not have within their own data center. IaaS can drive significant cost savings when customers have short-term, seasonal, disaster recovery or batch-computing needs. It can also be a boon to companies with limited access to capital and to small companies, especially startups, that cannot afford to invest in infrastructure (see "Cloud Computing Can Be the Singular Solution for at Least Five Use Cases" for details). For larger businesses with existing internal data centers, well-managed virtualized infrastructure and efficient IT operations teams, IaaS for steady-state workloads is often no less expensive, and may be more expensive, than an internal private cloud. While provider efficiencies will increase over time, and automated managed services will substantially drive down the cost of infrastructure management, the state of technology has not yet advanced to that point.
The software-defined data center is the center of a partner ecosystem. Programmatic (API) access to infrastructure is crucial, as it enables customers, as well as third parties, to build management tools for their platforms, and to enable applications to take maximum advantage of the infrastructure environment. Providers need to foster rich ecosystems of capabilities. While the leading providers are likely to build a substantial number of capabilities themselves, partners will extend the range of their capabilities, provide overlays for complex multivendor heterogeneous environments, and add "stickiness" to these platforms by offering tight integrations between applications, middleware and infrastructure.
The cloud IaaS market is more similar to a software market than to traditional IT services markets. To deliver greater value to customers, cloud IaaS providers must improve the quality and efficiency with which customers can manage their infrastructure. They must find ways to reduce the burden of operational chores such as patch management and backups. While manual managed services are frequently used to substitute for automated offerings, efficiency demands automation instead of operators. In the long term, leadership in the cloud IaaS market will require the ability to provide a range of ITOM capabilities to customers. Some of these capabilities have historically been part of enterprise ITOM software from vendors like BMC Software, CA, HP and IBM. Some will be new, "DevOps"-oriented capabilities. Some will be new forms of automation, analytics and insight, and "smart" infrastructure capabilities that take advantage of the unique perspective offered by the delivery of integrated compute, storage and networking resources. Consequently, providers are in a race to deliver features, and the "winners" are likely to be those that are highly innovative and that have the most resources to invest in breadth and depth of capabilities development.
Providers' size and scale matter. While scale does impact operational efficiency to some degree, more importantly, it impacts engineering efficiency — the ability to leverage an investment in developers as well as partner capabilities across as large a customer base as possible. Software requires a large upfront investment, but each incremental customer adds comparatively little cost, and software markets tend to become "winner takes all" arenas, where a small number of vendors command dominant market share. Scale also matters because the ability to deliver a broad range of integrated capabilities will become increasingly crucial. A provider's size, its existing customer relationships, and the strength of its brand have an enormous impact on its ability to gain market share and traction, especially on a global basis. Furthermore, the solutions ecosystem is likely to consolidate around a small number of market leaders.
The gap between the market share leader and the rest of the market is widening. Many providers have solid offerings that encompass the most fundamental capability in this market — the ability to provision VMs rapidly on-demand, coupled with storage and an Internet connection. But most are finding it challenging to move beyond this point. Customer expectations are increasing, use cases are broadening, and many providers have neither the ambition nor the resources to compete across the full breadth of the addressable market.
There are many providers, but they vary widely in quality. There are many competitors in the market; new entrants continue to launch offerings and existing providers are expanding the market segments they serve. Many providers are more interested in managed services than in the highly automated, self-service market, and consequently the quality of their technology and their investment in engineering varies greatly. Moreover, many of the newer market entrants are very large IT companies with considerable sales reach, which has enabled them to take market share rapidly. Yet these companies do not necessarily have superior offerings. Indeed, many of the better providers are actually smaller, highly innovative companies. Many providers will find it challenging to execute well in this rapidly evolving market. Most providers are able to deliver a basic offering — with reasonable availability, performance and security, and good customer support — but many have limited differentiation and value-add beyond the ability to provision resources quickly. Therefore, significant due diligence must be performed to evaluate providers thoroughly.
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