As much as the communications and collaboration industry touts “cloud, cloud, cloud” and businesses embrace the as-a-service model, tolling a death knell for on-premises systems would be premature, as we see in findings from our Workplace Collaboration MetriCast 2023 market size and forecast study.
In this study, 59.3% of the participating companies say they’re utilizing business phone systems. Among them, Unified Communications as a Service (UCaaS) is the most prevalent phone architecture today, and the movement in this direction is clear. However, the gap between UCaaS and other architectural choices isn’t as wide as you might expect given the mindshare cloud seems to have.
According to our WC MetriCast research, here’s how the percentages shake out: 36.9% are using UCaaS, 30.6% own and manage their own platform on their premises, and another 33.1% have dedicated hosted platforms. (These latter we define as third party-managed dedicated instances of a hosted platform.)
By company size, more than half of businesses within each of four bands—250 employees or fewer, 251 to 2,500 employees, 2,501 to 10,000 employees, and more than 10,000 employees—still have a dedicated platform, whether managed by the company itself on premises or in a third party’s dedicated hosted environment. On-premises PBX and UC solutions are most prevalent within mid-market companies (251 to 2,500 employees) and dedicated hosted has its largest use within larger enterprises (2,501 to 10,000 employees).
It’s fair to say that on-premises systems may be in use with other types. Sometimes, as is the case for nearly 32%, phone support requires the use of more than one system. Platform use might vary by division or regionally, for example, or as an interim during a transition from one type to another—say on-premises to cloud.
This sort of transition takes time, and we can anticipate many businesses continuing to own and manage on-premises platforms for the foreseeable future. And some may choose to continue forward with an on-premises architecture and not move to the cloud at all as they weigh factors such as cost, security, reliability, and customization requirements.
My colleague, Metrigy Principal Analyst Diane Myers, takes a deep dive on market sizing and spending forecast for on-premises PBX and UC systems as part of our MetriCast service. Her workplace collaboration size and forecasting series also features reports on enterprise session border controllers, IP desk phones, SIP trunking, and UCaaS. For more information, click here.