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Comparing Unified Communications andIP PBX Solutions and Costs: PremisesBased vs. Cloud-Based vs. UC OverlayFinding the Total Cost of Ownership, Financial Crossover Points, andImplementation Distinctions between the Three OptionsE. Brent Kelly, Ph.D.President and Principal AnalystKelCor, Inc.1770 Research Parkway, Suite 186North Logan, UT 84341 USADavid SteinPrincipalStein Technology Consulting GroupPO Box 10525Westminster, CA 92685 USAMarty ParkerPrincipalUnicom Consulting, LLC9745 Rim Rock CircleLoomis, CA 95650 USA 1.435.563.2532 [email protected] 1.714.420.5733 [email protected] 1.408.420.5539 [email protected] 2013 KelCor, Inc., Stein Technology Group, LLC, and UniComm ConsultingAll Rights Reserved-1

Comparing Unified Communications and IP PBX Solutions andCosts: Premises-Based vs. Cloud-Based vs. UC OverlayElectronic copy with limited organizational use license (Adobe Acrobat .pdf file); Pricing in USD Unified Communications Products/Services Vendor Unified Communications Products/Services Vendor – VendorResponded to 1 Enterprise Connect RFP Session Unified Communications Products/Services Vendor – VendorResponded to 2 or more Enterprise Connect RFP Sessions Channel Partner/VAR End User Reprint Rights or Bulk Copies for Channel Partners 10,000 7,500 5,000 2,500 2,500CallOrder Total: Payment OptionsCompany P.O. #:Credit Card:VISAMasterCardCredit Card #Exp. Date: /Name on Card:Verification Code:AMEXSignature:Marketing ContactBilling Address (if different)Contact NameContact NameContact TitleContact TitleCompanyCompanyAddress Line 1Address Line 1Address Line 2Address Line 2City, State, Zip or Postal CodeCity, State, Zip or Postal CodeContact Phone NumberContact Phone NumberContact EmailContact EmailContact SignatureA facsimile copy of a signature on this document shall have the same force and effect as an original document with signature.Please return toBrent Kelly at [email protected], Inc., 1770 Research Park Way, Suite 186, North Logan, UT 84341Contact; [email protected] 1.435.563.2532

Comparing Unified Communications and IP PBX Solutions and CostsRelease 1 – June 10 2013Prepared byE. Brent Kelly, President and Principal Analyst, KelCor, Inc.David Stein, Principal, Stein Technology Consulting Group, LLCMarty Parker, Principal, UniComm Consulting, LLCThe following acts are strictly prohibited: Transmittal to another organization outside yourimmediate organization (i.e. partners, resellers, etc.)in any media format Posting on a web site which is accessible to othersoutside your immediate organization Reproduction for saleThis publication is protected by United States copyright laws and international treaties.Unauthorized distribution or reproduction of this publication, or any portion of it, may result insevere civil and criminal penalties, and will be prosecuted to the maximum extent necessary toprotect the rights of the publisher.NOTE: The material presented in this report is based on both primary and secondary market data coupled with ourprofessional interpretation of the facts. We believe that the basic information and recommendations presented in thisstudy provide a basis for sound business decisions, but no warranty as to completeness or accuracy is implied All marketestimates and forecasts are those of the author, except as noted. We welcome your comments on this report.COPYRIGHT NOTICECopyright 2013 by KelCor, Inc., Stein Technology Group, LLC, and UniComm Consulting, LLC. All rights, including thatof translation into other languages are specifically reserved. No part of this publication may be reproduced in any form,stored in a retrieval system, or transmitted by any method or means, electrical, mechanical, photographic, or otherwise,without the express written permission from the authors.TRADEMARK NOTICEMaterial in this document may reference companies and their products and services. All trademarks, tradenames, services marks and logos referenced herein belong to the respective companies.Contact Information:E. Brent Kelly, Ph.D.President and Principal AnalystKelCor, Inc.1770 Research Parkway, Suite 186North Logan, UT 84341 USADavid SteinPrincipalStein Technology Consulting GroupPO Box 10525Westminster, CA 92685 USAMarty ParkerPrincipalUnicom Consulting, LLC9745 Rim Rock CircleLoomis, CA 95650 USA 1.435.563.2532 [email protected] 1.714.420.5733 [email protected] 1.408.420.5539 [email protected] 2013 KelCor, Inc., Stein Technology Group, LLC, and UniComm ConsultingAll Rights Reserved-2-

Comparing Unified Communications and IP PBX Solutions and CostsExecutive SummaryMany enterprises are in the process of creating their voice and unified communications (UC)strategy. Assuming that the business drivers have been identified for unifying theircommunications capabilities, enterprises must decide among three competing deploymentoptions for their UC solutionsi. These areOption 1 – Premises-Based (Private Cloud). Install a new IP PBX (or equivalent softwarebased call control), including UC functions, on the enterprise premises or outsourced datacenter.Option 2 – Cloud-Based or Fully Hosted. License and deploy PBX and UC functionality viaa ‘Cloud’ or hosted option, that is any system servers and software will be hosted and run atthe provider’s site with only user devices and necessary gateways and similar equipment onthe enterprise premises.Option 3 – Overlay or Side-by-Side. Install only the UC functionality so that it will co-existSide-by-Side with the enterprise’s existing TDM-based or IP-based PBX(s) and telephones.Although overlay deployments can be implemented either on-premises or in the cloud, thisreport focuses only upon the on-premises option.This document provides a financial comparison between these options and between multiplevendors for each option. It also provides commentary on the differences in functionality and inimplementation approaches between the three options and the vendors’ solutions.Table 1.Vendors who responded to the RFP for Options 1, 2, and 3Vendor8x8AastraAlcatel-LucentAvayaCisco SystemsEsnaIBMInteractive IntelligenceMitelNECShoreTelSiemens EnterpriseCommunicationsThinking Phone NetworksVerizonOption 1: On-PremisesUC with New PBXOption 2: CloudBased UCXXXXXX(See Verizon)XXXXXXXXOption 3: On-PremisesUC PBX OverlayXXXXXXXXXSource information for this comparison is based on responses to a request for proposal (RFP)created as part of the Enterprise Connect Orlando 2013 program. Twenty-three differentsolutions from fourteen vendors are represented: nine for option 1, seven for option 2, and sevenresponses for option 3 ii . There are clearly significant differences in responses for the threeoptions and among the responding vendors. We have gone to great lengths to normalize theresponses so that a consistent cost of ownership for each solution over a five-year period can bequantitatively compared. 2013 KelCor, Inc., Stein Technology Group, LLC, and UniComm ConsultingAll Rights Reserved-3-

Comparing Unified Communications and IP PBX Solutions and CostsAuthors’ Acknowledgement to Participating VendorsThe authors express their sincere appreciation to the 14 vendors who invested time and energyinto preparing the RFP responses which serve as the foundation for this report. Without theirefforts, this report would have been impossible to prepare. We applaud their vision and theirwillingness to explore multiple options versus promoting and protecting one traditional approach.Universally, these vendors have expressed that this multi-option RFP exercise has been avaluable learning tool for them as well as it has helped them better position their offerings for thisworld of UC capabilities delivered as private cloud/on-premises solutions, cloud-basedcommunication services, overlay deployments, and hybrid systems.47 Figures, 21 Tables, 94 Pages 2013 KelCor, Inc., Stein Technology Group, LLC, and UniComm ConsultingAll Rights Reserved-4-

Comparing Unified Communications and IP PBX Solutions and CostsTable of ContentsExecutive Summary . 3Authors’ Acknowledgement to Participating Vendors. 4List of Figures . 8List of Tables. 10Introduction . 11Summarizing the Request for Proposal . 14An Overview of EC’s Existing Communications Environment. 16Specifications for the New Communications Environment . 16The Model for Normalizing Total Cost of Ownership. 19Specific Cost Assumptions . 19Personnel Costs . 19Power and Space Cost . 20Local and Long Distance Costs . 20Networking Costs . 20Audio Conferencing Costs. 21Web Conferencing Costs . 21Current System Phase‐out Costs . 21The Premises-Based Solutions . 23Respondent Overview . 23Response Clarifications and Caveats . 23Aastra. 23Alcatel Lucent (ALU) . 25Avaya . 26Cisco. 27Interactive Intelligence (ININ) . 28Mitel . 29NEC . 30ShoreTel . 31Siemens . 32Normalizing the Premises‐Based Pricing . 34Adding in the Additional Operational Costs . 37The Cloud-Based Solutions. 40Respondent Overview . 40Response Clarifications and Caveats . 418x8 . 42Avaya . 43 2013 KelCor, Inc., Stein Technology Group, LLC, and UniComm ConsultingAll Rights Reserved-5-

Comparing Unified Communications and IP PBX Solutions and CostsShoreTel Sky . 44NEC . 45Siemens Enterprise Communications . 46Thinking Phone Networks. 48Verizon.