When considering a cloud-based unified communications solution, at some point, you will be responsible for identifying the current cost of your on-premise phone solution (PBX System) versus the future price of a unified communications solution. Both will require an investment in time, but the real question becomes what variables are part of the ROI (return on investment) and the TCO (total cost of ownership).
Cloud Collaboration Consultants has helped hundreds of IT professionals with our proprietary TCO tool, just like you build out their ROI/TCO. A robust and favorable ROI will also help get your project approved by the CFO or your technical committee.
So what goes into the TCO? Cloud Collaboration Consultants has identified the following:
PBX System and Upgrades
95% of the projects we have completed for IT Teams revolves around a Customer that has already invested in a PBX system. It isn’t uncommon for the system to be 10-15 years old, and although parts replacements, including handsets, become hard to come by, the phone system still does its primary job, providing dial-tone. But, most of our clients are faced with a PBX upgrade, something they push off for 3-years until the next renewal date comes around.
PBX System Maintenance
It would be nice to forgo maintenance, and some customers have elected to get care on the black market. Or they pay a firm to keep it running while they figure out their next move. But most systems require the upgrade to be performed before they can purchase maintenance. Annual maintenance generally costs 15% of the cost of the PBX.
Voice & Usage
In addition to upgrades and maintenance, voice usage is usually a big part of the ROI. Clients have T1 PRI(s), POTS lines, or SIP trunking to provide voice services to the PBX. The Carriers are increasing the older analog technology cost like POTS lines because of the high cost involved with the Service Providers maintaining old technology. It isn’t uncommon to see a single POTS line cost reach $70 per month, which is 4x the cost of a unified communications seat and offers a lot less value.
Conferencing & Features
There are three types of conferencing: audio, web, and video meetings. The most popular Video Meetings are from Microsoft Teams, Zoom, and Cisco WebEx. Video is now front and center and a priority for IT Teams because of the business units’ demands to support a remote or hybrid workforce resulting from the pandemic.
Installation
When comparing the cost in this category, we consider the cost associated with installation related to the PBX upgrade, if applicable, versus the cost of implementing the unified communications solution. The Unified Communications contracts we negotiate for our clients always include a paid implementation to focus on IT projects core to their business.
FTE Support
FTE is the amount of time someone, specifically someone in IT, dedicated to supporting the phone servers, maintenance, MAC’s, etc. If IT outsources this and is no longer managing the system, you will have to pull all the invoices paid out to the 3rd party vendor to calculate the costs.
Disaster Recovery Site (DR) Site
The Disaster Recovery Site (secondary PBX System) is mostly applicable to larger organizations above 500 users. A unified communications solution has built-in DR to run the cost of your DR site, i.e., data centers and servers, to compare this category.
Now that the variables have been identified, it is time to plug in your numbers. Cloud Collaboration Consultants makes this easy with our newly released TCO tool.
The question we get asked all the time by business leaders is, “Will unified communication save me money?“.
The short answer is maybe.
A willingness to factor in hard costs and soft costs also plays a role in cost savings. Suppose the IT team does a quick back of the napkin ROI by only comparing the PBX’s current price (which is zero) and the PBX upgrade (minimal) versus the cost of a unified communications solution.
In that case, a Unified Communications solution will never save you money, ever. One way to achieve cost savings is to upgrade the PBX and support SIP Trunking. You can cancel out the expensive PRIs and POTS lines with SIP and go with a more economical solution (SIP). But you are then still responsible for managing a phone system, which most technology leaders don’t want to do.
So what factors or situations allow for a business to save money?
Check out this recent post from industry leader RingCentral which showed a 441% ROI in favor of Cloud Unified Communications!
A Unified Communications solution’s real value is the ability to unify your phones, video meetings, and messaging via one application, delivered via the “cloud”. Suppose you have significant upfront costs resulting from a future PBX upgrade, a voice contract coming up for renewal, and current investment in MS Teams, WebEx, or Zoom. In that case, there is real potential for favorable ROI by moving away from on-premise to a unified communications solution.