What’s in a (Cloud, Hosted) Name?

Cindy Whelan

Cindy Whelan

Summary Bullets

  • The last couple of years have brought increased visibility to “the cloud,” driven in part by the economic environment.
  • Cloud and hosted models have some similar elements; some marketers use the terms interchangeably, adding confusion to the market.

Over the last several years, the communications marketplace has been inundated with news of “cloud” services, offering businesses the promise of cost savings in a challenging economic environment.  It has been difficult to find a news article or press release from a service provider touting its latest unified communications offer without the word “cloud” in the headline, or at least in the body of the release.  Some services previously referred to as hosted are being rebranded as cloud-based; marketing collateral sometimes uses the terms interchangeably, further muddying the waters.

Are hosted and cloud-based IP telephony and UC services the same thing?  No, although they do have a common premise.  In both models, the supporting infrastructure is located in a data center or service provider environment rather than at the customer premise, and are managed by the service provider rather than the enterprise.  When a service provider takes over management and maintenance of the service and equipment, the enterprise gets both capital and operational expense savings.  Additionally, both models have been around for years.  Carriers have long offered dedicated hosted PBX/IP PBX services where they deployed and managed communications gear in their data centers on behalf of customers, and the shared hosted model had its start years ago when carriers began offering Centrex services over the PSTN.  What we are seeing now is the term “hosted” implying a dedicated hosted environment and “cloud” referring to the shared hosted environment.

Dedicated hosted services support a more rigid delivery environment. The service provider manages and dedicates resources to a customer, and licenses the services on a per-user basis.  This model offers customers predictable pricing; and resources are not shared between enterprises, addressing customers’ security concerns. However, hosted services can be restrictive when it comes to changing features, and the technology refresh process may be slower for this service delivery option.

The shared hosted, or cloud, model supports a flexible service delivery environment with a pool resources shared across multiple clients.  This model offers a lower-cost option than dedicated hosted solutions, and these services can be controlled by customer administrators, modifying users and user features as required by the business.  However, customers will want to ensure that mechanisms and SLAs are in place to support redundancy, service availability and voice quality.

Each model has its place. Customers must decide on the appropriate solution based on company size, application requirements, IT support capabilities, budget and many other factors.  But when a service provider approaches them with a cloud “offer”, companies should be clear on whether it is actually a dedicated hosted or shared cloud service.

About Cindy Whelan
As Principal Analyst, Business Network & Wholesale Services, Cindy analyzes companies, events, products, technologies and technology initiatives in the telecom network services industry.

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