As bandwidth becomes increasingly available in South Africa and the quality becomes greater as prices drop, there has been much discussion around hosted telecoms and its viability in the local market.
While these services have purportedly been on offer in the country for several years now, they have been different levels of a hybrid model of hosting and ownership, and it is only recently with the bandwidth constraints being lifted somewhat that the possibility of true hosting has come to the fore.
"In South Africa, what has been termed 'hosting' does not truly reflect the capability of this model. Rather, service providers put down a box, but rather than selling it to the customer they will rent or lease it to them, calling it a gateway and linking all of the phones to it. This gateway is then maintained through a virtual private network (VPN). While this model has tangible benefits for the end-user, it is not true hosting," says Steve Webster, CEO at The Webcom Group.
There are in fact different levels of hosting, as Bryant Dennis, co-owner of Converged Telecoms, a Webcom Group partner, explains. "The traditional telecoms model involved purchasing a Private Branch Exchange (PBX) and all of the related telephones, but the problem with this is that in a few years all of the equipment may be outdated, so various hosting hybrids emerged to deal with this issue.
"The first level is to lease the hardware from a service provider, host it onsite and purchase the phones, with the advantage that the hardware is not owned by the customer. Another option is to buy the servers but have a service provider host them offsite in a secure hosted environment; however, this requires a certain level of bandwidth in order to link to the site. True hosting, on the other hand, occurs when the service provider gives you space on a hosted server and all applications are licensed to the customer," he adds.
True hosting has not been considered a viable option in the past in South Africa, due to the well-known bandwidth constraints we have experienced. However, as this has become far more available at a lower cost, and as SIP trunking has begun to take off, the viability of a truly hosted model of telecoms has increased dramatically.
"However, there are certain considerations that need to be taken into account before organisations jump on the hosted telecoms bandwagon," cautions Webster. "The biggest concern remains around bandwidth, despite the fact that we have a lot more available in South Africa, because hosted telecoms is not just about making phone calls. Organisations also need to consider the need for voicemail, unified messaging, instant messaging, softscreen reception consoles and so on, all of which increase the bandwidth usage."
Another factor to consider is that if an organisation has no local hardware on site then the risk increases. Because traditional models such as owning the PBX environment have in-built redundancy and resiliency, this may not be available using a pure hosted service, largely due to bandwidth remaining fairly unreliable at this stage. This makes the prospect of true hosted telecoms a less attractive one for larger enterprises, which simply cannot afford any increase in risk.
"As with any technology, pure hosted telecoms is not for everyone. Having said that, however, while it may not be particularly suited to the large enterprise, it is definitely an attractive option for smaller businesses, something which is of great benefit in the South African market because such a large proportion of enterprise comes from the small medium business (SMB) space," Dennis says.
Hosting in the pure sense of the model can provide a number of benefits to small businesses, including dramatically reduced capital investment, as there is no need to purchase any equipment, which suits the tight budgets of these organisations. Bandwidth is rented, handsets are rented and applications are licensed so all expenses can come off operational budgets rather than capital expenditure. This type of solution is, as a result, highly scalable and access to additional functionality is a simple task.
"Using hosted telecoms, smaller businesses can gain access to big business functionality such as call centre agents, Web collaboration models, unified communications and so on, for a fraction of the cost of buying all of the hardware to implement this technology in-house," says Webster. "The barrier to entry is far lower using hosted services, with the added benefit that large service providers can deliver far better security than small businesses could afford to deploy in-house, and when additional functionality or features are needed, the end user does not have to worry about trying to integrate them with the existing system."
Hosting gives these small businesses access to complex, expensive applications on tight budgets, while at the same time delivering numerous other benefits as well. However, choosing the right service provider is of paramount importance. Businesses need to ensure that all of the necessary services and applications can be delivered not only now, but in the future as well.
"Hosting is here, and it is a viable option now that South Africa has increased access to better quality bandwidth, and it delivers significant benefits especially for smaller businesses. However, it is still a fairly new technology and until it matures, remains a risky venture for large organisations," Dennis concludes.
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