Magic Quadrant for Unified Communications for Midsize Enterprises, North America

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1 ( LICENSED FOR DISTRIBUTION Magic Quadrant for Unified Communications for Midsize Enterprises, North America Published: 25 May 2016 ID: G Analyst(s): Megan Marek Fernandez, Bern Elliot Summary UC solutions for midsize enterprises continue to evolve as providers expand API support, enhance hybrid delivery capabilities and enrich features while simplifying the sales cycle. Midmarket IT planners should use this research to help identify best-fit UC providers. Market Definition/Description Unified Communications This research is for midsize enterprises that intend to deploy unified communications (UC) through a premises-centric deployment model. As part of the premises-based solution evaluations, Gartner highlights how cloud UC elements fit into providers' midmarket portfolios. Increasingly, organizations will utilize a mix of cloud-based and premises-based delivery approaches. UC solutions for large enterprises are covered in "Magic Quadrant for Unified Communications." Cloud UC solutions are covered in "Magic Quadrant for Unified Communications as a Service, Worldwide." The primary goals of all UC solutions are to improve user productivity, enhance business processes as related to communications and collaboration, and lower total cost of ownership of separate communications components. Gartner defines UC products (equipment, software and services) as those that facilitate the use of multiple enterprise communications methods to obtain these goals. UC offers the ability to significantly improve how individuals, groups and companies interact and perform. The UC products may be composed of a single vendor (stand-alone) suite, or enterprises may deploy a portfolio of integrated applications and platforms spanning multiple vendors. In many cases, UC is deployed to extend and add functionality to established communications investments. UC products are used by individuals to facilitate personal communications, and by enterprises to support workgroup and collaborative communications and business workflows. Some UC products may extend UC beyond a company's boundaries to enhance communications among organizations, and to support interactions among large public communities or for personal communications. UC applications are increasingly being integrated or offered in concert with collaboration applications to form unified communications and collaboration (UCC). In some cases, they also are being integrated with business applications and workflows, or they are being targeted at vertical user groups. It is useful to divide UC into six broad communications product areas: 383QOYQ&ct=160526&st=sg 1/36

2 Telephony This area includes fixed, mobile and soft telephony, as well as the evolution of PBXs and Internet Protocol (IP) PBXs. This category includes options for voice and video that bypass traditional connectivity methods, such as direct internet-based connections. Conferencing This area includes multiparty voice (audio) conferencing, videoconferencing, web conferencing that includes document and application sharing capabilities, and various forms of unified conferencing capabilities. Messaging This area includes , which has become an indispensable business tool, voice mail and various approaches to unified messaging (UM). Presence and IM Instant messaging allows individuals to send text and other information to others or to groups in real time. Presence services allow individuals to see the status of other people and resources. Clients Unified clients enable access to multiple communications functions from a consistent interface. These may take different forms, including thick desktop clients, thin browser clients and clients for mobile devices, such as smartphones and tablets, as well as specialized clients embedded within business applications. Communications-enabled applications Integrating communications directly with business applications and with a broader context is something Gartner calls "communications-enabled business processes (CEBPs)." These integrations improve the accuracy and speed of processes and workflows, and, in some cases, enable new digital business opportunities. These also enable stronger targeted vertical solutions. In many instances, midmarket organizations implement UC-lite solutions. Gartner defines UC-lite as solutions that are voice over IP (VoIP) telephony-centric. Frequently, the "find-me, followme"/twinning capabilities and messaging capabilities are emphasized, while the conferencing and collaboration capabilities are not. The Midmarket Profile Gartner defines the midmarket as organizations with between 100 and 999 employees and annual revenue of less than $1 billion. The midmarket can further be segmented into the lower midmarket (organizations with between 100 and 499 employees) and the upper midmarket (organizations with between 500 and 999 employees). The midmarket segment is a growth engine for the economy with overall IT growth rates higher than the overall market average. According to Gartner's User Wants and Needs survey in the fourth quarter of 2015 (see Note 1), approximately 66% of midsize enterprises expect to invest in UC solutions during the next two years. Midmarket organizations have unique UC solution requirements that are different from small businesses' or large enterprises' requirements. While midsize businesses have many of the same business objectives as their large-enterprise counterparts (for example, many North Americaheadquartered organizations have international sites), they operate on a smaller scale and function with fewer IT assets and resources. Typically, IT planners have multiple job functions and responsibilities. These relative resource constraints impose unique purchasing behaviors, and influence the success of UC solutions in the market and the satisfaction of UC users. Key buyer considerations in this market include: 383QOYQ&ct=160526&st=sg 2/36

3 Ease of administration, management and use Midsize enterprises prefer solutions that are straightforward to use and manage. Interfaces that are intuitive and easy to use will feature greater use by employees across the organization and result in solutions receiving higher satisfaction ratings. Solutions should offer straightforward and consolidated administration and management tools. UC integration Midsize enterprises tend to be highly mobile, and many have multiple job functions. UC applications should integrate with common business applications through APIs to extend business-specific functionality to worker groups. Furthermore, business functions should easily be extended to mobile devices (for example, phones, tablets and PCs) to enable flexible work scenarios. Pricing While pricing typically isn't the top factor driving midsize enterprises' UC decisions, price does play an important role during the UC selection process. Price quotes should be clear, straightforward and include the necessary costs to get the solution up and running. As long as pricing is in a reasonable range, pricing will not drive the investment decision. However, if pricing is unclear or falls outside the range, the decision process with be met with roadblocks. Customer service and support quality Service and support levels are the top factor influencing midsize enterprises' IT buying behaviors. As midsize businesses tend to have stretched IT resources, they become more dependent on the provider or their providers' partners for UC solution support. Poor support from a provider or its partners is the top factor influencing a midsize enterprise to replace the solution with a competitive offer during the next decision cycle. Providers demonstrating above-average service levels to their partners and/or customers will experience greater success and loyalty. Consequently, channel programs (including the training, certifications, dealer registration details, and presales and postsales support) remain critical components of providers' go-to-market midsize-enterprise UC success. Midmarket IT planners need to align with partners who understand midsize-enterprise organizations. Hybrid configurations Many midmarket organizations will opt to obtain UC functionality via a mix of cloud-based and premises-based delivery approaches. Consequently, the ability for UC solution providers to position flexible provisioning models to enable organizations to choose a combination of cloud-based and premises-based delivery will increasingly be a part of midmarket enterprises' evaluation process. Magic Quadrant Figure 1. Magic Quadrant for Unified Communications for Midsize Enterprises, North America 383QOYQ&ct=160526&st=sg 3/36

4 Source: Gartner (May 2016) Vendor Strengths and Cautions Avaya Avaya's primary UC solution for midsize enterprises is Avaya IP Office (while the Avaya Aura Platform targets large enterprises). Avaya IP Office is scalable up to 3,000 users (increased from 2,500 users in 2015). The solution supports voice, IM, presence, mobility, UM, audioconferencing, videoconferencing (via Avaya Video Collaboration Solution for IP Office), web collaboration and desktop integration. IP Office can run inside a virtual machine, on a dedicated server or on an appliance. In the second quarter of 2015, Avaya acquired Esna Technologies, a collaboration and communications software provider that enables easier integration with external business applications. For cloud delivery, Avaya offers the Avaya-branded cloud service, OnAvaya, and a partner-branded cloud service, Powered by Avaya IP Office. OnAvaya is designed for partners lacking data centers (Avaya hosts on a Google platform and sells the OnAvaya-branded service). Powered by Avaya IP 383QOYQ&ct=160526&st=sg 4/36

5 Office is built on IP Office, but the partner hosts the solution in its data center. Consider an investment in IP Office if you are a midsize business with existing investments in Avaya or legacy Nortel solutions, because Avaya offers aggressive discounts to upgrade legacy systems with the entire UC suite as part of the deal. Midsize enterprises with requirements for a strong contact center, sophisticated telephony or high security should also evaluate Avaya. STRENGTHS Avaya's acquisition of Esna provides straightforward integration between IP Office and browseraccessed cloud services (Salesforce, Google Apps and Office 365). Avaya continues to make progress in terms of simplification around quoting, ordering and installation of IP Office, making the solution straightforward for partners to position to prospects. Avaya offers UC and contact center applications at competitive price points for midsize enterprises with robust communications requirements. CAUTIONS Avaya continues to experience revenue weakness (as evidenced by 16 straight quarters of yearover-year revenue declines). Although the company continues to manage its cost structure so that profitability metrics and cash generation have been favorable, Avaya's financial score remains a Caution under Gartner's published methodology for rating IT providers' financials. Avaya maintains a broad base of channel partners across the region. The rate of change within Avaya's channel program, however, is frequent, which can mean partners need to adjust to new program dynamics or changes in Avaya's channel-related resources on a regular basis. Avaya needs to maintain consistent leadership and structures in its midmarket programs to encourage channel loyalty. IP Office solutions are leveraged primarily for UC-lite implementations, led by IP telephony. Frequently, midsize enterprises will leverage the find-me, follow-me/twinning capabilities and text messaging function, but often there is limited uptake of conferencing (beyond audioconferencing) or other collaboration functions. To improve adoption, Avaya must ensure easy interoperability with other collaboration solutions and encourage adoption of UC functions associated with IP Office to promote UC usage. Cisco Cisco positions the Business Edition 6000 (BE6000) across the midmarket. Cisco's Business Edition 7000 (BE7000) series is packaged for the upper-midmarket and large-enterprise segments. Cisco offers three BE6000 solutions: BE6000S supports up to 150 users, 300 devices and five applications per server; BE6000M supports up to 1,000 users, 1,200 devices and five applications per server; and BE6000H supports up to 1,000 users, 2,500 devices and eight applications per server. Cisco offers a full range of collaboration applications, including IM/presence, UM, videoconferencing, webconferencing and customer care capabilities. Cisco also offers a large portfolio of endpoints, including IP phones, desktop collaboration endpoints, videoconferencing room systems and telepresence solutions, as well as Jabber, its mobile and desktop client QOYQ&ct=160526&st=sg 5/36

6 For cloud-delivered functionality, Cisco leads with Spark, its mobile-first unified communications as a service (UCaaS) offering that includes messaging, meetings and calling functionality that is available across the midsize segment ranges. Spark can be configured either as a hybrid or full cloud offer. In the hybrid offer, the customer uses Cisco's premises-based call control (Cisco Unified Communications Messaging [CUCM] or BE6000). For a cloud-centric approach, Spark can be provisioned as a full cloud-based offer from the Cisco Collaboration Cloud. Spark offers an integrated service with three core UC capabilities: business messaging, meetings (web conferencing and videoconferencing) and calling (voice and video). While Spark's messaging and meeting services are available in more than 30 countries, Cisco Spark's calling capabilities are not yet widely available outside of the United States. Consider evaluating Cisco's BE6000 if your organization has strong collaboration requirements and price is not a top decision factor, or if you have standardized on Cisco networking infrastructure. STRENGTHS Cisco offers a full range of robust collaboration applications as part of the BE6000 solution and across the broader collaboration portfolio that can address organizations' requirements for rich communications and collaboration functionality. BE6000 generally receives positive customer and partner ratings. The solution is the highest ranked (in customer and partner satisfaction) across Cisco's entire product portfolio. Across midmarket organizations, Cisco has an extensive networking presence enabled by a broad base of channel partners, which can be leveraged to sell adjacent UC solutions. CAUTIONS Cisco continues to make improvements to its provisioning of UC to the midmarket; however, ordering licenses and ordering solutions can be a complex process. Currently, not all software applications appear in the license management portal, making central license management difficult. BE6000 is typically less competitive from a pricing perspective for basic telephony-centric UC requirements. Partners indicate difficulty competing in bids that involve limited collaboration requirements. Cisco's midmarket UC portfolio and roadmap is complex and, in some cases, includes overlapping functionality example Spark, WebEx and Jabber. This makes Cisco's UC proposition challenging for partners to position and challenging for customers to understand options. Digium Digium positions its Switchvox appliance in the midsize-enterprise market, targeting organizations with fewer than 500 users. Digium also offers its open-source Asterisk software (a toolset that can be customized to create a UC solution) to developers and end users across multiple-size segment ranges; however, Asterisk is not evaluated in this study because it's unavailable as an off-the-shelf product. In the first quarter of 2016, Digium upgraded the Switchvox appliance (Version 6.1) to the Asterisk 13 engine (the latest release), which increased solution capacity and introduced redesigned elements, including a new user interface (UI), new real-time API and switchboard. Switchvox provides telephony, presence/im, UM, audioconferencing, fax and basic Web Real-Time 383QOYQ&ct=160526&st=sg 6/36

7 Communications (WebRTC)-based video capabilities. Digium does not currently support web conferencing or external collaborative conferencing sessions. Since the 2015 midsize-enterprise UC Magic Quadrant report, Switchvox became VMware-certified to more easily enable virtualized configurations. For cloud delivery, Digium offers Switchvox Cloud, which runs on the same software and can be paired for hybrid delivery scenarios with a premises-based Switchvox. Consider Digium's Switchvox if you have a single-site organization and are looking for a pricecompetitive UC solution in the small- to lower-midsize-enterprise segment. STRENGTHS The Switchvox solution is straightforward for partners to position and simple to implement. The standard Switchvox capabilities are included as part of the offer and are extended to users without determining specific user requirements and without the need to acquire individual licenses. Switchvox continues to be a highly price-competitive solution, with bids frequently coming in at one-half or one-third the price of competitors' offers. Digium's migration to the Asterisk 13 engine offers notable performance improvements added efficiency and stability to applications that are expected to enhance the overall user experience. CAUTIONS Switchvox is administered through each individual Switchvox appliance, which poses administration challenges for multisite organizations looking for centralized administration capabilities. Switchvox has some feature/function and performance limitations. The solution does not currently support web/video collaboration with external parties. Furthermore, integration with Microsoft Exchange and Skype for Business (SfB, formerly Lync) is reported to be mediocre. Digium has fewer sales support and internal development resources than some of its UC counterparts. While the Digium team receives generally positive reports from customers and partners, stretched resources mean that both delivering on the product roadmap and supporting customers and partners through transitions can take more time. Microsoft Microsoft competes in the North American midmarket with its Skype for Business Server (SfBS; formerly Lync Server) offer. SfBS can be positioned for premises-based implementations, while SfB Online (SfBO; part of the Office 365 portfolio) is delivered from the cloud. These solutions are positioned across small and large market segments. Microsoft's roadmap continues to evolve as the company increasingly focuses on building out cloud delivery capabilities for UC. However, when considering SfB for telephony functionality, it is important to distinguish between SfBO and SfBS. The SfBO telephony offerings are new to the market and not yet proven. The emerging telephonyfocused offer includes a basic cloud PBX feature set (Cloud PBX), telephony calling plans from Microsoft and the ability to connect existing public switched telephone network (PSTN) circuits to Office 365 using Skype software on-premises. Call plans are available in the U.S. Calling plans 383QOYQ&ct=160526&st=sg 7/36

8 outside of the U.S. are slated for delivery in major global markets during the next several years, starting with part of Europe in the second half of Additional SfB Online offers introduced in late 2015 include dial-in and dial-out PSTN conferencing, which works with existing VoIP-based audioconferencing, and Skype Meeting Broadcast. The SfBS is a significantly more mature product than SfBO. It can support telephony requirements of midsize businesses that have basic requirements. Many organizations opt to have one of Microsoft's partners host the server for an additional per-user-per-month fee. As part of Microsoft's rebranding effort from Lync to SfB during 2015, the company delivered a new UI, leveraging elements from the previous consumer-grade Skype interface that had broad user adoption and, therefore, familiarity across user groups globally. Consider SfBS if you have existing Microsoft enterprise licensing agreements in place (through Microsoft Office applications and Exchange) and have a collaboration-centric workforce. Ensure you have the required IT resources in place to manage the offering if telephony is part of the SfBS rollout. Sufficient attention must be paid to network quality to ensure a satisfactory user experience. STRENGTHS SfB offers intuitive collaboration-centric UC for midsize enterprises. Employees frequently leverage the IM, presence and web-conferencing capabilities in conjunction with Exchange to communicate across the business. Organizations frequently report significant use and reliance on these applications once they are extended to employees. Microsoft has a broad base of Exchange and Microsoft desktop application users with existing license entitlements in place. This established base of business users provides a unique opportunity to position UC sell-through services. Microsoft has significant marketing and product development resources, as well as a broad array of established partnerships with system integrators, value-added resellers, service providers and technology providers globally. These resources enable Microsoft to be in a position of significant influence across the UC landscape. CAUTIONS As Microsoft continues rapid UC portfolio enhancements, the company is increasingly emphasizing cloud delivery of these applications through its Office 365 portfolio. While elements of the Online portfolio are mature ( ), the Online telephony functionality lacks many common features and functions sought in an enterprise-grade cloud offer. Furthermore, Microsoft is expanding its role in the delivery of these functions as it applies for regulatory approval to become a service provider across country markets globally, and the timing of approval will likely be a twoto three-year effort. Using a premises-based approach for SfBS can be challenging for many resource-constrained midsize enterprises. Obtaining a complete solution requires integrating multiple non-microsoft assets, including Session Initiation Protocol (SIP) trunks, gateways, network monitoring tools and 383QOYQ&ct=160526&st=sg 8/36

9 phones. Furthermore, managing and ensuring version compliance across these assets require additional effort. Customers choosing this route should work with a qualified Microsoft Skype for Business partner. As Microsoft moves forward with provisioning cloud services, it forces some of its channel partners to evolve their offerings to obtain new revenue streams or face a loss in revenue. While many partners will provision adjacent services (such as network and security, contact center, and managed Wi-Fi), others will be displaced, which could impact channel loyalty. Mitel Mitel positions its MiVoice Business and MiCollab across the North American midmarket. MiVoice Business enables call control, hot desking and endpoints, while MiCollab enables presence, IM, UM, and web, audio and video collaboration. Notable recent enhancements to the portfolio include: the embedding of the Meet-Me Conferencing solution in MiVoice Business that eliminates the need for a separate application service for larger or more robust conferencing requirements; single sign-on between MiCollab and MiVoice Business; and increased scalability with support for up to 5,000 users on a single server. Mitel continues to expand its solution breadth through inorganic growth with the acquisition of two companies in In April 2015, Mitel acquired Mavenir to capitalize on adjacent mobile (voice over Long Term Evolution [VoLTE] and fixed mobile convergence) opportunities. In June 2015, Mitel acquired TigerTMS, a provider of hospitality industry-specific applications, to strengthen its UC hospitality proposition. On 15 April 2016, Mitel announced a definitive agreement to acquire Polycom, a primarily video and telephony vendor; the acquisition is expected to close in the third quarter of MiVoice Business and MiCollab can be implemented in various configurations, including software only as a virtual appliance, in VMware and Hyper-V environments, premises-based, and in various forms of cloud (public, private, and hybrid), since the same core software is used across provisioning models. Consider MiCollab and MiVoice Business if you are looking for flexible UC configurations, including virtualized, premises-based and cloud configurations, at attractive price points. STRENGTHS Mitel's architecture and license structure enable flexible deployment approaches. Customers can leverage the same features and functions across these approaches. The bundle-based licensing enables hybrid provisioning scenarios so that a mix of cloud and premises-based users can easily be configured in the same implementation. At the organizational level, Mitel has a strong focus on the midmarket segment. The company continues to direct resources to mobility, cloud and vertical-specific initiatives areas that are especially important to midmarket enterprises. Mitel has a strength in positioning UC solutions to specific industry sectors, including hospitality, healthcare and education. As part of its verticalization initiatives, Mitel has increased verticalspecific APIs and ecosystem partners to offer richer industry-oriented application customization. CAUTIONS 383QOYQ&ct=160526&st=sg 9/36

10 Mitel's growth through an acquisition strategy means that significant resources are tied into rationalizing, integrating and supporting various resources and solutions. This process can disrupt or slow progress, as well as negatively impact Mitel's ability to both offer consistent UC sales approaches and release UC solution updates that are market-ready. Mitel's channel partners are familiar with selling and supporting its telephony solutions, but some lack experience in installing and supporting the full UC solution set. Midsize enterprises interested in a full UC suite should check its partners' certifications, experience and references. On a stand-alone basis, for the 12 months ending 31 December 2015, Mitel's financial rating, according to the Gartner financial rating methodology, is lower than it was last year, moving from Positive to Promising. However, Mitel recently announced its intent to acquire Polycom, with part of the rationale for the acquisition being improved financial ratios for various metrics related to profitability, cash flow and its balance sheet. On a pro forma basis, assuming the companies were combined for the last 12 months, Mitel's rating would be Positive, and we would note an improvement in the company's net profit margin, cash-flow margin and balance sheet scores. NEC NEC positions its midmarket UC portfolio within its Smart Enterprise framework, which focuses on integrating UC and IT through workforce digitalization. Within North America, NEC positions UC functionality through a three-tiered approach: the Univerge 3C, a software-based approach for ITcentric businesses interested in disaster recovery; UC for Enterprise (UCE), which runs on the SV9300 and SV9500 telephony platforms; and UC Suite, which runs on the Univerge SV9100 platform and is positioned in the lower-midmarket (500 users or less) segment. In the fourth quarter of 2015, NEC launched Univerge Blue cloud-based UC services, based on the Univerge 3C, to enable its channel partners to position cloud and hybrid services. Univerge Blue cloud services are available in the U.S., with planned rollouts in parts of EMEA and Latin America before the end of Consider NEC if you are looking for customized UC functionality in the education, government, healthcare, hospitality and transportation industries. STRENGTHS Channel partners consistently report positive relationships with, and strong support from, the NEC organization. Strong support to partners/dealers translates to solid preimplementation and postimplementation sales support experiences for customers. NEC is also one of the few providers offering five-year support contracts for its solutions (customers report software assurance costs and support contracts over the term are attractively priced), further enhancing the customer experience. NEC offers straightforward licensing to obtain UC functionality through four primary bundles: Basic, Standard, Standard Plus and Premium. Bundles are simple for dealers to differentiate and position to customers. NEC is strong in specific vertical markets, including hospitality, healthcare, government and education. It provides business-specific customization through its standard web-based interfaces and its CEBP-based development platform. CAUTIONS 383QOYQ&ct=160526&st=sg 10/36

11 CAUTIONS NEC's Univerge 3C has limited market adoption. Because of the low adoption, customers need to ensure their partner has experience selling and supporting the Univerge 3C solution during the evaluation process. NEC has a low uptake of UC applications across its SV platform series. Most implementations involve UC-lite capabilities, including telephony, voice mail to and presence, but they do not involve more robust UC features, such as conferencing. NEC has multiple platforms and solutions across its telephony and UC portfolio, which means product development and resources can be stretched. Furthermore, while NEC has global coverage, not all solutions are sold in all geographies, so organizations with sites outside of North America should ensure regional coverage during the evaluation process. ShoreTel ShoreTel positions a single platform, ShoreTel Connect, across the midmarket and large-enterprise segments, as well across premises, hybrid and cloud deployment modes. The premises-based branding, Connect Onsite, uses an appliance-based distributed architecture or can be virtualized. The individual appliances operate independently but are managed within a single, distributed directory. The solution supports failover between sites, but it does not support failover to the cloud. ShoreTel Connect was released in June 2015 and is the consolidated platform of the previously separate ShoreTel premises-based platform (ShoreTel 14) and the ShoreTel cloud-based Sky offer. The Connect client is common to both cloud and premises deployments and is a redesigned UI featuring contact-focused collaboration. The Connect solution offers telephony, UM, video (peer-topeer and support for room-based systems via partnerships), IM, presence, and web collaboration (application sharing for Windows, ipads and iphones) capabilities. ShoreTel positions Connect Cloud for cloud service delivery, and offers Hybrid Sites for a mixture of cloud and premises sites, as well as Hybrid Apps for a mix of cloud and premises-based UC applications. ShoreTel offers an option for applying credit from premises-based license purchases to cloud-based licenses. Consider ShoreTel if you are a multisite midsize enterprise with IT resource constraints looking for flexible deployment options. IT planners should ensure geographic coverage for deployments extending beyond the U.S. STRENGTHS ShoreTel offers commonly required UC-lite features in an easy-to-use solution. Gartner clients consistently report ease of use and ease of management associated with ShoreTel implementations. This simplicity aligns with the capabilities of many IT-resource-constrained midmarket organizations. ShoreTel has a single-platform approach. This consolidated approach enables the company to focus solution development, as well as sales and support resources, more narrowly on the consolidated UC portfolio QOYQ&ct=160526&st=sg 11/36

12 ShoreTel offers application integration; for instance, it offers Microsoft Skype for Business integration. ShoreTel Telephony for Microsoft features embedded support for Cloud and Onsite customers for Skype for business implementations. ShoreTel does not require additional license fees for this integration. CAUTIONS ShoreTel's Connect solution is new to the market and still has software patches that are being rolled out on a monthly basis to address glitches and bring new feature enhancements to the solution. While ShoreTel has broad U.S. delivery capabilities, ShoreTel has a limited presence in other geographies. IT planners should ensure geographic coverage for deployments extending outside of the U.S. ShoreTel's UC feature set will satisfy the functionality requirements of most midsize businesses, especially lower midmarket organizations; however, the ShoreTel solution is not as feature-rich as some of its competitors. For example, its conferencing capabilities (video, audio and web) might not meet the requirements for some professional-grade conferencing and collaboration requirements. Toshiba Toshiba offers its IPedge and UCedge solutions across the midmarket for premises-based implementations. The IPedge is a Linux-based telephony platform available in three configurations for different customer sizes. For conferencing functionality, Toshiba positions its IPedge Meeting with support for basic audio, video and web collaboration. In the first quarter of 2016, Toshiba added built-in audioconferencing capabilities to its IPedge server. The UCedge, Toshiba's UC client, supports Android, ios, Windows and Mac. Toshiba added a softphone for Windows and Mac in UCedge provides presence, IM, contact management, integrated UM, visual voice mail and fax, and find-me, follow-me, and it supports federation with Extensible Messaging and Presence Protocol (XMPP)-compatible third-party solutions, including Microsoft Skype for Business. Toshiba positions its VIPedge for cloud-based implementations through its dealer network. Toshiba offers promotional campaigns to encourage the transition from premises-based to cloud usage, including a promotion in which VIPedge prospects receive new Toshiba IP phones for free when signing up for the service. Consider Toshiba's offer if you are a multisite organization with fewer than 1,000 employees in any single location looking for low-risk, UC-lite capabilities. STRENGTHS Toshiba differentiates by imposing limited risk through investment protection plans on its UC solutions. Toshiba offers five-year system warranties and seven-year telephony handset warranties for its UC solutions. Furthermore, its solutions are noted for being reliable. Toshiba is known for being easy to work with, and as a result, the company has a loyal base of authorized Toshiba dealers that it supports across North America. Toshiba's channel partners generally report favorable response times and personalized support for both preimplementation and postimplementation sales QOYQ&ct=160526&st=sg 12/36

13 Toshiba's position in the consumer and electronics areas as a large provider of laptops and TVs continues to help the company with brand recognition and leverage in North America. Furthermore, significant financial backing from the global corporation helps to boost its credibility in some UC bids. CAUTIONS Toshiba's UC solution is well-suited for organizations looking for basic UC functionality, but the solution might not be suitable for IT planners requiring robust collaboration capabilities. Toshiba's conferencing capability has low adoption and limited functionality. Toshiba's UCedge solution includes English and French language support only, so the solution might not be suitable for multisite midsize enterprises with sites outside North America. According to Gartner's financial rating tool, Toshiba (corporate) moved down from a Promising to a Caution score following revenue reductions and declines in profit margins. The rating tool is used to help assess an organization's overall financial health and can indicate whether the organization will continue substantial product investments or will need to focus on cost-cutting measures. Unify Unify competes in the North American midmarket with its OpenScape UC platform. In this segment, OpenScape is offered in two versions OpenScape Business (a self-contained solution with a "sweet spot" in the lower midmarket) and OpenScape Enterprise Express (with an upper-midmarket sweet spot) although both solutions can scale to support up to 2,000 users. The solutions provide telephony, audioconferencing and web conferencing, mobility, and contact center functions. Videoconferencing can be enabled via Unify's OpenScape web Collaboration solution. Unify offers built-in OpenScape Web Collaboration in the OpenScape Business solution. OpenScape Business can be managed centrally using the web-based OpenScape Business Assistant management tool. OpenScape Enterprise Express can manage the applications and end-user management via the web-based Common Management Platform (CMP). OpenScape Enterprise is offered in the largeenterprise market segment. In January 2016, Atos, a Europe-based provider of IT services, completed its acquisition of Unify from Gores Group and Siemens. Unify is operating under its own name and retains its current UC product portfolio. Unify will continue its restructuring plan, which could shift future resources. Unify offers various versions of cloud-based delivery: Circuit, its team and collaboration solution, can be provisioned as a multitenant offer; OpenScape Business can be provisioned via multiinstance cloud; and OpenScape Enterprise Express can be provisioned via multi-instance and multitenant cloud. These are offered by Unify, as well as through partners. Consider the OpenScape UC suite if your company is looking for a standards-based, cost-effective UC software suite that can be extended as needed via integration with third parties. STRENGTHS Unify's OpenScape Fusion enables strong third-party integration between the OpenScape Enterprise Express client and third-party applications, including Microsoft, IBM, Google Apps and common social media applications QOYQ&ct=160526&st=sg 13/36

14 Unify provides a comprehensive packaged approach to the midmarket, helping to simplify implementation and follow-on support. Unify's Circuit offer provides the company with a unique teamwork solution to help demonstrate a forward-thinking approach to communications. During 2016, Unify enhanced Circuit with the addition of PSTN telephony and conferencing capabilities, as well as a universal telephony connector to both Unify and third-party platforms, in addition to native WebRTC support. CAUTIONS While Unify's acquisition by Atos provides some benefits from an organizational viability perspective, the deal introduces questions from a geographic and future investment standpoint. Atos is headquartered in Europe and maintains a solid footprint in the EU region, but the company lacks visibility for UC in North America. Furthermore, Unify is in the process of completing a 267 million restructuring plan and will continue with a 103 million restructuring plan. Given that Circuit is part of a relatively new and emerging segment for cloud-based collaboration tools, Unify's channel partners have limited experience selling Circuit and will require some time to ramp up on this offering. Unify's midmarket portfolio features multiple platforms and applications with overlapping functionality, which may indicate Unify's resources are stretched over the portfolio. Vendors Added and Dropped We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor. Added No vendors were added to this Magic Quadrant. Dropped Interactive Intelligence was dropped from this Magic Quadrant. The provider is more focused on contact center provisioning and did not meet the inclusion criteria for telephony users. Inclusion and Exclusion Criteria To be included in this Magic Quadrant, solution providers must meet the following criteria: Offer a premises-based unified solution that includes all of the following six UC areas: (1) telephony; (2) conferencing (audio, video and web); (3) messaging (which can be offered via integration with , voice mail and various forms of UM); (4) presence and IM; (5) clients for multiple environments; and (6) ability to support communications-enabled applications. Support of related hybrid (premises-based and cloud-based) UC functionality will be considered as a complement to the premises-based UC offering. However, this is not a prerequisite for inclusion QOYQ&ct=160526&st=sg 14/36

15 The ability to integrate UC functions into a complete solution (can involve third-party products) and presented via a consistent interface. The ability to generate significant interest in the 100- to 999-employee segment. An offering that has significant market presence and new and add-on premises-based license shipments to the North American midmarket. Demonstrable UC for midmarket portfolio/products with references. Evaluation Criteria Ability to Execute Gartner analysts evaluate UC providers based on the quality, efficacy and overall maturity of the solutions, systems, tools and procedures that enhance individual, group and midsize-enterprise communications. Ultimately, UC providers are rated on their ability and success in capitalizing on their vision. Product/Service: This criterion includes core goods and services offered by the vendor for the midmarket. This includes current product capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships. Overall Viability: Viability includes an assessment of the overall organization's financial health (see Note 2), the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: This criterion examines the vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, ease of positioning UC licenses, competitive pricing and negotiation, presales support, and the overall effectiveness of the sales channel. Market Responsiveness/Record: This criterion considers the vendor's ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: This criterion evaluates the clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the midmarket, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This mind share can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities. Customer Experience: This criterion considers the vendor's relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on QOYQ&ct=160526&st=sg 15/36

16 Operations: This criterion examines the ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis in the midsize-enterprise UC market. Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Weighting Product or Service High Overall Viability Medium Sales Execution/Pricing High Market Responsiveness/Record High Marketing Execution Medium Customer Experience High Operations Medium Source: Gartner (May 2016) Completeness of Vision Gartner analysts evaluate UC providers on their ability to convincingly articulate logical statements about current and future market directions, innovations, customer needs and competitive forces, and how well these map to Gartner's overall evaluation of the midsize enterprise UC market. Market Understanding: This criterion evaluates the vendor's understanding of how customer needs are changing (for users and the IT group responsible for managing telephony, collaboration and UC). It was especially important to see how vendors proposed to complement, or compete with, collaboration solutions. Marketing Strategy: This criterion assesses the vendor's ability to offer a clear, differentiated set of messages that has been consistently communicated throughout the organization and externalized through the website. It also considers advertising, customer programs and positioning statements related to the midsize-enterprise UC market. Sales Strategy: This criterion covers the strategy for selling solutions to the midmarket that uses the appropriate channels, marketing, service and communication affiliates to extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base QOYQ&ct=160526&st=sg 16/36

17 Offering (Product) Strategy: This criterion assesses the vendor's approach to product development and delivery that emphasizes ease of use, functionality, methodology and feature sets as they map to current and future requirements for the midmarket. Business Model: This criterion evaluates the logic of the vendor's underlying business proposition for the direction of UC in the midmarket. Vertical/Industry Strategy: This criterion evaluates the vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets. Innovation: This criterion considers the vendor's direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: This criterion considers a demonstration of how resources, skills and product offerings meet specific geographic requirements. Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Weighting Market Understanding High Marketing Strategy High Sales Strategy High Offering (Product) Strategy Medium Business Model Medium Vertical/Industry Strategy High Innovation Medium Geographic Strategy Medium Source: Gartner (May 2016) Quadrant Descriptions Leaders 383QOYQ&ct=160526&st=sg 17/36

18 Vendors in the Leaders quadrant have UC portfolios that are specifically positioned with features and functions to meet the needs of midsize businesses. The user and management interfaces are integrated and generally intuitive and easy to use. Leaders balance the need for some customization with end users' desire for simplicity in their licensing structures, sales demonstrations and UC solution portfolio. Vendors in this quadrant have mature channel programs with distinct processes for presales and postsales support. Challengers Vendors in the Challengers quadrant offer UC portfolios that have most of the elements of providers in the Leaders quadrant, but are lacking in one or more critical areas. Typically, the UC portfolio might feature an array of UC features and functions, but the solution lacks simplicity or ease of use in its administration/management and interfaces. In other instances, the provider's channel partners might not have significant experience in positioning portions of the UC portfolio. Visionaries Vendors in the Visionaries quadrant typically offer a strong and differentiating approach to one or more core areas. These vendors, however, have a limited Ability to Execute across the entire set of requirements, or they have marketing and/or distribution challenges that limit their ability to challenge the leading providers. Niche Players Vendors in the Niche Players quadrant offer solutions that are strong in a particular segment of the market, but do not execute well across the full midsize segment. These vendors might have notable traction with a particular user group or meet a unique/specific business case requirement. Context UC solutions geared toward midmarket enterprises continue to evolve, with providers displaying feature and function strengths and shortcomings, varying abilities to deliver flexible deployment options, and unique go-to-market delivery and channel support capabilities. Midsize businesses seeking premises-based UC (or at least having a portion of their UC portfolio as dedicated, versus shared or multitenant) must evaluate a range of factors to determine if requirements can be met by a provider and its channel partners. UC Technology Trends IT planners should examine technical features that display a high level of ongoing evolution: Hybrid provisioning: Many midmarket organizations will opt to obtain UC functionality via a mix of cloud-based and premises-based delivery approaches. IT planners employ hybrid provisioning for reasons relating to costs, business requirements and flexibility. In some cases, organizations see hybrid as a low risk approach to evaluating an eventual shift to all cloud. Midmarket enterprises evaluating hybrid delivery should evaluate the costs associated with integration as part of the evaluation process QOYQ&ct=160526&st=sg 18/36

19 Mobility: Many midmarket organizations are distributed (multisite entities) in nature, and they have workers that yield higher rates of productivity through conducting some business functions via mobile devices. UC clients that are downloaded to mobile devices can extend UC features to enhance flexibility for workers. Providers' mobile device support (OS and device type) varies with different UC functions. Furthermore, providers display differences in their ability to seamlessly manage these functions. Mobile support is still maturing across providers' UC portfolios and is expected to continue to evolve as mobility requirements shift. API support: Increasingly, providers are extending support integration with business applications (Salesforce, SugarCRM, Dropbox and Zendesk) via APIs. IT planners should evaluate API support as part of the evaluation to determine how communications and processes might be enhanced through integrations. UC solution administration and management: UC solutions continue to be at varying stages of functional integration. Some elements of UC suites are tightly integrated with consolidated servers, administration tools and consistent UIs. Others display limited integration and create additional complexity in terms of configuration, administration and management. Delivery and Go-to Market Capabilities The UC providers in this Magic Quadrant feature unique differentiators in their delivery and go-tomarket approaches. Most providers have mature indirect channel capabilities across the North American midmarket, although there are differences in the number of channel partners and the ability for these partners to obtain strong preimplementation and postimplementation support from the provider as part of the UC sales cycle. These differences influence end-user satisfaction with the implementation experience and satisfaction with ongoing solution use and management. Providers also display varying abilities to deliver hybrid premises-based and cloud-based UC functions. Some providers have separate cloud and premises solutions, with unique branding and separate channel partners and license structures in place. Others leverage the same software stream across premises and cloud-based solutions and position consistent branding. In some cases, obtaining some functionality via the cloud for certain applications and other functionality via a premises-based solution is straightforward to accomplish, but many providers lack significant experience with hybrid provisioning scenarios. Providers display unique differentiators in meeting midsize enterprises' requirements for UC solutions. In some cases, solutions that were designed for small business might lack specific features or lack the ability to scale to support larger numbers of users. Conversely, some providers create too many feature choices and options, thus limiting their ability to position straightforward solutions with limited complexity. IT planners should evaluate providers' delivery capabilities and go-to-market strategies as part of their UC solution consideration process: Expertise of the partner/provider installing the UC solution: Does it have experience positioning premises or hybrid implementations? Does it have experience positioning the solution in organizations of similar size or industry? 383QOYQ&ct=160526&st=sg 19/36

20 Does it have appropriate certifications required to sell, install and support all elements of the solution? What is the partner status? Determine partner status gold, platinum or premium to ensure adequate response times will be delivered by the provider to the partner to meet the requirements for higher tiers of support. UC solution provider capabilities: Does it have a favorable and straightforward license structure in place to support desired premises, hybrid or cloud implementations? Does it have a favorable Net Promoter Score (NPS)? Does it have strong support and channel programs in place to support its solutions and channel partners? Does it have a proven track record of delivering solutions in the midsize-enterprise market segment? Market Overview Providers in the 2016 Leaders quadrant receive frequent UC consideration from midsize enterprises evaluating solutions. The providers have broad distribution and support capabilities across North America and are able to support North America-headquartered organizations, with sites in other geographies as well. While all three providers in the Leaders quadrant offer robust telephony capabilities, the providers differ in their approaches to collaboration, licensing structures, pricing, industry-specific customization and complexity, each excelling in different areas. No vendors appear in the Challengers quadrant this year. Providers positioned in the Visionaries quadrant offer unique approaches in the midsize-enterprise UC market. The providers either position collaboration-centric UC or differentiation (by offering most of the features desired by midsize enterprises in a differentiated way). These providers, however, struggle to meet the full range of requirements across the larger midmarket. Providers that appear in the Niche Players quadrant display unique strengths and traction in a particular market segment but lack significant adoption across the broader midmarket. Significant differences exist with features/functionality, market size segment capabilities, price, channel coverage and level of robust UC application adoption. Evidence This research is based, in part, on: Feedback from Gartner inquiries Providers' responses to questionnaires specific to this Magic Quadrant Interviews with the providers' channel partners Interviews with the providers' customers 383QOYQ&ct=160526&st=sg 20/36

21 One-on-one briefings with the providers Generally available information, news and data in financial and industry publications Discussions with Gartner peers in relevant research communities Gartner management critique and peer review, and vendor review and confirmation Note 1 End-User Survey Methodology Survey results are based on a Gartner study conducted in six countries: Brazil (n = 500), China (n = 500), India (n = 500), France (n = 500), the U.K. (n = 500) and the U.S. (n = 500). The research was conducted online from September through December 2015 to gather content and help Gartner build its forecasts in the following areas: Business process services Software Data center Devices Enterprise communications applications Enterprise communications services Respondents answered the content areas to which they were more knowledgeable. For the enterprise communications applications section, the number of organizations surveyed was 1,237. Quotas were established for vertical and employee size for each country, using Gartner's published vertical and size of business forecasts. The results were then weighted to be representative of the business universe in each country. The survey was developed collaboratively by a team of Gartner analysts who follow the IT market, and it was reviewed, tested and administered by Gartner's Research Data and Analytics team. Note 2 Gartner's Financial Rating Methodology Gartner tracks and measures more than 750 public companies. Gartner uses the following four financial metrics gathered from public sources of financial data: Revenue growth for the trailing 12 months Net profit margin (using generally accepted accounting principles [GAAP] numbers) for the trailing 12 months Current ratio for the most recent period Cash flow to revenue For further information, see "Understanding Gartner's Financial Ratings of IT Vendors." Evaluation Criteria Definitions 383QOYQ&ct=160526&st=sg 21/36

22 Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel. Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision. Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base QOYQ&ct=160526&st=sg 22/36

23 Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements. Business Model: The soundness and logic of the vendor's underlying business proposition. Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market. ( Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services (/technology/about/policies/usage_guidelines.jsp) posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Gartner provides information technology research and advisory services to a wide range of technology consumers, manufacturers and sellers, and may have client relationships with, and derive revenues from, companies discussed herein. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity. (/technology/about/ombudsman/omb_guide2.jsp)" About ( Careers ( Newsroom ( QOYQ&ct=160526&st=sg 23/36