Answering the Call

Office Communications Server 2007 R2 can help bridge the traditional gap between IT and telephony while offering rich new opportunities for partners from both camps.

It's hard to imagine a partner-company executive more excited than Terry Gold is about Microsoft's Office Communications Server (OCS) 2007 R2 -- Redmond's next step into the world of telephony.

In the midst of an interview about the forthcoming product, Gold begins to catalog the multiple things happening on his computer and telephone displays at that moment, from his ongoing instant message conversations to the locations and activities of various employees at his company, Boulder, Colo.-based Gold Systems Inc.

Sounding more like a kid with a new computer game than the company co-founder and CEO that he is, Gold is unabashedly enthusiastic about using the OCS system himself. But he's equally enthused about the potential sales that the new unified communications (UC) platform will generate for his Gold Certified Partner business, a software company that specializes in developing telephone applications.

"It's going to open business up in ways that haven't been available to us in the past," Gold explains, citing widespread interest in the new version, scheduled for release by year's end. "I'm talking to companies I wouldn't be able to talk to before."

Such was the buzz about OCS 2007 R2 (also known as "Wave 13" while it was still in development) before and after Microsoft was scheduled to announce the new release at the VoiceCon conference in Amsterdam, The Netherlands, in mid-October.

R2 offers a host of new features likely to raise pulse rates at both partner and customer companies. Building on a system that already offers a combination of voice, video conferencing, IM and presence capabilities, the new version offers, among other things, an attendant function that allows a receptionist (or a programmable automatic system) to answer and transfer calls along with accompanying messages and meeting notes. It can track work groups, indicating whether colleagues are immediately available for conference calls, e-mails or IM chats.

The new system is also compatible with a range of mobile phones, including the Motorola Razr and the Nokia S40.

But for many customers, the most exciting new bell/whistle is likely to be the conference-calling functionality, which can eliminate the need to pay outside companies to manage group calls.

Overall, OCS "adds a lot of functionality in many different ways," says Matt Scherocman, vice president of consulting services at PCMS IT Advisor Group, a Cincinnati, Ohio-based Gold Certified Partner specializing in network infrastructure management, security and technical support. Scherocman says that he expects the OCS part of his business -- now at 5 percent -- to triple over the next few years. "I'm wildly excited about this product," he says. "It's huge."

A Big Market -- With Even Bigger Potential
OCS is part of Microsoft's ongoing UC initiative, a software-based approach to bringing together various communications technologies such as telephony, e-mail, videoconferencing and IM. In launching the initiative in mid-2006, Microsoft described the underlying goal as "driving down the cost and complexity of communicating and collaborating at work" -- a particularly attractive outcome during economic times when both budgets and workforces may be stretched to their limits. Also central to the UC strategy: the concept of "presence" -- that is, the ability to pinpoint when a colleague or customer is online and available to communicate. But in a recent Q&A on Microsoft's PressPass Web site, Gurdeep Singh Pall, corporate vice president of the company's UC group, emphasized that officials envision the UC initiative as ultimately involving far more than just bundling those communications technologies into a single infrastructure: "We're exploring ways to infuse unified communications into new business applications, workflow technologies and content management," he said.

"Coming from the traditional telephony world, we were limited in what we did. Now we’re selling something that saves companies a lot of money. It's something they're all interested in talking about."
Terry Gold, CEO and President, Gold Systems Inc.

Introduced in the fall of 2007, OCS was in use at more than half of the Fortune 500 -- Fortune magazine's annual list of the 500 largest U.S. companies by revenue -- within a year.

"Right now, it's a great way to front-end a telephony system," says Bill Vollerthum, president and CEO of Gold Certified Partner Enabling Technologies Corp., a Glen Arm, Md.-based consulting company and a charter member of Microsoft's Voice Partner Program. "It works with traditional PBX systems while allowing you to send and receive calls, set up an IM presence and do Web video conferencing."

Scherocman says that, in addition to being able to match or even trump the usability of larger specialized systems, OCS is priced to compete with more expensive offerings from Oracle Corp. and others that have long dominated the enterprise-business space. He cites his own company as an example: "If you take us, 110 people, it would cost something like $120,000 to buy a traditional system," Scherocman says. "Done with OCS, at the same level of functionality, it would be less than $30,000 retail."

Yancey Smith, Microsoft's director of unified communications, says the growth in the market, egged on by the rapid adoption by many companies of less expensive voice over Internet protocol (VoIP) strategies, means there's plenty more opportunity to come.

"The IT space is massive," says Smith, who cites Microsoft figures estimating a potential market of $500 million by 2012."The opportunity is hard to qualify," Smith says. "It's hard to see the top end."

The Wonders of 'Wave 13'
We could fill the magazine with a list of the new OCS system's features, which, at press time in early October, were expected to be the subject of much discussion at and following the announcement at the VoiceCon event. Partners most familiar with the new product were already describing it as Microsoft's next logical move into the brave new world of IT telephony.

"What they did was watch the first generation of unified communications products from other vendors. Then they introduced a set of next-generation applications that offer more flexibility and capabilities for the information worker," says Vollerthum.

Partner-company executives who worked with Wave 13 rhapsodize about the way the new applications are combined to form a seamless link between voice, video and IM platforms. Building on Microsoft's presence technology, the new release allows users to create live chat rooms, rather than using e-mail distribution lists. Application sharing is more built-in than added on in this version, with fewer buttons to push.

Many businesses are likely to appreciate the feature that allows a service rep to transfer a call -- and the notes from the rep's conversation with the customer -- directly to a supervisor's phone and desktop computer. That capability helps prevent customers, who may already be angry or impatient, from having to repeat the same information to each new person on the other end of the phone -- and it may help companies resolve complaints and answer questions faster.

Scherocman is particularly impressed with the productivity boost that the new system provides. "If I'm working on a problem with someone else by phone or IM, I can see if someone is on the OCS cloud that I can ask for help," he says. The system even saves the IM exchanges and allows newcomers to the chat room to review what has been discussed before they joined the conversation.

Smith believes the R2 release will help OCS -- and Microsoft partners -- break into the enterprise market that has been dominated by PBX systems. "It really extends our enterprise voice propositions," he says. "It's a new investment for end users to touch and feel every day."

Streamlined Conferencing
In early reviews, partners and customers were particularly excited about R2's new conferencing function. With this option, gone is the bother -- and expense -- of dialing an 800 number run by a third-party conferencing service. Gone, too, are the times when someone sets up a call for, say, seven people and only two call in, making what could have been a simple call into an expensive budget item.

"We pay a lot of money for a third-party conference call. It's a significant expense for a small company like mine," says Gold, who estimates that Gold Systems pays more than $1,000 per month for such calls. "In the original release of OCS, you couldn't dial into those conferences. Our customers would say they were looking forward to that feature in any new OCS system."

Although saving money could be incentive enough for companies to take the plunge, Microsoft's Smith believes that many clients will be attracted to the improved sound quality and the increased simplicity and control that R2 offers for managing meetings from the desktop. Conference attendees will still dial an 800 number, but it will be the company's own private 800 number, rather than one owned by an outside vendor.

"I get a box on my screen that helps me manage the conference," Smith explains. "I can see the dial-ins on the screen and promote speakers over side conversations. It's a much richer experience."

Most Likely Early Adopters: SMBs
Microsoft has estimated that some 130,000 of its employees, contractors and partners are using OCS in their everyday work, including more than 34,000 that have replaced their use of PBX systems almost entirely with OSC.

Those numbers are based on a strong bottom-line incentive: Microsoft estimates that its own use of OCS will save the company $11 million on communications costs over the next two years.

But OCS fans also believe the so-called holistic applications of UC will open doors to both customers and partners who still rely on traditional telephony for many communication functions.

"R2 is going to see a lot of customers who will use it to take a load off their PBX systems," Smith predicts. "It won't be replacing the PBX, but it will be sitting next to the PBX on everyone's desk."

"If I'm working on a problem with someone else by phone or IM, I can see if someone is on the OCS cloud that I can ask for help."
Matt Scherocman, Vice President of Consulting Services, PCMS IT Advisor Group

Such projections are exciting to partners who, like Vollerthum, believe that the IT world will see R2 as Microsoft's firm commitment to become a major presence in IT communications.

"We're expecting to see an uptick in customer adoption with the increase in proof-of-concepts and trial deployments," Vollerthum says. "Customers will want to leverage their communications with Microsoft."

Smith acknowledges that the communications area represents a relatively new direction for Redmond. "It's a space we haven't traditionally looked at," he says. "We were thinking of ways partners can build business solutions to include real-time communications. It can bring a big bonus."

Still, Vollerthum doesn't expect an immediate rush within larger enterprises to replace their PBX systems with an IT solution. That, he believes, will evolve more slowly.

"We'll see a change more with small to midsize customers than with large businesses," he says. "There will be a gradual adoption [by large companies]. Enterprises that are global have more complexities and require more planning. They will take a phased-in approach, unlike the smaller clients who are more able to throw the switch" to move from a PBX to an OCS system.

Scherocman says the expectations for R2 and subsequent OCS products have already prompted many potential clients, large and small, to hold off on looking at communication system upgrades peddled by other software companies.

"Microsoft has done a good job of freezing the market," he says. "I've been talking to customers who want to rip out their telephony system handsets. We say, 'If Microsoft can add it for you, you don't have to upgrade your entire system.'"

New Partners, New Alliances
The advances of OCS R2 is also attracting new Microsoft partners whose businesses, like those run by Vollerthum and Gold, are based on telephony solutions. To some partners, that fresh blood can help create new opportunities for the entire channel.

"Coming from the traditional telephony world, we were limited in what we did," says Gold, whose pre-Microsoft business focused on customizing customers' contact centers. "Now we're selling something that saves companies a lot of money. It's something they're all interested in talking about."

Vollerthum is happy to be part of the OCS team, anticipating that his company will see steady growth with OCS alone for the next three to five years. In effect, he says, his company has bet its business on Microsoft's strong presence in unified communications.

"We believe our business is going to grow exponentially with continued improvements with OCS and clients ready to move to deployment," he says. "We're scaling our technology and sales staff to meet that demand."

Smith notes that a Microsoft Partner Advisory Council is also helping with the effort to unite the IT and telephony partner communities: "We recognize that we have partners for OCS coming in from two different sides," he says. For many on each side, OCS represents the first real reason to work with partners from the other community.

Gold says getting to know communications specialists can be highly beneficial for traditional IT companies: "Some of the partners that are getting into telephony for the first time are going to be surprised," he says. "It's harder than it looks."

A Cultural Shift
Despite all those raves about the new OCS being packed with desirable features, partners are likely to uncover some cultural roadblocks when they travel deep into the uncharted territories of a new customer's organization. Partners with experience in making such journeys emphasize the importance of understanding the often complex relationship between the customer company's IT and telephony specialists. You may well find yourself in the middle of a smoldering, barely civil war between the two.

"I've seen these two groups come together where they've never met or met and don't like each other," Gold says. "We help the telephone guys understand computer systems and the fact that the IT guys aren't going to take down the PBX systems. Then we help the IT guys understand and have some respect for what the telephony guys have been doing for the past 30 years."

He also recommends educating yourself about the most widely used telephone systems to understand each customer's existing communications culture. Even then, you'll need to work closely -- and carefully -- with whoever oversees each company's phone systems. "You will often be deploying OCS with existing systems and you have to know those systems to be able to tell the administrator what you're trying to do," Gold warns. "If you don't understand PBX systems, they're going to eat you alive. If you try to bluff your way through a conversation with them, they will shut you down."

Scherocman cautions that some customers may be surprisingly resistant to some of the new system's key features -- most notably, IM. Many managers of a certain age view IM as a time-wasting social distraction that they don't want to provide to their workers.

"This is one of the biggest areas of education that we have to get through with some folks," he says. "I tell them, 'If you are hiring anyone out of college, you are going to have to give them this functionality. That's the way they communicate.'" Then he provides a brief tutorial about the advantages of secure, in-house IM systems, including the fact that they provide the storage for such communications that some regulatory agencies now require.

OCS 2007 R2 at a Glance

Another major element in Microsoft's unified communications strategy, Office Communications Server (OCS) 2007 R2 moves the OCS platform into IT/PBX territory, providing more services in a seamless link of presence, voice, instant messaging, text sharing and conferencing.

The new product also moves Microsoft and its partner community into the enterprise area of telephony, offering less-expensive solutions with features such as conferencing and attendant functions. It will not replace cumbersome PBX systems at large enterprises, but it will provide a foothold for partners to sell their way into this new and growing market. Here's a look at OCS in a nutshell:

The feature that has caught the most buzz is a function that eliminates the need for third-party conferencing services. OCS 2007 R2 offers the ability to host your own telephone conference with up to 10 participants. For some clients, the long-term savings alone justify the purchase of the system.

Attendant Feature
Allows for the option of a live receptionist or automatic answer and transfer function with conversation templates that tell the call recipient what's coming, such as: "I'm transferring the call to you," or "The boss is calling." The system can automatically transfer notes from the call to the next recipient. It also provides for music on hold.

Chat Group Function
Creates formal chat rooms, eliminating the need for IT to set up distribution lists. Questions can be sent to chat room members, who can respond and interact on a live basis. The function also has an archiving capability.

Desktop Sharing
One-click sharing replaces live meetings. OCS 2007 R2 eliminates the need to launch the conferencing client.

Communicator Web Access
Can be utilized by cross-platform PCs, Mac and Linux systems for desktop sharing.

Works with non-Windows Phones
Will work with other cell phones, such as Nokia S40 and Motorola Razr. Allows for multiple IM sessions and a search function for contacts.

Call Back Functionality
The OCS server can initiate a call back to an OCS phone, then dial the person. The system doesn't use up cell phone minutes on inbound calls.

IDS surveys estimate the total size of the market at $16 billion. Microsoft predicts hitting a $500 million mark in four years.

Traditional PBX software and software companies, such as Oracle Corp. and smaller, specialty telephony firms.

Specific figures weren't available at press time. Indications are that OCS systems would be one-third the cost of comparable PBX or hybrid systems.

The official announcement was made last month at the VoiceCon meeting in Amsterdam. Release is expected by year's end.

The product will allow partners to break into the enterprise telephony market. But there are words of caution for those new to the world of PBX systems. Partners recommend taking a hard look at customers' existing systems to understand what you're getting into. To help, Microsoft is working to pair telephony companies with traditional server providers.


-- F.B.

The Future
The opportunities and challenges of Office Communications Server 2007 R2 should be considered in another light. Even as Microsoft releases the new R2 system, the company continues working on Wave 14: the next iteration of OCS.

Smith offers reassurances that the next step will hold "great new features" and no "huge surprises" for the partner community, but provides no specifics beyond that. However, partners with some knowledge about OCS developments believe that the transition will be painless. As Gold puts it: "I don't expect Microsoft to disrupt my customers who have already installed OCS."

Vollerthum believes the anticipated added goodies in Wave 14 will give Microsoft and its partners the ability to compete with 70 percent of the business telephony market.

"We believe it's going to be a continuum of more functionality and more PBX replacements," he says. "We see the latest OCS as priming the pump for the next product by this time next year."

Scherocman predicts that future releases will include features such as the ability to hunt for chat groups and and the option to chat with coworkers while transferring a call to them. Meanwhile, he also views Wave 14 as a logical progression from R2. "The current product release says 'Leave your existing phone service in place,'" he says. "The next version says 'Start using your OCS as your PBX.'"