On-Premise vs. Cloud Hosted: What Does Avaya’s Bankruptcy Mean for the Future of Business Communications

This January, telecommunications company Avaya filed for Chapter 11 bankruptcy after facing challenges that arose from adapting to cloud technology just a bit too late. Though the company does provide software and services and made about 75 percent of their revenue in 2016 from these solutions, their capital structure was based on an older, hardware-focused business model that no longer reflected industry trends.

Avaya’s decision has left many in the industry wondering if the cloud has won or if there is still a place for on-premise telecom solutions in the modern marketplace. Below, we’ll discuss what Avaya’s challenges say about cloud-hosted solutions as well as where on-premise solutions fit in today.

What Avaya’s Situation Says About the Cloud

The events which lead to Avaya’s recent bankruptcy decision have brought to light an important challenge for many telecom businesses today. As the industry shifts toward more software and service-based business models, those companies with capital structures based on hardware solutions will need to adapt to the changing and growing needs of modern companies if they want to stay in business.

The marketplace is becoming increasingly more digital, and more businesses are forgoing physical locations in favor of online business platforms with remote employees. Not to mention, more and more businesses are developing a global outlook which may require more flexible communication solutions.

This is not to say that there is no place for on-premise telecom solutions. However, contemporary companies are changing the way they do business, and telecom solution providers need to adjust their structure to accommodate for new communication challenges.

On-Premise vs. Cloud Hosted: Is Cloud the Future?

Though Avaya’s challenges may suggest that cloud is the clear winner in the battle between on-premise systems vs. cloud-hosted solutions, the truth is that the “winning” solution will depend on the individual needs of your business. Both types of solutions have their pros and cons, and the key to choosing the right solution for your company is carefully considering what each option can offer.

On-premise systems give you greater control over your telecom investment and only require a one-time capital outlay with occasional maintenance and upgrade costs. However, these systems also require a significant investment up front as well as in-house talent that can manage and maintain your resources. Though this works for many larger businesses, it may not be the most effective solution for small or growing companies.

On the other hand, cloud-based services require only minimal up-front costs and offer you the ability to be up and running quickly. Cloud-hosted solutions are also very flexible and scalable, and they allow your company access to the latest functionality. This is a great option for businesses who have many remote employees or those who may not have the resources in-house to manage their system. However, the total cost of ownership over time may be more than on-premise solutions, and, in some cases, there are limited customization options.

Which is Right for Your Business?

When looking for the right telecom solutions for your business, consider both your current, near-term, and future needs. How many employees do you have, and how many of them work remotely? What is your growth strategy? You will also want to look at what existing telecom assets you have, what your network capacity is, and what your disaster plan or security measures look like. In addition, consider what your in-house expertise is and what resources you have available.

Do you need help finding the right business communication solutions for your company? That’s what we’re here for. Give us a call today to learn more about which telecom solutions might be right for your organization’s biggest communication challenges: (888) 323-0557.

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