In-Depth

Inside the New Lync Server: Microsoft Pushes into Voice Communications

Microsoft Lync Server is poised to become a major factor in the market for enterprise voice systems.

• By Paul Korzeniowski
• 11/01/2010

At one time, mentioning Microsoft and voice communications in the same sentence would have generated quizzical looks -- perhaps even laughter. But now, there's no doubt that Microsoft wants to become a prime supplier of enterprise voice systems.

"Microsoft understands that to be a key player in the collaboration market, it will need to offer robust voice solutions," says Allan Sulkin, president of TEQConsult Group, a telecommunications-management consulting firm.

One reason for Redmond's interest in enterprise voice systems is that technical advances have blurred delimiters among data, voice and video applications. Employees want to exchange different types of information and not worry about whether they're stored in e-mail, Web conferencing or voicemail systems. While Microsoft has always been strong in supplying users with access to data, historically it has been a bit player in the voice market.

Microsoft is trying to change that by pumping a lot of energy and money into its telecommunications linchpin, Office Communications Server (OCS). Microsoft is about to release a new version of OCS, and is re-branding it Lync Server.

However, even with several versions of OCS under its belt, the company is just getting out of the starting gate. "Microsoft market share in the Voice-over-IP market is negligible," notes Jonathan Edwards, a research analyst at IDC.

"The company doesn't even have 1 percent market share," Edwards adds. But that could quickly change. The design of Lync Server fits with the movement away from traditional hardware-based voice systems to software-based solutions, the latter of which has long been Redmond's bailiwick.

Consequently, observers expect Microsoft to increase its market share -- but how high it will climb is unclear.

With collaboration becoming the watchword in enterprises, the software titan's new emphasis fits with changing app requirements. Employees now want to be able to identify collaboration needs instantly, see who's available and quickly exchange information -- whether it's data, voice or video.

"Old-school telephony is one way for people to connect, but we feel that you can create a much richer experience that works from within Office, SharePoint and Exchange, and helps people feel more connected to one another than they would if using disparate, silo-based communications tools, like a phone," says Kirk Gregersen, senior director for Microsoft Lync. As a result, autonomous applications, such as e-mail, instant messaging and video conferencing, are being melded into Unified Communications (UC) systems, which enable employees to use a variety of methods to exchange information in real time.

Tight Integration
The Microsoft UC platform consists of client-server software that essentially give its apps the ability to interact in a variety of ways: e-mail, IM, voicemail and video conferencing.

The system supports presence, so individuals can collaborate on the fly. Some of the underlying functionality is built into OCS and Lync, and in other cases, it's being integrated into other Redmond applications, most notably Microsoft Exchange Server.

OCS -- including the new Lync -- has some strong attributes. One big plus is its integration with other Microsoft products. For instance, a company relying on Microsoft Outlook can now add phone features to a client system that's already supporting e-mail, contacts, calendaring and scheduling functions. Rather than having to check e-mail in one place, examine voicemail in another and pick up faxes in a third, all of these messages can be delivered to a user's Exchange inbox. Traditionally, voice functions have been tightly tied to the underlying hardware -- either a private branch exchange (PBX) or a Voice over IP (VoIP) switch -- but the industry has been moving to more software-based solutions, which also plays to Redmond's strengths.

Customer Appeal
Such features appeal to current OCS customers. For instance, Volunteers of America-Florida, which has 250 employees in 30 offices, is a nonprofit organization providing health, housing, training, education and employment services to the elderly, persons suffering from mental illness, and individuals with various substance-abuse problems. The organization, which serves 4,700 Florida residents annually, relies on Microsoft Exchange, SQL Server, SharePoint and System Center Manager to support its operations.

"We that think our users have a more integrated, cohesive experience because our applications come from a single vendor," says Rob Minshall, IT director of Volunteers of America-Florida.

In 2007, the nonprofit started to look at replacing its Nortel PBX, which didn't have sufficient lines to support the growing enterprise. The organization wanted to tie its

different locations together in a private network, and used long-distance lines from Sprint to do that. In addition to cutting the telecom costs, the new network enabled employees to collaborate virtually via OCS rather than face-to-face.

"Travel costs were eating up a lot of our budget, approximately $10,000 a month, but now we encourage employees to use OCS instead of holding meetings and have seen significant savings," Minshall says.

Also in early 2007, A.T. Kearney, a management consultancy with 3,500 employees in 50 offices, decided to replace its legacy Avaya PBX. The company issued a request for proposals to leading vendors and opted for Cisco Unified Communications Manager (UCM). Shortly after the new system was in place, the management company, whose employees are often out on the road, began looking for a way to extend collaboration features to its mobile workers.

"[Cisco's] approach cost three times more than the Microsoft option," says John Laughhunn, CTO of A.T. Kearney. Cisco charged for each collaboration app (voice, video, messaging), while Microsoft bundled them all into one license.

Once the upgrade was made in 2008, employees began collaborating in a wide range of ways.

"The conferencing features have been quite powerful; we can now instantly bring the best individuals in the company together to brainstorm on a problem," notes Laughhunn. Daily, 40,000 information exchanges -- including 500 videoconferencing sessions -- now occur at A.T. Kearney via OCS.

The University of Kentucky, which has 40,000 students and staff, also found the pricing for OCS attractive. The academic institution relied on an Alcatel-Lucent 5ESS switch for most campus voice functions, as well as on Cisco UCM, which was deployed in its medical center. In 2007, the IT department began to look for a collaboration tool.

"Pricing was a major factor for us," says Doyle Friskney, CTO of the university. "It would've cost us $2.5 million to go with the Cisco system, but only $150,000 for the Microsoft product."

The university started with a pilot program of 300 users, with individuals from a number of different departments involved. The video quality was better than the users had previously experienced, and the voice communications seemed as robust as those with the 5ESS switch.

As a result, OCS is now available across the campus and has spurred some novel deployments. Live Meeting has been installed on remote computers in various branch libraries so students can ask reference librarians questions via IM, voice or video without leaving their study sites. In 2008, the College of Medicine moved first-year medical students to a building away from upper-class medical students. To ensure that no student's needs were overlooked, the academic advising and support associate staff used OCS to stay in touch with students during the transition.

OCS has also found supporters among some non-Microsoft customers. Established in 1917, HarborOne Credit Union, which has 350 employees and 16 branches, manages $1.6 billion in assets. In 2007, the financial-services organization decided to modernize its IT infrastructure, which entailed dumping its Novell GroupWise office suite and upgrading its voice network, which was supported by a Nortel PBX. By deploying OCS, the corporation was able to route calls over its private network, cut its telecom costs by $250,000 and gain more-sophisticated collaboration functions. "Initially, we had to adjust the quality of service features on our network to ensure good sound quality, but now employees have a much richer array of options whenever they need to exchange information," says Wayne Dunn, HarborOne Credit Union CTO.

Transportation electronics manufacturer Stoneridge Inc., which has about 5,000 employees, started using OCS in 2005, mainly as a way for IT personnel to send IMs to one another. In 2008, management was looking for a way to promote online collaboration, and the IT department saw OCS as a good fit. The firm is widely dispersed and had relied on third-party conferencing systems to enable employees in the United States, Europe and Asia to collaborate without jumping on a plane. In 2008, Stoneridge began moving most of its conferencing sessions onto its own network.

Now OCS has emerged as the company's primary voice system. Traditionally, business units were able to purchase whatever they desired, so Stoneridge had a hodgepodge of voice systems in its offices. Recently, management thinking shifted to having more cohesion to its IT systems.

"Eventually, we'll use OCS in all of our locations, and don't plan to buy another PBX," explains John Young, IT technical director at Stoneridge.

Still Work to Do
So, how much of a force could Microsoft become in the voice market with Lync?

"Microsoft's moves should send chills through the old guard of the enterprise communications system suppliers," proclaims TEQConsult Group's Sulkin.

The Microsoft strategy of positioning the new Lync Server as either an augmentation to or a replacement for a PBX and VoIP could eventually pay big dividends. Cisco followed a similar strategy by having companies first deploy its IP telephones to help establish an installed base -- in fact, the company shipped many IP telephones at no cost. The vendor is now one of the top-two VoIP switch suppliers.

However, Redmond's potential rise to top telecom provider is not a slam dunk. Because it was in a nascent stage of development, previous versions of OCS didn't offer as many voice functions as alternatives did.

"We were missing some core telephony features in the past, including E911 and survivable branch office support," admits Gregersen, of Microsoft. To address such shortcomings, the company made significant enhancements to Lync Server. The improvements include:

• Support for adding context to calls. For instance, an employee can type in the reason for the call, such as "brainstorm about PowerPoint presentation," before placing the call. The recipient will see the subject of the call before deciding whether or not to answer.
• E911 (Enhanced 911) allows users to dial 911 and get local assistance no matter where they are, and the caller's location is displayed to the emergency responder without the person calling having to provide it.
• Simultaneous-ring feature, where -- based on who's calling -- a user can choose to have the call ring at a specific number, go straight to voicemail or simultaneously ring at multiple numbers, such as at a cell phone and a desk phone.
• Call parking, which lets the user put a call on temporary hold, transfer it to an unused phone and then resume the call.

For a full list of improvements provided with Lync, see "Making the Call."

With its $60 billion in annual revenue, Microsoft is a force in many IT markets. Its interest in voice communications has evolved slowly, with the company often meandering about on the market's periphery. However, the Goliath seems much more focused on becoming a top voice-solutions provider now than in the past. Redmond has the entrenched base, financial wherewithal and expertise needed to make inroads into this space.

"In three to five years, Microsoft has a good chance to become one of the industry's top-five enterprise voice-system suppliers," says IDC's Edwards. No one will be snickering if that happens.