Cloud-based communications provider Switch Communications just landed $35m in funding, highlighting a growing interest in the online communications and collaboration market.
The series C financing follows an $18 million B-round for Switch Communications, which provides cloud-based unified communications and phone systems. The funding round for the San Francisco-based firm was led by Amasia Associates, with Felicis Ventures, SoftBank, Work-Bench Ventures and previous investors Andreessen Horowitz and Google Ventures.
The deal might signal good fortunes for companies selling cloud-based telecommunications, but companies are still showing themselves to be wary of the cloud, especially when it comes to mission-critical infrastructural applications.
This was the finding of a survey from West IP Communications, a cloud-based unified communications company based in the US.
West IP surveyed over 300 IT managers to find out what they thought about cloud computing and its role in providing telecommunication services. It turned out that companies trusted the cloud to provide a high quality of service with telecommunications, but they weren’t so sure about security.
Nearly 75% of the IT managers interviewed said that the quality of telecommunications would stay the same in the cloud, or perhaps even improve. However, 55% of IT managers responding to the survey said that they didn’t believe communication service providers handle security competently enough.
These concerns pushed respondents towards a private or hybrid model. 55% of them said that they would prefer a private cloud solution to telecommunications, while another third opted for a hybrid approach.
West IP also asked IT managers about their perceptions of the cost involved in moving to a cloud environment to telecommunications. Just under half said that the return on investment wasn’t yet sufficient. The thin majority said that they would make the money back. But how?
Around three quarters of those who predicted a return said that they would cut the costs of doing business. The biggest single perceived saving was on capital expenditure, as companies look forward to spending less on hardware. Lower operational expense was the second most popular predicted benefit of a cloud computing move.
Cost is clearly still a driver for companies that do move their telecommunications into the cloud, but what about features? Kevin McMahon, director of marketing for West IP, said that larger companies tended to focus on this more.
“Especially among those organizations that skewed towards the higher end of the employee count. They tend to be a little more sophisticated, and typically they would have more locations,” he said. “The value of unified communications crystallise a little more clearly for them.”
Services like call recording directly in the cloud are particularly appealing for companies, he said, adding that the ability to integrate video was also becoming more important for larger firms.