NEC to Phase Out On-Premises Unified Communications Business Outside Japan: Key Considerations for Organizations

In April 2024, NEC made a significant announcement that it will begin phasing out its on-premises Unified Communications (UC) business outside of Japan over the next few years. This strategic shift comes with a series of critical updates and timelines that organizations currently using NEC's UC solutions must be aware of to ensure a smooth transition and avoid unnecessary cost increases.

Upcoming Changes to Software Assurance (SWA)

One of the most immediate changes impacting organizations is the upcoming increase in Software Assurance (SWA) costs. Starting on October 1st, 2024, SWA will see a 15% price hike. This increase will affect all customers who renew or purchase new SWA contracts after this date. Given this impending change, it is imperative for organizations to review their current contracts and consider renewing or locking in multi-year contracts before the deadline to avoid the additional costs.

However, it's important to note that while NEC Leasing currently provides financing for SWA, this may or may not continue for multi-year SWA contracts. Organizations looking to secure long-term deals should review multiple options on financing through third-party finance companies and the financing already in place for their organization. This shift adds an additional layer of complexity to the budgeting and procurement process, emphasizing the need for early planning and coordination with financial partners.

NEC Release 12 and Support Implications

Another critical development is the scheduled release of NEC's software version 12 in December 2024. With this release, NEC and the National Technical Assistance Center (NTAC) will only support two versions of the software: the current version and one previous version. For many organizations, this means that only versions 11 and 12 will be supported moving forward.

This change carries significant implications for organizations still operating on older software versions. To ensure continued support, organizations must upgrade to at least version 11 by the end of September 2024, but it is recommended that organizations upgrade to version 12. Failure to do so could result in potential disruptions in technical support and system stability.

Hardware Considerations: The Shift to CPU03

The upcoming changes also have hardware implications, particularly concerning the types of Central Processing Units (CPUs) supported by NEC's newer software versions. Specifically:

• CPU02 units will only support software versions up to version 9. This limitation means that organizations with CPU02 units will need to upgrade their hardware to run the newer software versions.

• CPU03 units are the only CPUs capable of supporting software versions 10, 11, and 12. Furthermore, the larger systems are dual-processor units, meaning that organizations should be purchasing two CPU03 units for each system they intend to upgrade.

This major hardware requirement significantly impacts budgeting and procurement plans. There are other hardware elements which need to be reviewed, system by system to ensure other elements are also in alignment with the future operability and longevity of the systems.  Organizations must not only plan for software upgrades but also for the necessary hardware investments. All hardware upgrades and purchases must be completed by December 31st, 2024, to align with the release of version 12 and to ensure continued support and compatibility.

Strategic Considerations and Next Steps

For organizations currently relying on NEC’s on-premises UC systems, the announced changes underscore the importance of proactive planning and strategic decision-making. The key steps that should be taken include:

1. Immediate Review of Current Contracts: Assess your current SWA contracts and consider renewing or extending them before the October 1st deadline to avoid the 15% cost increase.

2. Budgeting for Hardware Upgrades: Evaluate your existing hardware infrastructure, particularly your CPU units, and plan for necessary upgrades to CPU03 units before the end of 2024.

3. Exploring Financing Options: With NEC stepping back from financing multi-year contracts, organizations should engage with finance companies early to secure favorable terms.

4. Long-Term Transition Planning: Begin exploring alternative UC solutions if NEC's phased exit aligns with your organization’s timeline for technology refreshes. This might include transitioning to cloud-based UC solutions, which are increasingly becoming the industry standard.

5. Engage with a Technology Partner: Consider partnering with a technology consulting firm to navigate these changes effectively. Expert guidance can help ensure that your organization transitions smoothly, avoiding costly pitfalls and ensuring uninterrupted communication capabilities.

The upcoming changes from NEC represent both challenges and opportunities. By staying informed and taking proactive steps, organizations can manage this transition effectively, ensuring continued operational efficiency and cost control.

If your organization needs assistance navigating these changes, our team of experts is here to help. We specialize in voice communication system transitions and can provide the expertise you need to upgrade your systems and plan for the future. Contact us today to discuss how we can assist you in making this transition as seamless as possible.