Is It Time To Connect VoIP Into Your IT/Business Strategy?

By David Senf

and Gordon Edall

In today's economic environment the impulse is firmly entrenched to avoid unnecessary expenses. Therefore, companies with a sufficient installed base of legacy equipment are unlikely to forklift it all out to make room for VoIP gear unless there is a clear advantage to doing so. Moreover, with lower long distance charges and improved tools for managing legacy systems, the tactical savings associated with VoIP systems have largely been eroded. For enterprises with investments in legacy technology, new applications that offer strategic advantages beyond the simple tactical advantages are necessary. Until these applications arrive and the strategic value of VoIP becomes clear, many companies with legacy systems will continue to hold off on implementing VoIP strategies.

A large piece to the VoIP puzzle that is still missing is the "killer app" that offers enterprises a strategic advantage significant enough to justify the move to the technology on its own. The development of innovative applications has lagged behind because of the need for VoIP to provide feature parity with existing systems. With feature parity now essentially completed, attention is turning to the integration of VoIP into business systems and processes. This will become the key driver going forward, and many organizations will continue to wait for a specific "killer app" before making any significant move to VoIP.

Organizations considering voice over IP (VoIP) within their IT/business strategies will be weighing the growing capabilities of a young technology against its disruptive potential. VoIP is proving that it can save an enterprise money on several fronts, while simultaneously enabling new ways of doing business. However, its implementation today requires careful planning that begins well before deployment. The standards and technologies are still evolving, and while they are capable of meeting the majority of requirements within the enterprise, it is not yet clear that VoIP is the most effective solution in all situations.

The Promise of VoIP

In its simplest form, VoIP is intended to allow a phone call to be converted from an analog format into a packetized digital format that can be routed over a data network. In practice, however, when enterprises begin looking at VoIP, they are generally looking for a way to tie together a conventional circuit-switched telephone network and a packet-switched data network that is capable of carrying both data and voice.

The advantages to doing so are many and varied and have been heavily promoted by vendors since the early days of VoIP. Using a single network for both voice and data eliminates the need for an independent network dedicated to voice while extending the utility of the existing data network. It simplifies network administration by homogenizing equipment and centralizing control, thereby consolidating support staff. Moves, adds, and changes are typically far easier and cheaper. VoIP also simplifies the rollout of new services, while making new integrated applications possible. For businesses that need to aggregate calls from a variety of places or communicate with remote offices and telecommuters, the ability to extend features/functionality, bypass long-distance circuits, and make use of an already paid-for data connection can generate significant return on investment (ROI).

In addition to these sorts of hard savings, there are a variety of soft savings associated with VoIP that should to be taken into consideration. The value of being able to find remote or floating workers, regardless of their location, just by using their phone number is difficult to quantify, but self evident. Presence awareness offers a similar soft saving in that it can ensure that employees are using the most effective and efficient means of communication to complete a task, while benefiting from increased information flow.

The Tactical Advantages

The tactical advantages that VoIP offers are generally far easier to quantify in terms of dollars than of strategic advantages. Vendors over-hyped many of these advantages in the early days of VoIP, so calculating the potential ROI should be undertaken with some caution. Despite that caveat, it is possible to realize significant savings, including in the following ways:

  • Toll bypass. This was the primary selling point for VoIP vendors early on, which were essentially trying to sell the idea of "free long distance: anytime, anywhere." While this promise was somewhat misleading, there are significant savings to be had for enterprises with remote branch offices by avoiding long distance and leased line charges. However, the rapid decline in long distance charges in recent years has eroded the value offered by toll bypass.
  • Easier adds, moves, and changes. In general, adds, moves, and changes can be done more efficiently in a VoIP system, which helps lower operating costs. The recent availability of inexpensive Web-based interfaces for legacy systems has made them more efficient, but VoIP's advanced mobility functions, such as find me/follow me, go far beyond what is possible with traditional systems.
  • Intelligent routing. Intelligent routing can ensure that calls are made in the most effective manner. Calls can be dynamically switched between available interconnects, packet switched or circuit switched, to ensure that the relationship between cost and quality is optimized.
  • Improved efficiency through greater mobility. When combined with wireless LAN (WLAN, aka Wi-Fi), VoIP opens new possibilities across an enterprise campus. In healthcare, for example, where the roaming of doctors, nurses, and staff is a necessary part of delivering patient services, VoIP and WLAN can bring closer the promise of "anywhere and anytime" contact. Furthermore, when combined with intelligent routing, collaboration is facilitated through knowledge "on demand."
  • Reduced network administration and lowered operating costs. A single converged network, rather than parallel voice and data networks, is generally easier to administer and support. By avoiding the redundancy of a dedicated voice system, hardware upgrades improve the entire network, and many telephony functions are moved into software that can be more easily modified.

The Strategic Advantages

At the present time, the strategic advantages that VoIP offers are dependent on the business space within which it will be deployed. For call centers, as an example, VoIP has been a natural fit with a clear strategic case. However, in other areas of the enterprise and across market segments, the advantages are still more promise than reality. The reason VoIP is offering a strategic advantage in call centers is that the applications to integrate VoIP into the business processes with the call center have matured rapidly. By making it easier to identify calls and tie them into existing customer information databases, VoIP is improving business processes in the call center.

What the call center has made clear is that the strategic advantages VoIP has to offer are application driven. The current paucity of VoIP-enabled applications leaves its strategic importance up in the air for most businesses. However, because IP is now a familiar building block within the corporate environment, integrating voice capabilities into IP-enabled applications already on the network should be a natural fit. The caveat is that there are no "killer applications" yet for VoIP, and they are likely to be the ones that offer the real strategic advantages.

Is Now the Right Time?

VoIP remains a young technology, and there are still pitfalls. For the most part, vendors are using sales models left over from the days of legacy PBX systems and trying to sell soup-to-nuts VoIP systems. However, VoIP product lines continue to evolve rapidly, and no vendor can claim to have best-in-class products across the board. Making the situation worse, vendor interoperability remains the exception and not the rule.

At this point, it is still too early to declare any winners in the battle over standards, and it is all too clear that the major standards in use today will continue to exist for quite some time yet. Nonetheless, the joint support for H.248/Megaco by the ITU and the IETF is an encouraging sign. And Microsoft's decision to support SIP could very well lead to a far broader use of that technology than even H.323 enjoys in the carrier space.

Eventually, enterprise telephony will standardize on packet switched voice technologies. Because VoIP relies on the same network technologies that businesses have already learned to use, its success is all but guaranteed in the long run. For now, however, it is up to each enterprise to calculate when and how best to implement a VoIP strategy.

Contact author David Senf at dsenf@idc.com or 416-673-2202.

Copyright © 2003 IDG Communications, Inc.

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