A few years ago, no one would
have predicted the drastic downturn of the telecom industry following the
climatic rise in growth, spending, R&D and employment we experienced
around the turn of the century. But then again, no one could have
predicted the overall recession either, much less the events of September
As we sort through the impact of
these events on all businesses, look at the overall economy and consider
the financial, business and political venues, many question exactly what
happened? But now that events have happened, the next logical question is,
�Where do we go from here?�
Industry experts predict the next
major paradigm shift will involve Internet Protocol (IP) telephony.
However, this transition will and should occur over many years in order to
take full effect and render optimal impact for all.
CAN VOIP SAVE MONEY?
Unlike during the 1990s,
technological advancements such as Voice over Internet Protocol --
otherwise known as VoIP -- must be qualified on better grounds beyond
being considered �a really neat technology.� It will be legitimized by
any real, measurable savings that it enables. Generally, VoIP savings fall
into three categories: MAC savings, lower bandwidth costs (or better
utilization) for WAN links and reduced personnel. Many TDM PBX
professionals dispel the ability to reduce personnel as merely wishful
thinking. In actuality, they are probably correct, but only for the near
term. The initial installation and configuration of a corporation�s
first VoIP system can be challenging. However, once it is set up, the
number of dedicated personnel required to run it will be less than with a
traditional PBX system. Existing IT personnel will assume primary
responsibility for running the VoIP system.
Let�s evaluate the potential
benefits of each of the three main savings areas. When traditional PBX MAC
work is contracted out, the cost runs $55 to $295 per occurrence with an
average cost of $119. When handled in-house, the cost is expected to
average $64 (based on the same survey). The average MAC takes 1.5 hours in
a TDM PBX environment and the average employee requires 0.87 MACs per
year. For every 100 employees most companies spend $10,353 per year for
contracted MACs and $5,568 for in-house MACs.
In a VoIP scenario, each MAC
averages about 15 minutes and is done by the IT staff (typically help desk
personnel) for an approximate cost of $10.25. For every 100 employees, a
firm should expect annual savings of $9,461 versus contracted TDM PBX MACs
and $4,676 as compared to in-house TDM PBX MACs. Other benefits include
the ability to perform MAC work from any PC on the LAN/WAN and the fact
that users can simply pick up their phones, move them and log on anywhere
on the network without any IT involvement whatsoever.
Trunk lines are not new in the
PBX world, so why should we attribute lowered bandwidth costs on the WAN
using VoIP? Basically, VoIP proponents say that if you have a WAN link
dedicated for voice and a WAN link dedicated for data, you can eliminate
the voice link or at least reduce the size of your aggregate WAN links.
This would be possible, of course, only if you had bandwidth available on
the data WAN link that can handle the new voice traffic. Packet technology
is more efficient than TDM and can squeeze in voice packets among the data
packets (with proper QoS). IP (or should this be VoIP?) does not waste
resources waiting for the next time slot when the current one is empty; it
uses all of the bandwidth. Voice doesn�t use as much bandwidth as data
applications, so it makes sense to blend voice with data to maximize the
In the short term, don�t expect
noticeable personnel cost reductions. In fact, during the period when
companies are transitioning from TDM to VoIP, we have seen slight
increases in personnel complements in the telecom and IT areas that are
dedicated to IP PBX implementation.
There are several reasons for
these increases. One is that VoIP is new and many enterprises are bringing
in additional people (full-time or contract) into their IT areas who
understand the technology. During the VoIP system setup, the TDM PBX must
be kept running, requiring all of the telecom staff to continue in their
VoIP technology is so new to most
companies that implementing their first system typically takes
substantially longer than installing or upgrading another traditional PBX
-- a trend that will change as they move along the learning curve. Once
these initial issues have been successfully conquered, the personnel
savings will start to emerge.
IS VOIP A FAD?
VoIP is here to stay. Already in the first quarter of 2004, it appears
that new VoIP port shipments from the major manufacturers will exceed TDM
VoIP is justified from an ROI
perspective. The numbers and reasons appear to be a little soft in the
short term but if you project out 12 months from installation, the savings
become more obvious.
If your company needs to upgrade
its PBX system and it makes economic sense in the long term, then you
should consider implementing VoIP, but not if your current PBX is handling
all of your telecom needs.
In any given organization, four
basic measures must take place for a smooth transition from an old system
to a new IP network:
- Solidify existing capital structure --
solid financial planning is essential to secure the future success and
maintenance of any new system;
- Update the �highway� from copper
- Ensure necessary revenue exists to
support the new network
- Educate and engage all human capital
to be involved in the process.
VoIP has immediate
applications where the database already exists, as in a school or large
bank system. Even so, this transition can take months to get all end users
up to speed -- from the CEO down through the organization.
In most cases, VoIP should be
implemented as it becomes practical. Some systems currently can
incorporate IP telephony, but most will have to be developed over time.
Digital software-based networks need to replace today�s mechanical
systems and careful planning is necessary, especially for multi-site
organizations. Multiple factors should be evaluated, such as the status of
the current system, where all equipment and hardware reside, the
management process at each site and specific billing needs.
WHEN IS THE RIGHT TIME TO SWITCH TO
When evaluating whether or not to transition to VoIP, managers need to
assess what makes sense economically and for the company he or she
represents. It�s never smart to buy technology for technology�s sake
or before technology�s time. However, it is smart to become educated, thus
recognizing when the time is right to integrate new technology into
This inevitable transition cannot
happen overnight and should take a cautious seven to 10 years in order to
be successful. A decision maker should first consider all variables and
fairly assess potential savings before beginning a shift to VoIP.
Look for applications people in
your office can use efficiently and support with expertise. Keep in mind
the inevitable roadblocks -- existing capital assets, condition of current
physical plant, network costs to support margins and the abilities of your
All cautions aside, it
should be said that VoIP will most likely bring new sources of revenue.
They will include systems integration, project management capabilities and
professional services such as network assessment, consulting for
next-generation telephony technology and supplementary value-added
VoIP is getting better by the
day. Improvements to its efficiency are apparent and equipment is quickly
advancing. As soon as the investment has been qualified and your people
have been educated, it�s time to make the switch and evolve toward VoIP.
But keep in mind as you evaluate your companies� needs and press
Pioneers get the arrow, settlers get the land!
Potter is founder and Chief Executive Officer of SOURCE, Inc. SOURCE is a
telecom solutions provider, offering new system sales, repair and
exchange, technical assistance, disaster recovery, asset management,
system reconfiguration and equipment valuation. SOURCE products are
supported by a unique inventory system that combines information tracking
with serialized bar-coding to form a fully digital information logistics
database. SOURCE, an Avaya Platinum BusinessPartner and Authorized
Remanufactured Supplier, holds GSA Federal Supply Schedule #GS-35F-0499-L
for refurbished telecommunications equipment. For additional information
regarding SOURCE visit www.source.com.