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Industry Insight
December 2001

Jim Machi


Is VPN The Enterprise Panacea?


When the press talks about the downturn in telecom spending, they�re generally talking about the public network. As part of the IP telephony industry, I find the press asking questions like, �Whatever happened to IP telephony in the enterprise? Hasn�t the downturn in the enterprise been less severe? Doesn�t this mean the enterprise is the IP industry�s salvation?� It�s not quite that simple, of course, but that�s the basic angle. Since late spring, I�ve been increasingly asked to conduct IP telephony interviews with a wide range of publications. All of them have been eager learn my thoughts on the enterprise IP telephony market segment. 

This magazine is no different. In the September issue of INTERNET TELEPHONY�, Group Publisher and Editor-in-Chief Rich Tehrani wrote an article entitled LAN Telephony: Riding Out the Storm. In this article he explained why he believes enterprise IP telephony will help bridge the industry until public network spending begins to flow freely again. And in the October edition of INTERNET TELEPHONY, Editorial Director Greg Galitzine�s article, Enterprise Internet Telephony, covered similar topics from a different perspective.

Is this just some kind of hype to keep the industry alive? Or is there really significant action in the enterprise now that wasn�t worth reporting on say a year ago? I think it�s a little of both.

Business Customers
In the enterprise, we�re talking about business customers. And business customers won�t accept some of the stuff cell phone users or IP telephony debit card consumer customers will. Business customers demand voice quality, conference call voice quality, and reliability � a dial tone every time. This means the early adopters of IP telephony in the enterprise were likely not entirely happy, so enterprise IP telephony took a back seat to some very cool public network success stories.

But this doesn�t mean there wasn�t activity in the enterprise. Probably the earliest and still most successful users of IP telephony in the enterprise have been IP-based call center agents. We now have IP-PBXs with IP phones. If you haven�t tried one recently, go to a tradeshow and do it. These phones probably work better than you could ever imagine. In short, enterprise IP telephony is alive and well. And yet, while I may think it�s cool and exciting, enterprise telephony is probably not yet ready to carry the industry.

Some recent analyst studies bear this out. In September, IDC published a bulletin entitled Enterprise IP Telephony Services: A Demand-Side View. This study discusses how medium and large businesses are using IP telephony and why. The �whys� are familiar to readers of this magazine: Reduced costs; increased network efficiencies; and the capability for better applications and services. The �how� information is more interesting. For instance, less than 20 percent of the businesses surveyed were using VoIP today. About half said they plan to use it within the next year. Depending on how you look at your glass, this also means half the companies that were surveyed plan not to incorporate IP telephony.

Since I don�t think all 20 percent of the companies have IP PBXs installed, or that the 50 percent planning to do something will be buying IP-PBXs, what exactly are these companies doing with VoIP? It�s hard to tell exactly. But based on my experience with my products, they are likely using it for intra-company communications between offices or for remote workers or agents.

Enterprise Convergence
This, of course, is the start of enterprise convergence, the biggest buzzword of all. As the enterprise has come to rely more on the data network, the data network has become the communications infrastructure. It�s natural for many companies to begin putting voice on this new infrastructure. This is the first step toward the data network becoming the company network. In the meantime, it�s a converged network. And that�s what�s been going on the enterprise.

So how is the enterprise, in general, using VoIP? Since many enterprises already have managed networks in place, they can easily run voice within those networks. Putting VoIP between offices is relatively easy, since the offices are already connected data-wise. This is especially true of larger enterprises that may have some kind of leased lines between sites � which means that they are already connected security-wise. From a quality of service perspective, these types of solutions are typically fine bandwidth-wise. That�s probably the first step for many companies.

But how can smaller companies that may not have the data bandwidth to support leased lines get into the fray? And how can companies extend VoIP to remote or traveling workers? The next bold step for many companies is using virtual private networks (VPNs) to which they can add voice, thus increasing convergence even further. VPN becomes both a security vehicle and an IP vehicle. To make this idea really exciting, we�ll need to keep improving the quality of service.

VPN is where the action in the enterprise is these days. And it�s a development the press finds exciting. But is VPN really an enterprise panacea? In next month�s column, I�ll explore the role of VPN in the enterprise and in VoIP. 

Jim Machi is director, Product Management for the Intel Telecommunication and Embedded Group. The Intel Telecommunication and Embedded Group develops advanced communications technologies and products that merge data and voice technologies into a single network. For more information, visit www.intel.com.

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