by Clare Kaufman
It's inevitable--no matter the size of your business, your communications system is likely to eventually be IP-based. Converged voice-data networks offer cost savings and performance enhancements that are simply too dramatic for most businesses to ignore. In a difficult economy, however, overhauling a critical component of your office infrastructure can be a hard sell. Fortunately, the VoIP industry has matured, offering several service alternatives that remove the main obstacle to internet telephony: the initial capital outlay. Find out how VoIP service providers are easing the transition to VoIP, allowing SMBs to take advantage of enterprise-grade functionality and cost savings from day one.
Introduction
A difficult economy can stop capital investment in its tracks. Businesses are reluctant--or simply unable--to overhaul their businesses communications infrastructure for the sake of savings a year or two down the road. With recession in the air, investments that offer an immediate return most likely to win over increasingly cautious decision makers.
Voice over Internet Protocol (VoIP) is just such a recession-proof investment proposition. VOIP has a reputation for delivering five-figure savings in monthly phone bills. But the initial investment in a VoIP infrastructure can sometimes defer those savings a year or more. Fortunately, new options for implementing VoIP smooth out the investment-return cycle. The classic pattern of VoIP financing involved a dramatic initial capital outlay followed by dramatic ongoing savings, with the investment recouped in a year to eighteen months. Current options moderate these extremes by distributing the initial costs. Hosted solutions, equipment leasing plans, and phased migrations represent three options for minimizing the upfront cost of VoIP. These strategies allow even small businesses to tap into the deep savings potential of VoIP technology from day one.
Instant ROI
The potential cost savings of a converged voice-data system are too significant for any business to pass up--particularly in tight economic times. A May 2008 PC World report cited average net savings of 20 to 30 percent when businesses switch from time-division multiplexing (TDM) to VoIP. Eager to tap into the small and mid-sized business market, telephone service providers are developing new strategies for providing access to these returns without the upfront investment. The initial cost of a complete on-premises VoIP implementation can be high. Businesses face the cost of new network equipment, servers, IP phones, management software, and diagnostic tools. In addition, the new system typically requires training for IT personnel and users. Companies face three options for distributing the upfront expense of a VoIP implementation and heading straight to savings.
Option #1: Hosted Service
Hosted services pride themselves on delivering "enterprise business solution for small-business budgets." Under this model, the service provider assumes the upfront hardware expense and sells access to the technology on a monthly subscription basis. By contracting with many small clients, the provider is able to distribute the expense of high-cost equipment across the customer base and over time. Hosted services also take training costs off the table, since they assume responsibility for maintaining the system and provide an easy user interface for making day-to-day administrative changes.
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Providers such as Vocalocity and Packet8 specialize in bringing enterprise-grade functionality to small to medium-sized business (SMB) customers, with a la carte pricing that allows businesses to take advantage of exactly the features they need?no more, no less. Scalability is inherent in this model?businesses may tone down or ramp up their service level instantly to suit their communications needs. As Software Development Director Jason Mindte observes, "Small businesses are often on a tight budget and have no room for scope creep and cost overruns." Hosted solutions work because they align with customer needs from the outset.
Option #2: Lease Equipment
Leasing VoIP equipment distributes the expense of the new system over several years. Since VoIP equipment doesn't depreciate as quickly as PCs, lasting seven to ten years, leasing can make sense. Companies switching to VoIP often find that the necessary upgrades to their network equipment present the biggest initial expense. Leasing costly infrastructure components such as servers, routers, and quality-of-service-enabled switches can remove this barrier, leaving businesses to purchase only the IP handsets.
Option #3: Phased Migration
No need to retire that legacy system just yet. Many VoIP providers specialize in custom solutions that repurpose public switched telephone network (PSTN) equipment, such as a traditional private branch exchange (PBX) or even analog phones, in an IP environment. A strategic phased implementation can have a dramatic impact on the numbers. As a Cisco VoIP guide puts it, "Understanding the most appropriate insertion points for VoIP within an organization plays a critical role in how significant the ROI can be." Options for phased migration include:
- Keeping the internal PSTN system but installing VoIP over the wide area network (WAN.) Telecommunications consultant Stephen Leaden advises: "It's best to go with mature WAN-based VOIP implementations first, to gain a slow, steady, yet clear return." Not only do WAN deployments take advantage of some of the best VoIP features?remote access, long distance savings, and data convergence?but they also yield instant savings, an estimated "20 percent from Day 1."
- Retrofitting PSTN equipment. Special software can turn a legacy PBX into an IP PBX. Digital VoIP signals can be converted to analog, extending the life of legacy handsets.
- Rolling out the system gradually, starting with the divisions that stand to gain the most from VoIP functionality. The call center, service, and sales staff typically see the most benefit from productivity-enhancing features such as Automated Call Distribution (ACD) and CRM integration.
Rosesource.com
When Rosesource.com switched to VoIP, the company discovered cost savings and productivity benefits straight out of the box. The farm-direct flower sales business straddles two hemispheres, with an administrative office in Miami and agricultural operations in Quito, Ecuador. Linking these two remote offices through the PSTN was an expensive and inefficient proposition. The company's legacy PBX also offered no means for employees to communicate internally by phone.
As a small business, however, the prospect of investing in a new premises switchboard was daunting. Instead, Rosesource opted for Packet8's hosted PBX service. Packet8's Virtual Office system affords unlimited extension-to-extension dialing between Florida and Equador. In addition, the company makes use of enterprise-grade features that would otherwise be beyond the reach of its communications budget. A toll-free number for customers, for example, allows the organization to present a professional face to the public.
First Tuesday in November
First Tuesday in November (FTIN), a real-time voter tracking information service for political campaign managers, relies on its phone system to make timely, high-volume phone calls to constituents. The company needed a scalable, reliable system that would integrate with its tracking technology. IP telephony was the natural solution, but the cost and maintenance of implementing the technology presented a hurdle. FTIN discovered a hassle-free alternative in Vocalocity's software-based phone solution. Since Vocalocity hosts and maintains all the network infrastructure necessary to run the VoIP system, FTIN was spared the technology expense. In fact, the company didn't even need to invest in phone handsets--its agents call voters using their desktop computer or wireless laptop and a headset. In addition to removing a considerable capital expense, the computer-based solution takes advantage of time-saving features such as click-to-talk and data integration. Wireless laptop users also enjoy the portability. Finally, the company was able to eliminate installation and maintenance costs from its communications budget--Vocalocity assumes responsibility for both.
Conclusion
No pain, no gain, the saying goes. But hosted and custom VoIP migrations are taking the pain out of the equation. Small and mid-sized businesses without the resources to put toward an expensive VoIP system upgrade have a range of alternatives for taking advantage of this technology, which is quickly becoming the industry standard. Hosted services offer subscribers access to costly, enterprise-grade equipment for a monthly fee. This setup distributes the investment expense across many parties. Leasing companies achieve the same effect by distributing the initial costs over time. And custom VoIP migrations partner with companies to implement new technology in phases, using software and special equipment to bridge the gap between analog and digital components. These three options offer different approaches to removing the obstacles that stand between SMBs and VoIP savings. With them, VoIP savings are not just a distant mirage a year in the future, but real reductions reflected in your next monthly phone bill.
"Eight Tips for Migrating to Enterprise VoIP,"O'Reilly Media
"Hard Facts on IP PBX Savings," PC World (May 14, 2008)
"Making the Business Case for VoIP and IP Telephony," TMC.net
Packet8
"Save Money in the Near Term," TechTarget
Vocalocity
"Wringing Savings From VoIP," Computer World (Jan 20, 2003)
About the Author
Dr. Clare Kaufman is a freelance writer who covers business and education topics.
