VoIP on demand

Don't have the time or inclination to fire up a VoIP system in-house? Then call a provider

No one ever said VoIP would be easy. Adding voice to the data network entails networking equipment upgrades, new IP phones, network management software, and staff expertise beyond that of TDM network administrators. As a result, many IT managers are considering outsourcing their VoIP deployments. They want all that VoIP can offer -- long-distance cost savings, collaboration, unified messaging, call center integration -- but they don’t want the deployment and management headaches.

Select Real Estate, for example, wanted VoIP features but wasn’t too sanguine about the financial investment required to do it in-house. The real estate broker has 200 employees and a network of 1,000 brokers scattered around Northern California. In late 2004, IT managers set out to upgrade the company’s telecom infrastructure at several regional offices, and after looking at both of the large carrier offerings in the area, the task was handed off to a local carrier network, Covad Communications Group.

“It was a financial decision, based on feature sets and reliability,” says Matthew Collins, CTO at Select Real Estate. He adds that the larger carriers didn’t offer enough integration expertise, which was worrisome. “The big telcos just want to sell the service but don’t understand the back-end requirements and end-user needs.”

Features available from Covad, such as unified messaging from remote locations, central voice mail access, “follow me” phone and fax transmissions, as well as the capability to handle integration of voice applications with existing back-end systems made the decision to outsource an easy one. The flexible pricing structure offered by the regional carrier sealed the decision, Collins says.

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Relieving Deployment Headaches

Many companies that decide to outsource VoIP have geographically dispersed operations, with remote sales offices or regional locations with call centers. Others seek to equip mobile workforces and telecommuters with VoIP. The technology is easier to justify operationally and financially if the deployment is managed by a service provider.

“If you decide to go the hosted way, you’re taking all the headache off premises. You have professionals upgrade and monitor it, on 24-hour standby. Everyone’s getting the best and latest equipment. The cost of the [IP PBX] and depreciation is not an issue,” adds William Stofega, research director for VoIP at IDC.

When IT managers consider deploying VoIP in-house, they must think not only about network bandwidth, but also the overhead of deploying and maintaining voice/data software and training or hiring new IT personnel. By outsourcing, none of this is an issue, says Select Real Estate’s Collins.

“If you have 300 people doing unified messaging, what is the impact of that on the existing network? Do I need two T1 lines, and do I have the bandwidth I require on the back end? Oh, and I need a full-time network engineer and [I must] determine how many need to use it. A company the size of IBM, Xerox, and Boeing has the resources in-house, but we’re not quite at the point where we need to do that,” Collins says.

At the smallest of organizations, these considerations become even more pronounced. Ameriplus Financial Services is a mortgage broker with 10 employees. The company’s decision to subscribe to a hosted VoIP solution, also from Covad, was based on a combination of cost savings -- Ameriplus cut its long distance bills in half -- and IP-based features including special call-handling features, an e-mail server, Web hosting, and unified messaging accessible through a software console, says Aadil Northoo, owner of Ameriplus Financial.

“We wanted to extend the phone services, so the system can support brokers who want to work from home, [and it] lets us manage faxes and e-mail using the console. Plus, it’s easy to administer -- all the administration, including music, is done by one of my mortgage officers,” Northoo says.

He adds that flexible pricing is another benefit. The company can spend as much or as little as it wants on a monthly subscription that varies depending on which features are chosen.

Outsourcing by Degrees

Whether an enterprise chooses a completely outsourced solution, an in-house deployment, or something in between tends to depend on the size of the company. SMBs and enterprise branch offices are clearly the first adopters of wholly outsourced solutions. But according to Irwin Lazar, a senior analyst at Burton Group, larger VoIP customers gravitate toward outsourcing options that retain an in-house footprint, whether the technology is built by a consultant or by existing IT personnel.

“There are two approaches -- go with someone like IBM or EDS to build you a custom system and let them manage it. Dow, Ford, and Bank of America have gone this route. The other approach is to leverage a hosted IP service provider -- for example, IP Centrex -- in which you are using a shared service. In the first example, usually we find that the same company managing the VoIP system also manages the network, so they can handle any support issues. In the second, the enterprise still is responsible for managing performance within its own network -- the line of demarcation is typically the WAN interface to the provider,” Lazar says.

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Regardless of the model they choose, many larger enterprises are outsourcing VoIP deployments in small steps, testing the waters at regional locations, says David Lemelin, senior analyst at In-Stat.

“Enterprises are heavier users of their own IP PBX solutions, but [they] also use managed services. They’ll phase it in, based primarily on how they integrate, typically on a location-by-location basis. Very few companies are on VoIP-only networks. There’s still a lot of Centrex and TDM going on, too,” Lemelin says.

Keeping It All In-House

Many large enterprises dismiss VoIP outsourcing for a variety of excellent reasons. At Erlanger Health System, a non-profit medical teaching center, IT managers rejected outsourcing for two reasons: because the organization had the internal resources to keep it all in-house and because the service providers in the area did not offer what they needed.

With an IT staff of 78, Erlanger has 16 staff members supporting TDM and IP voice, including convergence applications and Web-based voice-related initiatives, not to mention the services and networks connecting it all. And with an annual operating budget of around $6 million and as much as an additional $3 million for capital investments, IT managers could afford to implement VoIP and ensure that it stays up and running, says Network Director John Haltom.

“We’ve heard of smaller ‘totally outsourced’ environments being done, several where a turnkey solution has been deployed. But without a full-scale, virtually trunked environment where we can obtain our own diverse paths for VoIP deployments with large scale Nortel Meridian- or CS1000-based switches backing each other up for dial-plans, inbound and outbound, we can’t afford to invest in that market. For the foreseeable future [we will] be the masters of our own destiny, and keep on the pace to be the model hospital for the future whenever we can,” Haltom says.

He also cites as a consideration the lack of vendors that could meet Erlanger’s needs.

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“The vendor support for VoIP has been sort of lacking in the outsourcing arena in the South. I really can’t see this as an option for us for quite some time, considering our internal expertise and the lack of virtual-trunking offerings in our area,” Haltom says.

Finding the Sweet Spot

For SMBs looking for VoIP features without the implementation and management issues that can come with the technology, however, outsourcing holds promise. “People go to service providers because they want someone else to maintain the system, and small and medium businesses are the play here. They’re also afraid of becoming outmoded,” says In-Stat’s Lemelin. An outsourcer can deliver VoIP quickly and add functionality as the technology evolves.

A recent survey conducted by Forrester Research echoes that line of thinking. When asked why they would use a managed telecom service, telecom managers’ top responses were to reduce cost and simplify operations, followed by a lack of in-house expertise or resources, desire for better quality or reliability, and to mitigate risks of technology changes.

Whether or not to outsource VoIP boils down to how much you’re willing to invest in equipment upgrades and how many additional network management issues you’re willing to take on -- and in some cases, how much you’re willing to pony up for consulting contracts. For now, most larger organizations are willing to shoulder that burden. But for smaller companies or regional offices that want VoIP in a hurry, handing off the problem to a provider is a perfectly reasonable choice.

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Copyright © 2006 IDG Communications, Inc.

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