But when it comes to voice-over-IP, which promises greater efficiencies and reduced costs by putting all forms of communications over one network, things stand to get even murkier.
Just ask Peter Gapp, senior vice-president and chief information officer, for Siemens Canada, subsidiary of Siemens AG, one of the largest and most diversified companies in the world, with operations in health care, information & communications, energy & power, industry & automation, transportation and lighting.
In Canada, Siemens is a multi-billion dollar company headquartered in Mississauga, Ontario, with more than 7,200 employees located in 76 offices and seven major manufacturing facilities.
Implementing voice-over-IP is no simple task. “It’s a work in progress and the benefits are apparent. “It’s enabling,” says Gapp, because it brings in new technologies that we did not have before such as group collaboration (tools such as whiteboards and groupware) and putting voice/video/data into one application.
But, and it is a huge but, “the business case doesn’t work here,” says Gapp who has 14 years of experience in IT strategy and development, audit, reporting and finance.
There are cost savings to be had in terms of reduced long distance charges but how does this weigh up against all the costs of replacing existing equipment and managing the network. “How do we know the impact on the network? We don’t.”
To mitigate those coats, Gapp turned to one of the carriers to provide voice-over-IP services. “We went down the route of building your own network but at some point you have to partner with your carriers,” says Gapp of this decision to go with a managed service supplied by AT&T Canada.
In fact, voice-over-IP has been around for some time having been implemented by Canada’s telecom carriers including Bell, Telus, Allstream and AT&T Canada.
“This change has been transparent to users since carriers have been able to maintain a high quality of service,” says Jay Lassman, research director with Gartner Inc. “You wouldn’t even know this was going on.”
While telecom firms have forged ahead, other industries have followed more cautiously. CIOs tend to look for protocol stability and consistency into the future. They can’t afford to deploy networks every couple of years,
“We have a significant investment in the current IT infrastructure,” says Gapp. “Yes, it will all converge, but not in the next few years. This is a multi-year process.”
Nor is voice-over-IP, which hides mostly in the background as high on his list as s strategic applications such as ERP, he adds.
“Many businesses don’t think about their phones,” says Rick Moran, vice president, Cisco Systems. “With all the demands on today’s businesses, would they want to spend money to replace something that works just fine, thank you very much?”
That line of reasoning did not hold for consumers, drawn in droves to the promise of lower-cost voice service by voice-over-IP. Many businesses, however, still hang back. “Four or five years ago, businesses had invested heavily in legacy technologies that they weren’t about to write off their balance sheets,” says William Bangert, senior vice president of technology, services and business development in Bell Canada’s Enterprise Division.
“At the time, functionality and quality was also superior to IP telephony.” Bangert asserts that neither argument holds water today.
Martin Phelps, global portfolio manager for AT&T Global Network Services Canada, fields requests from customers to help them make business cases for IP telephony. “There’s a substantial investment to be made up front,” he explains. “Justifying that outlay can be quite hard.”
Phelps notes a common difference between data and voice service budgets that can make the business case difficult to build. “In most large enterprises, the data organization, and its budget, is centralized.”
Not so for voice. “It’s more distributed. Facilities managers in different offices often own telephony budgets. There’s little coordination and management overview. That’s why collection of telephony cost information can be a painful exercise.”
Meanwhile, carriers and equipment vendors work against perceptions created by free VoIP services such as Skype. “VoIP is just transmission of voice packets from endpoint to endpoint, with no features,” says Jay Lassman, research director for Gartner, Inc. “IP telephony is VoIP with features and quality of service over private, managed networks.”
VoIP quality of service rules apply to corporate networks too, says Dave Zwicker, vice-president of marketing for Viola Networks, a provider of VoIP management and optimizing software, notes that firms must understand IP traffic in order to manage the peaks.
“Voice is sensitive to lack of bandwidth,” says Zwicker. “If there’s one per cent packet loss, you notice it. If there’s one millisecond of delay, you notice it.”
Now that IP telephony services are business-grade, toll-bypass savings aren’t the lure they were before long-distance costs plunged.
However, citing a research study of 1,200 users, AT&T’s Phelps says long-term operating costs decrease by 45% after the switch to IP telephony.
For example, moves, adds and changes (MACs) become simpler. Mark Tauschek, senior research analyst with Info-Tech Research Group, says that with the old technology, every MAC calls for either dedicated telephony specialists or hundreds of dollars in outsourcing costs.
“With IP PBXs, all you need is a minute of programming to say ‘This is Mark’s phone.’ Any time Mark moves, he just takes his phone and plugs it into an Ethernet jack,” says Tauschek.
When businesses ask Lassman how they should proceed, he answers “Slowly. Use a phased introduction. Get as much investment protection as you can from your current system. If an opportunity arises with a new site, try it there.”
And it isn’t all about costs. “The real value of voice over IP goes well beyond finding cheap ways to carry traffic. It’s about performance, flexibility and agility,” says Robert Tasker, vice-president of business networks product Management for Telus.
A fully IP network can exchange intelligence, like the IP address of a user’s edge device, with applications. This ability makes a range of new applications possible.
A 2005 Gartner Research report entitled “IP Telephony for Corporate Networks: Technology Overview” notes that IP is the enabler for applications that are either impossible or prohibitively expensive using separate networks for voice, data and video.
As well as VoIP, IP-enabled contact centres, both premise-based and hosted, have gained market traction. Telecommuters and road warriors more easily set up remote connections to their offices with access to both networks and their phones through the same link. “IP does things which traditional services can’t do,” says Phelps.
Lassman says applications can also allow for much easier collaboration. “Somebody’s presence, their availability is more easily determined,” he says noting that such use is an offshoot of session initiation protocol (SIP). “In the old days, such applications required multiple systems.”
Distributed workforces are more easily scaled, says David Denault, general manager of AT&T Global Network Services Canada. “Firms with diverse locations can bring people on quickly with an IP network without having to roll people in to a fixed office environment,” he says.
The promise of more application possibilities comes with the lure of lower overall costs. Traditional voice, data, and video services often call for three separate “pipes.” With only one infrastructure to buy, maintain and manage, costs go down, says Info-tech’s Tauschek. “Firms can mothball legacy TDM telecom networks as they converge technologies onto IP networks.”
Eric Fletcher, senior vice-president of marketing for MTS Allstream, agrees, “but there’s an investment that needs to be made to get to that level,” he cautions. “You can simplify your network management, but you require a new set of tools and a holistic security model.”
Successful convergence of voice and data networks is contingent on mutual learning. Telephony experts must view voice as just another application residing on the network, while data specialists must learn the quality needs of voice. “This requires considerably more engineering than typical data applications,” says Bell’s Bangert. “Both teams have to learn something from one another.”
At some point, they will also become the same person. People with IP voice and data skills “are very rare,” says Lassman. “Right now, firms buy such expertise from third-party companies, often somebody they already do business with.”
For CIOs such as Gapp who take a high level view of their networks all these considerations are important. But being part of a massive global oorporation, he must also comply with a governance model that enforces standard processes and that holds vendors accountable for their service performance. Voice-over-IP is much than just about cost-savings, it must also make a CIO’s life easier.
