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Page 1© Copyright 2004, the Yankee Group. All rights reserved.

Presenter:Presenter:Zeus Kerravala, Zeus Kerravala, VP Enterprise InfrastructureVP Enterprise Infrastructure

Is VoIP right for my business?Is VoIP right for my business?

© Copyright 2004, the Yankee Group. All rights reserved. Page 2

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Our Approach

AnalystDirectsm


AgendaAgenda

Today’s Business Challenges

Traditional Telephony

IP Telephony

The Business Case

Potential Pitfalls

VoIP Lifecycle

Recommendations/Conclusions

Questions and Answers


What is Voice over IP?What is Voice over IP?

Peer to peer` `

IPIP

Internet

`

Phone PCRouter Internet

Softswitch

PSTN

TDM

IP

Internet Based Telephony

PSTNManaged IP

NetworkPSTN

TDM TDM

IP Termination


VoIP Definitions (continued)VoIP Definitions (continued)

IP Gateway PSTNRouter

TDM

`

PC

IP Centrex

`

PCRouter

Managed IP Network Softswitch

PSTN

TDMNetwork Based IP Telephony

`

IP Phone

IP PBX PSTN

IP PBX

IP Phone

IP Phone

PC TDM


Business ChallengesBusiness Challenges

Improve user productivity by using technology-Competitive advantage

vs. Necessary evil Increase revenue while

lowering costs Growing mobile

workforce Unify all communications

platforms Improve communications


Telephony the Old WayTelephony the Old Way

PSTNPSTN

PBX

Key System

Digital Set

Digital Set

•Highly reliable •Closed architectures•Limited ability to share applications•Deployed on a per-node basis •Users are tied to a location•Complex administration •Expensive MACD•Call control located locally


Cellular

Teleworker

DSL/Cable

Premises-based Applications IP PBX

Telephony Becomes An Application on the LAN & WAN

• Resides anywhere

– Hosted v. Premises Solutions

– LAN or WAN

• Accessed from anywhere

– Uniform access

– Common Interface

• Open Architecture

– Interoperability w/ TDM

– IPT variants

WAN

Legacy PBX

PSTN

IP Phones

Hosted VoIP

Network-based Applications

ComplexityComplexity

IP provides flexibility in deployment but increases complexity


Enterprise Adoption is StrongEnterprise Adoption is Strong

Fully deployed throughout

organization3%

Fully deployed in multiple locations

13%

Fully deployed at 1 location

8%

Other24%

Currently testing; budgeted for small

installation19%

Don't currently have; no interest in

deploying13%

Budgeted to install w/in next 12

months5%

Budgeted to install w/in next 13-24

months4%

Currently evaluating; not yet

budgeted35%

Source: Dec. 2003, Enterprise Communications Survey Q13 & Q14 N=239 businesses with 1,000 employees or more

Which best describes your deployment of IPT?

0

2

4

6

8

10

12

14

16

18

2002 2003 2004 2005 2006

Total Lines

IP Telephony

(MillionsLines Shipped)


Companies Are Adopting IP Companies Are Adopting IP TelephonyTelephony

Adoption Results2002 – 10% penetration of line shipments 2003 – 24% penetration of line shipments2004 – 40% penetration of line shipments 2 Million IP Phones sold in 2002 3.5 Million IP Phones sold in 2003 6 Million IP Phones sold in 2004$24 Million in softphone revenue for 2004,

2x 2003 revenue


Analysis of AdoptionAnalysis of Adoption

2004 adoption was over 40% for a number of reasons Most traditional phone system vendors have adopted IP

Telephony Standards such as SIP are much more mature today Technology is reliable and there are many options for each

type of firm (early adopter, mainstream adopter) Channel from both the voice and data world have adapted

and new channels have been introduced (system integrators)

Many major corporations have started to adopt VoIP


What Are Companies Doing With VoIP

• VoIP help companies grow and lower cots – Lowers long distance charges– Lowers MACD charges– Reduces IT training costs – Streamlines productivity – Improves mobile communications– Enables new business process– Improves customer satisfaction


Users Expect Strong Cost Savings

Thinking about IP Telephony’s total costs and cost of ownership, what kind of savings or premium do you expect from the following categories?

83%

74%

68%

67%

62%

56%

56%

50%

48%

47%

46%

42%

76%

70%

63%

59%

55%

57%

55%

33%

36%

35%

29%

26%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Long distance costs

Overall total cost of ownership

Delivering telephony services to remote offices

Local telephone network connections and costs

Operational expenses for managing the converged network

Maintenance charges

The cost of moves, adds, changes and deletes (MACD)

Cost of IP phones

Power consumption

Network equipment costs

Network security

Initial cost of IP PBX or hybrid PBX

Percent of Respondents (Top Two Box Summary - Savings)

U.S.

Canada


IPT Improves Productivity

Thinking about IP Telephony’s total costs and cost of ownership, what kind of savings or premium do you expect from the following categories?

92%

88%

85%

81%

82%

80%

78%

78%

75%

72%

74%

69%

73%

63%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A converged voice and data infrastructure makes it easier todeploy other collaborative applications

IP telephoney makes it easier to deliver services totelecommuters and road warriors

If architected correctly a converged infrastructure can providebetter reliability and overall uptime than separate networks

The management tools I need to run a converged network areavailable today

Customer service can be improved using IP telephony

IP telephony will allow my organization to create new businessprocesses

IP telephony makes users more efficient

Percent of Respondents (Top Two Box Summary)

U.S.

Canada


Reasons Companies Consider a Converged Solution

Adapting to Current and Future Needs Improved Productivity

Cost Savings and Existing InvestmentsImproved Service to Compete Better

•“Our workforce, and the need for the telephony is growing faster than the present infrastructure will allow it to expand.”•“A converged system can more readily adapt to our changing needs.”•“We are behind the times.”•“We are building a new headquarters.”•“To manage an ever-changing, an ever-moving environment.”•“We want one system that we will not have to change for quite some time and will be easy to train people.”

•“To upgrade from current antiquated system and integrate recent business acquisitions in the same system.”•“To reduce the number staff working on the phone system.”•“For conferencing bridging,reduction in total cost of bridging.”•“To eliminate the bandwidth wastage.”•“Will be cost savings over time. Will provide benefits over existing system.”

•“Faster service and reliability.”

•“It seems to the next generation of phone systems. We also need ability to gather customer data and serve it up to agents before the customer says ‘Hello’.”•“Need to keep up with the times.”•“We need to update in order to be able to compete with today's market.”•“Better to service our customers.”•“ “to better server our customers and to be more efficient.”•“To compete with others with the latest technology.”

•“ It will be cheaper, easier to manage and more reliable.”•“When the upgrade occurs we want it to enhance productivity & to be a platform we can use for a minimum of 5 years, hopefully longer. •“To simplify things, to make everything more convenient.”•“Ease of use and management of system.”•“Ease of maintenance. Consolidation of resources and personnel. Greater control without reliance on 3rd party scheduling/costs, etc.,”•“So we can get rid of proprietary phone system programming language.”

cweiss

again...is this different in enterprise? can we add that in? thanks


Inhibitors Revolve Around CostInhibitors Revolve Around Cost

93

86

84

75

56

57

52

33

27

24

0 10 20 30 40 50 60 70 80 90 100

Uncertain Price/Cost Advantage

High Equipment Costs

Uncertain Voice Quality

Install/Configuration and Training Cost

Single Point of Failure

Lack of Staff Skills/Knowledge

Network Security

Lack of Confidence in VoIP SPs

Insufficient Network Management Tools

Lack of Confidence

Number of Responses

What are your organization’s main concerns about deploying IP telephony? (Select up to three.)

Source: The Yankee Group 2003 U.S. Enterprise Communications Survey

n = 239


Networking Trends IPT Impact

Networking Trends Drive AdoptionNetworking Trends Drive Adoption

Networks will be packet optimize

Web technology continues to drive app. Integration

Network and computing platforms will be homogenized through standards

Voice platforms will be adapted to packetized networks

The phone and PC become key voice/data integration points

Third party software vendors will develop vertically oriented “deadly” applications

Telephony will become an application on the data network Telephony will become an application on the data network


VoIP Is Transformational

Similar to the migration from mainframes to distributed computing

0-5 years

•Early Adopter Mkt

•Making IP looking like TDM

•Similar to 3270 emulators

•Focus on the technology

•Concerns:

•Availability, Reliability

•Security

•TCO more important than ROI

5-10 years

•Mass Market Adoption

•More focus on applications

•Similar to growth of distributed applications

•Value prop delivered by ISVs

•Concerns:

•App Integration

•What’s possible?

•ROI is more important than TCO

10+ years

•Laggers

•Standardization

•Removing cost

•Efficiency


The Changing Value PropositionThe Changing Value Proposition

What we have been saying:– VoIP, convergence, multicast, layer2, layer3,

QoS, switching, TDM, PSTN, etc.– Value proposition: TCO savings, IT productivity,

etc.What we should be saying:

– Its about managing and using information and communications better.

– Value proposition: driving business value through productivity improvements.


Tomorrows Requirements: Tomorrows Requirements: Extending CommunicationsExtending Communications

Partner

Employee

E-MailE-Mail

IP Voice IP Voice

TDM VoiceTDM Voice

Web Web InformationInformation

Call CenterCall Center

FaxFax

Voice MailVoice Mail

MobileMobilePhonePhone

Messaging Messaging

IVRIVR

Video Video ConferenceConference

Managing Information atManaging Information at

The Point of ContactThe Point of Contact


VoIP Enables Integrated Communications

• Integrated Interface

• Uniform Experience

• Voice and Data

– Telephones and Computers

– Telecom and IT

• Anywhere. Anytime.

Picture yourself in a hotel room accessing your office and mobile voice mail and email from your laptop with the same interface and procedures you use in your office.

Now imagine every employee in your company with the same capability.

VoIP enables integrated voice and data applications and delivers them to potentially every employee, and desktop.


The New Value PropositionThe New Value Proposition

Lower TCOLower TCO

Improved IT ProcessImproved IT Process

StreamlineStreamline BP BP

Competitive Competitive AdvantageAdvantage

Incr

easi

ng R

OI

Incr

easi

ng R

OI


Recapping the Business CaseRecapping the Business Case

Productivity benefits from unified communicationsDistribution of telephony applications to branches and

home workers Improved customer satisfactionFuture multimedia applications Facilitates business process change

Lower telecommunications costs Savings from adds, moves, and changes Simplified administration


What This Does to the BusinessWhat This Does to the Business

Talking Collaborating

Delayed Real Time

Media Restrictive Media Adaptive

DelayedReactive Proactive


IP Telephony ChallengesIP Telephony Challenges

Voice and video applications are extremely sensitive to delay, jitter, and packet loss

Need PSTN-like call quality:-New features and functionality will not compensate for

poor call qualityLarge networks require network audits and

upgradesQoS must be implemented:

-Best practice on the LAN-Mandatory for WAN

Call quality difficult to measure and monitor

cweiss

would you kill me if i asked you to change this to challenges rather than pitfalls? :-)


The Quality ChallengeThe Quality Challenge

VoIP is NOT just another application on their IP network– Voice sensitive to the inherent characteristics of IP

networks• Latency, packet loss, variable transmission rates

(jitter)– Organizations have never internally managed an

application with such high availability and performance requirements over shared facilities

How do I guarantee the quality and availability of voice traffic without degrading data packet transmission?


VoIP Requires a LifecycleVoIP Requires a Lifecycle

Plan

Desig

n

ImplementOperate

Opt

imiz

e

VoIP

Lack of proper lifecycle will

• Drive costs up

• Eliminate any value from the solution!

Lack of proper lifecycle will

• Drive costs up

• Eliminate any value from the solution!


The VoIP LifecycleThe VoIP Lifecycle

Use a trusted partner

to help deliver the

full lifecycle!


Successful Deployment ChecklistSuccessful Deployment Checklist

Consultation, engineering and management servicesfrom trusted partner-Delivering the full lifecycle can only be done with a services partner

Understand your calling patterns

-%off net/on net calls, international/domestic calling, average calls per employee hr, MOU, call duration are biggest factors

Understand where the various types of VoIP fit best

-Ideal implementation will be a mix

-Video, unified messaging, audio/web conferencing, presence

Roadmap current and future communications and choose correct platform


RecommendationsRecommendations

IP telephony/VoIP will happen – be ready.Perform a network assessment to evaluate all

current networks and elements.– LAN, WAN, PSTN, video, faxes, power, UPS,

cabling, management tools.Choose a test bed for deployment.Review sample business cases, calculate TCO

and ROI. Visit “live” implementationsSuccess depends on planning and

management infrastructure.– “Measure twice, cut once.”


Thank YouThank YouThank YouThank You

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