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If your telephony charges are already so low that VoIP would bring only marginal savings, you may have already written off the technology. Elizabeth Biddlecombe explains why that could be a big mistake

The reason why voice over IP (or VoIP, the encapsulation of digitally compressed voice into IP data packets) has made so few conquests in the UK is because businesses (erroneously) regard lower cost of ownership as its big advantage. It's an understandable mistake to make. After all, voice can ride for 'free' on the data network, reducing the costs associated with cabling, operation and maintenance. Packetised voice also uses bandwidth more efficiently: where traditional telephony holds the circuit open throughout all the silences in a voice call, on a data network when nothing is said, nothing is sent.

In parts of the world where telecoms tariffs remain high, such as in Latin America, the Middle East and Asia Pacific, the prospect of cheaper telephony has encouraged takeup of VoIP. In the UK, however, many telecoms managers have negotiated rock-bottom prices for telephony anyway, so there are few savings to be made by packetising voice.

But early adopters believe that cost savings (which can, incidentally, undoubtedly be made) are a secondary consideration in deciding whether to implement VoIP. Mike Winchester, head of IT services at Hampshire County Council, says his main reason for changing over to VoIP was to replace a 25-year old network with a converged IP solution covering core staff at 350 sites.

Similarly, savings were dismissed as a compelling reason for introducing VoIP by Chris Legge, communication services project manager at Innogy (formerly National Grid), whose Cogen division implemented voice and fax over IP for 70 users when it moved to a new headquarters in Solihull. "For smaller businesses it's a consideration, but a couple of thousand doesn't make much difference to a larger company," points out Legge.

David Brown, chairman of consultancy Schema, agrees. "The saving is minor in the context of the total communications bill of a corporate," he says. "Data is the most expensive component."

So why then are companies such as Open TV and Coca-Cola going with VoIP?

One key reason is the flexibility it allows. Road warriors can simply plug a headset into their PC and make calls to any phone worldwide. Because IP phones announce themselves to the IP PBX (Private Branch eXchange), they can be plugged in anywhere and keep the same extension number.

Legge says this particular feature is immensely valuable for Cogen because its employees work at customer premises for months, even years, building heat and power stations. "Engineers moving from project to project can pick up their phone and take it with them but be on the same extension when they plug it back in," he says. "This is when VoIP comes into its own."

The ability to log on anywhere, access unified inboxes and be alerted to the presence of messages via mobiles, desk phones or pagers is invaluable. Nor does VoIP require a PBX at the customer site.

But the really big advantage of VoIP is the diversity of applications it underpins. "In our view VoIP isn't about cheap phone calls - that's why it hasn't taken off - it's about multimedia services," says Craig Boundy, vice-president of Internet services at BT Ignite.

So far, however, UK businesses don't seem very interested. Part of the problem, says Pim Bilderbeek, IDC's VP for European network and e-business research, is ignorance. "The applications are really compelling, but business doesn't have a clear idea of what they are or how to benefit from them."

So what are these compelling applications? Unified messaging and videoconferencing are cited most often. Open TV, for instance, uses Webcams on desktop PCs for intra-company conferencing.

Users that do see a clear advantage in VoIP include call centres. For example, energy and telecoms supplier Universal Group had under four months to get a new call centre in Scotland up and running. It deployed VoIP to help 45 agents make outgoing sales calls. There are no handsets, call lists are pre-programmed on the desktop, and customer directories are integrated with customer records, so agents just have to point and click to call. As a result there are fewer dialling errors and call rates have risen. VoIP has also let Universal introduce presence management, shared calendars and virtual teams.

Elsewhere, Alf Raju and ExCel's smart-conference venue in London's Docklands, is selling communications services to users, who can hire laptops and desktops, store presentations on ExCel servers and access the Net. Meeting rooms are fitted with audiovisual equipment, which are able to stream video off the back of a 10,000-node network. Circuit-switched services such as ISDN are also available at the venue.

"We anticipate using VoIP on an extranet linking with hotels and travel operators, although we haven't agreed it yet," says Alf Raju, Pcubed programme director for ExCel. "VoIP underpins our forward thinking about the whole smart-venue concept." Raju says the entire implementation, excluding cabling, cost a quarter of a million pounds less than if ExCel had gone the standard telephony route and that in the long term the total cost of ownership will be lower.

ExCel has also built a wireless Lan and is planning a GSM cell at its London Docklands venue, which opens up the possibility of extending VoIP to mobile devices. This is something that will continue to unfold as IP begins to infiltrate the mobile world with the introduction of GPRS and 3G technologies.

But there's no need to wait for 3G. Officials at the All England Lawn Tennis Club are already using VoIP and wireless Lan systems. They carry data-capable walkie-talkies to keep track of events and scores on other courts as well as monitor the number of spectators.

Back at ExCel, Raju points to an obstacle many carriers are currently negotiating: IP billing. "We're selling services off the back of the infrastructure and we need to be able to bill per packet," he says. "Some areas of manageability just aren't there yet."

But what about the well-known problem of quality of service? Voice is a delay-sensitive medium and can't be treated the same as data packets. No business would contemplate running voice over the public Internet. The reality is that you won't consider Lan telephony - that is, VoIP on the Lan - unless you are rethinking your communications infrastructure for other reasons. An office might be relocating, the business might be expanding or you might be using an IP-based virtual private network.

For example, the Bank of Cyprus moved to VoIP to replace a poor-quality TDM network. "We were multiplexing voice and data and everything was being routed through a central hub, being compressed and expanded," says Soteris Antoniades, assistant general manager and head of operations. "Customers could not hear what staff were saying and there were whistles and pops on the line. The difference in voice quality that VoIP gives is phenomenal. There's been no significant cost saving but we now have the quality to manage the business. We can centralise the office and put in a call centre routeing calls seamlessly between locations."

There are other ways of sending voice over a data network. If you're running a hub-and-spoke network you might be better off with voice over frame relay. And if you have a lot of multimedia traffic, particularly video, you might want to consider ATM for its quality assurances. Mike Atherton, MD at integrator Infonet UK, says ATM is good value in the context of a global network. But even if it is only to run IP trunks between PBXs (the most common VoIP implementation in the UK), let your road warriors make calls over the IP VPN, or enable conferencing, VoIP can be enormously beneficial. And when carriers and suppliers themselves trust their own internal voice communications to VoIP, it must be worth a look.

The all-IP Network

Rapid staff growth has forced Capital One to reassess its entire IT infrastructure

As part of a drive to double its workforce by the end of 2002, financial services provider Capital One wanted a new infrastructure, in particular to cope with the expected high number of adds, moves and changes as employees moved in and out of temporary office space.

"We take our networks very seriously," says Mike Bettinson, UK service delivery projects manager at Capital One. "We like to think we use IT as an enabler and take on new technologies while mitigating the risk."

Capital One chose to go with Cisco because it already had a long-term relationship with the networking company and because Cisco's Call Manager product fitted with its existing architecture. IP phones that plug into a converged network were distributed to 600 Capital One staff. Users have already taken their handsets to the company's US offices where they can be reached on their usual extension number.

Bettinson says VoIP wasn't difficult to implement. "We had to learn about how the technology works, about implementing quality of service, but it's been relatively straightforward. It hasn't been a huge project." However, he does advise checking that different corporate PBXs can talk to each other for close integration into the PBX systems.

"This is the first stepping stone towards an enterprise-wide IP communications platform," says Peter Knight, IT director at Capital One. Future projects include moving from desktop handsets to soft phones at the call centre so agents can dial out from their contact lists for greater speed and efficiency.

On this year's agenda is implementing unified messaging, integrating the LDAP directory into WAP so the company directory can be accessed via a mobile device, and delivering information such as stock prices, to the IP phones via XML-based browsers.

Click to callUBS wants to let e-banking customers speak to it just by clicking on its Website

Swiss bank UBS wanted 'push to call' buttons on its e-banking Website so customers could speak directly to its Web-based call centre agents while in the middle of a transaction. Although a pilot project has been running for a year, takeup has been poor. Out of a total of 20,000 calls a day, only 10-50 are VoIP calls made from the Website. This is partly because the service hasn't been actively promoted but mainly because users need Microsoft NetMeeting up and running on their PCs.

"Almost nobody uses NetMeeting," concedes Tony Knecht, executive director of phone banking. "The people who do aren't average e-banking users but the 5% with a deep technical understanding. We have 50,000 e-banking users and it's a huge support issue to help them get up and running the first time. There are also some security problems."

UBS is therefore planning a new Java-based solution together with supplier Avaya (formerly the enterprise division of Lucent), which should be available to the public from March. Users will then need only a microphone and headset to talk.

"You can then catch the customer in the process, without the need for a second phone line," says Knecht. "If the problem is at step five of installing Quicken, for instance, the user can call the centre directly from their session and be routed to an agent who can support them. There's no need to ask 10 questions first."

The only problem with voice quality is echo, which is heard only by the UBS employee. This implementation fault will be corrected in the second iteration of the service.

Knecht cites four reasons for implementing push-to-talk buttons: customer convenience, better quality of service, a more professional service and faster transactions.

The destruction of distance

Headstrong needed a means of bringing the different skills of its widely dispersed workforce to bear wherever they were required

Global e-solutions provider Headstrong is using VoIP as part of Centra's real-time virtual teamworking and interactive training Symposium application. Previously known as James Martin and Co, Headstrong has been acquiring companies as part of a strategic makeover, giving it around 1,000 staff in 12 countries.

"We're a global company", says Ian Simpson, principal consultant at Headstrong. "We can't have every expert in every town, so we have to use our experts wherever they are."

It's not just collaboration that's enabled: internal announcements, regular team meetings, pitches to prospective clients, and reviews of prototype software have all been carried out via the Web-based tool.

The initial motivation was training. "Consultants need to be trained in the latest thinking but this often requires only two to four hours of knowledge sharing," explains Simpson. "We don't want to drag people back to head office for a two-hour session." The solution saves money on conference calls, videoconferences and travel, according to Simpson. "The first time it was used, 40 people logged on in 11 different countries and 20 different locations for two hours," he says. "Before we deployed the application, we'd have used a conference call for this type of meeting, costing up to $1,000 per session. With Symposium, the cost is less than $10."

But Simpson emphasises that cost savings weren't the main reason for adopting the application. "The cost benefit is almost irrelevant," he explains. "We wanted to improve the quality of our communications. People are talking more, we can share information better and take on projects more easily, which is very important for a global company. If we're rolling out a new idea, process or standard, we don't worry about it so much."

The voice component, which allows two-way communication, is indispensable. "Without voice, it would be ineffective for training and for briefings," says Simpson. Private conversations aren't possible, although there is text messaging.

Simpson admits voice quality varies. "Sometimes the voice drops out, but nothing is lost - it is simply a pause," he says. "Echo isn't a problem."

Fatal problems are rare and few users have complained about the application. In the first big session - a global management meeting, the only one of 41 users with a problem was using a non-standard PC.

The biggest hurdle is getting accustomed to presenting with no-one to look at. "It's very awkward at first because you have no-one to talk to," admits Simpson. "Some people put a mirror in front of themselves. And you have to use your voice a lot - you can't rely on body language. But after two or three sessions you get used to it."