In our
VoIP models and services: Complete guide, you'll
learn why VoIP is not one size fits all. With clear, concise
explanations of existing VoIP business models and deployment
methodologies, you'll be able to weigh the pros and cons of each
based on your needs. Is hosted VoIP the best fit for your
organization or would a managed solution better serve your needs
(and security requirements)? Should you migrate to VoIP
incrementally with a hybrid PBX or move directly to IP? What about
Skype or Yahoo – are they ready for the enterprise? This guide will
help you answer these questions and more.
Table of contents:
VoIP: Getting down to basics
What is the significance of "IP" in VoIP? Besides being an acronym
for Internet Protocol, it means that voice services are no longer
tied to a specific network. VoIP also provides enterprise
organizations with a significantly more network design
flexibility.
With traditional (layer 2) voice, each location had to have its
own PBX or key system and voice services were tied to that
location. Every time a user moved, an administrator had to come in
and reconfigure the PBX to move it around. Users were tied to
specific desks. At the IP layer (layer 3), the call control or IP
PBX, can live anywhere on the network. The IP PBX can be across the
office, across town or across the globe, very much like any other
client-server application. Also, since it operates at the IP layer,
companies can use their data network or even the Internet to
transmit voice, avoiding the toll charges that exist on today's
PSTN. There are both benefits and challenges to VoIP (see below);
however, the more VoIP evolves, the benefits will start to outweigh
the challenges.
Benefits:
- Lower infrastructure costs, including lower network management
and toll costs
- Advanced calling features
- Mobility of telephony features
Challenges:
- Service and voice quality is not 100%
- Unproven ROI and TCO metrics
- Security, compliance (911 services)
VoIP training, testing and budgeting
Twenty-five percent of enterprises are already taking full
advantage of VoIP, and 75% are looking to deploy it within the next
two years. Enterprises that are not actively planning to deploy
VoIP are at risk of falling behind their competition as this
technology continues to evolve. However, to truly glean the
competitive benefits of VoIP, network managers must learn how to
manage the new network environment.
Historically, voice and data have existed on two separate
networks. With an IP network, voice and data coexist on the same
network, thus increasing the management complexity. Introducing
richer, bandwidth-draining applications only convolutes matters
more. It means that telecom managers have to learn how data
networks function and network managers will need to become familiar
with telcomm operations.
For this reason, training should be a big part of the overall
implementation. A migration process will need to be put in place,
and most importantly, a training budget needs to be established.
One of the most common mistakes organizations make is not budgeting
in everything from the beginning to end of deployment. Before many
IT organizations deploying VoIP realize, the cost of implementation
has spiraled beyond their initial budget.
Another crucial error made in many implementations is the lack
of pre-assessment testing. Many have underestimated the importance
of testing and have paid for it by having to fix problems in a
production environment, which is much more expensive than
troubleshooting in pre-production. Actively testing the service,
voice quality and equipment can save managers a great deal of
headaches and downtime. Testing must be done in the pre-assessment
stage, and should also be viewed as an on-going procedure
throughout the deployment.
Types of VoIP
VoIP exists today in many shapes and forms. Some require equipment
on premise, some have the equipment located in the carrier network
and some are a mix of IP and TDM. Which one is best? There is no
single right answer. It depends on the needs of the organization.
Each option has its own pros and cons as shown below.
Hosted VoIP
Hosted VoIP is where the call control is located in the service
provider network. This could be a traditional CPE-based IP PBX
hosted in a service provider, but is more likely a softswitch-based
service. A softswitch is a carrier grade IP PBX that's capable of
delivering voice to multiple customers simultaneously. In either
case, the call control is located in the carrier network and
delivered over a data circuit so there is no need for an enterprise
to have any CPE-based equipment other than a router to connect to
the WAN (Wide Area Network). A hosted service obviates the need for
any kind of up front cost and is normally charged on a per-user,
per-month fee, very much like a traditional Centrex service.
Hosted services normally have fewer features than an enterprise
class IP PBX. Most enterprise vendors build their solutions based
on a standard called SIP (session initiation protocol), and then
add new features by creating proprietary extensions. Because a
softswitch hosts voice for multiple companies, the vendors normally
follow the SIP standard exclusively meaning that they will lack the
proprietary, pre-standard features. The majorities of service
providers today provide a hosted VoIP service offering for those
businesses who do not want to deal with the challenges of managing
an IP PBX system and leave that to their service providers.
Managed VoIP
Managed services have become the recent trend of the communications
industry as network complexities overwhelm most network managers.
Managed VoIP differs from hosted VoIP in that, instead of the
service provider managing the VoIP system on their own premise,
they provide enterprises with the CPE. The managed service provider
installs the CPE, tests it, and ultimately deploys it on the
customer premise. The service provider also provides network
monitoring and management remotely as well. This alleviates a great
deal of complexity, and frees up resources that can be better
utilized for some of the more important initiatives within an
organization.
One of the many challenges still surrounding managed services is
security. Many businesses are still not comfortable handing all
control over to their service provider. Another challenge that has
emerged recently is the complexity of managing several different
providers. Forty-two percent of enterprises prefer to consolidate
their vendors, which would provide a single point of contact or a
single "throat to choke" in the event of a failure. Enterprises
looking to implement managed VoIP should look to service providers
who are partnered with systems integrators that can provide a
single point of contact.
Pure IP PBX
A pure IP PBX is a software-based version of a traditional PBX
that's often delivered in an appliance. The pure IP PBX replaces
the traditional TDM PBX. The data network is then used to deliver
voice services. A pure IP PBX offers a high degree of flexibility
in where the call control is located. Normally, migrating from TDM
to IP is not a one-to-one replacement. Companies often rationalize
the number of IP PBXs down significantly. I recently spoke with one
company that rationalized 57 traditional PBXs down to three.
The downside of deploying an IP PBX is that the systems need to
be "hot cut" over (moving from the legacy PBX to the IP PBX with no
significant loss of service). Interoperability between the old
system and the new system is often a problem. An example: users are
often unable to forward voice mails from a traditional PBX from one
vendor to an IP PBX from another manufacturer.
Hybrid IP PBX
This form of VoIP is perhaps the most widely used. Hybrid
essentially means just that, a hybrid of old TDM network and IP.
This provides enterprises with a clear migration path towards VoIP,
and is particularly appealing organizations that have made a
significant investment in TDM PBXs as it provides a means to retain
some of that investment. In a hybrid environment, an IP card is
inserted into the PBX and the IP network is used for toll
bypass.
While in concept, hybrid does seem appealing, it can lengthen
the migration cycle. Hybrid requires touching every PBX, and when
the company wants to move to a pure IP system, it requires visiting
every location again. In essence, companies would do twice the
amount of work of moving to a pure IP system. Also, most hybrid
systems do not provide the same level of application integration as
a pure IP system.
VoIP deployment models
Hosted VoIP
- Pros: No upfront cost. Service located in the cloud means
faster upgrades and repair time.
- Cons: Lack of control. Limited feature set.
Managed IP PBX
- Pros: Little to no up front cost. Managed providers removes the
burden of managing converged network.
- Cons: Lack of enterprise control. Could limit vendor
choice.
Hybrid IP
- Pros: Leverages existing equipment. Enterprise can migrate at a
slower pace.
- Cons: Doesn't allow for the same level of
application.
Pure IP
- Pros: Flexibility in deployment strategies and total enterprise
control.
- Cons: Expensive upfront costs. Requires immediate migration to
new system.
Other VoIP business models
Skype (peer-to-peer)
Skype has a significant presence with consumers. Increasingly
however, Skype is emerging as an enterprise alternative, though the
trend remains end-user driven. Today about 33% of Skype users are
using it for business purposes. The danger with Skype stretching
beyond enterprise walls is that it is difficult to control and
manage. Topping the list of concerns among enterprise organizations
is security. Because Skype is Internet based, network managers are
hesitant to place Skype on their network.
To be competitive in the market, Skype has been seeking
partnerships for a comprehensive security solution that can provide
a more appealing product for enterprise markets. While Skype still
has a long way to go to play competitively in the enterprise
market, it certainly has the means to do so at a rapid pace.
Vonage
Vonage provides phone service via any broadband connection. While
Vonage has primarily been marketed to the consumer, it also has its
eye on the enterprise. Vonage has not been as successful as Skype,
as was evident by their disastrous IPO last year, but it has
managed to acquire a good number of subscribers. Vonage and other
like providers may be more successful in the small business market,
since the cost of PBXs is more expensive and Vonage can provide a
PBX free alternative. For Vonage, the SMB market currently
represents 10% of their customer base. However, for larger
enterprises, Vonage can be viewed as a complementary phone, rather
than a replacement to the PBX. In most large businesses, a physical
telephony system is still very much needed. Another downfall is the
dependence on a broadband connection. It is susceptible to power
outages and natural disasters.
Yahoo
Yahoo has introduced VoIP through their instant messenger service.
Much like Skype, its "Phone Out" PC to landline rates are as low as
two-cents-a-minute in most markets. Their "Phone In" plan allows
subscribers to receive calls on their PCs from their landline and
mobile phones at a flat rate of $2.99 a month. Still very much
consumer based, it has the potential to be slightly disruptive in
the SME market as many employees already have Yahoo instant
messenger on their desktops. Yahoo also has the financial backing
and global brand name to help it be successful in this arena,
should it choose to play.
Jajah
Making its name in the consumer market, it has the potential to be
as successful as Skype. Its model is different in that it doesn't
require a client download and doesn't use the PC to make the call.
Instead, the consumer logs onto the site, dials the originating and
destination phone numbers and the call goes over the Internet. The
last mile connection, however, does go through a PSTN or mobile
service. The service is not free; however, it is comparable with
Skype's rates.
Selecting the right VoIP model
Enterprises now have a great deal of options to choose from. It is
no longer as cost prohibitive as it once was, and many service
providers have now made it easy to implement and manage. Managed
and hosted services are now a viable alternative to premise-based
solutions and will be increasingly more popular with companies who
do not want to deal with the complexity of running a converged
network. For those businesses who still want an in-house
deployment, there are very reliable turnkey solutions out there
that can simplify this process.
When assessing which one of these models to go with, first you
have to assess the real needs of the business.
- Are there enough long distance calls occurring?
- Is voice quality critical to the success of your business?
- What percentage of your workforce depends on a phone?
- What percentage of your calls are on net and
international?
Any one of the traditional IP PBX equipment vendors can help
guide you in choosing the right solution for your business. Cisco,
Avaya, Nortel, 3COM and Mitel all have comprehensive VoIP solutions
tailored for the enterprise market. These vendors partner with the
systems integrators who help to deploy and manage these networks.
However, traditional equipment vendors are not the only players in
this sandbox anymore.
Emerging players such as Skype, Vonage, Yahoo and Jajah all
provide alternatives to traditional voice services. While these
vendors sell mostly to the consumer market, it's just a matter of
time before they begin to make traction in the enterprise.
Deploying VoIP: Five things every CIO should know
Navigating the complexity of VoIP can be overwhelming and it may
seem like you need a technical degree to understand it. Below are a
few recommendations that can help:
- Be prepared and fully understand whether you are ready for
IP telephony.
Before embarking on the project, have a qualified convergence
consultant perform a network-readiness assessment to determine the
cost to upgrade. Understand all the components of the solution and
be prepared to explain to the business executives what the
underlying costs are. - It's about the applications, not the technology.
Once the costs are fully understood, the CIO must be able to
discuss the benefits in business terms, not technology terms.
Simply put, business leaders really don't care about IP, SIP,
telephony or other technical terms. - Leverage existing technology wherever possible.
This is a good practice all the time, but was lost during the late
1990s. By bringing together all of the corporate applications and
infrastructure, companies will recognize greater efficiencies and
reduce the amount of excess and waste in many IT
organizations. - Sort out the internal politics.
The CIO must strategically determine who owns the converged
infrastructure. I recommend that companies cease distinguishing
between voice and data networking, and only concern themselves with
corporate communications. - Remember that one size does not fit all.
Pick the solution that fits the business best rather than trying to
force the business to change to take advantage of the technology.
In many cases, the latest and greatest technical solution isn't the
best thing for the business and a slower migratory approach is
prudent.
About the author:
Zeus Kerravala manages Yankee Group's infrastructure research
and consulting. His areas of expertise involve working with
customers to solve their business issues through the deployment of
infrastructure technology solutions, including switching, routing,
network management, voice solutions and VPNs.
Before joining Yankee Group, Kerravala was a senior engineer
and technical project manager for Greenwich Technology Partners, a
leading network infrastructure and engineering consulting firm.
Prior to that, he was a vice president of IT for Ferris, Baker
Watts, a mid-Atlantic based brokerage firm, acting as both a lead
engineer and project manager deploying corporate-wide technical
solutions to support the firm's business units. Kerravala's first
task at FBW was to roll out a new frame relay infrastructure with
connections to branch offices, service providers, vendors and the
stock exchange. Kerravala was also an engineer and technical
project manager for Alex. Brown & Sons, responsible for the
technology related to the equity trading desks.
Kerravala obtained a B.S. degree in physics and mathematics
from the University of Victoria (Canada). He is also certified by
Citrix and NetScout.