Adoption rates of
hosted VoIP and
managed VoIP are increasing as more companies look to reduce
the costs and complexities of deploying VoIP in house. Enterprises
are factoring revenue growth, enhanced productivity and
communication services into ROI calculations to make a business
case for hosted or managed VoIP. This guide explains the
differences between hosted and managed VoIP solutions and will help
you decide if outsourcing VoIP is right for your
organization.Table of contents
UNDERSTANDING HOSTED AND MANAGED VOIP
HOSTED
VOIP: CASE STUDIES
UNDERSTANDING
HOSTED AND MANAGED VOIP
Hosted VoIP
eliminates cost, complexity
An increasing number of businesses are adopting hosted voice
services in an effort to avoid the cost and complexity of
premise-based solutions, according to a recent study by Frost &
Sullivan.
Businesses are also reaping the benefits of supplemental
capabilities -- including unified communications, simple-to-use
conferencing, and find me/follow me. The study recorded hosted
Voice over Internet Protocol (VoIP) services revenues at $372.6
million in 2005, with estimates reaching to $14.6 billion in
2012.
"Small businesses that account for the majority of the end users
are likely to continue driving hosted IP telephony deployments,"
Frost & Sullivan senior analyst Lynda Starr said. "Medium and
large businesses' interests in hosted IP telephony and VoIP access
service are also likely to increase."
Decreasing hardware prices, improved voice quality resulting
from advances in codecs, and tight service level agreements (SLAs)
have fueled the drive toward hosted services. Hosted services allow
businesses with limited budgets and staff to balance the cost of a
more efficient communication system with a level of available
productivity. They also offer customers the immediate benefit of
upgrades that otherwise would not be considered a practical expense
for another 10 years.
The Frost & Sullivan study also found that most companies
with a premise-based system already in place are seriously
considering a hybrid solution as they migrate to hosted IP
telephony, allowing them to continue using existing systems for a
number of years.
"As these two systems can coexist," Starr said, "service
providers are likely to offer end-user enterprises a hybrid
solution of both premise-based and hosted solutions, enabling
customers to phase in a hosted solution with a trunking service and
existing legacy equipment."
Enticing businesses to switch to partial or complete hosted
service will be VoIP service providers' biggest challenge. Hurdles
include offering customers a unique set of features that are not
available over circuit-switched offerings and a pricing model that
offers adequate return on investment to the customer.
Starr concluded that end users of VoIP found the rapid growth
potential for the hosted services reassuring when beginning a
migration from outdated Y2K-era systems. She added that small and
midsized businesses in particular stood to gain a more professional
phone appearance.
Managed and hosted VoIP:
muddling through
Managed and Centrex and hosted, oh my! For companies looking for
an alternative to a premise-based phone system, there are plenty
available, and they come in all shapes and sizes. Hosted voice, IP
Centrex, managed IP PBXs and network-based voice service are all
viable alternatives to the do-it-yourself model. But these terms
are often used interchangeably -- incorrectly in most cases --
causing confusion among the buying community as to which product to
use in what situation. A clearer understanding of exactly whatis
available will help you at least ask the proper questions to
distinguish between the services.
The products
When considering an outsourced service, there are four basic
product categories. Hosted IP PBX, managed IP PBXs, network-based
services and IP Centrex. The basic premise of all of these services
is that a third party manages everything and provides a "service"
to the organization -- but they do differ. The main benefit of an
outsourced service is that much of the risk is transferred to the
service provider, but the customer does lose direct control of the
solution.
Managed IP PBX
This is where the traditional IP PBX is on premise. The enterprise
could choose to manage the products itself but chooses to outsource
the management to a third party. Itis important to note that not
all managed services are created equal. They range from simple
moves, adds and changes up to fully outsourced management of the
entire lifecycle of VoIP. Most VoIP services today are managed
services and are offered by most telcos and systems integrators,
and even by many vendors such as Avaya and NEC Unified
Solutions.
Hosted IP PBX
A hosted IP PBX is no different from any other hosted application,
such as email. Instead of the IP PBX being located on the customer
premise, it is located in the vendor's hosting center. The IP PBX
is exactly the same one that would be purchased and placed on
premise, meaning that the company is buying "hosted Cisco" or
"hosted Avaya," so it interoperates with the premise-based
equipment. Some companies "host" the IP PBX themselves by placing
the IP PBX in their own data center, and then every branch office
picks up the call control from there. A few companies Ihave talked
to have put the primary IP PBX in their own data center and the
backup in a third-party hosting center. The systems integrators and
VARs are the primary deliverers of hosted IP PBXs. An interesting
option for Avaya customers is Avaya's On-Demand voice service,
delivered in partnership with Savvis.
IP Centrex
The term "IP Centrex" is an overused tag used to describe anything
where the call control is located in the network instead of the
branch. There are many carrier services that carry the Centrex
name, but most of them are actually much more than an IP version of
a traditional Centrex service. A true IP Centrex service has an IP
gateway placed in front of a traditional Class 5 switch, with the
service delivered over IP, but the basic service is still a
traditional Centrex service. The growth potential of this type of
service is limited because many of the advanced unified
communications features cannot be delivered this way. Also, in the
U.S., Centrex services havennot been overly popular; IP enabling it
makes it a little easier to deliver, but the stigma of Centrex
still applies to it. As far as I know, there are no major carriers
that offer an IP-enabled Centrex service. A few rural ILECs do, but
the growth in cloud-based voice services is in a true network-based
service, highlighted below.
Network-based voice
A network-based service is similar to a hosted IP PBX but with a
couple of differences. First, the infrastructure -- known as a
softswitch -- which provides the call control, is located in the
telco network, not a hosting center. The softswitch is designed to
be a multi-tenant product, meaning that it can house the calling
capabilities of multiple customers, whereas a hosted IP PBX is
deployed on a per-customer basis. The softswitch has been
positioned as the IP equivalent of an old Class 5 switch, but a
softswitch is more of an application server thatis capable of
serving up applications other than just voice. Any service built
from a softswitch is capable of delivering many of the unified
communications applications as well. One mistake many carriers have
made is branding their softswitch-based services as "IP Centrex"
services. For example, Verizon's Hosted IP Centrex service is
actually a network-based service built on Broadsoft infrastructure
and is much more than just a basic Centrex service. AT&T's
Voice DNA and Vonage's phone service (consumer) are also examples
of this. Organizations considering a cloud-based service should do
the due diligence to understand exactly how the service is
delivered and the long-term roadmap of the service. The downside to
these services is that the infrastructure that provides the service
needs to adhere to industry standards, meaning that the features
are limited to ones that have made their way through the standards
bodies. Most premise-based IP PBXs from vendors such as Cisco and
Avaya also adhere to standards, but they add on extra features
through proprietary extensions to the standard. In many cases, the
standards-based features available should be sufficient for many
organizations, but companies considering this type of service
should keep this in mind. As time marches on and the standards
mature, the gap between proprietary features and standards-based
features will close.
The main theme behind a hosted, IP Centrex, and network-based
voice service is that the call control is somewhere "in the cloud,"
and all thatis needed on the customer premise are IP phones and a
router for the data services. Telecommuter phones and PC-based
softphones can also interoperate with these services.
Even though the industry has done a great job creating confusion
among all the available VoIP services, I do think they are a good
alternative to organizations that want to offload much of the
up-front expense of buying the equipment and the ongoing
operational costs associated with managing the equipment. If you
are considering a service, though, keep a few things in mind.
Understand the architecture behind the service
Many of the services have been branded with names that do not
accurately describe them. For example, a name like "Hosted IP
Centrex" service doesn't really describe whether it's a true hosted
service, Centrex service or network-based service.
Even if you're a predominantly do-it-yourself IT organization,
consider a hybrid environment where the hosted services are
used for some of the smaller branches and telecommuters. This will
probably scale much more easily for you as you move more locations
over to VoIP.
Managed VoIP -- 10 tips for
a smooth migration
VoIP migration can take a lot out of a company. It takes massive
amounts of time and piles of money. From the largest enterprises to
the smallest SMBs, managed VoIP has become a reality. Many
companies just don't have the time to do it themselves. They need
to hire a service provider to oversee the transition to VoIP and
ensure high reliability and performance. But even with managed
VoIP, there are things companies need to know before selecting
their partners and deciding who will manage their mission-critical
voice applications.
According to Laurie Shook, Verizon Business' director of managed
IP telephony, said companies need to start focusing on the quality
of a voice deployment and who best suits its needs, instead of
trying to do it themselves.
"Companies need to realize there is too much at risk to try to
do it yourself," she said. "Businesses aren't used to thinking of
their telephone systems as an IT system."
Companies labor under two major misconceptions when considering
a provider for managed VoIP service, Shook said. They often
underestimate the degree of readiness in the existing WAN to
accommodate VoIP, and they underestimate the complexity of managing
VoIP when it's on the same backbone as data.
Some vendors run a VoIP readiness assessment based on a
pass-fail analysis, while others offer a more comprehensive
analysis and make recommendations. Research has shown that roughly
85% of customers looking for a managed VoIP service require some
sort of WAN upgrade to accommodate IP telephony, Shook said.
"There's no more problems with IP [systems] over TDM [systems],"
she said, "but when you do have a problem [with IP], it's a lot
harder to figure out where that problem is."
There are 10 things a company should look out for when
considering a migration to managed VoIP, according to Shook. And
though these steps can help a smooth migration, she said, they are
certainly not a cure-all.
According to Shook, Verizon Business suggests that companies
should:
- Evaluate service provider and system integrator capabilities in
terms of breadth of services and flexibility of offerings.
- Ensure that the vendor is financially stable and committed to
the business over the long haul.
- Determine whether resources are available when and where they
are required.
- Look for a service provider that will build upon the existing
investment in hardware and software.
- Identify the scope and scale of service provider
responsibility.
- Tour the company's network management facility and meet the
people who will monitor the network.
- Ask about employee and site certifications.
- Select a service provider with built-in system redundancy.
- Obtain fully documented service resolution procedures.
- Consider vendors that are committed to continued investment in
network operations and systems integration.
Companies really need to put managed providers under fire before
signing on the dotted line, Shook said. It essentially comes down
to "who you are able to have a trusting relationship with," she
said. "Can the vendor meet your needs?"
In some cases, vendors offer help with implementation but not
future management, Shook said. Companies also have to consider
whether they want a centralized solution that will be managed
separately and must also figure out how much of their existing
infrastructure they want to reuse.
Most importantly, however, companies need to pay attention to
the SLAs offered by service providers, she said. The wording of the
SLA can determine whether refunds are related to repair time or
response time, and some service providers aren't clear which they
offer until the issue arises.
According to Jim DeMerlis, vice president of managed services
for Verizon Business, these 10 tips are not necessarily set in
stone; rather, they are guidelines to ensure a smooth migration
with as few surprises as possible.
"These suggestions are not a silver bullet for success,"
DeMerlis said. "Organizations must devote the time and resources
necessary to develop a comprehensive IPT migration strategy.
Incorporating these tips into the due diligence process will help
ensure a smooth transition."
Hosted and managed telephony solutions offer a great litany of
benefits as compared with premise-based solutions which are
costlier and require more responsibility for network maintenance.
It is often possible to create umbrella solutions that combine both
hosted and premise components, and allows the customer to maintain
their own network instead of outsourcing that responsibility.
Hosted VoIP: Take the
headache and heartache out of VoIP, part 1
No matter what size network an enterprise is running these days,
large and small alike are faced with increasing technical and
financial challenges. These include dealing with a myriad of
networking components, never ending security issues, the
unquenchable demand for new network services -- such as Voice over
Internet Protocol (VoIP) and IP television -- as well as balancing
this demand with the ongoing pressure to reduce capital and
operating expenses. Increasingly, enterprise CIO's are deciding to
outsource the operation, support and maintenance of their
enterprise network to a third-party. The driving force behind this
shift is new market innovations, such as the convergence of voice
and data, which makes network operations more complex.
The term "hosted VoIP" means a number of different things to
different people. One key data point is that the "who" of hosting
should be transparent to the end user. It can be a service provider
or a third-party offering the hosted solution. The hosting can be
offered in a completely separate facility sometimes called a global
network operations center (GNOC) or can be offered directly on the
carriers' or their customers premises. One key point is that
whoever is providing the hosting actually owns the equipment and
this in turn significantly reduces the amount of CAPEX for the
enterprise. Enterprises will ultimately choose the optimized hosted
solution based upon their own network needs, core technical
competencies and capabilities as well as desired services.
While the hosting infrastructure architecture can be designed in
a variety of ways technically, one of the parts of the decision
process is who should perform the hosting. Obviously an
enterprise needs to carefully select a trusted partner. Just as any
outsourcing decision, handing over an important function of network
operation needs to be a well-thought out process. Enterprises need
to take into consideration the performance record of their partner,
their partner's commitment to new services development and
deployment, as well as their customer support and business
continuity and disaster recovery plans.
For many enterprise CIO's – especially those involved with large
enterprises – outsourcing on a scale this big might be considered a
loss of control and a decision that could compromise overall
quality. However, as technologies such as VoIP continue to evolve
to new and even more challenging applications, it may be easier for
enterprises to keep up by using a third-party provider.
New technology introduces complicated technical issues and VoIP
specifically has two very relevant concerns that need to be
addressed immediately -- security and quality of service (QoS).
Both of them can be addressed in the network, however since both
continue to evolve on a sometimes-weekly basis, they can become
very cumbersome issues. This makes it quite difficult for an IT
organization that is already over tasked with regular network
issues to identify and resolve without significant investment.
The industry often chooses to focus on the positive features of
VoIP — shared IT infrastructure, and plug-and-play adaptability.
While these key elements take advantage of the flexibility of IP,
they are also what make it more susceptible to possible outside
attack. Unlike a traditional circuit based telephone network., a
VoIP network is vulnerable to the typical IP infrastructure issues,
including interference from denial of service (DOS) attacks,
viruses and wo,prms. These attacks can lead to the major outages
that sometimes occur with data networks – taking the network down
for hours or even days.
There are also a variety of attacks that specifically target
VoIP networks. A couple of recent examples include spam over IP
telephony (SPIT) and malicious transmission of obscenities. All of
these issues are things that would be a huge problem inside a
corporate network – especially when they can lead to the disruption
of phone service.
In today's fast-paced global business world many workers spend
hours on conference calls and reaching out to customer and
colleagues by phone. The ability to pick up a desk phone and have
it work almost 100 percent of the time is taken for granted.
However, with a VoIP network there are not the same guarantees.
Because they are vulnerable to outside influence, these disruptions
can magnify some of the other common deficiencies with VoIP –
latency, dropped calls or distortion. Since voice communications is
one of the most reliable and personal ways to conduct business most
companies do not tolerate downtime on a voice network or
unintelligible calls the same way they might with a data network or
a mobile phone.
Hosted VoIP: Take the
headache and heartache out of VoIP, part 2
The good news is that VoIP has been around for a number of
years, so some of its major risks are well understood. The industry
is constantly developing best practices and tools and techniques
for protecting and controlling VoIP networks. For instance, the
International Organization for Standardization offers ISO 17799,
which provides recommendations for information security management,
also provides a common basis for developing organizational security
standards. Similarly, the International Telecommunications Union's
X.805 standard, pioneered by Bell Labs, defines security
architecture for systems providing end-to-end communications. And
NRIC, the Network Reliability and Interoperability Council,
provides best practices guidance in a number of areas that relate
to VoIP operations.
While the tools to deal with security concerns and VoIP exist,
the time it takes to implement them may be the harder part of the
equation. Because the industry is constantly evolving, security
issues may pull away hours and hours of resource time from already
strapped IT staffs.
Even the creation of a best practices model for an individual
company is a laborious process. Typically these includes both and
internal review that involved detailed -- users, administrators,
managers and other employees -- as well as the more traditional
security equipment assessments to show potential technical security
gaps. A well-devised security plan must be able to include these
unforeseeable risks and minimise them – however finding the time
can be the trickiest part. In a hosted environment much of this
work, especially keeping current with new types of attacks and
solutions, will already be addressed.
The second major issue that is also commonly overlooked or
minimized in the zealous race to move to a VoIP network is QoS.
While QoS has long been discussed in data circles, when an IP
network is carrying voice traffic it becomes an even more critical
element. Just as planning is a key aspect to controlling the
potential security issues; planning and network design are the
foundation to building a VoIP network that delivers upon quality
expectations. A good network design methodology includes
prioritisation, traffic engineering, a plan to handle voice in a
converged network and a restoration process.
In addition administrators must put a call admission control
(CAC) process in place. CAC allows the customers to properly design
the network to carry the traffic load even at the busiest times
while still meeting QoS objectives. This complex process can be
managed, for the most part by using one of the following methods:
per call bandwidth reservation, local measurement based management,
path-based management and link-based management. A network needs to
carefully consider each choice, because the wrong one can have a
direct impact on total voice quality.
In a traditional circuit based network voice is given a
dedicated bandwidth allotment so the quality is assured. In a
packet environment a customer must either predict voice quality in
a new VoIP deployment or assess voice quality in an existing
network to ensure end user satisfaction. Both scenarios can be
managed by using a well-designed modelling process. One way to
accomplish this is to combine both subjective testing with
objective testing models. The subjective category includes the
e-model scale of user satisfaction categories (ITU G.109) that set
definitive end values and give a Mean Opinion Score (MOS). The
objective components then measures network impairments such as
delays, packet loss and echo, and computes a total score. In the
case of a brand-new network these models are then combined with a
network performance prediction tool (NPPT) that takes into account
network information, VoIP traffic demand patterns and a network
performance prediction algorithm to deliver a VoIP voice quality
prediction report.
In the case of an existing network the e-model testing is still
used for a voice auality assessment portion, but it is combined
with other assessment tools such as network discovery, network
performance measurement, delay asessment plan, delay assessment and
root-cause analysis to deliver a VoIP voice quality assessment
report.
While the industry has a number of different approaches to QoS
it is clear that voice quality is key to the ultimate success of a
VoIP deployment. The planning and traffic prediction make or break
the deployment. The use of a hosted environment where detailed
planning was built into the network design and will continue to be
upgraded and monitored as new technology emerges may make a
significant difference in overall performance.
Given today's competitive operating environments, the benefits
of the hosted model provide some compelling reasons to consider it
as a viable option. These may include lower overall operating
expenses, ability to provide enhanced security, improved network
performance and ability to quickly rollout new services such as
VoIP. This approach allows enterprises to focus on their own core
network competencies and re-deploy staff to areas that make the
most use of their expertise.
As VoIP and a wide variety of other broadband communications
applications including unified messaging, security and mobile
extension applications that can extend the functionality of the
office phone system to a mobile environment, continue to emerge on
the scene, the network landscape is dramatically changing. The
continuous push to add new technology is tipping the scales in what
was once a closely guarded possession for organizations -- network
operation. When customers combine the cost-effectiveness and the
ability to immediately offer new services the decision to outsource
is becoming clearer every day to both the network operator and
enterprise CIO.
HOSTED VOIP:
CASE STUDIES
Hosted VoIP
improves portfolio, company functionality
"Americans feel they have certain inalienable rights," said
Quentin Krengel, president and CEO of Krengel Technology --
"including the right to a dial tone."
As a beta-tester for MailStreet's recently added
hosted VoIP feature, Krengel has enough
experience to say with certainty that he wants a dial tone to be
a right. As founder and CEO of an online marketing and software
development firm, Krengel knows what he wants from his
communications services and isn't afraid to ask for it.
Yet with a growing business, the need to rely on continuous
connectivity became an issue, and eventually the situation came to
a head when Krengel Technology experienced a three-day service
outage with Vonage. By the third day, when patience was exhausted
and weak assistance from customer service had run its course,
Krengel began a search for a new communications provider. Two or
three days after the outage fiasco, Krengel Technology began a
fruitful partnership with Apptix's MailStreet.
Apptix offers three levels of service, with MailStreet catering
primarily to what is termed the "ultra-small" business market --
one to 20 employees -- and offering a cost-conscious solution.
Covering all the basics of enterprise-class email, unified
communications, hosted Exchange and hosted PBX services, Apptix's
various service levels launched their latest feature, Apptix Voice
-- a hosted VoIP solution -- on March 19, in response to a demand
among businesses of all sizes. Amir Hudda, CEO, said, "Combined
with our hosted email and collaboration solutions, Apptix Voice
extends our vision of delivering reliable, enterprise-class
business communications solutions to the SMB [small and midsized
business] market."
In addition to choosing the more traditional MailStreet
offerings of hosted Exchange, email and Outlook integration,
Krengel also volunteered his firm of primarily home-office-based
employees to beta-test the MailStreet VoIP feature. He said it was
important that all the workers in his firm felt comfortable
handling call conferencing, call forwarding and call transfers --
both internal and external -- so the user interface would need to
be easy to use but graphically dynamic.
After initial testing among the employees, a user in the
marketing department came back and confirmed the functionality of
MailStreet's offering by stating, "Even a non-geek like me can use
the system and understand the display easily." The firm is also
testing softphones, handsets and PC integration among the three
features, which share the same phone number -- another feature of
MailStreet's offerings that appeals to Krengel.
Krengel acknowledged that he is a demanding user, but he knows
what he wants and is also aware that the
perfect communication system does not exist.
But a high level of customer service -- including rapid
turnaround on emails, willingness to assist on implementation of
new features, and availability after hours to handle difficult
situations as they arise -- has convinced Krengel that he made a
wise choice in taking his firm to the next level in
communications.
VoIP software
eases company's communications constraints
Hosted VoIP is getting a new spin as the telephony community
begins to explore voice communications as software applications on
a converged network.
"We're allergic to the word 'hosted,'" Russ Maney, vice
president of marketing, said when describing Smoothstone and its
view of the Voice over IP (VoIP) communications world.
Rather than following the better-known model of hosted VoIP
services, Smoothstone considers itself a fully managed
communications service provider. Terming its service "converged
communications as a service," Smoothstone takes the approach of
offering a complete solution -- covering everything from basic dial
tone to automated call distribution (ACD) and videoconferencing
services.
Using the Software as a Service (SaaS) model and replacing
traditional telecom equipment and separate silos of legacy
networks, Smoothstone makes VoIP software and services available
over a network connection from an externally hosted platform. In
addition, Smoothstone offers businesses the chance to converge
separated data, voice and video networks into a single provider
that offers these features over a private, nationwide network as a
service.
Vic Elarde, IT manager at Telular, said that six months with
Smoothstone's complete solution liberated his staff to focus on the
higher-value activities of the network rather than spending their
time keeping the voice system operational.
Whenever there was a problem with the phone system, Elarde knew
he would need to set aside at least a few hours to phone in the
problem to his previous provider, AT&T/BellSouth, and then wait
for a call back with a response -- the actual fix for the issue
could take another day or two, depending on the problem. In
comparison, Elarde said, "It took one call to reach Smoothstone's
support versus waiting a day or two to hear back from our previous
provider, or several hours on the phone before reaching a support
worker."
For Telular, the cost-savings benefits of VoIP and hosted VoIP
had become another incentive to find a different telephony
solution. With an average bill of $30,000 per month before
switching to Smoothstone, and struggling to reach a customer
service rep with the other company when there was a problem,
monthly costs of $12,000 to $13,000 reaffirmed Elarde's decision to
switch.
As a manager who is customer service-oriented, Elarde is also
thrilled with the near-weekly phone calls he receives from his
Smoothstone customer service rep to check in. Telular also found
that using a new hosted service helped the company avoid the cost
of a forklift to VoIP -- one that might not have included the other
unified features included with Smoothstone's complete solution.
Rather than allowing the site to be down for the duration of the
physical move, Smoothstone enabled Telular to virtually move the
site from the Chicago server to the New York office's server. Once
the physical move to downtown Chicago was over and the server was
back online, Smoothstone transitioned the site back onto the
Chicago server -- without experiencing any downtime.
For Telular's remote and mobile workers, additional features
have also improved communications capabilities. As its complete
solution places all network users onto the same private network,
the entire company is on the same virtual call center -- allowing
workers to communicate with one another as if they were in the same
physical location.
Elarde has found that Smoothstone's flexibility is invaluable to
improving Telular's business -- including being able to add T1
lines as the volume handled by the call center increases, or
rerouting calls to the Chicago office when the volume spikes.
With the number of benefits Elarde has seen for his IT staff and
within the rest of Telular, he is confident that a converged
communications system was the best path for his company to take to
improve its business.
"In choosing to use a converged communications model," Elarde
said, "our cost savings alone have made our company
profitable."