Small businesses get serious about VoIP

News Analysis

Small businesses get serious about VoIP

Jim Rendon, Senior News Writer

Small and medium-sized businesses are starting to show serious interest in Voice over Internet Protocol (VoIP) . And the technology, whether hosted or deployed on site, has some real benefits to offer.

The simplest hosted services offer businesses a bargain on their phone bills. More complex on-premise systems or even some of those soon-to-arrive hosted systems offer small businesses all the features, integration with presence-based information and applications that are available in systems for large businesses.

"It is not a question of whether small businesses will adopt VoIP; it's a question of what is the right time for them," said Lisa Pierce, a vice president with Cambridge, Mass.-based Forrester Research Inc.

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A December survey of 1,500 U.S.-based SMBs by International Data Corp., in Framingham, Mass., found that 11% of those businesses are either testing or running VoIP. Another 20% are seriously considering adopting the technology.

Last summer Mentorware Inc., a San Jose, Calif.-based hosting and marketing consultancy, realized that it was spending too much money on calls to its Bangalore, India, office. As a result, employees were avoiding making calls between the offices to save money. .To solve the problem, Mentorware set up an IP private branch exchange (IP PBX) from Zultys Technologies, a Sunnyvale, Calif.-based IP PBX and phone provider that focuses on SMBs.

Since launching the VoIP system, the company has saved money on its calls, which are now routed over the Internet, to India. The company also uses a messaging client that is part of the Zultys system. It can forward calls to cell phones and has e-mail notification for voice calls.

"There is no hesitation about calling people in India; we know there is no cost," said David Noland, vice president of engineering with Mentorware. "We now meet on the phone instead of via e-mail or an online chat."

Since Mentorware is a technology company, it has enough tech-savvy staff members to manage the system on its own. But managing voice can be a challenge.

With VoIP, voice becomes another application running on the LAN. But unlike other data applications, voice has stringent requirements and immediate consequences if those requirements are not met. Voice is sensitive to latency and jitter, which result in dead spots in calls. When businesses deploy VoIP -- and even when they use many hosted systems -- they need to ensure that they have adequate bandwidth and quality of service on their networks, said Tom Valovic, program director for VoIP infrastructure with IDC.

"Whether you are a large enterprise or a small business you always have to make sure that your LAN has the capacity," Valovic said.

But many small businesses may lack the expertise necessary to manage their own on-site IP PBX or may not be able to hire people trained to deploy and manage VoIP systems, Pierce said.

"It takes money and expertise to manage VoIP systems and frankly anyone who would have the expertise would likely parlay that into a better job [at a larger company]," Pierce said.

Instead many small businesses may opt for hosted VoIP systems. Major carriers such as Verizon Communications Inc., SBC Communications Inc. and Qwest Communications International Inc. have all recently launched hosted VoIP systems. Other VoIP-specific companies are also starting to focus on businesses. Many of these systems provide basic phone service with fewer features as an in-house system.

"It's a no-brainer to go with the hosted model," Valovic said. "It eliminates the need for capital outlay and that is attractive."

For Rennen International Corp., a New York City-based manufacturer and importer of automobile wheels, the decision to go with VoIP was purely driven by cost. The company pays $300 a month for three phone lines with Verizon. In contrast, its three lines from Edison, N.J.-based Vonage Holdings Corp. cost about $150. Vonage also offers faxing, which most VoIP providers do not.

Because there are fewer IP features in this offering, Rennen does not even need a data network to use the system. Rennen has a DSL connection and Vonage provides a converter that allows them to plug analog phones into their Internet connection. Calls travel over Vonage's network.

Rennen keeps its three Verizon lines for incoming calls in case there is any trouble with the Internet connection. Weizrung Lee, marketing director at Rennen, said the company hopes to upgrade to T1 lines at which point it may be able to do away with its traditional lines.

Hosting was an obvious choice for Rennen. The company has only one IT person and is not very tech savvy.

"Hosted was a better choice for us," Lee said. "It's better to leave it to the professionals. We're not in the VoIP business."


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