IP: The financial benefits

How can you use IP networks to gain financial benefits in addition to taking advantage of sophisticated features? Antony Adshead...

How can you use IP networks to gain financial benefits in addition to taking advantage of sophisticated features? Antony Adshead finds out

In 1992 at a meeting of the Internet Engineering Task Force, a heated debate over the future of internet protocols turned angry and so-called “father of the internet” Vint Cerf tore off his shirt to reveal a T-shirt bearing the slogan “IP on Everything”.

A typically loopy act in the high priesthood of geekdom, for sure, but incredibly prophetic – we are now very close to "IP on everything" in the network.

In June, BT announced that IP will be used for voice and data over its national network in its 21st Century Network programme. More recently, analyst Gartner predicted that 90% of all new corporate telephone systems will be IP-enabled by 2008.

The advantages to you of basing your business around IP is that it is one protocol that has become dominant in voice and data traffic, so that you can use economies resulting from standardisation and convergence in addition to taking advantage of sophisticated features.

Maren Bennette, regional business development manager for SMEs for Cisco Systems in South West England, points to IP’s growing dominance driving down costs.

“IP networking is much simpler than its predecessors – such as SNA, X.25 and ATM – because it is based on well-understood common standards and technology. Because it is simple compared with other networking technologies, it has achieved a wide customer base and has driven the cost of networking appliances and bandwidth down to a level easily affordable by all.”

You may not need reminding of the fact that cost has always been a pressing consideration for companies of your size, and in the past this consideration has probably meant that you have been able only to afford the basics and lacked the cash or resources to support the sophisticated technology that put them on a par with larger competitors.

An evolutionary approach Mike Valiant, international market development manager for voice solutions at 3COM, says businesses like yours want the benefits associated with networking but do not want the complexity that historically comes with it.

“SMEs want the functionality of corporate products but they have to be less expensive and easier to install and maintain. With limited IT staff, companies like yours need easy-to-use, lowcost products,” he says.

He says companies like yours are uniquely able to take advantage of the latest technologies. You will likely not be hidebound by rigid corporate policy, and rapid growth can mean an evolutionary approach to network technology suits them.

“Most new technologies fit into a phase of SME network implementation – setting up a basic data network, enabling remote and internet access, adding voice capabilities to the data network and exploring wireless solutions. Each is a natural evolutionary progression from the other.”

Andy Rawll, product manager for Avaya’s SMB converged communication system, IP Office, says you can now take advantage of technologies previously only available to corporates. The growing number of solutions that converge voice and data using IP mean that sophisticated features are available to almost every business.

“IP levels the playing field and redefines the rules of engagement – smaller businesses can now build communications infrastructures that are microcosms of those deployed by larger business. The benefits of converged communications are now within reach of the budget, skills and capabilities of businesses like yours, enabling them to compete with larger ones.

“You can standardise applications, user interfaces and network interfaces to one common, open and standard networking protocol and simplified heterogeneous network infrastructures, where best-of-breed and rightsized products from different vendors can be combined in a cost-effective and commercially-compelling manner,” he adds.

In IP telephony, the intelligence is in the handsets and not necessarily the network, so far more can be done with an IP phone than with an analogue or digital feature phone.

Because the phones are IP devices, linked over an IP network to applications that are running on IP servers, applications can be integrated far more deeply and at significantly lower costs than was possible in the days of separate phone systems and data networks. 3Com’s Valiant offers a low-risk method of migration to IP telephony.

“Networked telephony is now an affordable solution for the SME. But for those companies unwilling to make a full commitment they can run networked telephony alongside their existing PBX so they can become familiar with the technology and let their telephony system grow at its own pace.

Basic architecture

“The business case for networked telephony is a strong one in comparison with legacy PBXs – it has very low management and maintenance costs. When the SME grows and expands, adding new users to the system is a simple and straightforward process. The only additional cost is a new handset, and the easy-to-use browser administration tools mean that anyone who can navigate the internet can easily manage the telephony system.”

This convergence of network applications means that as long as your business gets the basic architecture right, it can design networks to suit its needs easily. Cisco’s Bennette says this can bring down costs too.

“Provided the underlying IP network – the routers, the LAN switches, the security devices, etc – support quality of service standards such as 802.1pq, the power over Ethernet standard 802.3af and security standards such as IPSec, the SME can more or less design the network to suit their own requirements,” she says.

You can sketch out possible scenarios. If voice is the driver for deploying a new network, you can design it around applications such as voicemail or IP contact centres, and perhaps not worry whether the switches support Gigabit Ethernet.

On the other hand, if new data applications are the driver, then network speed will be the most important factor.

While the arguments for IP voice are compelling, it is still a technology in the early adopter phase, but for Bennette, all businesses, no matter their size, should be looking at it.

“Voice is the one ubiquitous communications medium needed by all people, in all aspects of their lives. So it is not a question of who should consider it, but of when they should consider converging voice and data – and video – to provide a single, easy-tomanage network at a significantly lower total cost of ownership (TCO) than multiple networks,” she says.

The answer to the "when" question will vary from company to company. You may well take the opportunity of a PBX coming to the end of its lease, or being made obsolete by the vendor, to deploy an IP telephony solution. In an alternative scenario you could take the budget available for a data network upgrade and add a little extra to deploy IP telephony. For many companies like yours, the most compelling trigger is when you move offices as you grow.

A car dealership in the South West region is a good example of a SME taking advantage of converged network services.

Before IP networking convergence, the company would have to have bought a telephone system, a data network and a DECT wireless phone system for roaming staff. Instead, the company has installed wireless data and IP telephony solutions that cost half as much to buy and are much more easily managed than three separate networks – and the staff are said to be delighted with the flexibility their system provides them.

Wireless in that case is a vital component of the converged IP network. For SMEs, the argument for wireless is a good one. That can be simply because your senior managers want the freedom to use their laptops wherever they like, or as a way of making yourselves more competitive against larger companies by, for example, being available to talk from the factory floor.

3Com’s Valiant insists wireless has a natural home in firms like yours. “SMEs are characterised by rapid growth, moving offices as they grow or moving people around, so wireless is an ideal solution. The greatest benefit of wireless is its cost-effective nature. Rather than having to pull up floors and drill holes in walls, a wireless extension to a network will allow employees the opportunity to access the network from anywhere in the office, accessing real-time information at a fraction of the cost.”

The emergence of SIP

Another IP-based technology that is now featuring in products is SIP – Session Initiation Protocol. This is a signalling protocol that uses low bandwidth to overcome the limitations of the public internet to support voice, making it viable to make and receive calls over the web.

Paul Taylor, sales and marketing director at Swyx Solutions, says this is a technology that can help bring down your costs.

“It works in a similar way to instant messaging, so users can connect to an IP address rather than to a telephone number. The major implication is that the cost of calls will be free, but a further benefit is that it widens the choice of handsets that can be used. As long as they are SIP compatible, they will work. This significantly reduces the capital expenditure for IP telephone equipment, making it even more affordable to the average SME in both the short and longer term,” says Taylor.

Avaya’s Rawll says that applying the principles of instant messaging technology to voice and data more widely could have as big an impact on business as email did in the 1990s.

He says, “The application of the instant messaging concept to other forms of communication is driving the idea of the ‘personal workspace’, where communication with a user is no longer device-centric but user-centric, providing a single ID or SIP address for each user.

“This routes calls to their mobile, PDA, desk phone or e-mail according to who is calling and availability of the called party, perhaps based on their personal information manager or calendar application.”

As with other IP-based technologies you will be able to take advantage just as your larger competitors do. IP-on-everything means your business is freed from the traditional costs associated with cutting-edge advances in the past .

Read more on Voice networking and VoIP