Is Skype really all blue sky for business?

The free internet telephony service Skype has moved from being a consumer play into the business arena. So what canit offer you and how is it best implemented?

The free internet telephony service Skype has moved from being a consumer play into the business arena. So what canit offer you and how is it best implemented?

According to Andrea Wilson, operations director of Dublin-based software consultancy Exoftware,  two recent developments have enabled the company to dramatically cut the cost of doing business: low-cost air travel and Skype, the free internet telephony service.

"Skype is one of the best things to hit businesses in recent years. We are seeing significant savings in telephone costs by using Skype, which we use for internal meetings, sales calls and for conference calls with other companies. Nearly all our calls are made over Skype now," Wilson said.

In fact, the company usually ensures new employees set up a Skype account if they do not have one already.

The reasons for that are clear: internal calls using Skype are free, as are calls made to other Skype users around the world. Other calls incur minimal charges: making an outbound call to non-Skype clients in Europe, for example, costs just £0.012 per minute.

For Exoftware, that also helps to control the call costs of employees working from home, as well as those on business trips, who previously relied on costly mobile calls to stay in touch. Also, combining Skype with simple webcams has given Exoftware employees access to low-cost, easy-to-use video conferencing facilities, said Wilson.

This enthusiasm for Skype is reflected widely across a broad range of industries and company sizes. At one end of the spectrum is The Dream PA, Nadine Hill's one-woman outfit. She has deployed Skype so her clients can brief her on jobs.

At the other end is recruitment giant Manpower. "Skype obviously has benefits, otherwise we would not be using it," said Kevin Fitzpatrick, the company's chief technology officer. "We see great value in being able to communicate with external partners and development groups in other countries at low cost."

In fact, said Bruce Everest, senior consultant at telecoms group Avaya, any company that does not think its employees are using Skype to make calls is probably fooling itself.

"Skype calls are being made in almost every client site I go into, whether the client knows it or not," he said.

This is causing an inevitable backlash among the enterprise voice over IP (VoIP) companies, which argue that Skype is inherently a consumer service and ill-equipped to meet the demands of businesses.

Of particular concern with Skype is service quality, said Everest. "When voice over the public internet works, it is great,  but when it is bad, it is appalling, and business users will not tolerate poor voice services when they are conducting important company business."

Nor does Skype offer companies business-level VoIP functionality, said Graham Walsh, VoIP specialist at business telephony group Telinet. "Skype simply does not have the functions that one takes for granted in a business, such as a switchboard, the ability to transfer calls between phones and the ability to forward calls to other devices."

And in IT management terms, it poses real problems, said David Thorn, chief executive of telecoms provider Telstra Europe. "Unlike Skype, business-level solutions come complete with network monitoring tools, which provide IT diagnostics and analyse and monitor usage, enabling the IT manager to make decisions about their network and the quality of service that is being provided.

"Obviously, there is a danger that, with a solution such as Skype, the IT manager will be in the dark about usage, without visibility of how the service is being used or its impact on other business services."

But there is plenty of anecdotal evidence that the quality of service offered by Skype is largely meeting business users' expectations - or at least is not a serious impediment to offseting the cost benefits offered by the service.

And at most larger companies where frequent Skype calls are made, the service is being used as an add-on to existing telephony services, not replacing them.

Perhaps a more worrying issue is the claim made by industry analysts that companies using Skype are exposed to a host of undue network security risks that could seriously impact their businesses.

In November 2005, for example, Canadian IT analyst company Info-Tech Research Group called for businesses to ban Skype - or at least take steps to ensure it is policed and secured - in a research note provocatively entitled, "Five reasons to ban Skype".

These reasons include Skype's ability to bypass corporate firewalls; basic technical vulnerabilities which Info-Tech claims leave companies open to hacker attacks despite Skype encryption; and the burden of tracking and storing all user communications with the software.

If IT managers want to allow Skype in the workplace, said InfoTech analyst Ross Armstrong, they should at least develop and enforce policies on acceptable usage, such as refusing file transfers, and warn against using it for sensitive communications.

That process is already underway at Manpower, said Fitzpatrick. "We need to ensure that our wireless area network is not adversely impacted by Skype traffic, so we are completing a roll-out of analysis tools and processes that will enable us to monitor bandwidth usage across all of our 4,000 sites globally," he said.

But according to Richard Edwards, an analyst with UK-based analyst company, the Butler Group, Info-Tech's warning overlooks another important point: the risk that corporate computers will be commandeered by Skype to act as super nodes.

Because Skype has very few physical assets as a company, it relies on the power of third-party devices connected to the internet to route Skype traffic. Indeed, signing off on the Skype client software licence agreement gives the company tacit permission to do this.

"Any computer running Skype with clear line-of-sight to the internet, plenty of bandwidth and plenty of resources [such as memory and CPU] has the potential to become a super node, and this could result in this machine - and potentially the network segment it is attached to - becoming overwhelmed by Skype traffic."

That threat is somewhat overplayed, said Skype executives. Skype chooses powerful computers with clear access to the internet - so corporate PCs would be unlikely to be affected - and, in any case, it uses only a tiny percentage of CPU and bandwidth resources.

According to Skype, the selection algorithms are designed to keep usage of super node resources at an acceptable level, so even if a corporate machine was selected, it is unlikely any change in performance would be noticed.

Not only that, said Skype's vice-president of marketing Saul Klein, but Skype is doing its best to educate network administrators on the best ways to securely manage Skype traffic across corporate networks.

"We encourage business users to visit, where there is a variety of resources available for download," he said.

"These provide guidance on the best ways to police and control Skype traffic on corporate networks, but I should add that we have never had any complaint from any business user about any of these issues."

There is a growing awareness at Skype of the importance of business customers, said Klein. "We put a lot of time into surveying customers last year and one thing that came up was that approximately 25% of our 61 million registered users rely on Skype for business purposes."

In October 2005 the company launched the Skype Group service, which enables a single administrator to buy and distribute Skype credits to multiple Skype accounts as well as buy Skypein and Skype Voicemail premium services for group members.

Skypein enables callers on regular phones to call Skype numbers and has proved very popular with business users, said Klein.

"Using Skypein, a business user working in a company's London head office can set up a Swedish Skypein number so that Swedish co-workers and customers can call in from the regular phone network at the local [Swedish] rate," he said.

Up to 10 Skypein numbers can be associated with a single Skype name, he added, and the company's research found that about 30% of Skype Group users now put their Skype name and a Skypein number on their business card.

The future of Skype - the analyst's verdict

Skype has acquired over 50 million registered users since it appeared in 2002, and with over three million users online at any given time, it is fast becoming the intercom of the internet.

Available in 27 languages on Windows, Mac OS X, Linux, and Pocket PC operating systems, Skype is an easily installed and easy to use internet telephony application that allows its users to communicate across the internet for free.

Skype's value-added services - Skypeout, Skypein, and Skype Voicemail - provide the company with a small but growing revenue stream, and enable users to call regular fixed-line and mobile phones at discounted rates.

In these days of standards and interoperability it is interesting to note that Skype favours its own protocols above established standards, such as Session Initiation Protocol (SIP) and eXtensible Messaging and Presence Protocol (XMPP)

Therefore we might see the likes of Google, MSN, AOL, and Yahoo having to re-engineer their own communication tools in order to interoperate with the growing Skype user base.

Internet telephony may still be in its infancy, but the £1.5bn acquisition of Skype by eBay last year will now fuel its growth as the network effect takes hold.

The acquisition will also enable eBay and Skype to pursue entirely new lines of business, so interesting times are undoubtedly ahead.

Partnering technology with Skype

For every company that argues Skype is a consumer technology and should stay that way, another is betting that Skype's foothold in the enterprise market is likely to grow.

For example, in January 2006, hosted customer relationship management (CRM) company announced it was integrating Skype capabilities within its Appexchange service.

By combining the two companies' technologies, Skype for Appexchange embeds communications features directly into applications. So when a sales person receives a Skype call from a customer, that customer's contact details and purchase history will appear on screen.

Alternatively, when viewing a customer's records, sales staff can make a "one-click" call to that customer using Skype. Skype also enables staff to identify when a customer is online to receive their call.

Another company looking to capitalise on corporate usage of Skype is Packeteer, a supplier of technology that enables IT managers to monitor, control and accelerate application performance over Wans and the internet.

The company's chief technical architect, Mike Morford, said the company had seen a large increase in Skype traffic over corporate networks in the past year, and in late 2005 launched an updated plug-in for its Packetwise product that helps IT managers identify Skype traffic.

Customers for this product fall into two categories, said Morford. "There are those that wish to protect Skype traffic because they see Skype as a valuable and cost-effective tool for communicating with customers and partners, and there are those, particularly in heavily regulated industries, that wish to stop Skype traffic altogether, because compliance concerns mean that all inbound and outbound calls need to be logged through the PBX." - Richard Edwards, senior research analyst, Butler Group

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