VoIP for SMBs: Cutting edge and cutting costs

Thinking of VoIP? So is everybody else. Yankee Group offers some pointers for cutting through the hype.

SMBs' interest in Voice over Internet Protocol is soaring, and why not? On paper, the benefits look outstanding. As Yankee Group itemizes in a recent report, VoIP eliminates start-up costs, monthly line fees and usage charges for local, regional and long-distance calling. Instead of paying $50 to $300 every time somebody in the company makes a move, an IT manager can add, change or remove a phone line through a user interface, or do it remotely. Factor in the potential business benefits from tying in phone calls with other applications -- your customer resource management software, for example -- and IP telephony looks even more appealing.

Four SMB VoIP tips

Get all C -level execs on board.

Have a through knowledge of your current data and voice networks.

If you are managing it yourself, test your network to see if it can handle the additional  traffic.

Choose a system that is  easy to upgrade, has ample bandwidth and comes from a reputable vendor.

Indeed, according to the Boston-based research firm, only 6% of SMBS are not interested in VoIP. So, how come only 5% of SMBs are transmitting voice services over a digital network?

"It really comes down to two things -- a crowded and very fragmented vendor landscape and concerns about services," said Yankee Group research associate Matthew DelPercio, author of the report, "Assessing the SMB VoIP Market." With service providers, equipment manufacturers and resellers jostling for the SMB VoIP business, the marketing hype is overwhelming, DelPercio said, even for analysts. For SMBs, which typically lack the staff or experience to vet the vendors, cutting through the hype is daunting.

The other barrier to entry is uncertainty about the service -- the quality of the call, the latency, the jitter, the bandwidth, packet loss and security risks. "Communication is the heart of any business, big or small. If you don't have a voice communication system that is reliable and of high quality, you're not going to be in business," DelPercio said.

Michael Sylvester, chief of IT for the department of public services in Riverside County, Calif., said Riverside has weighed the risks and rewards of IP telephony for several years, working with a major Internet provider to pilot VoIP in parts of the county. The vendor service was not optimal. And both the central administration offices and Sylvester's department, the largest in the county, have "backed away a bit."

"Little quirks, because it is still fringe technology, were coming up, and we were having a hard time getting these problems resolved. If you can't make a phone call, you're nowhere," Sylvester said. And VoIP security remains a concern. Riverside has not been immune to some of the big viruses of recent years, and there have been times when the Internet had to be turned off. "It is unimaginable for us to have that kind of impact on the phones. We're still just so driven by phone transactions."

Still, the cost savings and new services offered by VoIP are a strong pull, Sylvester said, and he has broached the idea of segmenting the phone systems. Public safety departments, such as fire, police and hotlines, would have a higher level of VoIP service, with greater levels of redundancy, than other areas. That would erode some of the cost savings. "But if we can still save some money, yet have those levels of redundancy, then you've mitigated the risk, and could make the transition. I think it is very doable and may finally happen in the next few years," Sylvester said.

VoIP technology primer for SMBs

Yankee Group's DelPercio said there are good VoIP services out there for the SMB. "The technology is there. The most important thing a vendor can do is provide reference customers. On the SMB side, the timing has to be right for the company."

Written as a primer for SMBs, the Yankee Group report explains the basic technology of VoIP and outlines its chief benefits and drawbacks. There are plenty of both. There are four basic models of VoIP to choose from, according to the Yankee Group.

Hosted: SMBs access the call processing server, also known as Internet Protocol private branch exchange (IP PBX), through a Web-based interface. The hosted PBX is off site, is managed by a service provider and offers the same functions as a PBX, for a contracted fee, without the sizable upfront costs of buying, installing and maintaining the equipment on premises. The downside is the SMB gives up control.

Managed: The IP PBX resides at the company but is managed remotely by a service provider, again avoiding upfront capital investment and maintenance costs. But the on-site IP PBX is subject to power outages or natural disasters.

Do-it-yourself: The SMB takes complete control, buying the VoIP system itself, or through resellers, and managing the system. Cost and no disaster recovery backup are the potential drawbacks.

Broadband VoIP: SMB takes the consumer approach, using an analog telephone adapter to access VoIP through a broadband Internet connection. A small business could reap significant savings. The big worry? Call quality and quality of service.

Who should ring in VoIP? SMBs with branch or satellite offices stand the best chance of realizing cost savings by reducing the cost of moving, adding, changing or removing phone lines for employees and long-distance charges between offices and to clients. SMBs with a mobile salesforce or a large number of teleworkers are good candidates for VoIP.

Read more on Voice networking and VoIP