2 keys to dramatically lower VOIP TCO

This is the first post in a series that explores five reasons to revisit the business case for deploying IP telephony and VoIP in your organization.

IP telephony has been with us for more than a decade, but despite the attractive features and progressive nature of the technology, the pace of adoption has been rather slow. Only about 40% of businesses today have introduced some form of VoIP in their offices or factory floors.

When IP telephony first hit the market, people liked the idea of deploying shiny new phones plugged directly into the LAN. However, they were much less enthusiastic about the business case for doing so. A phone is still a phone, and when it is offered to you at prices that are higher than your old equipment, you pause for a moment.

Things are starting to change now, and there are plenty of reasons to look at IP telephony again.  

VoIP and Total Cost of Ownership (TCO)

Until recently, deploying VoIP in an enterprise usually meant acquiring an IP-PBX and replacing the old TDM sets with IP phones. Even when the price of the new equipment compared favorably with the old gear that it replaced, VoIP did not significantly affect the TCO of other key communication systems, including:

• Telephony interfaces to the outside world (PRI interfaces and monthly fees)
• Long distance costs
• Media gateways
• Bandwidth fees for data communications
• Specialized personnel to maintain the communication system
• Replication of a portion of all of the above costs in a multitude of local branches

The interdependency between IP telephony and the rest of the enterprise communications TCO will grow closer. This is for the better, as enterprise communications TCO can be reduced dramatically by leveraging two new telecommunications trends that directly relate to IP telephony.

1.      SIP Trunking: SIP trunking, or the ability to communicate through IP telephony beyond the confines of the enterprise, along with its extended variant, SIP trunking consolidation, can deliver significant savings for organizations that have the acumen to deploy them.

Let’s look at SIP trunking consolidation, for example. An enterprise that deploys VoIP and uses an IP connection to their service provider for both voice and data communications can gain the following benefits:

• Consolidation of all PBX functionality at the data center and elimination of all smaller PBXs at the branches.
• Elimination of all direct PSTN links (PRIs).
• Consolidation of all SIP trunking connectivity at the data center and the elimination of local media gateways.
• Lower long distance costs through the optimized IP routing of calls.
• Data bandwidth savings through converging voice and data connectivity over the IP network.

Studies have indicated that these changes can lead to TCO savings of 40% or more.

2.      Smartphones: The smartphone cannot be ignored. It has evolved from a symbol of juvenile self-absorption to an indispensable tool in many business interactions. The growing bring your own device (BYOD) trend will only enhance the status of smartphones and tablets. Since most smartphones work on both cellular and Wi-Fi networks, they can be integrated with an IP telephony system and, in many cases, replace or partially replace desktop telephone sets. If 30% of desk phones are replaced by mobile devices, an organization can save up to 25% on the total cost of purchasing new phones. This attractive option does not work and is not available with old digital telephony systems.

SIP trunking and smartphones alone justify taking another look at the TCO savings that can be triggered by IP telephony. Stay tuned for future posts in this series that will explore more reasons why you should look at IP telephony. You will definitely be encouraged by what you see.

Download ‘The IP Imperative‘ from Frost & Sullivan to learn more about creating business value through enhanced enterprise communications.