The ROI of VoIP

The ROI of VoIP

Recently, a group of CIO Executive Council members met over a teleconference to share their experiences with voice over IP (VoIP). The primary topic of conversation: how to get the most out of your investment. Whether you need to convince your board or yourself, their experience getting these four benefits from VoIP can help you prepare for your implementation.

1] Improved phone infrastructure. Jonathan Earp, CTO of T&F Informa, a $US500 million media company, faced a host of telephony problems in his UK offices while he was in the middle of a merger that would ultimately double the size of operations. Of the company's 12 London offices, the board of directors' office was experiencing the most frequent downtime because of its proximity to a construction zone where phone lines were frequently disrupted. To compound the problem, the phone systems in the London offices were old, featured poor configuration and were prone to service-rated problems that ran up costs. The infrastructure had a hard time handling the telecomms volume, and the chairman announced that it would be difficult for the company to acquire new businesses given the extent of these problems.

After researching viable options, Earp chose VoIP, which would not only solve the phone system problems but would also be more reliable, deliver cost savings and eliminate voice leased-line costs. Earp managed the VoIP project like any other application deployment and left the technical configuration work to T&F Informa's integration partner. "VoIP helped to solve our infrastructure problems, enabled the merger to succeed and resulted in the business operating more efficiently," says Earp. With the success of VoIP and other IT standardization projects, senior business leaders now recognize IT as one of the drivers of the organization.

2] Improved reliability and cost savings. Bob Odenheimer is a senior vice president of the IT operations & telecommunications group at Magellan Health, a $US1.7 billion provider of behavioural health services. With Magellan's heavy emphasis on call centres, reliability of phone service is critical. Since Magellan call centre agents deal with sensitive mental health issues, a dropped call is not an option. "Reliability and quality of service was paramount for us," says Odenheimer. To improve reliability, he built redundancy and additional capacity into the data network infrastructure. Then, by deploying VoIP, Odenheimer could provide better service at a lower cost to Magellan, a must-have for a 24/7 call centre.

3] Increased agility. In addition to cost savings, T&F Informa's Earp found that VoIP will offer rapid deployment of phones in an environment where merger and acquisition activity reigns supreme, faster recovery of telecomms systems should disaster strike, increased employee mobility and unified messaging capabilities.

"Once VoIP is established, new sites can be added with a switch and a few phones, at a fraction of the cost and labour of a new [private branch exchange] at each new site," says Earp. He has already put VoIP to good use for disaster-recovery efforts at a newly acquired business in London. "The company had their local telecomms switch go down, and we used VoIP as a short-term disaster-recovery solution," he explains. "We installed 50 VoIP phones in a matter of a few hours by patching them into the London architecture that they had already in place," he says.

4] Improved customer interaction. Mike Palmer, executive vice president of supply chain management and CIO at Allied Office Products, used VoIP to rework and improve customer service across various geographic regions. Palmer used the VoIP deployment to consolidate one call centre and seven geographically dispersed satellite centres, made up of 49 customer service representatives, to one virtual centralized call centre. The VoIP deployment enables agents to use new capabilities, such as online chat, which has increased productivity and improved customer service. Because the department is now centralized, Palmer can monitor a single set of key performance indicators rather than evaluate each call centre individually, which allows him to easily track performance.

first steps

Getting Buy-In

Two tactics to help you persuade your fellow executives to come along for the ride:

1. Convey The State of the State.

Prior to deploying VoIP technology in 2001, Curt Pederson, CIO of Oregon State University and the Oregon University System, completed a "state of analysis" for the different campuses to determine network readiness for a move to VoIP. Pederson's team conducted meetings with data and telecommunication technical staff on each campus. They evaluated the state of their telecomms equipment, WAN/LAN network connectivity, network administration, firewall schemas and service-level agreements. The final written report outlined ROI targets for VoIP, identified potential sites for early adoption, considered organizational changes and examined the cost of deploying VoIP.

The team used what they had learned in a presentation to senior management, lobbying for a beta site for VoIP technology where voice systems were old and costly. Management agreed. "By looking at the existing voice, telecommunications and network platforms across our many campuses, we were better equipped to make an informed recommendation about available options and the total cost of the VoIP deployment," says Pederson. »

2. Trying is Believing.

Mike Palmer, executive vice president of supply chain management and CIO at Allied Office Products, sent key executives to training seminars to experience VoIP technology. "After the meeting, we took what the business leaders had learned from the vendors and put it in the context of what was going on at Allied," says Palmer. For example, by converging voice and data platforms, Allied's sales force could be more productive on the road using wireless notebooks as phones.

Similarly, during T&F Informa CTO Jonathan Earp's VoIP deployment in London, one of his managing directors questioned VoIP-related charges because he didn't understand what VoIP could offer. Earp found the director in a meeting room, gave him the VoIP handset and connected him to his office phone. That experience helped him see the light, says Earp.

QHow do you deploy VoIP in international locations where bandwidth availability is a challenge?

by - Le Vu, Director of Global Communications, The World Bank

AThe World Bank's Global Network serves over 120 field offices and 30 global distance-learning centres in international locations where bandwidth availability is a challenge. Since the network was first deployed in 1995, it has grown to incorporate different transportation technologies - including Time Division Multiplexing (TDM), Time Division Multiple Access (TDMA) and Demand Assign Multiple Access (DAMA) - over a three-satellite network operated by Intelsat. The earlier solution for automated bandwidth distribution between multiple services (for example, voice, data and video) was frame relay.

The three services were becoming more complex and expensive to maintain. For example, we run 15,000 videoconference sessions a year to three to 10 locations and multiple sessions at the same time. Those conferences had become difficult to schedule and manage, and we were looking for a uniform integration strategy.

To solve this problem, in 2003 we deployed the multiservice IP network infrastructure for field offices and distance-learning centres. The newly integrated IP network has already led to many payoffs, including savings in satellite bandwidth, staffing and a much simpler network to operate. Network management costs are also lower; the network administrators use Simple Network Management Protocol to control routers. SNMP provides a means to monitor and control network devices and to manage configurations, statistics collection, performance and security. And the quality of service features scale easily because as capacity and channels are added for voice, video or data traffic, routers can be reprogrammed in minutes.

We are planning to develop tools to generate reports, including the quality of each voice or video session. The ability to automatically and optimally distribute bandwidth between multimedia services is a dream come true. (To read more about The World Bank's global network, read "Calling Ouagadougou" in the April 2005 issue of CIO).


A VoIP Implementation

For University of Notre Dame CIO Gordon Wishon and Deputy CIO and CTO Dewitt Latimer, the decision to move to VoIP and to outsource the technology made good sense. With their traditional phone contract up for renewal in January 2006, the pair had already started talking with existing carrier SBC about telecomms alternatives, which included VoIP. "We didn't have a problem with our existing service, but we are always looking to improve our offerings," says Wishon. Moving to VoIP offers the potential for unified message capability and improved move/add/change (MAC) functionality. In an environment where faculty, staff and students are constantly moving and new construction is a mainstay, improvement in MAC services was huge.

Once they decided to move from traditional telecomms to VoIP, they had another decision: run it in-house, or outsource it to SBC? Cost was a consideration as they negotiated with the vendor to ensure that outsourcing VoIP would not cost any more than the traditional phone service that the university was already outsourcing to SBC. VoIP was a prime candidate for outsourcing because it fell outside the IT department's expertise. Wishon didn't look for an outsourcing partner. In fact, his team didn't seriously consider other vendors given the positive relationship they had built with SBC over 12 years. In late 2004, Wishon signed a contract with SBC for a pilot deployment of VoIP, along with the possibility of four one-year contract extensions.

In March 2005, SBC deployed the VoIP pilot on roughly 275 phones in central IT. By isolating the initial deployment to a single department, Latimer and his team were able to monitor problems as they arose. Almost all of the IT staff attended SBC's formal training sessions for the pilot. SBC trainers taught 20 hour-long courses onsite over a five-day period. Wishon and Latimer continue to monitor vendor performance using traditional telecomms metrics to ensure the quality of basic voice services. In fact, they simply transferred the service-level agreement metrics from the existing telecomms services contract into the VoIP contract.

If the pilot is successful, broader deployment of VoIP at the University of Notre Dame will continue in phases, beginning in 2006, and will first include early adopters, mobile professionals requesting VoIP-enabled phones and academic buildings undergoing upgrades. New construction on campus will also be a prime candidate for deployments. Wishon and Latimer anticipate that user training will focus on how to use enhanced services, such as unified messaging, rather than simply how to make a call. Looking ahead, Wishon and Latimer will continue to watch the changing needs of their customer base and adapt their deployment strategy accordingly. ­



» Session border controllers: Enables phones to connect to enterprise infrastructure, eliminates worry about VPN for voice connections and improves out-of-state deployment

» Loop service such as ATM and sonnet ring: Brings improved customer service and faster deployment time for new offices

» More packet-level costing: Allows companies to pay telecomms carriers for only the bandwidth they use rather than pay a flat fee

» Improved quality of service: Always an area for improvement; vendors are introducing new software, and third-party vendors are starting to compete

» Move to Session Initiation Protocol (SIP) compliance: Provides increased flexibility and security, and brings VoIP to the mainstream

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