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Page 1© Copyright 2004, the Yankee Group. All rights reserved.
Presenter:Presenter:Zeus Kerravala, Zeus Kerravala, VP Enterprise InfrastructureVP Enterprise Infrastructure
Is VoIP right for my business?Is VoIP right for my business?
© Copyright 2004, the Yankee Group. All rights reserved. Page 2
Advisory and consulting services delivered by experienced analysts conducting original research
Global view, interpreted and applied to local market conditions.
Easy, direct, frequent client-analyst interaction allowing interpretation and application of our research and guidance
Our Approach
AnalystDirectsm
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AgendaAgenda
Today’s Business Challenges
Traditional Telephony
IP Telephony
The Business Case
Potential Pitfalls
VoIP Lifecycle
Recommendations/Conclusions
Questions and Answers
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What is Voice over IP?What is Voice over IP?
Peer to peer` `
IPIP
Internet
`
Phone PCRouter Internet
Softswitch
PSTN
TDM
IP
Internet Based Telephony
PSTNManaged IP
NetworkPSTN
TDM TDM
IP Termination
Page 5© Copyright 2004, the Yankee Group. All rights reserved.
VoIP Definitions (continued)VoIP Definitions (continued)
IP Gateway PSTNRouter
TDM
`
PC
IP Centrex
`
PCRouter
Managed IP Network Softswitch
PSTN
TDMNetwork Based IP Telephony
`
IP Phone
IP PBX PSTN
IP PBX
IP Phone
IP Phone
PC TDM
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Business ChallengesBusiness Challenges
Improve user productivity by using technology-Competitive advantage
vs. Necessary evil Increase revenue while
lowering costs Growing mobile
workforce Unify all communications
platforms Improve communications
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Telephony the Old WayTelephony the Old Way
PSTNPSTN
PBX
Key System
Digital Set
Digital Set
•Highly reliable •Closed architectures•Limited ability to share applications•Deployed on a per-node basis •Users are tied to a location•Complex administration •Expensive MACD•Call control located locally
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Cellular
Teleworker
DSL/Cable
Premises-based Applications IP PBX
Telephony Becomes An Application on the LAN & WAN
• Resides anywhere
– Hosted v. Premises Solutions
– LAN or WAN
• Accessed from anywhere
– Uniform access
– Common Interface
• Open Architecture
– Interoperability w/ TDM
– IPT variants
WAN
Legacy PBX
PSTN
IP Phones
Hosted VoIP
Network-based Applications
ComplexityComplexity
IP provides flexibility in deployment but increases complexity
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Enterprise Adoption is StrongEnterprise Adoption is Strong
Fully deployed throughout
organization3%
Fully deployed in multiple locations
13%
Fully deployed at 1 location
8%
Other24%
Currently testing; budgeted for small
installation19%
Don't currently have; no interest in
deploying13%
Budgeted to install w/in next 12
months5%
Budgeted to install w/in next 13-24
months4%
Currently evaluating; not yet
budgeted35%
Source: Dec. 2003, Enterprise Communications Survey Q13 & Q14 N=239 businesses with 1,000 employees or more
Which best describes your deployment of IPT?
0
2
4
6
8
10
12
14
16
18
2002 2003 2004 2005 2006
Total Lines
IP Telephony
(MillionsLines Shipped)
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Companies Are Adopting IP Companies Are Adopting IP TelephonyTelephony
Adoption Results2002 – 10% penetration of line shipments 2003 – 24% penetration of line shipments2004 – 40% penetration of line shipments 2 Million IP Phones sold in 2002 3.5 Million IP Phones sold in 2003 6 Million IP Phones sold in 2004$24 Million in softphone revenue for 2004,
2x 2003 revenue
Page 11© Copyright 2004, the Yankee Group. All rights reserved.
Analysis of AdoptionAnalysis of Adoption
2004 adoption was over 40% for a number of reasons Most traditional phone system vendors have adopted IP
Telephony Standards such as SIP are much more mature today Technology is reliable and there are many options for each
type of firm (early adopter, mainstream adopter) Channel from both the voice and data world have adapted
and new channels have been introduced (system integrators)
Many major corporations have started to adopt VoIP
Page 12© Copyright 2004, the Yankee Group. All rights reserved.
What Are Companies Doing With VoIP
• VoIP help companies grow and lower cots – Lowers long distance charges– Lowers MACD charges– Reduces IT training costs – Streamlines productivity – Improves mobile communications– Enables new business process– Improves customer satisfaction
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Users Expect Strong Cost Savings
Thinking about IP Telephony’s total costs and cost of ownership, what kind of savings or premium do you expect from the following categories?
83%
74%
68%
67%
62%
56%
56%
50%
48%
47%
46%
42%
76%
70%
63%
59%
55%
57%
55%
33%
36%
35%
29%
26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Long distance costs
Overall total cost of ownership
Delivering telephony services to remote offices
Local telephone network connections and costs
Operational expenses for managing the converged network
Maintenance charges
The cost of moves, adds, changes and deletes (MACD)
Cost of IP phones
Power consumption
Network equipment costs
Network security
Initial cost of IP PBX or hybrid PBX
Percent of Respondents (Top Two Box Summary - Savings)
U.S.
Canada
Page 14© Copyright 2004, the Yankee Group. All rights reserved.
IPT Improves Productivity
Thinking about IP Telephony’s total costs and cost of ownership, what kind of savings or premium do you expect from the following categories?
92%
88%
85%
81%
82%
80%
78%
78%
75%
72%
74%
69%
73%
63%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
A converged voice and data infrastructure makes it easier todeploy other collaborative applications
IP telephoney makes it easier to deliver services totelecommuters and road warriors
If architected correctly a converged infrastructure can providebetter reliability and overall uptime than separate networks
The management tools I need to run a converged network areavailable today
Customer service can be improved using IP telephony
IP telephony will allow my organization to create new businessprocesses
IP telephony makes users more efficient
Percent of Respondents (Top Two Box Summary)
U.S.
Canada
Page 15© Copyright 2004, the Yankee Group. All rights reserved.
Reasons Companies Consider a Converged Solution
Adapting to Current and Future Needs Improved Productivity
Cost Savings and Existing InvestmentsImproved Service to Compete Better
•“Our workforce, and the need for the telephony is growing faster than the present infrastructure will allow it to expand.”•“A converged system can more readily adapt to our changing needs.”•“We are behind the times.”•“We are building a new headquarters.”•“To manage an ever-changing, an ever-moving environment.”•“We want one system that we will not have to change for quite some time and will be easy to train people.”
•“To upgrade from current antiquated system and integrate recent business acquisitions in the same system.”•“To reduce the number staff working on the phone system.”•“For conferencing bridging,reduction in total cost of bridging.”•“To eliminate the bandwidth wastage.”•“Will be cost savings over time. Will provide benefits over existing system.”
•“Faster service and reliability.”
•“It seems to the next generation of phone systems. We also need ability to gather customer data and serve it up to agents before the customer says ‘Hello’.”•“Need to keep up with the times.”•“We need to update in order to be able to compete with today's market.”•“Better to service our customers.”•“ “to better server our customers and to be more efficient.”•“To compete with others with the latest technology.”
•“ It will be cheaper, easier to manage and more reliable.”•“When the upgrade occurs we want it to enhance productivity & to be a platform we can use for a minimum of 5 years, hopefully longer. •“To simplify things, to make everything more convenient.”•“Ease of use and management of system.”•“Ease of maintenance. Consolidation of resources and personnel. Greater control without reliance on 3rd party scheduling/costs, etc.,”•“So we can get rid of proprietary phone system programming language.”
Page 16© Copyright 2004, the Yankee Group. All rights reserved.
Inhibitors Revolve Around CostInhibitors Revolve Around Cost
93
86
84
75
56
57
52
33
27
24
0 10 20 30 40 50 60 70 80 90 100
Uncertain Price/Cost Advantage
High Equipment Costs
Uncertain Voice Quality
Install/Configuration and Training Cost
Single Point of Failure
Lack of Staff Skills/Knowledge
Network Security
Lack of Confidence in VoIP SPs
Insufficient Network Management Tools
Lack of Confidence
Number of Responses
What are your organization’s main concerns about deploying IP telephony? (Select up to three.)
Source: The Yankee Group 2003 U.S. Enterprise Communications Survey
n = 239
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Networking Trends IPT Impact
Networking Trends Drive AdoptionNetworking Trends Drive Adoption
Networks will be packet optimize
Web technology continues to drive app. Integration
Network and computing platforms will be homogenized through standards
Voice platforms will be adapted to packetized networks
The phone and PC become key voice/data integration points
Third party software vendors will develop vertically oriented “deadly” applications
Telephony will become an application on the data network Telephony will become an application on the data network
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VoIP Is Transformational
Similar to the migration from mainframes to distributed computing
0-5 years
•Early Adopter Mkt
•Making IP looking like TDM
•Similar to 3270 emulators
•Focus on the technology
•Concerns:
•Availability, Reliability
•Security
•TCO more important than ROI
5-10 years
•Mass Market Adoption
•More focus on applications
•Similar to growth of distributed applications
•Value prop delivered by ISVs
•Concerns:
•App Integration
•What’s possible?
•ROI is more important than TCO
10+ years
•Laggers
•Standardization
•Removing cost
•Efficiency
Page 19© Copyright 2004, the Yankee Group. All rights reserved.
The Changing Value PropositionThe Changing Value Proposition
What we have been saying:– VoIP, convergence, multicast, layer2, layer3,
QoS, switching, TDM, PSTN, etc.– Value proposition: TCO savings, IT productivity,
etc.What we should be saying:
– Its about managing and using information and communications better.
– Value proposition: driving business value through productivity improvements.
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Tomorrows Requirements: Tomorrows Requirements: Extending CommunicationsExtending Communications
Partner
Employee
E-MailE-Mail
IP Voice IP Voice
TDM VoiceTDM Voice
Web Web InformationInformation
Call CenterCall Center
FaxFax
Voice MailVoice Mail
MobileMobilePhonePhone
Messaging Messaging
IVRIVR
Video Video ConferenceConference
Managing Information atManaging Information at
The Point of ContactThe Point of Contact
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VoIP Enables Integrated Communications
• Integrated Interface
• Uniform Experience
• Voice and Data
– Telephones and Computers
– Telecom and IT
• Anywhere. Anytime.
Picture yourself in a hotel room accessing your office and mobile voice mail and email from your laptop with the same interface and procedures you use in your office.
Now imagine every employee in your company with the same capability.
VoIP enables integrated voice and data applications and delivers them to potentially every employee, and desktop.
Page 22© Copyright 2004, the Yankee Group. All rights reserved.
The New Value PropositionThe New Value Proposition
Lower TCOLower TCO
Improved IT ProcessImproved IT Process
StreamlineStreamline BP BP
Competitive Competitive AdvantageAdvantage
Incr
easi
ng R
OI
Incr
easi
ng R
OI
Page 23© Copyright 2004, the Yankee Group. All rights reserved.
Recapping the Business CaseRecapping the Business Case
Productivity benefits from unified communicationsDistribution of telephony applications to branches and
home workers Improved customer satisfactionFuture multimedia applications Facilitates business process change
Lower telecommunications costs Savings from adds, moves, and changes Simplified administration
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What This Does to the BusinessWhat This Does to the Business
Talking Collaborating
Delayed Real Time
Media Restrictive Media Adaptive
DelayedReactive Proactive
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IP Telephony ChallengesIP Telephony Challenges
Voice and video applications are extremely sensitive to delay, jitter, and packet loss
Need PSTN-like call quality:-New features and functionality will not compensate for
poor call qualityLarge networks require network audits and
upgradesQoS must be implemented:
-Best practice on the LAN-Mandatory for WAN
Call quality difficult to measure and monitor
Page 26© Copyright 2004, the Yankee Group. All rights reserved.
The Quality ChallengeThe Quality Challenge
VoIP is NOT just another application on their IP network– Voice sensitive to the inherent characteristics of IP
networks• Latency, packet loss, variable transmission rates
(jitter)– Organizations have never internally managed an
application with such high availability and performance requirements over shared facilities
How do I guarantee the quality and availability of voice traffic without degrading data packet transmission?
Page 27© Copyright 2004, the Yankee Group. All rights reserved.
VoIP Requires a LifecycleVoIP Requires a Lifecycle
Plan
Desig
n
ImplementOperate
Opt
imiz
e
VoIP
Lack of proper lifecycle will
• Drive costs up
• Eliminate any value from the solution!
Lack of proper lifecycle will
• Drive costs up
• Eliminate any value from the solution!
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The VoIP LifecycleThe VoIP Lifecycle
Use a trusted partner
to help deliver the
full lifecycle!
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Successful Deployment ChecklistSuccessful Deployment Checklist
Consultation, engineering and management servicesfrom trusted partner-Delivering the full lifecycle can only be done with a services partner
Understand your calling patterns
-%off net/on net calls, international/domestic calling, average calls per employee hr, MOU, call duration are biggest factors
Understand where the various types of VoIP fit best
-Ideal implementation will be a mix
-Video, unified messaging, audio/web conferencing, presence
Roadmap current and future communications and choose correct platform
Page 30© Copyright 2004, the Yankee Group. All rights reserved.
RecommendationsRecommendations
IP telephony/VoIP will happen – be ready.Perform a network assessment to evaluate all
current networks and elements.– LAN, WAN, PSTN, video, faxes, power, UPS,
cabling, management tools.Choose a test bed for deployment.Review sample business cases, calculate TCO
and ROI. Visit “live” implementationsSuccess depends on planning and
management infrastructure.– “Measure twice, cut once.”
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Thank YouThank YouThank YouThank You