Internet TelephonyConference & Expo East

The Business Case for SMBs

to Migrate to Hosted VoIP

Bill DermodySales DirectorM5 Networks

www.m5net.com

Contact: (312) 957-8140bill@m5net.com

Telecom is bewildering

Business Continuity Hybrid SystemsVoIPInternet TelephonyDigitalAnalogPC-basedOpen SourceMedia ServersSIP, MGCP, H.323RoutersSwitchesSkinnyGatewayBorder ControlEthernetPOTSISDN

ConferencingCollaborationVideoCall CenterPresenceDSLTrunk-sideCentrexChannelized T1Integrated T1Central OfficeInterconnectCSU/DSUQoSEarwaxVoice VPNManagedMobilityWirelessLNP

SoftphoneCat 3, 5, 6PoERegulationBillingOutsourcedCIDE911ANIDIDRCFWiFi, WiMaxDirectory ServicesToll-freeDiversityKey SystemRedundancySLAPBXT1

vXMLIADOn-PremiseNetwork MonitoringATMFaxHostedPRIUnified MessagingCTI

The discussion should be about business, not technology

They come in roughly three sizes:

SOHO ENTERPRISESMB1-10 staff Everyone in one room

ORVirtual teams & road warriorsOwner deals with phones

10-500 staffFew IT staffDepartmentsLAN, maybe a few offices CTO, CFO or Owner buys Phones

500+ StaffCampusesWANsIT & Telecom Departments

Most SMBs Will Outsource Their Phone System

Yankee Group believes 70% of SMBs prefer the idea of a hosted phone system today, but can’t find a competent provider

InfoTech predicts 48% of SMB sites will use a hosted solution by 2010

IP Centrex Subscriber Forecast

Source: Gartner DataQuest (Sept 2006)

IP Centrex Subscriber Forecast

1761,291

3,075

6,209

9,948

13,810

17,693

20,324

22,56224,161

0

5,000

10,000

15,000

20,000

25,000

30,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Year

Su

bs

cri

be

rs (

00

0s

)

According to Gartner, In 2014 there will be 24 million IP Centrex Users Existing 12 million users from legacy centrex upgrades Additional 10 million users from SMB market (<100 seats) which they believe is

conservative Additional 2 million users from medium- large businesses

Higher Service Availability, SLAs, etc. Improved Business Continuity Simplified Vendor Management Multiple locations networked Leveraged Expertise

• Training • Installation • Feature Deployment• Security • QoS• and more

Outsourcing can Save Time & Money

Lower Initial & Ongoing Cost of Ownership

• No need to purchase or maintain a phone system

• Better line usage - ~30k/simultaneous stream

• Better rates/minute without Telco dependencies

• Efficient processes

Outsourcing Can Save Time & Money (continued)

Total Cost of Ownership- 1

Direct cash outlay displacement:

• Local and long distance lines and services.

• Third-party conferencing services.

• Capital investment/lease of a PBX

• Maintenance and support fees

• Software upgrade/implementation fees

Total Cost of Ownership- 2

Internal management costs:

• Managing the PBX and vendors

• Managing lines capacity and growth

• Upgrade management

• Moves, Add, and Changes

• Answering users’ questions

Plus, what is the cost of not having:• Disaster recovery protection?• The ability to work from home or satellite

office as if you were at the office?• The flexibility to add, shrink, change

staffing and have immediate phone functionality?

• Unlimited lines for burst call volumes?• Peace of mind of knowing you have the

best solution available being maintained 7x24 by industry professionals?

• State-of-the-art front/perception to market

Total Cost of Ownership- 3

How It Works:Sample Hosted VoIP Architecture

Benefits Customer avoids buying PBX Superior business continuity Scaleable to multiple locations Single, accountable, vendor

Remote access (e.g. home, road) Focused application delivery expertise Operating cost savings Constant feature upgrades

Hardened Hardened Telecom/Data CentersTelecom/Data Centers

Hardened Hardened Telecom/Data CentersTelecom/Data Centers

Gateways Access Router

Redundant Phone Systems

Multiple Telecom Providers to the PSTN

Multiple Service Providers to the Public Internet

Broadband/DSL Connection

M5 DSL(backup)

M5 T1

M5 T1

M5 DSL(backup)

Inbound & Inbound & Outbound CallsOutbound Calls

Inbound & Inbound & Outbound CallsOutbound Calls

InternetInternetInternetInternet

Customer Customer Main LocationMain Location

Customer Customer Main LocationMain Location

Data LAN Router

Customer Customer Secondary Location(s)Secondary Location(s)

Customer Customer Secondary Location(s)Secondary Location(s)

Customer Customer Home Office(s)Home Office(s)

Customer Customer Home Office(s)Home Office(s)

What a Typical Hosted Solution Provides

Personalized auto-attendants Unique phone number and voicemail for each end-user Robust end-user feature set Multiple locations (e.g., 1 phone system for corporate and branch offices) Satellite office (e.g., same business phone number from work and home) Unlimited local and domestic long distance calling Internet service Redundant phone and Internet access Free support

Potential Business Benefits

Is telecommuters/off-net support worth it?• Mi8 distributes the call center• Infinity Consulting Group works from home• Platform Learning sets up work teams• Trevor Stuart saves on real estate

Do I support road warriors?• Softphones• Webportals

Is better information valuable?• Coldwell Banker tracks ads• National Parts Depot tracks staff• Stadtmauer, Bailkin does timesheets

More Potential Business Benefits

Do productivity gains justify the investment?• Off-net productivity/Gap-time• Unified messaging• Dial-from PIM• Presence

Am I a big conference caller?• On-site bridges start at $15,000• Technology changing fast

Is easy sub-tenant support worth money?• M5 grows into its space• Office Suite Group outsources telecom• 424 W. 36th St. attracts tenants

Is there value in a rapid deployment?• Brooklyn Brewery’s PBX explodes• Montfort Healy’s Telco closet is flooded• Maxon’s Restoration gives up on a vendor• KGTR attacked by terrorists

Even More Potential Business Benefits

Now, let’s look at some Success Stories

Investment Bank40 Seats; 1 Location

The Challenge: Needed to replace an outdated Nortel key system due to office relocation Wanted an easily upgradeable, software-based phone system that could be managed remotely and provide additional functionality Unsure they had time and resources available for implementing and managing the complexities of VoIP technology.

The Solution: Evaluated IP-PBX, hybrid, and hosted solutions from multiple providers, measuring installation and monthly recurring costs as well as costs for cabling installation Rated vendors based on his minimum requirements for conference calling, call forwarding, redundancy, remote access, QOS guaranty, and client references. Upgraded infrastructure and installed M5’s Outsourced IP Phone System

The Results:“M5’s service is reliable and the advanced applications it provides allow us to meet clients’ needs at a higher level than before.”James BerkeryChief Information Officer, Berkery, Noyes & Co. LLC

Cost Comparison

Prices are for 1 location & 40 end-users; based on client’s analysis

Comparison of Key Criteria

(Based on client’s analysis)

Craft Brewery40 Seats; 1 Location

The Challenge: An electrical shortage caused the companies premises-based phone system to catch fire and shut down phone service for the entire complex.

The Solution: After assessing the situation, M5 devised an emergency plan for restoring Brooklyn Brewery’s phone service. Within one week, employees were up and running on a provisional solution. A few weeks later, Brooklyn Brewery went fully live on M5’s Outsourced IP Phone System with a dedicated T1 circuit and backup DSL.

The Results:“M5 gives us all the flexibility of a large, in-house phone system without the associated overhead and maintenance headaches. M5’s customized configuration abilities allow us to manage call flow and conduct business in a way that is more efficient for our organization.” Eric OttawayGeneral Manager, The Brooklyn Brewery

Construction Management Firm60 Seats; 2 Locations

The Challenge: Company inherited an onsite Nortel phone system after moving to a new office Employees mainly work from field offices, and the limited features and expensive expansion costs associated with their premise-based phone system required them to share voicemail boxes and made communication with clients difficult.

The Solution: Impressed by its reliable network and competent service delivery team, Horizon signed on with M5. M5’s virtual communication services made Horizon’s several offices appear as one physical location to their clients.

The Results:“M5 helps our company achieve a higher margin potential through increased business communication transactions, competitively priced calling plans, and the ability for employees to use their M5 phones around the country without incurring additional fees.” Kenneth BorrusoChief Operations Officer, Horizon Engineering Associates, LLP

Law Firm50 Users; 1 Location

The Challenge:Water damage in the telecommunications closet ruined the PBX. Finger-pointing between the phone system maintenance company, the phone service provider and the PBX manufacturer intensified the problem and prompted the firm to find an alternative phone system solution.

The Solution: M5 brought in temporary IP phones and the FrontDesk receptionist application and plugged them into the company’s existing DSL line so that attorneys no longer had to rely on cell phones for communication with clients M5 project managers conducted a thorough planning session with the firm, devising a long-term phone system strategy and walking them through the entire implementation process

The Results:As a law firm that works on dozens of client cases simultaneously, we could not riskthis type of business disruption again. By switching to an outsourced phone system, we now have a more advanced and more reliable solution along with greater peace of mind knowing that M5 assumes responsibility for all of our voice and data needs.”Donald NeumannManaging Partner, Montfort, Healy, McGuire, & Salley (Personal Injury Law Firm)Client since 2005

Bill DermodySales DirectorM5 Networks

(312) 957-8140bill@m5net.comwww.m5net.com

Questions?