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Cheap talk - or much more?

Don`t expect cheap international calls. When Boeing switched to VOIP it found the real value lies elsewhere.
Staff Writer
By Staff Writer, ITWeb
Johannesburg, 01 Dec 2004

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can save your company money - but not in the way you think it might. CIO Insight magazine points out that analysts now recommend running the return on investment numbers for VOIP based solely on cost savings that will be realised through converging the voice and networks, without including long-distance call savings.

There are interesting international case studies to learn from. Boeing, the Chicago-based aerospace and defence company, decided to replace its entire aging phone network with 150 000 IP nodes running over a Cisco Systems network, reports CIO Insight. Cliff Naughton, Boeing`s director of network services, says the company looked at the exercise as an investment in technology features.

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With offices in 48 states and 70 countries, the idea of saving money on inter-office calls was compelling. But of far more importance was the ability to get employees to collaborate by combining high-end video, data and voice.

The decision was by no means a no-brainer, reports CIO Insight. Problems with the equality of VOIP service forced the company to upgrade much of its network equipment, at huge cost. But, since the early pilot, Naughton says a lot of the technology has matured enough for Boeing to feel comfortable expanding the roll-out company-wide.

Boeing executives feel the technology will bring about a massive cultural shift throughout the company. They envision a design and engineering workforce that can work from home until their presence is required during final assembly. Boeing also anticipates a work schedule that "follows the sun", as Naughton puts it, operating on a true 24-hour-a-day schedule.

In addition, costs of running a converged network can be significantly lower than managing two separate communications networks. Moving employees from office to office, or hiring and firing - a process known as move/add/change, or MAC - can cost hundreds of dollars per transaction on the circuit-switched network. With IP phones, the process requires only a quick data entry from the main control panel, which is virtually free. Factoring that in, Boeing estimates a complete return on its VOIP roll-out - a five- to seven-year project - will be realised in just three to four years.

All that convenience is going to cost though, especially in the near-term. IP phones are still expensive (over R4 000 per phone) and IP PBXs can cost as much as 20% more than traditional PBXs. All of which doesn`t begin to address the bottlenecks that sending voice traffic over the network inevitability creates. Most companies deploying VOIP also need to perform some level of network upgrade and invest in more bandwidth.

For more VOIP information:
Adoption: More pros than cons
Deployment: Seven questions to ask before adopting IP telephony
Enterprise IP telephony adoption: Past the tipping point
Standards: Get with the programme

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