IP telephony will be basis of next-generation communications systems

The integration of voice, data and video and associated applications enabled by voice-over-Internet protocol (VOIP) demonstrates a compelling value proposition. IT managers need to explain what financial benefits this new technology will bring to the business in terms of cost containment, avoidance and cost of ownership improvements.

There is general consensus within the communications industry that VOIP is the technology driving the next generation of enterprise telephone systems. Multiple suppliers, including start-ups, established PBX and key system suppliers, as well as major data communications equipment companies, are in the process of marketing and selling their first-generation VOIP products.

An IP-based infrastructure for voice enables new value-added applications that could not otherwise have been easily implemented with a traditional PBX system. Mitel Networks considers IP-enabled applications to be the primary driver for migrating to VOIP for most organisations. However, total cost of ownership (TCO) reduction is also an added convergence benefit for many customers today.

In addition, while toll by-pass can result in some savings for some organisations, the real savings from IP telephony are a result of decreased capital and support costs over the long-term. These include reduced capital infrastructure to support a single network; consolidation of support skills and personnel required; simplification of and reduced cost of moves/add/changes (MACs) of personnel; and easier integration and support for home office/teleworkers.

Whatever the driver (TCO reduction or competitive advantage through new applications), there is no doubt that IP telephony will be the basis of the next generation communications systems and applications, and that most organisations will trial or initiate transition to this new technology within the next two years.

The easiest justification for transition to VOIP is where there is a clear cost benefit to make the change. The true savings in migrating to VOIP come from several different areas.

The first is savings from the easier movement of people. With dynamic allocation of IP addresses, it is possible for personnel to simply plug a phone in at a new location and still receive the full suite of functionality for which their phone had originally been configured. This type of saving will be important to clients who have a very dynamic organisational structure where people are constantly moving. An example of such an organisation would be an engineering or consulting company where people are structured into project teams.

The second area of savings results from reductions in required infrastructure. Ideally, in a new building environment, this would mean having to install the wiring for only one type of network, and realising the associated savings in wiring closets. In an existing office facility, it means not having to spend money on a PBX for a new branch office or major expansion. Telephones could be installed by users at the branch office and managed centrally in headquarters. No skilled technician is needed at the remote site to install or configure a PBX or the phones.

A third potential area of savings is for reduced call charges. This is most significant with a user community that has a number of branch offices and/or a large component of voice/fax traffic between offices.

The fourth area of cost savings is through staff efficiencies and convergence in skill sets. This would typically benefit organisations where the size of the support staff is sufficiently large that a reduction in IT personnel could be achieved through reduced workload. In the case of smaller offices, the workload can justify one person with a standard skill set, rather than two under-utilised people, one specialising in voice networks and the other in data networks.

Another less tangible saving is in the area of scalability. The iPBX is only involved in the call set-up. Voice is switched in the IP network. This implies that the system can grow much more flexibly than conventional TDM-based systems.

The move to VOIP will also provide benefits to telecommuters. Telecommuters and road warriors can access their office computing environment and voice facilities over the same wide area IP network and with full security.

Additional technology benefits include support for very large global networks, distribution of intelligence within the network and integrated applications (through use of XML, Speech Recognition and other emerging standards). Wireless IP voice and data devices; integration with other IP devices and systems (eg, PCs, servers, personal digital assistants); and easier integration and support for home office/teleworkers are additional benefits.

There is no doubt that the future of telephony will be in IP-based systems. With the growing momentum, the question is not "if" but rather "when" the majority of traffic will have moved to the new technology. VOIP will be the first of a multitude of new multimedia capabilities in a converged network providing voice, video, unified messaging and other conferencing and collaboration functionality. Costs in using VOIP will continue to decrease as economies of scale and standardisation take hold. The use of IP in both voice and data will result in more choice (and higher functionality) in networking components to support IP, regardless of whether it is used for data or voice.

While many companies have already invested in separate voice and data networks, the cost benefit of having them unified is obvious. Once VOIP is accepted as an alternative to installing two cable systems, more and more new facilities will migrate to using one wiring plant. The result would be a greatly simplified wiring closet, with wire bundles, split blocks and punch down connections eliminated entirely.

Greenfield installations would also be less expensive with VOIP. New IP phones would not require special, on-site expertise. Servers could simply be installed centrally and phones sent to users to plug in. Actual installation time for new office workstations is anticipated to decrease by up to 20% in comparison to a dual network environment where the phones and computers have to be handled separately.

According to industry analysts, the mainstream adoption of VOIP is predicted for sometime over the next three to four years. One of the reasons for this conservative uptake of the technology is the considerable up-front initial investment required to move to VOIP. For some organisations, however, the payback is worth the upfront investment. Typically these organisations are characterised by factors such as dynamic personnel, eg more than 10% of telecommunications labour budget spent on moving users. Other factors include a highly mobile workforce or high percentage of teleworkers; high growth, multi-site organisations looking to open new offices as well as the need to replace an existing communications system.

The rationale for a transition to an IP-enabled application may also stem from a more compelling business reason. In the case of small, standalone businesses, implementation may be driven more by the need to differentiate themselves from competitors on the basis of innovative applications enabled by IP telephony.

By integrating new technologies such as VOIP, XML, speech recognition and unified messaging, organisations will truly benefit from the convergence of voice, video and data in the deployment of multi-media system wide applications (eg multimedia help desks and call centres). These same organisations will also benefit from individually focused applications at the desktop (eg, location-independent working applications and personal digital assistants/applications).

Every organisation must analyse its current infrastructure, future business plans and application needs to determine the proper time to migrate to VOIP. With some organisations, TCO reduction provides a compelling enough business case to migrate today; with others, it is the need for differentiation enabled by IP-based applications that will justify migration.