Implementing VOIP on a Crazy Schedule: A Mini Case Study

By David F. Carr  |  Posted 2007-09-11 Print this article Print

The healthcare provider Molina gave itself six months to replace a tangle of inherited telecommunications systems with a single one built on IP. Here's how it managed the feat.

For Molina Healthcare, the cost savings associated with Voice Over Internet Protocol technology proved less important than the flexibility it offered—flexibility for disaster response, as well as more routine administration and reconfiguration of the phone network.

Molina's VOIP project succeeded despite a breakneck schedule, malfunctioning equipment, and the sale of the consulting firm hired to perform the work. And before the project was over, the technology would prove its worth not just as a way to cut telecommunications costs but for the flexibility it offered in the face of what could have been a day-long business interruption.

The Long Beach, California-based healthcare company has been growing rapidly in recent years, with about 85 percent of that growth coming from acquisitions. As it acquired other health plans, Molina, which specializes in serving low-income people, also inherited a hodgepodge of telecommunications systems and carrier contracts, leading to higher toll charge and administrative costs. By switching to a Cisco VOIP system, in which corporate phone traffic would flow over the same network as data, Molina aimed to standardize operations, cut costs, and increase flexibility.

Like many organizations with operations in multiple states, Molina was attracted to VOIP partly because of the potential to avoid long-distance charges by routing phone calls over its corporate wide-area network, rather than the public telephone network. But VOIP systems are also more programmable and easier to reconfigure.

For example, the relationship between an extension number and a phone sitting on a particular desk is set in software, rather than hard-wired in physical circuits. So employees can sit down at a different desk and "log in" to the phone there, and calls to their extension will immediately start ringing through to that phone. For their part, administrators can make sweeping changes through a web-based administrative tool.

The combination of long-distance savings and simplified administration can help drive down costs. How much savings is a question, however. Jay Lassman, an analyst with Gartner Inc., says VOIP vendors often play a "shell game" by shifting telecom expenses into the data communications budget as a way of making the savings look larger.

In Lassman's view, the real benefits only materialize if VOIP is pursued in the context of a broader initiative to improve communication and collaboration. "If you're just doing a like-to-like replacement of an older phone system with VOIP, you're only looking at maybe a 3% ROI," Lassman says.

The VOIP project grew out of a 2003 initiative to upgrade the phone systems at Molina's headquarters, which in turn led to an examination of how a company-wide upgrade to a common digital phone system could improve Molina's efficiency and its disaster recovery capabilities. Molina currently operates in eight states.

The VOIP implementation began in April 2005 and ended in November of the same year—a very tight schedule. "We had people sleeping in conference rooms after pulling all-nighters" on a few occasions at sites where the implementation was going badly, says Edward Poman, Molina's manager of network infrastructure.

The tight schedule so worried former Chief Information Officer Rick Click, who joined the company in May 2005, about a month into the implementation, that he considered canceling it, even though the contracts were already signed. (Click left Molina last month.)

One of the things that bothered Click was the plan to complete the rollout within six months, which struck him as overly ambitious. "It easily should have been a 12- to 18-month project," to allow time to adjust plans if things went wrong along the way, he said in an interview earlier this year. He said the schedule was set by another (also now former) executive of the company who was determined to show that the information technology department could move more quickly and deliver projects on time and under budget.

Meanwhile, the consulting firm Molina had hired for the project, Norstan of Minnetonka, Minn., had changed hands. In early 2005, shortly after being acquired by Black Box Network Services of Lawrence, Penn., Norstan's Cisco Consulting practices was sold to Spanlink Communications Inc. of Minneapolis, Minn.

Click said he was convinced Norstan underbid the project and over-committed on promising how quickly it could be completed, but nevertheless Spanlink promised to follow through on those commitments. Still, the burden wouldn't be just on Spanlink but also on Molina personnel who would have to work long hours, on an unforgiving schedule, to pull the project off. "We really cautioned a slowdown," said Jeremy Chapman, Spanlink's Technical Services Director.

David F. Carr David F. Carr is the Technology Editor for Baseline Magazine, a Ziff Davis publication focused on information technology and its management, with an emphasis on measurable, bottom-line results. He wrote two of Baseline's cover stories focused on the role of technology in disaster recovery, one focused on the response to the tsunami in Indonesia and another on the City of New Orleans after Hurricane Katrina.David has been the author or co-author of many Baseline Case Dissections on corporate technology successes and failures (such as the role of Kmart's inept supply chain implementation in its decline versus Wal-Mart or the successful use of technology to create new market opportunities for office furniture maker Herman Miller). He has also written about the FAA's halting attempts to modernize air traffic control, and in 2003 he traveled to Sierra Leone and Liberia to report on the role of technology in United Nations peacekeeping.David joined Baseline prior to the launch of the magazine in 2001 and helped define popular elements of the magazine such as Gotcha!, which offers cautionary tales about technology pitfalls and how to avoid them.

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