Project Guide: Is It Time for VOIP

By Baselinemag  |  Posted 2005-12-14 Print this article Print

Today's Internet-protocol telephony systems have grown into dependable workhorses, though many enterprises still use the technology sparingly.

Two years ago, pulte mortgage, the Englewood, Colo.-based lending subsidiary of homebuilder Pulte Homes, found two sound reasons to move to Internet-protocol telephony.

First, its previous phone system was failing under heavy loads at peak weekday calling periods—a big problem for Pulte Mortgage, which processed 35,232 loans worth $6.7 billion last year.

"Obviously, the business can't have the phone system go down," says Sean Kelly, the unit's director of infrastructure, architecture and engineering.

Second, Pulte Mortgage was then in the process of opening a new loan processing center in nearby Centennial, Colo.

Kelly's team had already decided to install new Cisco Systems Catalyst 6500 data switches, which have the necessary features to support IP phones.

Those switches provided power over Ethernet wiring—so phone sets don't need separate power supplies—and a feature called quality of service, which guarantees voice traffic will get priority over data so phone conversations aren't affected by activity on the data network.

After an evaluation period, the company decided to adopt Cisco's CallManager and related software to distribute calls to 800 service agents, as well as 300 other administrative staff and executives.

An IP telephony system breaks up a call into "packets," which it sends over a data network, and then reassembles them at the other end of the line.

By contrast, a traditional phone system establishes a dedicated physical circuit for every call.

Expectations at Pulte Mortgage were low, Kelly recalls: "All the business side wanted was a reliable dial tone."

The system has provided that, and then some. Kelly says he saved money on cabling because each desktop is served by only one wire, an

EXECUTIVE SUMMARY: Internet-Protocol Telephony:

WHAT IT IS: Systems that transmit voice calls over Internet-protocol networks, plus the telephone sets (or software that runs on desktop or laptop computers) used with them. Related products include systems for storing and retrieving voicemail; managing call-center activities; and providing desktop videoconferencing.

KEY PLAYERS: Alcatel, Avaya, Cisco Systems, Inter-Tel, Mitel Networks, NEC, Nortel Networks, ShoreTel, Siemens, 3Com

MARKET SIZE: $2.1B for enterprise IP phone systems, 2004 (Dell'Oro Group)

WHAT'S HAPPENING: IP phone systems continue to displace traditional circuit-switched systems, although the older technology still represents about 80 percent of all systems in use. Some companies in vertical industries, like hospitality and health care, have adopted new phone-based applications that integrate data. Giving employees mobile handsets that work over Wi-Fi data networks is increasingly popular.

ONLINE RESOURCES: Pulver.com provides news, research and blog commentary by industry consultant Jeff Pulver; FierceVoIP.com offers a free biweekly newsletter on the industry.

Ethernet cable.

And customer service agents now are able to work outside the corporate call centers, since the Cisco system can send calls over any IP network.

In fall 2005, Pulte Mortgage opened a new call center in Charlotte, N.C., to serve East Coast customers, and outfitted the location with Cisco telephony gear.

Kelly's team configured the network to route calls across the country if the Colorado centers go down. Says Kelly: "IP telephony has helped us save money, and it's given us business-continuity capabilities."

Today, many large organizations feel comfortable that Internet-protocol telephony has become as rock-steady as traditional voice systems.

The Boeing Co., for one, is in the second year of a 160,000-phone rollout with IP telephone equipment from Cisco; Boeing expects to complete the project by 2011 (see "Jumbo Overhaul").

Still, analysts say most enterprises are using IP phone technology selectively—in a new office building, for instance.

About 20 percent of all enterprise phone systems were IP-based in 2004, according to research from the Telecommunications Industry Association trade group.

Consider the experience of Southern Co. The Atlanta-based power utility has deployed IP telephony at 50 of its 500 remote office locations since 2001. Typically, the company's telecommunications connections are split 50-50 between voice and data traffic. In certain offices, the voice half wasn't being used efficiently.

By sending voice over a single data pipe at its IP telephony locations, Southern avoided having to upgrade to faster lines as more and more data was transmitted over them, says Tom LaCorti, the company's principal information-technology architect.

"We wanted to use our network bandwidth better," he says.

Separately, Southern has also installed 600 desktop IP phones from Siemens in its new downtown Atlanta headquarters, which opened this fall.

Why not cut over every office to IP telephony? "It's a time and resource issue," LaCorti says. In other words: For most of Southern's employees, the benefits of the technology don't fully justify the expense.

Story Guide:

  • Talking Points: After years as an also-ran, VOIP is in the front ranks of business tech.
  • Leap to IP Is Still a Tough Call Despite advantages in cost and maintenance, it still takes a leap of faith to migrate, and a lot of determination to sell the idea to decision makers.
  • No Killer App, But Lots of Small Enticements Smallish efficiencies and the increasing number of apps aimed at particular businesses build up to make a good case for VOIP.
  • Boeing's Jumbo Phone-System Overhaul: Boeing moves 125 phone switches to IP, in what may be the largest corporate migration to date.
  • Non-Trivial Migration: 35,000 Users, 125 PBXs, Clusters, Servers…
  • Cutting Costs; Admirable ROI: 49 percent over seven years.
  • Unsupportable Optimism? Some analysts say Boeing and other companies may be ignoring potential downsides.
  • Cost Analysis: Functionality aside, do the costs justify a migration to VOIP?

    Next page: Leap to IP a Tough Call

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