VOIP in the Enterprise: Can CIOs Take It to the Bank?

 
 
By Darrell Dunn  |  Posted 2007-08-27
 
 
 

Technology can weave into the enterprise tapestry by way of choice or by necessity, as businesses face the prospect of either joining the next generation or clinging to outdated tools. CIOs and other I.T. decision-makers are faced with that quandary now as they attempt to create a long-term communications strategy built around Internet Protocol (IP)-based telephony.

IP telephony is the routing of voice over the Internet or an IP-based network. IP-based communications networks are being used to replace or augment traditional time-division multiplexing (TDM)-based circuit-switched networks.

The move to IP-based networks is already well underway. A third of all telephony extension line shipments this year are expected to be IP-based, while two-thirds of the shipments will be based on TDM technology, according to research firm Gartner. By 2011, that ratio will reverse, with IP-based lines accounting for two-thirds of all shipments.

Most large enterprises have already begun limited use of voice-over-Internet Protocol (VoIP) and other IP-based telephony tools, Gartner says. As the growth curve of IP-based installations indicates, the future for telephony is IP. Even the most conservative CIO understands that future telecom investment will be IP-based, while the workhorse TDM-based networks of the past will be gradually weeded out over the next decade. Unified communications has been a topic of roundtable discussions, but has been found mostly in back-room R&D efforts within enterprises and at technology vendors for much of the past decade. Growth in IP-based systems during the past few years, however, is serving as the launching pad for the uniting of existing communications and data networks, including desktop telephone systems, voice mail, Internet, presence and contact information, and the integration of business applications.

Nonetheless, business leaders are leery of IP telephony. A number of vendors have struggled financially, including 3Com, Nortel, SunRocket and Vonage. Within enterprise deployments, IP telephony remains relatively nascent with a significant amount of ongoing experimentation to determine the best practices for deploying a unified communications strategy. This often requires the technological assets of multiple vendors, and has led to partnerships such as Nortel-Microsoft and 3Com-IBM.

Next page: The Widening Reach of VoIP

Widening Reach

Still, businesses are looking beyond the present-day risks and are concentrating on the potential for IP-based networks. "It doesn't make sense to buy old technology," says Gary Horn, director of enterprise architecture and network security for Advocate Health Care. "We didn't want to be installing 1980s technology in the new millennium."

That was the decision the Chicago-based health-care organization was faced with in 2001 as it looked to upgrade an aging TDM network. With eight hospitals and nearly 100 clinics, doctors' offices and outside-care sites in the Chicago area, Advocate executives viewed IP as a long-term foundation to a unified communications strategy, promising new levels of integration with the organization's data networks.

Beginning in 2002, Advocate worked with Alcatel-Lucent to roll out an IP-based network slowly, implementing a single campus at a time. Today, about 25% of the organization's network is IP-based, with a plan to move to about 75% within the next three years, Horn says.

He believes the IP platform is saving Advocate money in several ways, including freeing up floor space that otherwise would be dedicated to TDM equipment, a reduction in cabling and ease of redeployment in moving users to the new system. Since the company needed to replace the old communications infrastructure anyway, Horn believes there was no additional cost to moving to an IP-based system.

Until a couple of years ago, businesses looked at IP telephony to gain cost savings from VoIP by cutting long-distance tolls. Today, the growing investment across various types of enterprises is driven by enhanced productivity with unified communications platforms such as IP-based audio and video conferencing, unified messaging, and integration with customer- and employee-facing applications. For Advocate, the first benefit from its move to IP was the ability to develop an enhanced nurse call system. With traditional nurse call systems, a patient pushes a bedside button for assistance, sending a signal to the nurses' station; that signal must be answered, and then the message is sent to the appropriate nurse. Nurses at Advocate are now given IP-based wireless phones that allow patient calls to automatically route to the appropriate caregiver, who can respond directly.

Companies are also looking to boost IP telephony for telecommuting and call centers, where businesses are increasingly competing for the best agents. With little reason for most call-center workers to be tied to a specific physical location, businesses like Advocate are using IP-based platforms to allow the call-center agents to work from home.

Next page: Room for Growth

Room for Growth

Even with unified communications options growing, few businesses want to rip and replace existing equipment. Instead, businesses are looking for ways to meld existing infrastructure with pieces of an IP-based network, starting an evolutionary process where CIOs can determine how quickly changes occur.

Alan Weisenberger, vice president of technology services for the Evangelical Christian Credit Union, had no interest in undertaking a large-scale overhaul of an existing TDM-based network. But by 2003, he also knew upgrades were necessary. ECCU services about $2.5 billion in assets, focused primarily on providing loans for Christian organizations, missions and schools.

Although Weisenberger felt IP-based networks lacked the maturity necessary for major deployment, he says he could see where the industry was headed and wanted to begin positioning the infrastructure to use IP-based tools.

ECCU worked with Siemens to create a hybrid platform that enabled both TDM and IP-based communications. The credit union has put its branch office on an IP-based system, and began increasing its use of IP within its headquarters in Brea, Calif., although he feels no hurry to accelerate a deployment schedule. "Even to this day, we think the IP market is still maturing," Weisenberger says. "The TDM architecture has been around a long time, and the IP world has just got a ways to go to catch up. But we are gaining expertise and an understanding of issues associated with voice-over-IP without having to move our more critical functions into that area as yet."

The investment in IP-based platforms and unified communications tools is being justified by most enterprises not on the basis of cost savings, but the ability of the converged network to provide advances in streamlining communications, collaboration and integration.

Next page: IP Telephony: Evolution in the Enterprise

IP Telephony: Evolution in the Enterprise

What It Is:
Internet Protocol-based communications systems are moving beyond voice-over- IP (VoIP) to create platforms to unify communications and data networks, and their applications, too.

Key Players:
3Com, Alcatel-Lucent, Avaya, Cisco, IBM, Microsoft, Nortel, Siemens

What's Happening:
Businesses are attempting to create new road maps to allow for the integration of IP-based tools with existing investments in traditional TDM-based communications networks-and consequently avoid "rip and replace" costs. Most large enterprises have begun using VoIP to develop a unified communications strategy that will allow businesses to achieve new levels of functionality with key applications that can take advantage of both voice and data integration.

Market Size:
A third of all new deployments in 2007 will be IP-based, growing to 67% of the market by 2011

Question: Have you begun an IP migration at your company? Are you thinking of doing one? Write to us at editors@baselinemag.com.

Next page: 3Com: Strength in Numbers