VoIP: the promise and the pain

“Our branches had every type of phone system imaginable,” says Stan Adams, SouthTrust’s group vice president of voice and data. With 730 branches and 13,200 employees, SouthTrust, a regional bank based in Birmingham, Ala., had been growing through acquisitions since 2000.

“Dealing with all those maintenance programs was turning into a major management headache. We were about to upgrade all our branches to T1s and switched 100Mb anyway, so we decided to build a converged IP voice/data network that would let us manage all our voice and data services centrally from Birmingham.”

Now all of SouthTrust’s sites are populated with IP-based phone handsets connected over the data network to a few Cisco CallManager IP PBX server clusters in Birmingham, which are in turn backed up by another CallManager cluster in Atlanta. “The CallManager clusters manage call setup, voice mail, and long distance for all our sites,” Adams says. “The savings we’ve seen from centralized management are incredible. And now we can take advantage of cheaper high volume long distance rates and bypass long distance tolls on the branch WAN connections.”

SouthTrust’s story is a great example of how far enterprise VoIP (voice over IP) has come in the past few years. The consensus is that VoIP, which describes many different scenarios for running call control and digitized voice traffic over enterprise IP data networks, works. “The early issues of voice quality, quality of service, scalability, migration, features, and functionality in enterprise IP phone systems have pretty much been solved,” says Jorge Blanco, vice president of marketing at Avaya, a major player in both the legacy TDM (time-division multiplexing) and IP telephony market. Steve Blood, research vice president at Gartner, agrees. “You can now choose from a host of VoIP integrators such as IBM and [Hewlett-Packard] and service providers such as Verizon that have real expertise and track records deploying VoIP in the enterprise.” Verizon typically acts as an integrator and then takes over management of customer-based VoIP equipment. Many carriers also offer an IP form of Centrex to small and some midsize businesses.

Perhaps even more exciting than cost savings is the promise VoIP holds for enabling true converged voice and data applications. Instead of being the separate silo that it has been up until now, voice is on the verge of becoming simply another network application that can integrate with other real-time applications — such as instant messaging, presence, and Web and video conferencing — to enhance collaboration among geographically dispersed workgroups or partnering organizations. VoIP can merge with Web, e-mail, live chat, and phone interactions in a multimedia contact center that greatly improves customer service. And VoIP has the potential to integrate with ERP and other enterprise applications to speed up approvals that used to stop business processes in their tracks.

VoIP Under the Hood

Unlike residential VoIP, enterprise VoIP is not simply about making cheap international calls over the Internet. Instead, it aims to replace the proprietary PBX phone systems and dedicated voice networks enterprises have relied on for years with standards-based call processing servers or appliances that run digitized voice and call control over the packet-based IP data network. Also known as IP PBXes, these servers provide most or all the features of their legacy PBX predecessors and connect over the LAN or WAN with IP-enabled phone handsets. IP handsets look and function exactly like their legacy predecessors, but VoIP vendors have recently added more PC-like features, such as color displays, Web surfing capabilities, and limited access to data applications in some models. IP softphones provide the same handset capabilities in software installed on a PC, notebook, or sometimes even a PDA.

In addition to phones and IP PBXes, an important component of VoIP systems is the gateway, which is used to translate between IP and the TDM scheme used by legacy PBXes and the PSTN (public switched telephone network). Gateways provide the translation necessary to add IP phones to a legacy PBX, to connect two legacy PBXes over an IP WAN, or to provide an IP PBX with trunks to the PSTN.

With maturing standards and broad industry support, there’s no question that enterprises are taking VoIP seriously. According to a Meta Group survey of 276 North American companies, 62 percent of midsize enterprises and 63 percent of large enterprises (with 1,500 or more employees) have implemented some form of VoIP. “It’s widely accepted that everyone will convert to IP telephony,” says Lon McCauley, director of network services at IBM Global Services. “The only question is when.”

The $64,000 Question

“When?” turns out to be a pretty big question, because the reality is that, unlike SouthTrust, many enterprises are still in the VoIP pilot stage or have implemented VoIP in some parts of their infrastructure but not others.

Why the hesitation? A primary reason is that many of the dramatic savings vendors have promised to IT haven’t panned out. Early in the VoIP game, it was thought that routing voice calls among company offices over the data network would produce significant savings in long-distance bills. Then business long-distance rates plunged. “When you can get long-distance rates of less than 3 cents a minute, what’s the point?” Blood says.

Then there were the productivity benefits that would come from unified messaging. All your e-mail and voice calls would sit together in one inbox accessible from your PC, notebook, or PDA. “Recent statistics show that if you’re on the road, unified messaging saves you about 15 minutes a day,” says Tony Jenkins, director of product marketing at Mitel, “and if you’re in your office, about seven minutes a day.”

What about the dramatic management savings that would come from converging separate staffs and infrastructures, voice and data, into one? It’s true that moves, adds, and changes are much simpler with IP telephone systems than they are with a legacy PBX. However, it’s also true that for most companies, TDM voice infrastructure already exists — and VoIP proponents have often underestimated the network overhaul required to make hundreds or thousands of IP phones work across an enterprise. This usually involves a detailed analysis of call volume at various points in the day (particularly peak periods); upgrading to switched Fast Ethernet to the desktop with Power over Ethernet throughout, discovering and eliminating numerous bandwidth bottlenecks, and upgrading routers with new OS versions and more memory to support VoIP. Then you have to configure network quality of service to help prioritize voice (which cannot tolerate latency) and quite possibly upgrade WAN connections.

The upgrades can be even more dramatic for large call centers. “When you do traffic engineering for a typical VoIP rollout, you can assume that people are on the phone 20 percent of the time,” says Elizabeth Ussher, vice president of technology research services at Meta Group. “But imagine the requirements of a large call center with hundreds or thousands of people on the phone 85 percent of the time and call monitoring. People get scared.”

Security is also a major concern, particularly with the relentless rise in the network attacks. Many IT managers complain that the network monitoring and management tools that support VoIP are less than adequate. And merging voice and data staffs has proven to be more difficult than originally thought. “In many companies you have a centralized IT and CIO, but the voice folks work out in the various business units and understand their requirements much better,” Blood says. “They can be absolutely critical in defining where end points should sit and what functions and service levels are required and their very sound advice is often a revelation for IT. It’s the organizations that can get the voice and data staff to work together well that have the most successful VoIP implementations.”

VoIP’s Edge

In the face of such hurdles, how is enterprise VoIP being implemented today? It turns out that an increasingly popular scenario is a hybrid deployment that puts VoIP where it costs the least and produces the most benefit — leaving legacy phone systems in place everywhere else. “With a carefully targeted VoIP deployment you can get 70 percent of the ROI with 30 percent of the investment,” says Jeanne Bayerl, director of business development at Alcatel. That’s where legacy vendors such as Avaya, Nortel Networks, Mitel, Siemens, and Alcatel excel. All offer integrated IP and legacy TDM-based phone systems that allow mixing and matching in every way imaginable, enabing gradual or partial IP implementation. This scenario can make a lot of sense if you want to save money by retaining many of your existing legacy phones and you already have a relationship with one of these companies.

The other side of the argument, however, is Cisco’s all-IP strategy, which IBM’s McCauley describes very well. “If I’m looking where this is going in the future and who is likely to win, I might want a company like Cisco that can thrive, grow, and provide all its capabilities in an Internet world, especially if much of my data infrastructure is Cisco-based.” Cisco’s VoIP solutions can bridge to legacy phone systems, allowing you to keep both systems and many of your legacy phones in place, but you can’t get the hybrid functionality in one system from the legacy vendors.

Greenfield deployments, particularly in new branch offices, are obvious candidates for full VoIP. You only have to build one infrastructure with one set of cabling, you get a chance to get your feet wet, and, if you wish, you can manage it all remotely. “Branch offices tend to have small PBXes and key systems with different levels of capabilities,” Bayerl says. “Connecting them to the main PBX via IP gives everyone a consistent solution.” Most legacy phone vendors let you connect these offices over an IP WAN to your central TDM or mixed TDM/IP PBX using a gateway. If you’re a highly distributed company such as SouthTrust, with hundreds of branches, or lots of retail stores, a complete IP overhaul across the organization can make a lot of sense particularly if, as in SouthTrust’s case, you’re already planning a major data network upgrade.

Another likely scenario is to provide IP phones to telecommuters and the parts of the staff, such as sales, that can benefit most from maximum mobility, at which IP excels. The telecommuter solution typically works with an IP phone and broadband connection that links to the main office PBX over a VPN. “We gave our telecommuters VoIP phones in their homes,” says Paul Shane, IT director at Milliman, an actuarial and professional consulting services organization that has rolled out a hybrid solution from Alcatel. “Now we can give them a direct dial number here at the main office and all their calls ring on their remote IP phone in their homes.”

For more mobile road warriors, a softphone installed on a notebook can provide an office phone in any location, even a hotel room or a Starbucks with a Wi-Fi hot spot. Some systems let you set up all calls to ring simultaneously on your IP phone and cell phone. This flexibility means better customer relationships, because calls get to the intended person much more often.

Some companies, such as JetBlue, have taken this mobility to the extreme, creating completely distributed, virtual-IP-based call centers in which their entire staffs are actually working with IP phones in their homes across wide areas of the United States. “VoIP gives you access to labor pools that didn’t exist before,” Avaya’s Jorge Blanco says. “You don’t have to provide a roof over their head and you can get highly educated people from any location.” Jenkins points out that you can take advantage of time zones to extend call center hours — and that IP phones are great for the growing category of “day extenders” who continue working when they get home from the office.

IP systems also allow better collaboration with branches and telecommuters, because they often provide built-in, easy-to-use audio conferencing. The benefits are even more dramatic when you start converging VoIP with other real-time applications such as instant messaging, document sharing, and Web conferencing. Presence functions let users see on their PC screens exactly who is in the office and who is on the phone, so you waste much less time leaving voice mails or directing calls to people who are not available. It becomes much easier to pull people into instant virtual meetings, allowing for faster decision making. “IP allows the branch office to become much more integrated into the overall business,” Bayerl says. “If Jane in branch x is the worldwide expert in widget y, it’s as if she were right down the hall.” VoIP also makes it easier to implement multimedia contact centers where the same people handle Web, chat, and voice interactions concurrently, and any of these communications can be routed quickly to available people with relevant expertise.

Many analysts and vendors agree that the next phase will be integrating VoIP and other real-time communications into ERP and other enterprise applications. “By bringing real-time communications into business applications you can get over hurdles that used to stop a business process,” Bayerl says. “For example, if a process needs finance approval, the application knows that Joe in finance is the person with authority that is currently available and it can make a connection.” Cisco offers phones with LCD displays that can replace PCs in retail and other environments that have limited data access needs. Cisco and Alcatel’s phones support XML services that you can use to add access to billing, inventory, and other applications to the phone.

Another application that is generating excitement is VoIP over the wireless LAN, which can be useful in warehouse, hospital, and retail environments and possibly move into the mainstream office. SpectraLink has been involved in this category for several years and Cisco is offering phones with Wi-Fi capabilities. At the Spring 2004 VON (Voice on the Net) conference, Ericsson, Motorola, and Nokia demonstrated hybrid wireless VoIP and cell phones that allow users to make calls over Wi-Fi networks when available, whether in the office or at a hot spot on the road, and via cellular when Wi-Fi is not. “I’d be happy to get rid of the phone on my desk if I could have a single phone to take with me that could tie into all those converged applications,” Meta’s Ussher says.

The Voice Choice

Such advanced benefits may be compelling, but not at the sacrifice of the typical call control features offered by a standard PBX. Fortunately, those who decide to take the plunge into VoIP will discover that IP-based phone systems now support all the basics — call forwarding, caller ID, speed dialing, call hold, auto attendant, and so on. And voice quality is no longer a question. For most customers, the place to start is with their existing PBX vendor, which can help them deploy a hybrid system that retains legacy equipment.

The nature of IP telephony also lends itself to hosted solutions. Verizon, AT&T, and other players offer converged IP voice and data networks using a specification called MPLS (Multiprotocol Label Switching) that permits these carriers manage different service levels to accommodate voice. They’ve also been replacing TDM switches with IP — and some carriers have active plans to bring VoIP over the last mile directly to the home or business. This approach will make it easier for carriers to provide their own VoIP services, including videoconferencing, unified communications, and contact-center applications that could replace or complement whatever an enterprise has on site. Until now, carriers have mostly served as VoIP integrators or have provided IP Centrex services for small and midsize businesses.

Most agree that a major transition to VoIP in the enterprise is inevitable, but in most companies it will probably be a gradual process of greenfield branch office rollouts, deploying IP where it brings the most benefit, replacing obsolete legacy equipment, and gradually upgrading the data network infrastructure. Ultimately, every enterprise will find its own unique path to VoIP.