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A Closer Look at VoIP in the Enterprise
2006-12-28

"You're not just changing the technology in the back room," with IP telephony, says Craig Hinkley, senior vice president and manager of strategy, architecture and security for enterprise access and desktop services at Bank of America. "What you're doing has an impact on the way associates are using the technology every day; it's a little more disruptive."
Is VoIP reliable? Scalable? Ready for prime time? For the answer, you only need to look at the raft of ambitious enterprise VoIP projects -- with multiple-thousands of phones -- announced in recent months, or the latest telephony market research, which shows VoIP outselling digital PBX lines for the first time.
"IP telephony has gone mainstream," says VoIP analyst Brian Riggs, of Current Analysis. "There's no doubt about it."
Planned and ongoing VoIP rollouts at Bank of America, The New York Times Co., Amazon.com, Chicago public schools, University of Pittsburgh Medical Center and dozens of other enterprises all point to the acceptance of VoIP as the new standard for business telephone and messaging systems, analysts and users say.
Not that telecom professionals are entirely abandoning more than 50 years of digital PBX technology. Many are mixing IP and time division multiplexing TDM technologies for now as they wean employees off of the old phone equipment.
Call VoIP King
The shift in market dominance from TDM to IP really became apparent in the first quarter of 2006, according to research firm Synergy Research Group. Two years ago, only a third of business phone system lines were IP, but by this year's third quarter, more than 60% were. (Enterprises have spent $ 7.7 billion on telephony in the first three quarters of 2006, according to Synergy).
So what has prompted the shift?
"What changed over the past few years is that nothing changed," Riggs says. Products from companies such as 3com, Avaya, Cisco and Nortel have matured, not undergoing the disruptive changes seen in the early 2000s. Many of the questions regarding feature sets, stability and quality have been addressed, he adds.
IP telephony products and standards are at the point where some organizations are even comfortable with open source technology.
Amazon.com announced earlier this year that it is deploying the Pingtel SIPxchange Enterprise Communications System, an open source IP PBX, based on Linux servers and SIP phones, to support thousands of users at its Seattle headquarters. Separately, Sam Houston State University in Texas and the Southern Co. are going live with the open source Asterisk VoIP platform, in enterprisewide rollouts and in small-pocket deployments.
"We have a lot more peace of mind with the open source system," says Aaron Daniel, senior voice analyst, Sam Houston State University.
Following the Leader
Many companies now embarking on IP telephony projects are following the lead of early adopters, such as Bank of America, which in 2004 announced plans to deploy 180,000 IP phones to all of its U.S. retail branches and offices.
With 800 branches nationwide hooked into Bank of America's centralized Cisco CallManager-based phone systems, the project is now running at full-steam, just as more enterprises start taking on large-scale VoIP rollouts.
"You see a lot more VoIP stories in the marketplace now," says Craig Hinkley, senior vice president and manager of strategy, architecture and security for enterprise access and desktop services at Bank of America. "Were we the early adopter, or the front-runner? Maybe. But, I believe based on the size of our deployment, we needed that [large amount] of time because we had such a massive transformation to undergo."
While Cisco's IP telephony technology was deemed viable for deployment two years ago by Hinkley and his technology team, incremental improvements in reliability, features and interoperability have since been introduced.
"You would hope the technology is more stable and more available and more reliable than it was a year or two ago," he says. "There's a better, faster, cheaper paradigm that Cisco and all networking vendors are pushed towards from customers."
What all this has meant so far for the bank is better communication tools for its associates, which equates to improved customer service. On the operations side, the bank is seeing significant cost reductions in telephony maintenance, service provisioning, and adds/moves/changes with the Cisco VoIP gear, Hinkley adds.
Many large rollouts starting now are also trending towards a single-provider for data and voice, as with Bank of America's all-Cisco project. Easier integration between the phone system and data network is the reason, some customers say. Deployments in new buildings without incumbent voice and data networks are primary targets for single-vendor convergence.
"Conceptually, we felt we could be successful with either an integration of Cisco and Avaya products," or an end-to-end Nortel package, says Robert Kraft, vice president of enterprise services for The New York Times, which is building a network of 3,600 IP phones from Nortel, along new router, switch and security products from the vendor.
The issues of standards and interoperability were not a concern with a multi-vendor package, Kraft says; he felt a single-vendor approach offered tighter integration of applications and security along with voice and messaging. OK to VoIP, But Hold the Phone
"When an enterprise goes to IP telephony, they either stick with their incumbent -- a Nortel or an Avaya -- or they bring in a new vendor, such as Cisco," says Jeremy Duke, vice president of Synergy Research. Either way, Duke says, users must operate in a hybrid technology mode at some point.
"It can allow you to deploy as much IP as you want, incrementally," Duke says of hybrid IP/TDM systems. "[This] also lets [users] gracefully migrate off of older systems."
Such deployments are key where public safety and reliability are considerations, or where there are cost concerns about rolling out tens of thousands of new phones.
IP handsets at consumer products giant Kimberly-Clark "will be more of an exception, rather than the rule" in that company's VoIP deployment, says Mike Post, senior manager of I.T. communication services. The Irving, Texas, company this year began replacing stand-alone PBX systems at over 200 sites with Avaya VoIP gateways, which tie back to a centralized data center for call processing and messaging apps. Avaya digital desk phones in most locations will remain the same. "We didn't see a great amount of value in deploying IP phones widely," Post says.
With IP handsets starting in the $ 200 to $ 400 range in some cases, companies say there are significant savings in a PBX-replacement project by connecting existing digital desktop phones to VoIP gateways, which can be tied to an IP-based call processing servers in a network data center. This approach still gives users the operational efficiency and cost savings of eliminating multiple PBXs at sites by consolidating call processing. In Kimberly-Clark's case, the company could expect to save as much as $ 10 million by not deploying all IP phones to its 57,000 employees.
Besides the cost of phones, using a hybrid approach can also save on wiring costs, as replacing two-pair RJ-11 cabling with Ethernet wiring, and the necessary in-line power and backup systems required.
"A lot of our schools are over 100 years old so we don't have the [cabling] infrastructure at this point to go 100% IP," says Katie Zalewski, telecom director at the Chicago public schools, which are spending $ 28 million to replace 19,000 Centrex handsets with digital phones, attached to a centralized Mitel IP PBX system over the school system's WAN.
For many customers, the impetus to go with VoIP is consolidation of disparate phone systems, and centralized management -- not flashy desktop IP handsets that with built-in Web browsers.
"We have a lot of infrastructure out there [that's] just not integrated," says Bill Hanna, vice president of I.T. infrastructure at the University of Pittsburgh Medical Center, which plans to install over 66,000 IP, digital and analog phone lines from Alcatel. The organization will crunch hundreds of PBXs and 30 voice-mail systems into a few blade-server-based Alcatel OmniPCX VoIP systems. In hospital environments, where dial tone failure is not an option, analog and digital handsets will remain, while back-office deployments will have IP sets on desktops. "It will be about a 33% mix across the board."
People Power
Phones are the only business technology that workers put up to their ears and mouths. Telecom professionals who have successfully moved to IP, or are about to start the transition, say that recognizing the personal nature of the phone is as important as the myriad technical and system considerations.
"You're not just changing the technology in the back room," with IP telephony, says Bank of America's Hinkley. "What you're doing has an impact on the way associates are using the technology every day; it's a little more disruptive."
Hinkley says the I.T. staff had to closely learn how branch employees used phones in their daily work routines and what benefits IP telephony might bring.
"We've had some lessons learned around the training and how we communicate the use of the technology," he says. "We're making sure associates understand the training around how we're now using the new phone system to execute business processes, and not just as a phone with basic features and functions."
But before this work even begins, I.T. staffs must prepare their own people for the shift. Large organizations that ran separate telecom and datacom departments in the past say this is the most important move before any steps to deploy VoIP are made.
A year before The New York Times even chose its vendor for IP telephony, the voice and data I.T. staffs were merged. At first, general cross-training occurred among administrators and technicians. Then the training became more specific once Nortel was selected.
"We not only converged traditionally separate voice and data technical folks, but we have reorganized the entire support and operations teams surrounding this," the Times' Kraft says.
By Phil Hochmuth
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