Hosted VoIP gains momentum...Business Plus

Monday, 24 January 2005 00:00

Business Plus , January 24, 2005

“Enterprise VoIP gains momentum with U.S. and northern European corporates”

Peter Dykes

VoIP is taking off in a big way with large U.S. corporations, and there is strong evidence that the same is happening in other markets, such as the Nordic countries and the UK.

Business VoIP: An End-User’s Perspective 2004, a new report from InStat/MDR, records that, overall, the percentage of U.S. companies using VoIP grew from 3% in 2003 to 12% in 2004. Daryl Schoolar, the report’s author and an InStat/MDR senior analyst, told BPthat he expects the number of companies using the technology will top 20% in the next year or so. Hidden within those figures, however, is a story of uneven take-up by companies of varying sizes. Schoolar says that substantially higher rates of penetration are found within the larger business segments. Middle-market penetration was about 34% at the end of 2004, he says, while penetration was 43% among the top-end corporations.

“Typically, VoIP solutions are proving most attractive to companies with distributed operations,” Schoolar observes. “Firms with a central head office and a large number of outlying branches are using it to cut the costs of interbranch communications. However, cost is not the only driver. Companies that are moving to new premises or expanding their operations are increasingly looking to VoIP for their communications needs.”

In Europe and the UK, the story is similar. Trygve Nordly, marketing manager for Danish systems integrator NeoConsult, is convinced the business case has been made and the rush to adopt VoIP has begun. “Let’s get one thing straight: We are beyond exploring business cases,” he told BP. “It’s now becoming a bandwagon thing here among the top 500 companies.” Nordly noted that other Nordic countries are experiencing similar growth.

One of the differences between the U.S. and the Nordics, however, is that where Schoolar has observed a tendency toward hybrid PSTN/VoIP solutions in the U.S., Nordly is adamant that VoIP is seen as a replacement for circuitswitched technology, at least in his part of the world. “It is either or,” he argues. “VoIP deployments are founded on business cases based on the savings on the phone bill, and while there are hybrid solutions around, that’s because of the installed base of [private automatic branch exchanges]. But that’s a transition thing. There is some concern about the claimed lower uptime of the LAN infrastructure compared to the PSTN network, but with service providers offering 99.999% SLAs and MPLS in place, time will tell. I believe, however, that while we will get some horror stories going forward, it’s not going to stop VoIP.”

The same is seemingly true in the UK. “All of the companies we deal with are switching to VOIP exclusively, and there are no compelling reasons why legacy PSTN solutions would be best for anyone, other than where bandwidth was not locally available,” David Crombie, CEO of UK-based Voicenet Solutions, a managed VoIP service provider that partners with telcos and ISPs, told BP.

One other trend the InStat/MDR report noted is a movement toward totally outsourced solutions among businesses planning to deploy VoIP. Again, this trend is reflected in European markets. Finnish call-center specialist Wicom says that, as businesses begin to consider deployment, outsourced solutions emerge as the most cost-effective solution for many.

“Incorporating IP telephony as a hosted service based on pay-as-you-use pricing provides a viable business case for many companies, whether it’s being used for trials or total replacements,” says Pekka Porka, Wicom’s vice president of marketing. “For example, in Wicom’s customer base, roughly three out of four installations are based on the hosted-service model, for both contact centers and corporate telephony. During the network assessment and business-case estimation, the system requirements and appropriate delivery model for the particular business become clearer.”

Outsourced solutions, it seems, are particularly attractive to companies that are replacing legacy systems and going for an exclusively VoIP infrastructure, according to Voicenet Solutions Crombie. “The ‘toe in the water’ approach may be the answer if a company already owns or leases nonamortized equipment and wishes to make the move to VOIP,” he notes. “However, if the company requires a replacement of old or outdated equipment, then a noncapex solution is very attractive, with considerable advantages over legacy PABX, as the only thing that can possibly cause problems at the customer’s premises is the IP handset, all other aspects of the product being remotely managed.” If, as seems to be the case, the majority of companies switching to VoIP are replacing infrastructure, the future certainly looks bright for telcos and service providers that have gotten into the market early.

So, will VoIP be a flash in the pan, or can vendors and SPs expect continued growth? “VOIP solutions have been on people’s lips for about a decade or so, but the availability of broadband has turned talk into reality, and now, as more and more bandwidth becomes available, so we expect the uptake to increase exponentially,” says Crombie.

To find out more about VoIP read our Business VoIP Guide

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