Convergence: VOIP/UC Business Case. Robin Gareiss Executive Vice President, Sr. Founding Partner

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1 Convergence: VOIP/UC Business Case Robin Gareiss Executive Vice President, Sr. Founding Partner

2 Agenda About Nemertes Business Case for VoIP & UC h Drivers h Getting Started h Team Approach Implementation and Management Costs Recommendations

3 About Nemertes Analyze business value of emerging technologies Advise Fortune 100-2,000 businesses on critical IT strategies t Benchmark reality h 2,500+ IT executives share strategies, costs, vendor satisfaction. Analysts have years experience, including operational Founded d 2002

4 Pre-Approved Business Case: Required? Pre-Approved Business Case Required?

5 Why Create a Business Case? 85% of organizations are working with decreasing or flat IT budgets. Organizations that require a business case are less likely to put projects on hold.

6 Building a Business Case Accurate assessment of current costs h Implementation, operational, capital Identify business & process benefits h Engage business units to understand problems your technology can solve We didn t need to schedule a follow-up call to answer that question? We didn t have to search for that information? We had the benefit of X s insight when we needed it on this project? Confer with business process owners to validate improvement & gain buy- in Test-drive a prototype to uncover problems Measure before and after results! Measure ROI, TCO, NPV

7 Sample TCO Overview for IP Telephony Prepared for: IT Staff Large Global Company HQ & Branch Analysis Cost Analysis The Nemertes Cost Analysis Tools has calculated the following results for your organization. This section provides an overview of the cost benefits of this technology. Your annual IP telphony savings with Avaya: $3,003,840 Your annual IP telephony savings with Cisco: Your annual IP telephony savings with Nortel: Years for cost analysis: Five-year financial gain Percentage of revenue Percentage of IT budget $1,978,447 $2,907,905 7 $15,019,199 with Avaya 0.06% 1% Annualized VOIP Cost Savings Cost Analysis $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 $3,003,840 $2,907,905 $1,978,447 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Avaya Cisco Nortel Existing TDM Avaya Cisco Nortel $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Benefit Highlights The Nemertes Cost Analysis Tools has calculated the following annual savings with an Avaya solution: Your MAC Costs will be reduced by.... $1,502,514 Your Voice trunks will be reduced by... $75,262 Your Equip Maintenance will be reduced by.. $171,429 Your Local Loops will be reduced by.... $52,185 Additionally The Nemertes Cost Analysis Tools has calculated the following productivity benefits with an Avaya solution: You can establish 5-digit dialing, intercom, transfer calls, and implement other features between sites. Standardizing on a VOIP product family will prepare your network for collaborative applications. Your mobile workers can 'log on' to phones in any office, receive calls & voic there. Your mobile workers can use wireless VOIP phones to enable mobility within the corporate LAN. Nemertes Research 2009

8 Team Approach Identify business/technology liaisons within IT Identify grassroots help Budget time for discussions with business-units h Leaders in HR, sales, finance, customer service, legal, etc. h Also discuss with managers and staff Don t ask technology questions focus on what problems with their jobs, processes, customer relationships, revenue-generation, etc. Understand business problems, and relate your technology knowledge to solve them Assemble UC team h Multi-disciplinary team network, telecom, application development, contact center, security, business units Engage team in all UC-related decisions

9 Steps for Success

10 VOIP Business Case Is a VOIP business model still necessary? h Yes! Now seeing 12-month paybacks as crucial in many industries for any new IT investment h Executives want to see hard- and soft-dollar costs/savings. h Looking for ROI, TCO, and NPV Challenges exist h Do I need to budget for network upgrades? (54% do upgrade) h What are the true implementation and operational costs? h Do I need third-party management tools? h How much should I invest in training? h How quickly should we move to unified communications?

11 VOIP Costs: Key Findings Overall, capital costs are dropping h Vendors are becoming much more competitive h Large companies saving 30%-90% off list price when dealing directly with vendor-manufacturer Implementation/operational prices 20% higher the first 2 years when compared to TDM h As expertise grows, costs decrease IT training (and cross-training) important h Troubleshooting IP takes 1x-4x longer than TDM More companies spending budget on management tools Cost details available separately

12 VOIP Cost/Benefit Criteria Implementation h Time/expertise Capital Costs h Switch, Handsets, Gateways h Network upgrades h Management tools h Cabling Ongoing operational h Network/WAN h Staff (internal/outsourced) h Maintenance & Licensing h Training Implementation h Cabling costs Capital Savings h Softphones v. handsets h Centralizing voic /um, servers h Hosted Offerings h Audio bridges Ongoing Operational h MACs h Staff Reductions & Retention IT, receptionists, CC turnover h Network, FMC h SIP trunking

13 Nemertes Data: Cost Components Implementation: h Planning, installation, troubleshooting. Internal + consulting Capital: h Capital costs for IP switches, phones, gateways, network upgrades related to the VOIP implementation, IP video and audio bridges, management tools, unified messaging, and traditional voic . For comparison here, we included only VOIP switches and phones (hard phones & soft phones). Ongoing operational: h Time and money companies spend managing and maintaining their VOIP systems.

14 Average VOIP Costs VOIP Costs 2009 Implementation $ 135 Capital $ 408 Operational $ 570 First-year costs $ 1, *Figures for Avaya, Cisco, Nortel, ShoreTel rollouts Average Profit Margins Hardware/software: 15% - 38% Professional Services: 50-55%

15 VOIP Management Tools Spend Average number of employees managing VOIP range from 1 for small companies to 10 for very large companies When managing in-house, they add between one and six tools just to manage VOIP! 43% buy tools 3 years after deployment (20% between 1-2 years)

16 How Did WAN Costs Change With VOIP Project? Average WAN savings: 23%

17 LAN Upgrade Costs IP Telephony Implementations Capital Costs Per Person Number of End Units Cost per end unit* Less than ,000 More than 5,000 All sizes IPT Hardware $667 $411 $342 $554 LAN Upgrade $553 $280 $159 $421 LAN Upgrade: Total Average Capital $1,220 $691 $501 $975 LAN Upgrade: % of Overall Capital 45% 41% 32% 43% *End unit is IP handset, audio bridge, softphone or other end-user device. Includes pricing for all vendors

18 Closing Thoughts: Best Practices to Success Understand business problems UC can solve. Don t rush! Spend time up front educating IT, business units, executives. h Win support internally. Tie VOIP to the overall UC project. Tie UC to corporate green initiatives. h Enables telecommuting, conferencing Understand vendor roadmaps & alignment with your strategy h Architecture & scalability h UC app support h Virtualization plans h Partner expertise

19 Thank You Robin Gareiss Executive Vice President & Sr. Founding Partner

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