SIP Trunking Is a Building Block of Unified Communications

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1 SIP Trunking Is a Building Block of Unified Communications by Zeus Kerravala August 2010 Executive Summary Organizations today are undergoing a major transformation to global, Anywhere Enterprises, and unified communications (UC) is a core component of this evolution. UC allows companies to collaborate and communicate better with the entire extended enterprise (see Exhibit 1). It is a transformational technology that has the power to lower the TCO of communications, raise worker productivity to new heights, bolster green initiatives and create new business processes that are communications-enabled. Despite all its promise, however, UC is not without its challenges. Organizations often deploy new technology using old technology principles, and UC has followed this trend. Many early adopters deployed VoIP and UC with the same architecture and best practices as legacy TDM systems, significantly limiting the value UC can bring. Migrating traditional systems to new, IP-based systems must coincide with a migration away from a traditional trunking service to a SIP trunking service. SIP trunking is a simple, cost-effective method of accelerating the deployment of UC and gaining new efficiencies. SIP trunking should be thought of as a core building block of UC as important as the underlying IP network. A UC deployment built on SIP trunking allows companies to achieve the following benefits: Reduced overall communications costs More efficient use of network assets Accelerated deployment of current and future UC applications through the simplification of network design Higher reliability and better disaster recovery capabilities than traditional TDM-based systems This report details SIP trunking and the role it plays in accelerating UC deployments. It also provides recommendations for evaluating SIP trunking providers and offers some advice for initial deployment. This custom publication has been sponsored by Level 3 Communications.

2 SIP Trunking Is a Building Block of Unified Communications Exhibit 1: The Communications Needs of the Extended Enterprise Source: Yankee Group, 2010 Table of Contents I. UC Is Long on Hype and Short on Deployments 3 II. Introducing SIP Trunking 4 III. Enterprise Benefits of SIP Trunking 5 V. What to Look for in a Solutions Provider 6 VI. Case Study: SIP Trunking in Action 7 VII. Conclusions and Recommendations 8 2

3 August 2010 I. UC Is Long on Hype and Short on Deployments For about a decade now, UC and VoIP have been touted as game-changing technologies that can lower the overall cost of communications, create communications-enabled business processes and bring user productivity to new heights. UC brings all of a company s communications and collaborative applications together, improving the manageability of communications and making the deploying organization more responsive and agile. UC enables companies to achieve their full potential and ultimately gain a competitive advantage over their competition. Despite the promise, hype and maturity of the technology, however, companies have been slow to adopt it. Our Anywhere Enterprise Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-12, reveals that 40 percent of respondents have only deployed basic UC, while only 6 percent have deployed a full UC solution (Yankee Group defines basic UC as VoIP plus one other feature, advanced UC is a broader implementation of multiple communications applications and a full deployment uses all UC applications). Additionally, 22 percent of the responding base had no plans to deploy, were unsure or were more than a year away from deployment (see Exhibit 2). Exhibit 2: UC Deployment Lags Behind the Hype Source: Yankee Group s Anywhere Enterprise Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-12 Which of the following best describes your organization s current use of unified communications? Basic UC deployment in the next months 8% Not deployed/no plans for UC 10% Basic UC deployment in the next 12 months 13% Unsure/Do not know 4% Full UC deployment 6% Advanced UC deployment 19% Basic UC deployment 40% n=684 There are several reasons for the gap between UC vision and deployment status. Most notably: The underlying network architecture used to support VoIP and UC follows TDM instead of IP best practices. Traditionally, circuit-switched PBXs are deployed on a nodeby-node basis. Each location has an independent key system or PBX (depending on the size of the location) that consumers in that area use for phone service. Traditional PBXs work this way because their underlying technology operates at Layer 2, so call control cannot be carried past the network edge. IP PBXs, on the other hand, work at the IP layer, meaning they can be distributed to any point in the corporate network like any other IP-based application ( , Web and so on). Companies that do not redesign the underlying architecture before deployment significantly limit the value UC and VoIP can bring. Deploying organizations need to leverage the fact that IP is a dynamic, scalable protocol instead of trying to make IP deployments look like older TDM implementations. Traditional VoIP deployments terminate at the enterprise edge. From the numerous customer interviews Yankee Group has conducted over the past several years, we estimate that over 90 percent of corporate VoIP deployments terminate IP at the enterprise edge and convert to TDM to connect to the PSTN. Ideally, IP connectivity should be carried all the way to the telco cloud, extending the flexibility and dynamic nature of IP. By not taking advantage of SIP trunking, enterprises significantly reduce their VoIP ROI. Lack of centralized call control means the number of trunks and trunk capacity is sub-optimal. Traditional node-by-node deployments dictate that each node or location needs its own trunk lines to connect to the PSTN. In many cases, each location has at least two trunks for redundancy purposes. This means each location must provision trunking services for maximum capacity, so in non-peak times, much paid-for capacity is left unused. UC holds tremendous potential and can even help deploying organizations leapfrog their competition (see Exhibit 3 on the next page), but organizations must consider a new architecture for deploying UC. The next section explains how SIP trunking can accelerate the move to a new architecture and provide greater ROI for UC deployments. 3

4 SIP Trunking Is a Building Block of Unified Communications Exhibit 3: The Accelerating UC Value Proposition Source: Yankee Group, 2010 Instant Messaging Voice over IP Unified Communications Unified Messaging IT Process Improvement Competitive Advantage Streamline Business Processes Enterprise Audio Conferencing TCO Benefits II. Introducing SIP Trunking SIP trunking services have been available from network operators since the early part of the decade, but deployments have been limited for a few reasons. First, the overall awareness of SIP trunking is relatively low. Yankee Group estimates less than 20 percent of the VoIP decision-makers we ve interviewed understand SIP trunking well. Until recently, most IP PBX vendors hyped the value of SIP but used it on the line side of the IP PBX to make IP phones talk to the call server, creating some misunderstanding among network managers regarding the end-to-end value proposition of the technology. Also, incumbent network operators have been slow to push SIP trunking as an alternative to traditional PSTN trunks. SIP trunking greatly threatens to cannibalize the revenue stream of incumbent operators legacy TDM trunking services due to consolidation of circuits. Once network managers fully understand the value it provides, moving to SIP trunking will be one of their easiest deployment decisions. However, fully understanding SIP trunking is the first step in overcoming this barrier. Understanding SIP Trunking With traditional telephony, the local phone company delivers telephony services over a wire, or a trunk, that connects the corporate PBX to the PSTN. This physical trunk, made up of multiple channels, carries phone calls from the corporation out to the PSTN, allowing the company to have phone service. SIP trunking allows companies to replace these physical circuits with virtual trunks that are deployed over any data connection. This connection can be a dedicated data circuit or a shared connection with a data service, or companies can even use the Internet for connectivity if they so choose. Because the service is emulated over a data connection, organizations can pool a group of trunks together and allocate bandwidth as dictated by business policy. SIP trunking delivers much more value to an organization than traditional PSTN trunks do. First, there s no actual limit to the number of user voice sessions that can be carried over a SIP trunk the limit is governed by bandwidth, not number of channels. A traditional PSTN trunk limits the number of calls to the number of channels available (typically 24 per trunk). SIP trunking scales by bandwidth. Need more calls to go through? Increase the bandwidth of the connection instead of deploying another physical one. Also, in addition to voice services, many UC services can be more efficiently deployed over SIP. SIP trunking makes it simpler to layer on additional UC applications such as chat services, presence, conferencing, application sharing and video. SIP trunking allows organizations to extend VoIP past the corporate network, where most deployments end today. It removes the need for organizations to purchase costly gateways, bridges or other equipment to connect the corporate UC environment to the PSTN. Instead, these are connected by the network of the telecommunications provider, so the enterprise does not have to incur the cost. Overall, SIP trunking is a simple, cost-effective method of increasing the ROI of a UC rollout. 4

5 August 2010 The growth of SIP trunking will be aided by the following drivers: Availability of solutions: Prior to last year, SIP trunking was available primarily from competitive network operators, not incumbents. In 2009, almost every major telco made its SIP trunking services broadly available. While competitive operator services are more mature, an increase in the number of solution providers will spur adoption. Maturation of SIP as a standard: Five years ago, most vendors that supported the SIP standard did so with proprietary extensions to fill in many of the features missing from the standard. Since then, SIP has matured to the point where a pure standards-based SIP solution can provide total voice functionality for most organizations. SIP optimization of communications platforms: The latest generation of IP PBXs from the leading manufacturers have been designed to work in SIP environments. Products like Avaya s Aura, Cisco s Session Manager and Microsoft s Office Communications Server have been engineered with SIP as the underlying protocol and are meant to work in centralized environments. Desire to cut costs: Organizations have been forced to look for ways to cut communications costs. A difficult economy, smaller IT staff and competitive pressures have put IT organizations in a position to look for new ways of solving problems. SIP trunking is an excellent way to lower the cost of communications. Strong ROI, mature technology and economic drivers have created a perfect storm scenario for SIP trunking that will accelerate the usage of the technology and the UC solutions it supports. III. Enterprise Benefits of SIP Trunking Although SIP trunking is a network technology, its benefits can be realized not only by the IT and network groups, but also at an enduser level. Organizations that choose to embrace SIP trunking will realize the following benefits: Lower costs due to reduction in the overall number of trunks. Because many new IP PBXs are designed to operate from a centralized architecture, each location in the network can receive call control over the WAN, allowing SIP trunks to be centralized (see Exhibit 4). Centralization can be at a company level, a regional level or any other way the company chooses to architect the network. This is similar to the way other IP applications are deployed in companies today, and it can save organizations thousands of dollars per month. The majority of cost savings come from decreasing the number of trunks required, but there are also operational savings to be gained from a centralized architecture. Exhibit 4: SIP-Based Architectures Are Simpler than Traditional Ones Source: Yankee Group, 2010 Traditional Approach New Architecture Remote Worker Remote Worker Remote Worker Remote Worker Enterprise Network Centralized SIP Infrastructure Business Partner Business Partner Mobile Worker Mobile Worker Mobile Worker Mobile Worker Headquarters Headquarters 5

6 SIP Trunking Is a Building Block of Unified Communications Better utilization of trunks. Since trunk lines are brought in over an IP connection, deploying organizations can deploy fewer, bigger trunks to handle the calling needs of a greater part of the organization. Additionally, because global organizations typically have reduced calling needs when the local region reaches nightfall, the call capacity can be pooled together and used more efficiently. Lower intra-enterprise calling costs. All on-net calls (that is, calls within a corporation) are kept on the corporate data network, meaning the cost of these calls can be eliminated altogether or at least greatly reduced, depending on architecture. Cost savings will vary by organization type. A large, distributed multinational company will save orders of magnitude more than a large company located in a single building. Better network reliability than traditional PSTN. The thought that VoIP is any less reliable than traditional voice is one of the biggest myths holding back greater adoption of VoIP. IP is a resilient protocol and reliability can be built into the design. For example, instead of having separate voice and data networks, a company could choose to deploy two data networks that could act as a backup for one another. This would cost no more than the traditional model but could protect against any network outage. It would also provide better disaster recovery capabilities than running separate networks. Simplified network management. Because all traffic runs on a common data network, it is easier to manage and plan for future capacity. Converged networks create converged management opportunities. Extension of IP communications all the way to the carrier network. This has two benefits. First, there is no IP-to-PSTN conversion needed, which improves call quality. Additionally, as more call capacity is needed, it can be added almost on demand, and then reduced later as the situation warrants. This is a significantly faster way of adding capacity compared with having to order new Primary Rate Interface (PRI) links and then waiting for them to be installed. For example, an organization could quickly add capacity if it were to open a number of new branch offices. Conversely, a university could quickly lower capacity during the summer season when call volume is lower. Faster deployment of UC applications. Because the use of SIP trunking promotes a centralized architecture, new UC applications can be deployed in the central location and then distributed to all users over the company network. This can improve the time to market of new applications by orders of magnitude compared with the node-by-node deployment of traditional communications applications. V. What to Look for in a Solutions Provider Organizations that do the proper preparation work and education will find the decision to use SIP trunking is an easy one. SIP trunking is the most cost-effective method of creating a scalable UC deployment and has benefits far beyond those of PSTN trunking. But which SIP trunking provider is best and what are the key considerations when making the decision? While every situation is unique, the following should be considered when choosing a SIP trunking provider: The footprint and quality of the SIP trunking service. To gain maximum solution efficiency, the number of SIP trunking providers should be minimized to avoid network hops. This means each provider s coverage footprint is very important. However, coverage can be an issue for some SIP trunking providers. Some providers use a patchwork approach by aggregating a number of providers together. A network that is 100 percent owned and operated by the SIP trunking provider often yields the best results. Local phone number and 911 connectivity. This is related to the bullet above but needs to be a key consideration on its own. Companies that choose SIP and centralize trunks still need to provide local phone numbers and be able to connect to 911 services. Some patchwork providers outsource 911 completely to other providers, which causes them to lose a degree of control and visibility into 911 accountability and responsiveness. An all-ip network to support the SIP trunking service. SIP trunking operates at the IP layer, so voice traffic should be carried as far as possible via IP to avoid introducing latency. Many SIP trunking providers are IP at the edge and then convert the signal to PSTN across the network and back to IP at the egress edge. An all-ip network will provide a much higher quality of experience and lower cost basis for the service. 6

7 August 2010 A quality Web portal for self-management. SIP trunking and a centralized, converged architecture offer organizations great flexibility as to when and how new services are added. A quality Web portal allows customers to self-manage many of these tasks. An added benefit to a portal is the ability to remotely manage the services, which could be critical in the event of a disaster or other business-disrupting event. Experience in the market. As mentioned previously, many service providers launched their SIP trunking services in This means the services have been commercially available for no more than a year. When dealing with converged networks, specifically when voice is involved, experience does matter, and some of the newer solutions could be immature. A provider with a long history in SIP trunking will have more experience and best practices in place to ensure a quality deployment. Interoperability with the major UC and session border controller (SBC) vendors. UC is more than just SIP trunking. Use a SIP trunking provider that has alliance relationships with major UC and SBC vendors to ensure problems do not arise because of lack of interoperability with the hardware and software used to power the solution. Deep expertise in SIP trunking. A network operator with a deep bench of SIP expertise is critical to success. Every customer environment is unique and requires a slightly different configuration. Having resources with experience in troubleshooting a wide variety of issues is the only way to be assured of long-term success. SIP and commercial availability. Almost every operator today will market SIP trunking when asked about it. However, because of the large revenue stream associated with legacy services, incumbent operators will often try to steer customers away from SIP trunking. Often it makes sense to use an alternate, best-of-breed provider for part, if not the majority, of the deployment, as it is likely to have a more robust SIP trunking offering. This can be achieved by investigating the carrier s architecture to determine if SIP trunking is just a SIP gateway in front of a TDM solution or if it s a true end-to-end, SIP solution. No one of these decision criteria is more or less important than any other. All must be considered when choosing a SIP trunking provider that can act as a partner for a deploying organization. The right choice ensures a successful UC rollout that saves money, boosts worker productivity and works optimally all the time. VI. Case Study: SIP Trunking in Action A large national retail chain was paying approximately U.S.$50,000 per month for its traditional telephony services, which included POTS lines and PRI links from the local exchange carrier (LEC) to over 160 locations. In addition to high service costs, the company was suffering from inconsistent voice quality and user experience because many of its locations used different solutions from various providers. The retail chain was searching for a solution that could lower the total cost of communications and improve the overall experience for the end-users. The company decided to move to next-generation SIP trunking services and leverage the corporate WAN to distribute telephony service to all locations. It needed a service that could handle enough concurrent call paths to allow six to 10 telephone numbers per location. The company evaluated three solution providers and chose Level 3 Communications for the following reasons: Cost: At a cost of $30,000 per month, the Level 3 solution is approximately percent less expensive than the previous solution. Trust: The retail organization already has a trusted relationship with Level 3 and is a highly satisfied user of its MPLS WAN solution. Coverage: Level 3 has the best phone number coverage of all the solution providers evaluated. It owns telephone numbers that cover 98 percent of the organization s national locations, which simplifies vendor management and leads to a more consistent user experience. Architecture: The Level 3 solution has a solid network architecture, including end-to-end SIP capabilities as well as failover redundancy. 7

8 SIP Trunking Is a Building Block of Unified Communications By switching telephone services from a mix of legacy services to a SIP trunking-based service from Level 3, the company lowered its overall TCO by up to 40 percent while simultaneously improving the end-user experience. VII. Conclusions and Recommendations Deploying UC is a key component of transforming to an Anywhere Enterprise. UC can help companies lower cost and improve worker productivity. If deployed strategically, it can also help companies redefine business processes around communications and leapfrog the competition. However, UC deployment should be a well-planned, strategic initiative that involves breaking the status quo on traditional deployment models for communications services and tools. With that in mind, companies looking to deploy UC should consider the following guidelines: Think IP-based applications when deploying UC. As companies plan UC deployments, network and IT professionals should migrate the deployment to a centralized architecture. This means the servers that provide UC functions should eventually be located in the corporate data center along with the other mission-critical applications like and CRM. This type of architecture should be adopted, whether it s a new implementation or a migration from existing systems. Start deploying UC now. Many organizations considering UC are waiting until they finish deploying VoIP. UC can add immediate value to companies through the use of presence, advanced messaging and collaboration. SIP trunking is used as a core building block of UC; it can accelerate both VoIP and UC deployments and allow companies to realize ROI faster. Break away from the status quo and move to SIP trunking services. SIP trunking is a highly cost-effective way to increase the value of the data network and gain more bang for the buck in the UC deployment. Often, these investments in UC infrastructure have already been made and SIP trunking can further the value proposition. SIP trunking can provide a faster path to UC deployments. 8

9 Yankee Group the global connectivity experts The people of Yankee Group are the global connectivity experts the leading source of insight and counsel trusted by builders, operators and users of connectivity solutions for 40 years. We are uniquely focused on the evolution of Anywhere, and chart the pace of technology change and its effect on networks, consumers and enterprises. For more information, visit Yankee Group s Link products and services provide clients the insight, analysis and tools to navigate the global connectivity revolution. Research Data Interaction Consulting Events Leverage qualitative research to make informed business decisions today and plan for the future. Gain quantitative insight into current markets and new opportunities via monitors, surveys and forecasts. Connect with analysts to gain deeper insight into research and trends. Get in-depth analysis and actionable recommendations tailored to your needs. Access world-class events live and online with industry leaders and Yankee Group experts. Zeus Kerravala, Distinguished Research Fellow Zeus Kerravala, distinguished research fellow, leads the Research Council and is chartered with the responsibility of providing thought leadership to the research organization. Comprising senior research leaders, the Research Council provides outreach to clients and the broader Yankee Group community, as well as ensures that the company s research agenda addresses the needs of business leaders. Zeus drives the strategic thinking of the research organization and helps shape the research direction. Much of his expertise involves working with customers to solve their business issues through the deployment of infrastructure technology. Headquar ters Copyright Yankee Group Research, Inc. Yankee Group published this content for the sole use of Yankee Group subscribers. It may not be duplicated, reproduced or retransmitted in whole or in part without the express permission of Yankee Group, One Liberty Square, 7 th Floor, Boston, MA All rights reserved. All opinions and estimates herein constitute our judgment as of this date and are subject to change without notice. Corporate One Liberty Square 7th Floor BOSTON, MASSACHUSETTS phone fax European 56 Russell Square LONDON WC1B 4HP UNITED KINGDOM phone fax

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