Decentralize Your Business Operations with Hosted VoIP Phone Systems

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1 White Paper Decentralize Your Business Operations with Hosted VoIP Phone Systems Contents Executive Summary....2 Five Benefits of Hosted VoIP....2 Benefit #1 support home workers....2 Benefit #2 cost effective ways to grow....3 Benefit #3 flexibility for managing growth....3 Benefit #4 business continuity....4 Benefit #5 requires minimal IT expertise....5 Five Business Implications....5 Implication #1 telephony can effectively be outsourced....5 Implication #2 - placing trust in the cloud....6 Implication #3 - SIP trunking....6 Implication #4 the future of the office....7 Implication #5 the future of your business Conclusion....8 About Ziff Davis B2B Ziff Davis B2B is a leading provider of research to technology buyers and high-quality leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over 50 million in-market technology buyers every month and supports the company s core mission of enabling technology buyers to make more informed business decisions. Copyright 2014 Ziff Davis B2B. All rights reserved. Contact Ziff Davis B2B 100 California Street, Suite 650 San Francisco, CA Tel: Fax:

2 Executive Summary Phone systems are the communications lifeblood of all businesses, but can be limiting in several ways. This is certainly true for legacy telephony, where phone systems were not just expensive but inflexible. They did a great job with telephony service, but created a centralized environment that posed challenges for businesses looking to expand beyond their four walls. Large enterprises have the means to address those challenges, but most small businesses do not. For the latter, the footprint of their legacy phone system has largely defined the footprint of the business. The Internet, and later VoIP, has changed that, but the more pertinent development for small businesses is the evolution of hosted services. VoIP has been available this way for some time, but only recently has it become fully aligned with the needs of small businesses. With these developments, businesses no longer need to be built around centralized models, and hosted VoIP creates new possibilities for decentralized operations that improve competitiveness in today s global marketplace. This guide explains how hosted VoIP brings greater flexibility for small businesses, and frees them from the limitations imposed by legacy telephony. These freedoms, however, bring business-level implications, which are also explored in order to give this guide a balanced perspective. Five Benefits of Hosted VoIP There are many benefits from using hosted VoIP, and this guide has been prepared with a particular focus on having a decentralized phone system. By nature, legacy systems are centralized around a physical location, but VoIP opens up new possibilities, and below are five benefits specific to this scenario. Benefit #1 - support home workers PThe trend for home-based work has been growing for some time, but two factors have prevented it from being even more popular. First is the lack of trust from management that their employees will be as productive and engaged, and second is the limited ability to communicate effectively. Of course, the latter impacts the former, and legacy technologies simply didn t make this viable on a broad scale. Two related developments have changed that the Internet and IP-based communications. The Internet has made the always-on digital lifestyle possible, and tools like VoIP make it possible to balance today s work/life demands. In short, happy employees are productive employees, and small businesses have lots of their own reasons to support to support these desires. While home-based employees can be reasonably engaged with near real-time tools like , fax and chat, real-time modes such as telephony are far more desirable at least from management s point of view as a proxy for being in the office. This is where VoIP becomes ziffdavis.com 2 of 8

3 a key driver for home-based workers, and if you need a switched system, hosted VoIP makes even more sense. This model is more economical than a premise-based system, and it easily extends the full feature set to employees wherever they are, so long as they have a broadband connection. Supporting home-based employees is a micro-level example of how a decentralized phone system adds value. Not only do employees get the basic benefits of VoIP, but their home phone will function just like their office phone. As such, when making or taking business calls, the call display shows their desk coordinates, meaning that the other party doesn t know that they re working remotely. This creates a more professional appearance, allowing your business to come across as a larger scale operation, but without the larger scale overhead that comes with having everybody working at the office. Benefit #2 - cost effective way to grow By nature, most small businesses want to grow, and cost is often a constraint. Generally speaking, landline telephony costs have been declining, and are not a major budget item. Legacy telephony, however, has always been perceived as expensive, especially for small businesses, so VoIP has been a welcome development. In terms of reducing the cost of telephony service, VoIP is definitely good news, but the associated phone systems can still be a big investment. Premise-based systems are still the norm, and the expense can be justified by the control that comes with ownership. Many forms of hosted VoIP exist, and with these come a variety of options to suit your needs. Some businesses have the resources and/or desire to manage their system in-house, but others will prefer to outsource as much of this as possible. In this regard, the decentralized nature of VoIP is a cost-effective way to grow, even with minimal IT resources. The cost savings are especially attractive when growing by adding new office locations. Working from home is great for individuals, but in other cases, you need more sites to support both customers and overall operations. With legacy telephony, each site requires a standalone phone system, and that can be costly if only supporting a handful of employees. The underlying technology for hosted VoIP means that you only need to add broadband connectivity to a new site, and from there, the phone system at Head Office can easily be extended to support those new employees. Benefit #3 - flexibility for managing growth Related to the cost savings outlined above, comes flexibility with hosted VoIP. When businesses are in growth mode, office space is a primary issue. Some scenarios warrant committing to long term leases, while others may be more transient, such as trying to enter a new market without making a major investment. Agility is often a form of competitive advantage for small businesses, and flexibility is one way of achieving this state. VoIP is highly flexible as a service, and hosted VoIP provides similar ziffdavis.com 3 of 8

4 flexibility on an operational level. Since you don t need a phone system for each new location, the associated cost factor comes out of the equation when considering your growth plans. Whether adding one new site or several, they can all be supported from your core phone system at Head Office. The key to growing this way is SIP trunking, which provides full IP connectivity between each new site and your Head Office. You can certainly do this with legacy trunking PRIs (Primary Rate Interface) but these are more expensive and can only be purchased in fixed bundles of 23 channels. Not only that, but your telco my tie you into long-term contracts for these. Aside from being able to right-size with SIP trunking only taking as much connectivity as needed to support employees at the new site with VoIP, but the scale can easily be adjusted up or down. This is a great way to control costs when staffing needs fluctuate with peak busy times. This form of flexibility is not well understood when considering hosted VoIP, but can be a major virtue for supporting a decentralized growth plan. Benefit #4 - business continuity This is another benefit not widely considered with hosted VoIP, but is a key enabler for decentralized growth. Generally speaking, the more sites you have, the harder it is to manage the business, and this is where having a consistent communications solution has value. Hosted VoIP fits that bill perfectly, but even more than you might think. The idea of business continuity has changed with the Internet and the rise of a 24/7 economy. Today, competition is global, and many businesses must be able to support customers across all time zones. Before VoIP, this wasn t much of an issue with telephony since the PSTN never goes down. Even when power failures hit, the phone service still works; unlike with VoIP, which won t work when there s no power to keep the data network running. Fortunately, with premisebased systems, there is usually PSTN failover for VoIP, so calls can be routed over the legacy network. However, for longer outages, this won t totally do the job. With hosted VoIP, the service is based in a remote data center, and many providers have a redundant architecture, meaning they use multiple data centers in different locations. In the event that one data center goes down, the services are mirrored in the other locations, providing another layer of continuity for your phone service. For businesses that have lived through hurricanes, floods, extreme weather, and even overloaded power providers, this capability will be most welcome. Hosted VoIP translates into reliable service, and when adverse conditions hit, your business can still function, regardless of where your employees are based. This is where the decentralized model makes even more sense, as productivity doesn t suffer when employees cannot get into the office, and all sites can communicate with each other, even if a few don t have local power. ziffdavis.com 4 of 8

5 Benefit #5 requires minimal IT expertise VoIP is generally is appealing for this reason, especially when switched systems are used. Legacy PBX systems have long been the backbone of business communications, but there is an ongoing maintenance component. Not only does this cost add up over time, but these systems require specialized expertise. Large enterprises can provide much of this support internally, but IT operates on a much smaller scale with small businesses. This lack of expertise can be an inhibitor for VoIP phone systems, although the needs are less complex than with legacy systems. However, to the extent that VoIP itself is a new and unfamiliar technology, there can be concerns here as well. Whatever your IT situation and/or comfort level, there are variations of hosted VoIP to make all aspects of the service manageable. Aside from providing the service itself, cloud-based providers can also take on the task of ensuring your network can effectively support VoIP along with everything else it has to do. This solution is typically called managed services, where all you need to do is have the phone system deployed onsite, and they take care of the rest. Over time, this may prove an expensive option, but for businesses that either choose to not or cannot make the required IT investment, they can now have phone service that s on par with their largest competitors. Aside from allowing your business to step up to VoIP quickly, this path also makes it easy to expand operations or even right-size them in terms of either head count or office sites. While a hosted VoIP service is centralized at a data center, it supports any form of decentralization for the business. As such, you can add or drop remote branches as business conditions dictate, or do the same for supporting home-based employees. Whatever addresses the needs of the business, you can do so without being constrained by the current state your IT operations. Five Business Implications Having considered these benefits, there are implications to address by choosing to deploy hosted VoIP. These are largely business-level considerations, but also have IT-specific implications. Each of the five implications below can be managed with good planning, and doing so will help you fully realize the advantages of having a decentralized operations model. Implication #1 telephony can effectively be outsourced This decision is not made lightly, especially if you ve been using legacy telephony for a long time. With few exceptions namely Centrex there is only one way for businesses to get legacy service. Not only were incumbent telcos the only option before VoIP, but the service was used on their terms, not yours. Even though multiple options for VoIP have been available for years, most businesses remain legacy-based. One reason is philosophical, in that management believes telephony is too strategic to outsource. There is merit to this thinking, but as we move further along the ziffdavis.com 5 of 8

6 spectrum from TDM to IP, hosted options gain more credence. VoIP continues to mature, closing the gap with legacy to the point where parity has been achieved in almost every regard. While voice remains mission-critical to any business, the underlying telephony service can now be done equally well onsite or offsite. Once businesses come to that point of thinking, they are then ready to accept the hosted option for voice namely VoIP. This rationale becomes even stronger when thinking about growing in a decentralized manner. As noted earlier, legacy telephony does not support this model very well, but hosted VoIP does. By extension, then, outsourcing telephony becomes a key step forward in supporting this growth plan. Implication #2 - placing trust in the cloud By accepting the idea that telephony can be outsourced, acceptance of the cloud must follow. The cloud itself, however, requires its own scrutiny, as several implications arise for telephony. Businesses may not realize how extensively they have been using the cloud for other things that drive operations, such as Salesforce.com. Most business software is going in this direction, led by Google, with Microsoft now trying to keep pace via Office 365. As with VoIP, the cloud is quickly maturing, and is certainly able to meet the needs of small businesses. Concerns do remain about reliability and security, but the overall trend is clear. Since VoIP has largely reduced telephony to being just another data application, the holdbacks for hosted telephony become fewer. In this regard, the move to hosted VoIP may simply be one more step along the way for a broader cloud strategy to run your business. What you may not realize yet is that more steps will follow, and for that reason, having a cloud strategy will be essential to a decentralized growth plan. The cloud helps you do that by decoupling operational growth from the need to have physical resources at every place of business. In fact, the more decentralized you become, the greater are the cloud s efficiencies. Related to that, however, will be the need for more engaging forms of communications otherwise, workflows become inefficient. This is why VoIP is just one step along the way. Once that becomes established, you ll soon become aware of the needs that Unified Communications addresses. This is a topic unto itself, but with further research, you ll see why this makes decentralization so much more manageable. Implication #3 - SIP trunking When it comes to extending the capabilities of your VoIP phone system to branch offices, this is where SIP trunking becomes a factor. As explained earlier, you can do this with legacy trunks, but given the drawbacks, SIP trunking has some distinct advantages. In addition to those already cited, the economics alone are compelling. As such, aside from the practical benefits to push VoIP out to wherever employees may be, there is a financial upside independent of supporting your decentralization plans. ziffdavis.com 6 of 8

7 There is a forward-thinking aspect to consider as well. VoIP is just one mode supported by SIP trunking, and if you move along to UC, decentralization becomes even more powerful. Beyond VoIP, SIP trunking makes video more viable, both in meeting rooms and on the desktop. Nothing drives remote collaboration better than video, and as employees learn to be more comfortable with it, this will be just as valuable to your plans as VoIP. Conversely, there are some realities to consider before going head-long into SIP trunking. SIP is widely viewed as the de facto protocol for VoIP, but is still young and not standardized the way comparable protocols are for legacy telephony. As such, both vendors and service providers lack a universal standard for SIP, creating challenges for SIP trunking on a broad basis. Some players are more SIP-friendly than others, and you ll need to do some research here, especially for the VoIP phone system you plan to use. Implication #4 the future of the office Getting beyond the technology issues, consideration of hosted VoIP should raise bigger questions about the role the office plays in your business. One of VoIP s advantages is being able to support any operational configuration. At one end is the fully centralized business where all employees and resources are in one office or location. This could be a one-man show, a micro-business of five employees, or a mid-size operation with say, 50 employees. Once you get too big for one space, more offices are added, either locally or afield, depending on what s needed to support your customers and suppliers. Now the business starts becoming decentralized, even if only two sites in total. Finally, there s the fully decentralized business where there is no Head Office to speak of, if at all. This takes us into the virtual organization model, but you have to be highly organized to work this way. Hosted VoIP plays a different role in each of these scenarios, and for that reason, you should now be thinking about your future needs. What s the best way to support your customers? In what environments are your employees most productive? How much office space can your cost structure really support? What model optimizes your business processes? These are just a few questions that can help shape your thinking about where and how decentralization provides business value. Whatever path you take, rest assured that hosted VoIP can support your plans. Implication #5 the future of your business An even bigger picture question has to do with the business itself. Whatever plans you make for hosted VoIP will impact not just how much decentralization you do, but also why and how you do it. In other words, the driver may simply be cost reduction, which comes in many ways here lower telephony costs, reduced trunking costs, less office space, fewer full time employees, etc. You may also have a broader vision, perhaps with an eye to virtualizing the entire operation. If you increasingly move away from office space towards home-based and remote workers, that ziffdavis.com 7 of 8

8 calls for a different skill set and makeup in employees. Not everyone can do that, plus human nature dictates that we like to be social, and that s what the office provides. Technology can go a long way from making remote employees feel part of the team, but it s still virtual and you can only expect so much. Now think about what s best for your customers, not to mention the customers you wish to get down the road. Not all customers are created equal, and there are strategic decisions to be made here in terms of what market you really want to serve. Decentralization may open doors for new markets, but it could make it harder to support some current customers. As such, your decisions around hosted VoIP are business-related as much as being technology-related. Conclusion The important message from this guide is that phone systems should not dictate your plans for office space. Prior to VoIP, the high cost of both legacy service and phone systems were enough to be a factor in such decisions. This is no longer the case, and with VoIP, decisions about phone systems can actually be made at any time. Whether that happens before an office move, during the move, or once you re settled in, there are solutions you can have up and running in very little time. Many of these scenarios point to the hosted VoIP model, where all the complexity is basically outsourced to the cloud and managed by your cloud-based VoIP provider. With hosted VoIP, you can even keep your existing phone system, so it s not essential that an office move requires a new investment. The key benefit in operational terms is the ability to extend hosted VoIP to as many locations as you need. In other words, with the service being centralized in your VoIP provider s data center, all your locations can connect into that system, including home-based workers. Given the flexibility of VoIP s underlying technology, the more decentralized your operations, the more sense hosted VoIP makes for telephony. This model is far more economical than remaining premise-based, especially if you re still using legacy phone systems. In fact, hosted VoIP can be so effective that you can do away with offices altogether and have all your employees work remotely. Virtual businesses don t make sense for everyone, but VoIP does make this option possible, and is just one more example of how this is a step forward from legacy telephony. ziffdavis.com 8 of 8

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