1 LEAVING LEGACY BEHIND: TRANSITIONING TO AN IP VOICE COMMUNICATIONS SOLUTION WHITE PAPER
2 Leaving Legacy Behind: Transitioning to an IP Voice Communications Solution Introduction Seeking to be more efficient and nimble, many companies are leaving their aging legacy Key or Private Branch Exchange (PBX) telephone systems behind and transitioning to modern voice services that are enabled by IP-PBXs, managed IP-PBXs or Cloud-based voice solutions. These new technologies can converge all communications and devices onto a single network, integrating voice, fax, voic and for a unified communications (UC) solution. IP communications can save upfront equipment costs, long-distance charges, travel expenses and other outlays, reducing the Total Cost of Ownership (TCO). This technology also enables advanced communication services, increasing efficiency and productivity for remote, mobile and on-site workers. Among the factors driving businesses toward IP communications are: + Increasing Productivity A complete IP communications infrastructure provides access to a variety of communication, collaboration and productivity applications and services. + Enhancing Efficiency An IP communications system can be centrally managed; applications, services and new users can be added, moved or deleted quickly and easily. + Improving ROI The convenience of the Cloud can save on equipment costs and other investments. 2 + Lowering TCO IP communications systems and cloud-based solutions all offer lower TCO than a traditional legacy PBX. IP communications are available in a variety of solution options, each with its own set of benefits. But how can you choose the right solution from the right vendor for your business? There is no one size fits all answer for every organization. As you go through the decision-making process, understanding how the various solutions fit within your unique business model and budget will be the first step toward transitioning to a modern communications platform. This paper is intended to give you a clearer understanding of market trends driving IP communication solutions, the differences between various IP-based voice systems and the benefits of choosing a managed IP-PBX, a Cloud-based voice solution, or operating your own IP-PBX. We will discuss the relative TCO of the available solutions and review some of the features you should look for when migrating to a modern voice system. Finally, we will provide some tips to help you select a reliable voice services provider and navigate confidently to a new IP voice system.
3 The Evolution of IP Voice and Cloud Services As computer technology and connection speeds have advanced, IP communications have also improved. With the development and expansion of faster broadband technology since the introduction of IP voice in the mid-1990s, voice quality has significantly improved and become more reliable. Service providers can now offer businesses of all sizes solutions to meet their voice communication needs at more affordable costs and with a wide range of features and functions. As IP voice quality and features have become more advanced, so have the opportunities to take advantage of them. Growing bandwidth, ultra-fast downloads, higher processing speeds, and an avalanche of sophisticated mobile devices have resulted in the rapid adoption of Cloud services. Industry trends indicate that the Cloud will eventually dominate business-class communications and data services delivery. In an increasingly mobile world, IP voice has created unprecedented flexibility for audio and video conferencing, group messaging, emergency notifications, online collaboration and many other services. In addition, a challenging economy and a mobile workforce are driving companies to seek solutions that can reduce costs, simplify management and increase efficiency and productivity. What is IP Voice? IP Voice or Voice over IP (VoIP) is simply the process of sending voice signals over the Internet, just like data traffic, instead of through phone lines and legacy switching equipment. Using the Internet Protocol (IP), voice signals are bundled into data packets and transmitted over the Internet or through a private network to IP phones, computers, mobile devices or even to adapter-enabled analog phones and other devices. Some of the biggest advantages of IP voice are simplicity, flexibility and affordability. You can send or receive voice signals regardless of location as long as you have an Internet connection. Instead of separate lines carrying data and voice traffic, a business using IP voice can have a single connection to carry both. 1. Gartner Says 821 Million Smart Devices Will Be Purchased Worldwide in 2012; Sales to Rise to 1.2 Billion in 2013, 2. Market Research, Metaswitch Networks, March 2013 Cost Mobility, Manageability and UC: Driving IP Communications Today s companies must compete in a global, increasingly mobile economy. According to Gartner, mobile device sales are projected to exceed $1 billion in 2013, and by 2016 two-thirds of mobile workers will own smartphones and 40 percent of the workforce will be mobile. 1 Today many employees telecommute they work from home, from a customer location, or from remote branch offices. Customers expect instant answers, and employees and customers alike use multiple modes of communication, and must interact with each other through a variety of devices, from anywhere, at any time. The need to compete and securely communicate in this new business environment is driving companies toward solutions that can converge all communication modes including mobile devices onto a single IP network, offering more advanced capabilities and more simplified management for less money. This concept, called Unified Communications, or UC, enables any device (mobile phone, desktop phone, personal computer, etc.), anywhere, to communicate over the company network and access the full IP communications feature set (Call Waiting, Call Forwarding, Voic , etc.), even if the user is off-site. Mobility and unified communications are important, but they are not the only drivers. According to a recent survey, 56 percent of companies with 50 to 99 employees plan to implement an IP communications solution within one year. 2 Companies surveyed ranked the most important factors for switching to IP communications as follows: 1) Economics (cost savings) 2) Ease of management 3) Qualifications of the service provider 4) Communication features Some of the features respondents ranked as most important to their decision-making process included Music on Hold, Auto Attendant, Call Center, Mobility and Unified Communications, and a Softphone (a virtual phone on a mobile device or personal computer). Each of these features became even more important after 3
4 What is the Cloud? The Cloud simply refers to hosting and, in many cases, management of services over the Internet. Through the Cloud, providers can offer storage solutions, virtual desktops, applications, data backups, communications and other IT services online. Services are delivered to the customer via the public Internet or dedicated connections to the provider s facility. Customers, therefore, eliminate the need for on-site network hardware and IT resources, saving on upfront capitalized equipment investments as well as on training, staffing, management and maintenance costs. adoption, more than doubling in importance compared to pre-purchase evaluation. For example, 30 percent of companies surveyed prior to purchase listed the Call Center feature as important to the buying decision; however, post-adoption, 70 percent of these same clients considered Call Center as important to their business. The Business Benefits of IP Communications As they transition from a legacy solution, organizations want to reduce costs, while simultaneously enhancing business communications. Companies need solutions that: + Work as seamlessly as possible with existing infrastructure and equipment + Enable communications at any time, from anywhere + Improve their competitive edge through cost savings, efficiency and productivity Traditional legacy telephone systems can be cumbersome to manage, maintain and expand. Functionality is limited, adding new users can be slow, and customer service and repairs can be inefficient, costly and time-consuming. IP communications offer an attractive alternative to traditional key or PBX phone systems. Among an array of features and benefits provided by an IP-based solution are the following: + Simplified setup, requiring only a data or Internet connection + Lower Total Cost of Ownership (TCO) due to reduced infrastructure, wiring, equipment and other costs + Communication at anytime, anywhere, on any device, with a single phone number, saving time and increasing productivity + Greater flexibility and scalability to quickly and easily add, move, remove and change services, applications and users as your business needs dictate + Flexible, convenient, more customer-friendly, and less expensive contact center solutions + More advanced, enterprise-class communication features and functionality, such as High-Definition voice quality and advanced voic and unified messaging, audio and videoconferencing, call recording, etc. + Reduced maintenance expenses + Reduced travel and training expenses through high-quality IP audio/video conferencing and web collaboration + Higher productivity for remote and mobile workers + More reliable and redundant disaster recovery solutions Unifying communications through an IP-based solution can save upfront equipment costs and simplify management. In addition, access to powerful, ubiquitous applications and services increases productivity, improves customer service speed and quality, enables real-time communication with remote or branch office employees and enhances collaboration and efficiency. All this adds up to higher revenue potential, happier customers, higher returns on investment and a stronger competitive advantage. 4
5 Choosing the Right Solution For voice communications, an IP-PBX provides the same functionality as a traditional PBX, except that the voice packets are transported via Internet Protocol (IP) instead of through voice lines, or trunks, provided by a legacy telephone company. To ensure a seamless transition, you can use the IP-PBX to make calls over your standard phone using an Internet Telephony standard called Session Initiated Protocol (SIP) trunking. Replacing your outdated phone system with an IP-PBX or Cloud-based voice service can be accomplished in a variety of ways. Three options are currently available: + Customer-owned premise-based IP-PBX + Managed voice services + Cloud-based voice services Customer-Owned, Premise-Based IP-PBX A customer-owned premise-based IP-PBX is exactly what it sounds like: You need to invest in a PBX, phones and networking equipment, which you house, manage and maintain on site. Generally, a customer-owned premise-based system requires a well-staffed and trained IT department to handle upgrades, updates, troubleshooting and maintenance. Managed Voice Services With a managed voice solution, you can get the benefits of a premise-based solution, but a service provider installs, manages, maintains, troubleshoots and updates the system for a fixed monthly fee per phone, with little or no upfront capital investment in the system. Additionally, you can choose from managed voice service options where the network equipment is hosted at the service provider s data center or colocation facility, or on your premise. If the network equipment is hosted by the provider, traffic is routed to the off-site IP-PBX, and you can use an online interface to manage your account, add, move or delete users, applications or services, and other tasks. The managed service provider owns and installs the IP phones, sets up the IP-PBX, manages updates, and upgrades the equipment to ensure you get the latest technology. You may pay a modest upfront fee and then a monthly fee per seat to access and use the voice and data services and features. Cloud-Based Voice Services Another option to consider, especially for more costconscious or more mobile companies, is a Cloudbased voice service. In this solution your IP phones are included in your monthly bill. The provider is responsible for delivering dialtone and phone features off a multi-tenant platform housed in a secure carriergrade data center. If you have mobile workers, a Cloudbased voice solution can easily allow off-site employees to communicate with the office, and if you have multiple locations, you can choose your area codes to fit your presence. You pay a flat monthly fee, with no upfront capital expenditures. The provider is responsible for all upgrades, security, maintenance and other activities and provides the IP phones, which are included in the monthly fee. Adding users or changing features can be done through a Web-based portal. Which Solution is Best for You? Managed voice services offer advanced capabilities that can be customized to meet your business needs. The service provider works with you to design the system, installs the equipment and provides the training. There is no up-front capital expenditure and you pay a IP Voice Solutions Solutions: Cloud-Based Service Managed Voice Services Hosted at Carrier Data Center Managed Voice Services On Customer Premise SIP Trunking and Customer Owned IP-PBX Infrastructure: Public/Shared Private/Dedicated Maintenance, Upgrades, etc.: Carrier Administered Customer Administered Location: PBX in Cloud PBX in Colocation PBX on Premise 5
6 low monthly fee for the services you need. Maintenance and upgrades to the system are covered in the monthly fee. Managed voice service systems generally cost less to install and manage than an owned premisebased system. Additionally, they utilize more advanced equipment platforms than a typical customer owned premise-based IP-PBX. If your company has multiple locations or remote branches, adding new users is easily accomplished. With managed voice services you have the option of housing the network equipment on your premise or having it hosted at your service provider s data center or colocation facility. Cloud-based voice services offer flexibility along with premium features and the latest technology. The service provider installs the phones, provides the training and maintains the system. You can add new users via a software dashboard interface. The service is hosted by the service provider and you pay a monthly subscription fee, priced by user for the service. You don t have to worry about the equipment, upgrading software or maintaining a network on your premise. Some organizations prefer to have more control over their communications system. In a customer-owned premise-based system, on-site users are behind the corporate firewall, and this may offer a security advantage, especially for larger enterprises. That being said, it is usually assumed that customer-owned onpremise solutions are better suited for larger enterprises, because they may need more control over their services or have too many users for a hosted provider to manage. However, with the advances in IP voice, broadband speeds and other technologies, this is no longer the case. Managed voice service solutions are now available for all sizes of organizations. The managed voice service option may be an attractive compromise between the on-premises and cloud-based hosted solution, simplifying management and reducing upfront investment, while still providing the level of security and control desired by many enterprises. Whichever solution you choose, IP-based voice services (whether customer-owned on-premises, managed or cloud) can simplify and unify communications, cut costs, ease management and maintenance, improve flexibility and scalability, and offer a wide range of features not previously available with legacy telephony systems. Total Cost of Ownership (TCO) and Other Considerations When comparing total cost of ownership (TCO) between voice solutions, you must compare initial costs for equipment outlays, training fees, IP phones, etc. You must also account for recurring monthly costs, such as data usage, various service charges and others. Finally, you must add up costs for system management, maintenance, repairs, upgrades and other related costs. All of these costs are combined and compared over a specific period of time. These expenses can be categorized into three main groups: + Acquisition costs + Recurring monthly costs + Annual maintenance costs Acquisition Costs Upfront investments for equipment, training, installations, connection setups and any other costs required to move from your existing system to an IP communications solution must be considered. Recurring Monthly Costs Recurring monthly costs may include flat monthly fees for voice services and data, a per-minute cost for phone calls, a flat rate for unlimited data or a fixed monthly charge for blocks of data and/or calling minutes. With an IP voice solution there are no extra costs for calling between business locations because voice is routed through the network. + For a customer-owned premise-based IP-PBX, recurring costs may include management and maintenance fees, data circuit costs and local and long-distance charges or flat monthly fees for bundled voice services. + In managed voice service scenarios, recurring charges can include voice and data costs and management and maintenance fees, based on the number of users. Depending on the managed voice service option, monthly fees may include a flat rate per IP phone, including bundled calling fees, maintenance, management and the data circuit. IP phones may either be part of the acquisition costs, or the provider may provide handsets as part of a bundled package that is charged each month. 6
7 + Cloud-based voice services are typically provided for a flat monthly fee, which includes local calling, phones and a fee for the voice/data convergence circuit. Annual Maintenance Costs Annual maintenance costs include any recurring yearly costs for hardware and software to continue contracted maintenance, such as charges for software and equipment upgrades and technical support fees. These fees may be based on a percentage of the original purchase price or a flat rate per year, with options for various levels of support and maintenance. Comparing TCO As you compare TCO across options you will find that premise-based, managed and Cloud-based voice solutions all feature significantly lower TCO than a traditional legacy PBX. A cloud-based solution offers the lowest possible TCO compared to all other options; however, premised-based and managed solutions can in some cases provide a set of features not offered with a Cloud-based voice offering. This will require an analysis of the features available versus those your business actually needs. If you require a simple traditional voice services solution, a Cloudbased solution may be ideal for you, featuring extremely low startup costs, worry-free management and low recurring costs. If you are moving from a traditional legacy Key System, PBX, or an older IP-PBX to a new IP-PBX, you should consider the initial acquisition costs versus the recurring costs of all the available solutions to arrive at the right one for your business needs and budget. It is harder to put a tangible cost on the time required to make service changes or add new users. In a managed or Cloud-based voice solution, changes can be made in minutes via an online portal interface, while in a legacy or premise-based system it may take much longer, increasing labor costs, which should be figured in with your cost estimates. Online portal interfaces may be available for purchase separately through the other service options. Other Considerations: Ask the Right Questions When calculating TCO, you must take into account the value of the features offered by specific providers. If one vendor offers more features for the same cost, a straight comparison of TCO would be less meaningful, and you will need to look deeper into each provider s offerings. Further, a single feature may improve productivity, decreasing costs and potentially increasing revenues. Similarly, high quality network performance can improve productivity, while poor performance can obviously slow productivity. Ask potential providers to provide a history of reliable, secure network performance in the past and have your team evaluate their response. If their network goes down, and they don t have an adequate business continuity plan, your productivity and profits will plunge. Questions to Ask Service Providers: + Can you give a detailed TCO breakdown of your IP voice services solutions? + Do you have a local sales and engineering staff to provide a high level of support for the service? + Do you manage the quality of the service with a fully managed LAN? + Do you lease your network from another vendor, or do you own and operate your own network? + For a hosted solution, do you charge installation, equipment or setup fees, in addition to charges per seat? + Can you incorporate mobile devices on the network, enabling mobile users to communicate as they would if they were on site? + Do you offer defined Service Level Agreements (SLAs)? + Do you offer training and support for users and management? Do you offer local, hands-on training, with additional training and reference materials? + What are the specific terms of the contract? + What are your minimum monthly charges? 7
8 Scalability is another important consideration. Ask potential providers not only about how easily their features and services will scale to meet your needs, but ask them also how much it will cost as your company grows. Can they keep pace with your business growth, and how much will it cost? Can they handle your company s growth with their current infrastructure? Providers who own their own network can offer customers lower costs, better service and more effective troubleshooting. Summary Global competition and evolving technologies have made more flexible and powerful business communications both necessary and increasingly complex. Replacing your legacy telephone system with a newer IP-PBX or Cloud-based voice communications system has a compelling business case, but the technology and the choices can be overwhelming. A premise-based IP-PBX or managed solution can lower your TCO, provide more features, make management easier and help your business compete in a global, more mobile economy. Total TCO of a managed or Cloud-based voice services solution has been shown to be lower than that of a premise-based solution, which requires significantly higher up-front investments; however, for well-funded companies wanting more control over their communications infrastructure and security a premise-based system is an attractive option. Beyond TCO, you must also consider ease of management, features and each solution s impact or drag on productivity and efficiency. All IP-based options offer much lower TCO than a legacy phone system. No single solution is right fit for every business, no matter the size of the company or the number of employees. Due to the complexity and constantly changing nature of today s IP communications technology, choosing a service provider can be challenging as well. As a decision maker, you must do your research and be prepared to ask potential service providers a range of relevant, specific questions to help you make the best choice. About Integra Integra is one of the largest facilities-based providers of communication and networking services in the western United States. We connect businesses of all sizes with advanced technology solutions in 35 metropolitan markets. Integra owns and operates an enterprise-class network consisting of a 5,000-mile long-haul fiber-optic network, 3,000 miles of metropolitan fiber and a nationwide IP/MPLS network INTEGRA All other trademarks mentioned herein are the property of their respective owners. 8 COL :06/07/13