1 A COMPARISON OF HOSTED VOIP AND PREMISES- BASED IP PHONE SYSTEMS FOR IT AND TELECOM DECISION MAKERS Executive Summary Using the same technology that moves data, text and images around the global Internet, the Internet Protocol (IP) treats voice like any other data stream, enabling telephony to converge with PCs, servers, and business applications. This convergence is transforming how IP-enabled businesses communicate, offering them new tools like unified messaging, distributed call centers, and mobility all of which improve staff productivity, sales opportunities and customer response. Consequently, IP-based phone systems have emerged as the communications platform of choice for businesses, government agencies, and enterprises of every type and size. With the cost and functionality benefits readily apparent, organizations are now evaluating how they want to deploy this technology. Many also want to extend its many advantages to their remote locations and teleworkers, and leverage it for business continuity. The choices Own or Lease There are two types of IP phone systems for you to consider. One is the traditional Premises-based system where you invest in and own the IP Telephony server and the data switching equipment. The other Hosted IP Telephony is based on the old Centrex model where you pay for usage.
2 In the latter case, a service provider maintains the IP Telephony server at its data center and you use a small portion of the shared platform for your business. You may also lease the data switching equipment on your premises. The service provider will usually price the entire package to include local and long distance service at a fixed charge per month. The Hosted service, typically determined by the number of seats, covers the hardware, software features, management tools and upgrades. Phones are not always included in the monthly price. Both methods of IP Telephony deployment have advantages and disadvantages, which we ll explore in more detail. Network infrastructure With the more familiar Premises-based phone system, the brains are in a telephone closet or computer room that is set aside to serve your business location. The network infrastructure includes wiring to the phones, which begins at a wiring panel co-located with the telephone system and switches as well as any ancillary equipment you may have integrated into your overall communications system. With this arrangement, you likely have separate wiring for the phones and the PCs distributed throughout your office suite or building. Like traditional phone systems, every IP-based phone system will need a way to connect the end user phones to the switching platform, regardless of whether the platform is on your premises or Hosted elsewhere. IP lets you consolidate your voice and data networks onto the same infrastructure including the wiring and switches, but first your office LAN will need to be evaluated, and upgraded if necessary, to ensure that there is sufficient bandwidth and quality of service (QoS) to accommodate the addition of voice. Rounding out the network infrastructure are the end user phones. Both Hosted IP and Premises IP systems offer conventional-looking business telephones. The types of phone sets range from stripped down basic to speaker and display models that offer visual panels in rich color. Although based on standards, IP phones, like any network device, must be approved for interoperability by the system s manufacturer or service provider that supports them. You ll want to make sure your phone set options include the capabilities your organization needs at the various answering positions, as well as all the desktops TCI, a Telcept Holdings LLC. Company Page 2
3 Protection against technology obsolescence IP Telephony holds out the promise of a standards-based technology that won t grow outdated. Since we know the technology will continually be improved, the question is not if technology will offer better tools in the future, but when they will become available. Before you select a Premises or Hosted IP solution you ll want to decide if you want direct control over when and how to add new capabilities. With ownership, you will have more opportunities for customizing your IP phone system with applications that are unique to your business. Premises IP systems offer you the advantage of complete control over what, how, and when you enhance your system. Enhancements with a Hosted IP system will be at the convenience of the service provider. This should come as no surprise when you consider that you are leasing a small portion of a shared application among many other subscribers. The service provider will determine when to add new features based on the market potential for demand and profitability. If you are a small- to medium-sized business that anticipates needing the addition of the latest IP capabilities for a competitive advantage you should carefully evaluate the flexibility of your potential business communications partner to keep your options completely open. Legacy Centrex offerings from the old telephone company were notorious for not keeping up with the market. This is not necessarily true with the Hosted IP Telephony providers of today, but justifying any investments in their IP Telephony applications is still their decision to make. An all-inclusive solution You should expect your IP phone system to be able to do everything your phone system does today and more. Carefully measure feature-parity to ensure every feature you need is available. Do not assume that the obscure feature you depend on everyday will be in the standard features list of your new IP phone system. Ask about the cost to activate embedded features of both Premises and Hosted IP system providers. If your business model changes, you may end up needing some features you are not immediately using. Ask the vendors to explain how a new feature is provided and at what cost. Many IP Telephony system manufacturers are at the forefront of extending true customization to the user, having open application programming interfaces with tools to tailor your system well beyond 2011 TCI, a Telcept Holdings LLC. Company Page 3
4 standard features and administrative options. Using the system s built-in scripting language, you can modify virtually any existing features, blend them, or create new ones. Imagine creating applications that Connect with back office systems, and allow important information, such as inventory management, to scroll across the phone or screen. Connect with online sources for reference information, pertinent to your business or clients. Set up call management features that provide special handling for important calls, such as find-me / follow-me routing and twining your business extension with your mobile telephone. With unfettered customization, you can sustain all of your voice services, add functionality, make use of alternate carriers and Internet voice transport as pricing moves, and add any other advanced mission-critical tool whenever you want to. Support for multi-location enterprises Your business is growing, and all the work may be getting done under one roof today, but if you re already distributed in multiple locations or you can foresee a time when you will need to work remotely, or support those who do, you need to make your IP phone system decision with those logistics in mind. It s the rule, rather than the exception, that most businesses have enabled some custom voice solution to meet the needs of their business with the help of their vendor. So think about your wish list A distributed call center with agents working at home? 4-digit dialing between all your locations? A teleworking solution for employees who can get more done at home or on the road? Mobility options for employees who spend little time at their desks? Premises-based IP systems are not limited by geography, they can be installed anywhere. Check the service footprint of a Hosted IP system provider ahead of time to know where they can and can t serve your business TCI, a Telcept Holdings LLC. Company Page 4
5 System management One of the best kept secrets of IP telephony is how much money and time it can save you in terms of day to day moves, adds, and changes (MAC). IT administrators can access the system management tools using a web browser from any location with an Internet connection. This gives you more control over what features users can access. Users, too, have more control and can customize their call handling features to suit their individual work styles. Hosted solutions are popular for those IT departments that are concerned about their ability to manage the voice application. Check with the host provider about charges for MAC requests and committed timeframes to implement them. Both Hosted and Premises IP systems are noted for their flexible reporting and management tools. This leads us to the next important element you need to evaluate Service If you have a Premises-based phone system, you might already be familiar with the service responsibilities that ownership entails. If you don t have the in-house technical resources, you must reach out to your local phone system vendor for help. Many equipment resellers support large teams of certified technicians and engineers who can be dispatched to take care of any problem they can even make changes for you and fix many issues remotely. Find out who will make changes to your router, for instance, or configure your firewall to allow calls in and out of your organization without exposing other applications to unnecessary risk. Depending on the company, service providers that market Hosted IP solutions provide technical support with many different arrangements some outsource techs, while others may dispatch within a limited local territory Therefore, it is important for you to pin down exactly how and who will provide support at your location when you need it. And make sure you nail down a rock solid Service Level Agreement from the Hosted service provider. These guarantees detail what type of service reliability you can anticipate, and describe the responsibility of the service provider to make things right when problems arise. Remember, the only thing you are hosting is the IP Telephony server that provides the call control and features the phones and the local data network will still need hands-on technical attention from time to time TCI, a Telcept Holdings LLC. Company Page 5
6 Security Securing voice traffic isn't very different from securing any data traffic on an IP network. The IP phone system must be placed behind a firewall and software patches must be installed periodically to protect against vulnerabilities. And like any other application server, they must be monitored using intrusion-detection systems. Such measures as encrypting voice services, building redundancy into the data network, locking down IP Telephony servers and performing regular security audits are advisable. If the IP phone system supports voice-overwireless connections, access to the wireless link as well as the link itself must be secured with a combination of authentication and encryption. If you choose to go with a Hosted IP Telephony solution, consider archiving of voic messages, company contact and directory information, and other proprietary system information that may be kept by your service provider. Find out how the service provider addresses questions of basic security and what access you will have to that information in the event of a service dispute. These are just some of the network security issues you ll need to address as you evaluate your alternatives. Reduced capital expenditure There will be an upfront investment when you transition to a Premisesbased or Hosted IP system. The payback period will be a function of how much upfront spending you need to take on and the savings off your monthly expenses moving forward. With a Premises-based approach, leases can smooth cash flow. In some cases a Hosted solution will be a forklift upgrade, requiring new service provider-approved IP phones, for instance. Each service provider has their own approach to accommodating legacy phones with gateway devices, but in some cases that may not be an option. By using IP gateways, many companies can retain their embedded investment in digital or analog phones and switching systems, and phase in more IP phones as their equipment ages or the budget permits. Other considerations It is always a good idea to look carefully at the financial viability and backing of a service provider. The telecom industry has seen its share of 2011 TCI, a Telcept Holdings LLC. Company Page 6
7 implosions leaving many customers scrambling for alternatives when their service providers went under. Giving careful consideration to interoperability in the event of a transition will protect your organization during an unforeseen industry shakeout. For over 25 years TCI has been supporting client transitions to new technology. We ve always been there evolving networks from analog to digital and now to IP, building and managing the networks our customers have come to depend on. Find out how TCI s IP Telephony solutions can benefit your business. Call TCI 1001 or Don Routhier at About TCI TCI is one of the largest full-service integrated solutions providers in the Washington D.C. and Baltimore metropolitan areas. We deliver voice, network and data support to organizations of all types and sizes. TCI offers a complete line of client services and business solutions, including security services, in partnership with leading manufacturers. Learn more by visiting our website, TCI, a Telcept Holdings LLC. Company Page 7