Why Your Business is Not Too Small for VoIP

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1 White Paper Why Your Business is Not Too Small for VoIP Executive Summary If you re a small business, you may think that larger businesses have all the advantages. That may be true for things like purchasing power and efficiencies that come with scale, but not every advantage is written in stone. Whether out of necessity or choice, most small businesses compete with enterprises, and need to take any edge they can get. One advantage is agility, as smaller businesses can react faster to change. That s becoming critical as the pace of change keeps accelerating, especially when it comes to communications technologies. Enterprises have been using VoIP for some time, and many smaller businesses hold the idea that somehow this is yet another advantage not available to them. Nothing could be further from the truth, and this guide serves two purposes to that end. First is simply a reality check to clarify a number of misconceptions that our research indicates are holding back VoIP adoption among small businesses. Building on that is our second purpose, which is to empower small businesses with this knowledge. VoIP is far more accessible than many businesses realize, and in fact you re now in the driver s seat when it comes to being a customer. No longer must you let telcos and vendors dictate the terms of doing business. By being an informed customer, you can now make decisions that can have a big impact on your business and put you on par with larger competitors when it comes to communications capabilities. To that end, this guide explores five reasons why small businesses should think differently about VoIP. There may still be situations where VoIP isn t for you, but in today s environment VoIP can do more than just provide lower cost telephony. By thinking this way, you ll see that you re never too small for VoIP, and there are great choices available today to start you on this path and turn your phone system into a new driver for competitive advantage. 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: [email protected]

2 Five Reasons Why You re Not Too Small for VoIP Reason #1 - VoIP is a service, just like TDM The first thing you have to consider with VoIP is that there are two distinct elements the phones and the service. You may be using a VoIP service in your home, and if so you re probably just using one line. When it comes to the service component, VoIP is really no different for your business. In fact, whether you need 1 line, 10 lines or 1,000 lines, there are plenty of VoIP providers to choose from. Some cater strictly to SMBs, and even SOHOs, and these providers will have a solid understanding of your needs from end-to-end. Conversely, your current voice provider is probably an incumbent telco, and this may well be the reason you might think you re too small for VoIP. Before VoIP and competition, small businesses were not well served by telcos, mainly because they had to take what was given. Telephony was largely the domain of the incumbents, and it s fair to say that small businesses overpaid for a long time and were also underserved. VoIP has diminished the premium value of telephony, and with that the carriers have lost a lot of leverage over subscribers. Now that SMBs have choice and telephony is not that special any more, there is no reason to feel beholden to your telco. No business is too small to use VoIP, and no matter how many lines you need, there are many competitive carriers happy to help. With that said, there is an important difference between getting VoIP at home and in your business. At home, you can run VoIP just fine from your router, even for a few lines. Things are more complicated in a business environment, especially if VoIP is fully displacing legacy service. In that case, you ll enjoy the efficiencies that come from shifting voice off its own network to your data network. However, this puts more pressure on your LAN, and if it s not yet set to properly support VoIP, you may need to invest in some network upgrades. Long-term, you should be planning for this to happen, so sooner or later you ll need to get your network up to par. This may seem like a big cost now, but as you come to understand that VoIP is more than just telephony, the full range of benefits will make the business case easier to justify. Don t forget, you ll also be gaining savings from network convergence and going from two networks to one. Network convergence is a topic unto itself, but the main point here is that making network upgrades is within your control, and the benefits go beyond VoIP. In basic terms, VoIP is a service, and this should not present a barrier to adoption. When the ziffdavis.com 2 of 8

3 service runs over your network, you do have more obligations, but whatever upgrades are needed, they are manageable and should not be that costly. Reason #2 - you don t need switched telephony This is a bit of a misconception caused by associating business-use VoIP with expensive legacy PBX systems. After all, it s clear why a business in that situation would seek a lower cost option. This is especially true is their PBX is fairly current, which means they ll be locked into using that system for years to come. The next best thing is to reduce the cost of their phone service, and that s where VoIP comes into the picture. The cost savings may not be spectacular, at least compared to switching out to an IP PBX, but they ll be enough to be worthwhile. Of course, switching both phone systems and services at the same time is even better, but that s a much more ambitious proposition. In either case, having a switched phone system is the driving force. As such, you need to separate the two elements explained earlier. Size of business is not a factor for buying the service itself, but it very much relates to the phone system. Generally, the economics for a switched system make sense for businesses with over 100 employees, and historically, that typically means a PBX. Today, that means an IP PBX, and while more affordable than a legacy system, it is still beyond the reach and often will be overkill of smaller businesses. The next step down is a KTS Key Telephone System and while these have been in use for decades, they are a poor choice in today s market. They are much less expensive than a PBX, but of course you get fewer features and very little latitude for upgrades. These are still widely used, however particularly in retail and while they provide a basic level of switched functionality, they will go the way of legacy PBXs in due time. Regardless of that prognosis, KTS s are still popular, and represent another example of how businesses rely on switched phone systems once they get to a certain size. Much smaller businesses can manage without this, but there are many others on the bubble where they could benefit from a switched system, but find them cost prohibitive. Whatever form of switched telephony you think of, this should not be viewed as an obstacle to VoIP. The more you understand the native feature set of VoIP, the more you ll see that many aspects of a legacy switched system are resident within the VoIP service. A key characteristic of VoIP is that the service runs over a data network, and the underlying protocols particularly SIP extend intelligence across the network, right ziffdavis.com 3 of 8

4 out to the endpoints. This is fundamentally different from the command-and-control model of the PSTN, where the service provider retains control at their end. While this closed system ensured quality and reliability, any change requested by the end user involved time and money. With VoIP, the service is based on an open system, allowing end users to self-provision features. Network administrators do sit in the middle and control which features employees have access to, but the main idea is that a lot of the functionality locked into legacy phone systems, now resides freely at the end user level. For small businesses, this translates into added capabilities with VoIP without the need for a switched system. They won t get all the extra features, but enough to be worthwhile. In other words, you can keep your current setup of standalone phones, get advanced features that approximate a switched system, and a lower phone bill. If you think you ll be better off investing in an IP PBX, that s your decision, but in many cases it simply won t be necessary. Reason #3 - VoIP does not require a full service IT department This may be the best reason to use hosted VoIP, but this is also another misconception holding back adoption. With legacy telephony, enterprises have long had a highly trained team of IT staff to maintain this service. In this world, voice was separate from data, which meant that the core IT staff had little understanding of telephony. For this reason, early implementations were problematic, as they did not recognize how the real-time nature of VoIP required special attention. This has since largely been solved, but it has created the widespread impression that VoIP is complex. To some extent that is true, especially if you view VoIP from a legacy mindset. As a technology, VoIP is not well understood by this audience, but that s becoming less important now. IP networks are maturing quickly, and as more voice traffic is ported over from TDM, the learning curve shortens and VoIP becomes more familiar to IT. VoIP vendors have a lot to do with this, along with the standards bodies that help make the technology more interoperable across multi-vendor deployments. This is good news for smaller businesses, as VoIP can be implemented with little or even no IT support. In very small businesses where standalone phones are the norm, there may not be anybody with telephony expertise, including whatever semblance of IT you have to manage the LAN. Often, telephony will be an add-on task for an employee with a hodge-podge of responsibilities, and when that person leaves, it simply gets passed on to someone else. The realities of small businesses like this are far removed from the enterprise world, although your larger brethren may not be any more efficient. They have different ziffdavis.com 4 of 8

5 challenges to manage, but that s not our focus here. As noted earlier, there are many varieties of VoIP providers to choose from, and in terms of this perceived obstacle, even these types of businesses can move to VoIP. A few years ago this wouldn t be the case, and the key change is the cloud. VoIP has been offered as a hosted service for many years, but never available in a form to serve this end of the business market. The cloud has become a dominant trend in IT circles, and communications services have recently fallen into that fold. Most forms of hosted VoIP are tied to switched phone systems, and this is an attractive option for SMBs that have limited IT resources, as it allows them to painlessly make a move they couldn t really do on their own. This still doesn t help smaller businesses, but other flavors of cloud-based VoIP do. The more recent development is the ability of some operators to provide VoIP service almost entirely from the cloud. In other words, the service can be ordered over the Web, and from there provisioned to the point where each employee has control over their own VoIP line. The only hardware requirement is an inexpensive adapter to VoIP-enable legacy handsets, or should you choose to go-ip, to replace them with IP phones; which today are quite affordable. Add to that a media gateway at the edge of your network, and possibly an esbc session border controller - and you re all set. Otherwise, you can go with offerings where all the network-related issues are managed by the provider, leaving you with just one task paying the monthly bill. Reason #4 - no long-term commitment needed At this point, you should be thinking that any and every business should be using VoIP, and we certainly won t argue. We constantly research the market, and are keenly attuned to the needs of all types of businesses. The differences can be quite stark, not just in terms of awareness of VoIP, but also perceptions about what the technology can and cannot do. This is important to note since VoIP is still evolving, and in fact is becoming increasingly friendly to even the smallest of businesses. One way providers do this is to structure offers than minimize your risk as well as theirs. You can never fully eliminate risk, but considering that you probably have limited IT resources and cash flow constraints, the decision to adopt VoIP won t be made lightly. After all, it s new for you, and if you have never had a problem with TDM, you ve got to feel pretty comfortable making a switch. Add to that the state of your phone system, and this can be a high-risk move. If your phone system is fairly new, you ve got a lot invested in that, and since TDM almost never has problems, why would you move to VoIP just to save a few dollars? ziffdavis.com 5 of 8

6 This is an important consideration since cost savings is usually the key driver for VoIP, especially among SMBs. In the early days of VoIP, incumbents could get away charging a premium for landline service since there weren t any alternatives. VoIP s pricing back then was attractive, but the quality was poor, and that kept a lot of people away. Don t be misled, however, as the quality issues had more to do with the state of connectivity than VoIP itself. Today, high speed broadband is everywhere, and that s a big reason why those quality issues have largely gone away. Along with other things, that development has made VoIP much more acceptable for homes and businesses, and is very much on course to eventually replace legacy service. As a result, incumbent carriers that still want to protect their legacy customer base have lowered their pricing to be closer to VoIP. When the cost savings becomes minimal instead of significant, legacy customers bear more risk in the overall equation, since they must still accept some quality compromises. This is a key reason why you need to do your homework in terms of price shopping when considering VoIP suppliers. Not only that, but you can use that to create some leverage with your incumbent telco. If they really want to keep your business, they may be willing to negotiate better pricing. This could be a good option if you re still not sold on VoIP, but that s not the purpose of this guide. In terms of reducing risk to go with VoIP, there is another financial consideration other than price. From the beginning, VoIP providers did not tie subscribers into lengthy contracts the service was always taken on a month-by-month basis. For consumers, this was no different than legacy service, but that was always a mirage since you had no alternatives until VoIP came along. Businesses, however, are typically bound by contracts with their carriers, especially for trunking to service all of your phone lines. This is a highly effective tactic for locking in customers, not just for a long time, but also to keep paying high prices that are no longer competitive in today s market. If this sounds familiar, then you may think that all telephony services are contractbased, providing yet another reason to not consider VoIP. Clearly, the opposite is true, and this type of flexibility is another way to make the risk more equitable between both parties. If VoIP service doesn t perform as advertised, you can switch out any time, and even go back to legacy without missing a beat. This holds whether you re a multinational enterprise or a 5 person micro business, so whatever your size of operation, you always have an out with VoIP. Reason #5 - there are many operators who want your business This may be the best reason of all, especially if you ve felt like an afterthought with your incumbent. Some businesses grow over time and as their value increases to a telco, the better the service on all levels. Carriers will be more inclined to extend price ziffdavis.com 6 of 8

7 breaks, special discounts, offer exclusive services, provide premium level technical support, etc. This is a win-win scenario, but does not describe the audience our guide has been written for. Many businesses especially micro level will always be small scale, and growth is simply not in the plans. Not to mention businesses that would like to grow, but are still hurting from the last recession, and are just hanging on. In either case, thinking big or high growth is really not the driver of everyday operations, but still, these businesses have telephony needs too. Clearly, they will have little appeal to incumbents, so they can afford to give you take-it-or-leave-it pricing, especially if your phone system has lots of life left. If there is no short-term hardware selling opportunity, they ll just offer the status quo, and if you go elsewhere, so be it. If that describes your situation, you really should look at this as an invitation to shop around and leave on your terms not theirs. As noted earlier, in today s VoIP world, there are solutions for all sizes and types of businesses. On a services level, you can choose from services that range from simple telephony to integrated offerings that are variations on Unified Communications. In terms of phone systems, you can go with premise-based or cloud-based deployment models, or even hybrid plans that give you a bit of both. These will largely determine what phones work best, and aside from keeping what you have, you can easily move to an IP PBX or standalone IP phones. For a change, you are in the driver s seat, and there are plenty of businesses just like yours; that s why there are so many offerings available. Another factor is that geography no longer determines who you buy from. Before VoIP, you had to go with the telco who had a local physical network footprint. Today, you can choose from providers on the other side of the country. As long as you have broadband and preferably take on SIP trunking you are no longer limited to dealing with networkbased providers. Conclusion Not so long ago, incumbent telcos had all the market power, and business customers had a passive relationship with them. Telephony was strictly a utility where everyone paid similar prices and were served by the same provider. There was no competitive advantage to be had here, and telcos had no incentive to innovate, so it was really just a cost of doing business. Small businesses were always a casualty of that status quo since they had zero leverage to level the playing field with the enterprises they were trying to compete against. VoIP has changed all of that, and arguably, these same small businesses look to be the biggest beneficiaries now. After all, they re starting from nothing, and now have unprecedented choice when it comes to telephony. This means there is a tremendous amount of pent-up demand for ziffdavis.com 7 of 8

8 better solutions, and this is just from businesses that know about VoIP. Add to this another layer of small businesses that are just discovering VoIP, and there is an exciting upside waiting to happen for solutions providers who know how to serve this market. These types of businesses represent the audience this guide has been written for, and once the knowledge gaps outlined herein have been addressed, VoIP adoption will inevitably accelerate among SMBs. ziffdavis.com 8 of 8