Session II: Hosted & Managed VOIP

Session II: Hosted & Managed VOIP An Educational Session Presented to the ITPX / NCUG 2011 Conference April 11, 2011 ~ 1 ~

Deploying VOIP: Multiple Approaches Training? Disaster Recovery? Support? Staffing? Footprint? Up front costs? Approaches: Standalone Approach Managed Hosted Flexibility? Often when one reads about VOIP in a magazine or on-line article the discussion revolves around the necessary steps to successful implementation. Some articles focus on particular aspects of VOIP such as Codecs, signaling protocols like SIP, or hardware and network issues. The articles usually praise the benefits of switching to VOIP and discarding our old TDM circuit switches. The volume of articles written about installing VOIP and migrating your current telephony switch to VOIP is staggering. Yet, what if an organization does not wish to invest the time and treasure in yet another IT system that will require specially trained and dedicated employees? What if economic factors have created an outlook favorable to outsourcing and reduced ownership? What if you need the power and benefits of VOIP but don t want to own the system? Good questions all. The answer to these questions is written about much less often: outsourcing VOIP. The idea is to let someone else purchase and manage the telephony software and associated hardware. All you do is pick up a phone and make calls and take advantage of services that scale with your business as it grows and contracts. You pay for service, not hardware. This is not a new idea, as the discussion of Centrex will explore in future pages. What is new is doing it with IP. Hosted VOIP, Managed VOIP, and IP-Centrex are all variations of outsourced telephony that extend the features and benefits of VOIP to customers at lower up-front costs than traditional implementations of VOIP. We will discuss these options in the pages that follow. ~ 2 ~

Standalone VOIP: A DIY Project PSTN CO Switch Analog and/or digital trunks IP-PBX Site B TDM Circuit Media Gateway Located on your premises Consumes electricity and floor space You have total control You have total responsibility Public or private IP network Site C As a point of comparison, let s review the major components and basic architecture of Standalone VOIP solutions. With the traditional Standalone, or DIY (Do It Yourself), solution the organization must purchase and install the necessary hardware to support the VOIP project. IP telephones, server platforms, analog gateways, and trunking gateways all need to be obtained, installed and maintained by the organizations internal Telecom and IT staff. The LAN switches sometimes need to be upgraded to support the new IP telephones and their power needs. All of the hardware and software is located on the organizations premised and the responsibility for continuous availability and maintenance rests on the organizations staff. Configuration of Softswitch logic and configuration of telephone parameters are the responsibility of the organization. Staff may need training in the proper operation of the VOIP software. Technicians may need to be trained in new or somewhat different troubleshooting procedures for telephone devices. Control of Moves, Adds, and Changes resides with the organization as does the ability to expand the system and make changes swiftly. The VOIP system can be uniquely tailored to the organizations unique needs and demands. ~ 3 ~

Standalone VOIP: Advantages Fully control & customize Internally supported Natural migration from PBX MAC & repairs almost immediate Lowest Total Cost of Ownership The traditional DIY approach to implementing VOIP has some compelling advantages: Upgrades can be executed immediately and by internal staff. Favorable long-term total cost of ownership. Highly customizable, especially when it comes to administrative functions. Service Level Agreement costs are eliminated. Internal Telecom/IT teams have a thorough knowledge of the entire system. Allows a company to rigidly specify system parameters so that every detail and configuration matches the purchaser s needs. Because the system is located on-site, modifications to telephony configurations can be made swiftly and to the purchaser s specifications. Adding a new line or extension, for example, are tasks that can be completed without the assistance of a service provider, granting organizations maximum control and flexibility. ~ 4 ~

Standalone VOIP: Disadvantages Installation time may be lengthy Consumes electricity and space Staff acquisition & training Large initial capital expense Pay for unused features? The disadvantages of premises-based VOIP can be a difficult hurdle for some organizations: Largest up-front capital expenditures on hardware and software. Ongoing maintenance fees and operational expenses. Costs of keeping an in-house Telecom/IT team with the right skills. Often pay for features and capabilities that may never be used as they are part of the package chosen. Full installation and integration with existing systems may be a lengthy process. ~ 5 ~

Managed VOIP PSTN CO Switch Analog and/or digital trunks Managed by, and leased from, 3 rd party Upgrades are predictable IP-PBX Site B TDM Circuit Media Gateway Remote monitoring & fault analysis SLA Onsite support from vendor 3 4 hours Located on your premises Consumes electricity and floor space Public or private IP network Site C With a managed VOIP solution, all hardware and software necessary to implement VOIP are provided by and managed by a third party vendor company. Managed VOIP is distinct from hosted VOIP in that all of the hardware is locate at the customer premises. The vendor supplies servers, Softswitch software, gateways and IP phones. The vendor also will work closely with the customer to integrate the new phone system into the existing data infrastructure. One significant advantage of managed VOIP is that the customer does not have to hire and train staff to operate the VOIP phone system. The vendor remotely monitors the system for faults and performs software updates and configurations for the customer. The vendor can also perform physical support activities such as Moves, Adds, and Changes (MAC) if specified in the contract. Customer-defined Service Level Agreements (SLAs) determine response times, quality reporting, and uptime percentages. Pricing for managed VOIP solutions can be all inclusive are ala carte. Pricing and cost factors to be aware of include equipment maintenance fees, technician call-out charges for MAC, and monthly recurring service fees. These may be included in the flat rate quoted by the vendor. Equipment acquisition costs are presented as lease payments. Managed VOIP solutions allow an organization to have the power, flexibility, and features of onpremises VOIP without the need to train and acquire staff or incur large up-front capital expenditures. ~ 6 ~

Managed VOIP: Advantages Low up-front expenditures Predictable operating expenses No staffing or training requirements Low or no cost upgrades Service Level Agreements Managed VOIP services offer distinct advantages such as: Access to experienced vendor staff that can help deploy and manage a VoIP network in accordance with an organization s unique business needs. A third-party provider typically boasts an aggressive product-development cycle, ensuring that a company enjoys access to the latest technology and that equipment does not become obsolete. Much lower up-front capital expenditures as the hardware is not purchased by the customer. Often, a managed service lets a company leverage its existing technologies alongside a new system. Predictable operating expenses since services are usually contracted and based on monthly charges or fixed flat-rate billing. Because Managed VoIP services feature a service-level agreement, companies can be confident that the system will perform at peak levels in the face of security threats, business continuity and disaster recovery. Flexibility that accommodates a company s fast growth, anticipated seasonal peaks and unexpected economic downturns. Many Managed VoIP services include value-add capabilities through the availability of mobility, communications and productivity applications. ~ 7 ~

Managed VOIP: Disadvantages Higher TCO over time Consumes electricity and space MAC and repairs may take too long Risk of contract failure Pay for unused features? The disadvantages of Managed VOIP revolve around total cost of ownership and loss of direct control: Recurring monthly fees mean the total cost of ownership may be higher than DIY VOIP over the course of several years. System improvements and upgrades may take longer to execute than if the equipment is under the direct control of the company. There is always the possibility that a vendor may go under or consolidate with a competitor. Services or agreements may therefore be in jeopardy. In worst-case scenario, the Managed VOIP suddenly becomes a Standalone solution. The VOIP servers, gateways, and other hardware are on-site, consuming electricity and floor space. Insurance premiums may be affected by the presence of the equipment. ~ 8 ~

Hosted VOIP Customer Network Internet Softswitch (IP PBX) is located at provider site: Redundant Backed-up ATA Connections to provider: Internet PSTN Dedicated circuit Managed IP service Border controller SS SS Gateway Very little customer equipment: IP Phones Analog Telephone Adapters (ATA) Maybe a managed access device PSTN SLA Provider Network Remote management of phones Technicians for MAC Hosted VOIP solutions offer sophisticated call processing and services with the smallest equipment footprint of all options. Hosted VOIP is also called Virtual PBX or Hosted IP-PBX. All call handling equipment, such as servers, Softswitches, and media gateways are located at the provider data center. IP phones connect via an IP connection to the provider s network and are processed and routed from there. This connection may be over an existing Internet connection or over a dedicated circuit. Analog phones and faxes connect either over the Public Switched Telephone Network (PSTN) or thorough a media gateway located on the customer premises. The customer need not worry about finding qualified telecom or IT staff to support the VOIP system as all the servers are located on the provider premises and are maintained by the provider. Providers also support the telephones at the customer premise and can optionally provide wiring services as well. Service Level Agreements determine system availability percentages, quality reporting, configuration response times and repair response times. Pricing for Hosted VOIP solutions are typically package-based and involve monthly fees. Support is usually included but technical call-outs may be additional. Most providers offers tiers of package features ranging from lower cost basic telephony features to costlier full-blown Unified Messaging capabilities. Hosted VOIP allows an organization to very quickly implement VOIP without equipment outlays and worry over staffing needs. Ongoing operations of the system are totally outsourced. ~ 9 ~

Hosted VOIP: Advantages Smallest equipment footprint Low up-front expenditures; level recurring costs Granular addition of features; pay for usage No staffing or training requirements Rapid installation Service Level Agreements Quickly add & subtract phones as needed Hosted VOIP solutions offer a number of attractive features, especially for small businesses and start-up operations: Lowest initial capital expenditures of the options presented. Easy to increase and decrease capacity in accordance with seasonal peaks and economic swings. Troubleshooting is conducted remotely, eliminating the 3 4 hour wait time typically involved in service calls. By not involving the participation of a company s internal staff, providers can deliver a faster and more reliable deployment schedule. Integrates seamlessly with most classic PBX systems, allowing for an easy migration from traditional telephony to VoIP. Since the hardware is located off-site, negligible impact on floor space and electrical usage. Per-seat licenses mean companies only pay for the technology they re using. Can tie together multiple sites and manage them as a single entity. ~ 10 ~

Hosted VOIP: Disadvantages Higher TCO over time System and feature upgrades slow Calls limited by connection bandwidth MAC and repairs may take too long Risk of contract failure Hosted VOIP disadvantages are similar to managed VOIP: Recurring monthly fees mean the total cost of ownership may be higher over the course of several years. System improvements and upgrades may take longer to execute than if the equipment were based internally. There is always the possibility that a vendor may go under or consolidate with a competitor. The number of simultaneous calls at each location is limited by the access bandwidth available to the hosting provider. ~ 11 ~

IP Centrex Centrex service began in the late 1960s and grew in popularity through the 1980s Small to medium sized businesses Customer rents a portion of the provider s class 5 switch One voice pathway for each extension, either an analog line or ISDN-BRI (2 for 1) The original outsourced telephony IP Centrex adds support for VOIP Customer can use IP phones and analog devices Provider can save money by using a softswitch Centrex is a telephone carrier service that allows the customer to connect telephones to the carrier telephone switch and pay for services rather than purchase and install their own on-site PBX. Born in the early 1960 s at New York Telephone and improved by Bell Labs in the late 1960 s and early 1970 s, Centrex has long been a popular service with small to medium businesses and government agencies. Typically priced on a per-set basis, Centrex delivers standard PBX-style telephony features with ease of installation and administration. Centrex was the first outsourced or hosted telephone system. IP Centrex can be delivered over one of two architectures. One architecture utilizes an existing Class 5 switch adapted to work with IP by deploying network and customer gateways. The second architecture replaces the Class 5 switch with a Softswitch running on a carrier-class server in the provider s network. The Softswitch and the customer gateways and IP phones signal one another over a packet network using an IP telephony protocol such as Session Internet Protocol (SIP). This second form of IP Centrex is indistinguishable from Hosted VOIP. Depending on the provider, IP Centrex typically delivers a core group of 30 or so basic telephony features, including call-control features like call forward, call transfer, call waiting, last-number redial, and three-way calling; dialing features like extension dialing and speed dial; and other features like voicemail. Many providers offer Unified Messaging features for additional cost. Many IP Centrex locations in different cities can be tied together and managed as one Centrex service. ~ 12 ~

IP Centrex: Class 5 switch Customer Network IP Network Services provided by the providers class 5 circuit switch Gateway switch (IAD) Connect back-to-back gateways: Internet Fixed capacity circuit Managed IP Network Gateway CO switch Gateway switch connects IP phones and analog phones and faxes back to the provider. Typically uses SIP. PSTN SLA Provider Network Remote management of phones Technicians for MAC Performance and QOS The provider may continue to use their class 5 circuit switches to provide standard Centrex to customer telephones. Telephones, either IP or analog, connect to a media gateway at the customer site. This device is both an Ethernet switch and an analog telephone adapter which connect to a customer-owned router. The router is then connected to the provider over an IP network such as the Internet, a dedicated circuit, or MPLS. ~ 13 ~

IP Centrex: Provider Softswitch This is Indistinguishable from Hosted VOIP Customer Network IP Network Carrier class Softswitch at provider site offers telephony and unified communications ATA Connections to provider: Internet PSTN Dedicated circuit Managed IP service Border controller SS SS Gateway Very little customer equipment: IP Phones Analog Telephone Adapters (ATA) Maybe a managed access device PSTN SLA Provider Network Remote management of phones Technicians for MAC When the provider replaced the class 5 circuit switch with carrier-class Softswitches they are able to reduce or eliminate the customer-facing media gateways. The carrier can offer Unified Communications much easier from a Softswitch. This form of IP Centrex is the same as Hosted VOIP. In fact, some articles use these phrases interchangeably. ~ 14 ~

Mixed Strategies Standalone Sites Connect to other providers and cellular networks Managed Sites Internet MPLS Hosted Sites There is no one size fits all solution for large organizations with multiple sites of varying sizes. These organizations met their varying telephony needs in the past by internetworking switches and key systems together over TDM circuits and carrier networks. Today, these organizations can network their telephony needs over their private IP networks, public IP networks, and carrier IP networks. Some locations would benefit from DIY on-premise VOIP systems, while others need the benefits of a managed installation. Other sites can take advantage of cost effective hosted and IP Centrex offerings. All of these sites can be networked together with SIP and media gateways. Most vendors of hosted services also support SIP trunking, so those sites can communicate with the on-premise sites over internal and external IP networks. Hosted / IP Centrex providers can offer alternate site disaster recovery solutions for locations that have on-premise systems. ~ 15 ~

Hosted and Managed VOIP There are dozens of vendors of managed VOIP systems, hosted VOIP solutions, and IP Centrex. Within each category, each vender offers powerful VOIP feature sets as well as unique features that separate them from their competitors. A wide variety of pricing plans can be found among the vendors. On the following pages can be found short discussions of some vendors offering Managed VOIP and Hosted VOIP solutions. IP Centrex has been folded into the Hosted VOIP category as they are synonymous from a carrier perspective. This is by no means meant to be an exhaustive and comprehensive list of vendors. Indeed, such a list would be obsolete shortly after being drawn up. The discussion is meant as a representative cross-section of vendors. No discussion is presented of vendors of Standalone DIY VOIP products as the focus of this section is on alternatives, namely managed and hosted VOIP. ~ 16 ~

Managed VOIP Vendor Examples One Communications Cisco UC500 OneSolutions Managed portal Remote monitoring 4 hour repair response SLA with QOS Regional footprint Verizon Business Verizon Managed IP PBX IMPACT management portal Remote monitoring 3.5 hour repair response SLA with QOS Global footprint One Communications a regional provider offering the OneSolutions Managed IP PBX in the Midwest and Northeast. Based on the Cisco UC500 series of Unified Communications platform, each system supports up to 50 users. One Communications advertises a 4 hour response time for repairs and features the OneSolutions Managed Portal for services administration. Verizon Business Available in 25 countries, the Verizon Managed IP PBX offers full VOIP capabilities managed by Verizon. SIP trunking to their hosted VOIP service is available. The patented IMPACT software system provides for remote monitoring, fault isolation and analysis. Comprehensive QOS reporting is provided as part of their services. Verizon advertises a 100% platform availability and 3.5 hour response time for repairs. ~ 17 ~

Hosted / IP Centrex Vendor Examples 8 x 8 Virtual Office Enterprise Mirrored data centers 100 100,000 extensions Self Service Portal SIP trunking Call Center support North American footprint AT&T Voice DNA Multiple data centers Unlimited extensions WEB portal SIP Trunking Call Center support Global footprint Velocity Networks Business VOIP Services Unlimited extensions CommPilot portal SIP trunking N.A. SMB market 8 x 8 Virtual Office Enterprise is their hosted solution that is mirrored at 2 other data centers for hot failover protection. Supporting between 100 and 100,000 extensions in multiple locations nationwide, Virtual Office Enterprise offers Unified Communications via their Virtual Office Pro solution. 8 x 8 offers call center support and SIP trunking as well. The Self Service Portal allows customer changes to phone features, extension settings, and global administration settings. AT&T going by the name AT&T Voice DNA, their services can connect unlimited sites together. Connectivity via AT&T Managed Internet Services or AT&T Network VPN/MPLS is also supported. AT&T offers a Web portal for moves, adds, changes, and administrative updates. Voice DNA supports SIP trunking to on-premise IP PBX systems and integrates with Unified Communications services from AT&T. Support for call centers is also available. AT&T states that an unlimited number of phones are supported worldwide. Velocity Networks targeting the SMB marketplace with their Business VOIP Services, Velocity Networks advertises support for an unlimited number of extensions. Velocity offers call center applications and offers Unified Messaging features as well. CommPilot is the web portal that allows customer initiated Moves, Adds, and Changes. ~ 18 ~