VoIP Case Study #1

The primary selling point for Voice over Internet Protocol is the potential for saving organizations money in toll calls and beyond. But interest extends well beyond that single factor. We take a look at two such instances. First, the city of Daytona migrated to a converged telecommunications system...

By Linda Paulson | Posted Jan 17, 2002
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Voice over Internet Protocol, commonly referred to by the acronym VoIP, is a communications technology originally designed to displace the public switched telephone network. Telephony's evolution beyond POTS and PBXes has opened a wide spectrum of services able to marry voice and data, of which VoIP is but one.

The primary selling point for this technology is the potential for saving organizations money in toll calls and beyond. But interest extends well beyond that single factor.

"There are customers out there converging their networks and taking advantage of VoIP" says Alan Eng, product manager for the access communications group Cisco Systems, Inc. "Cost saving was the first easy application. The converged solution really addresses that plus, it has improved productivity. And the technology is really evolving."

Although some pundits would argue that VoIP is still maturing, corporate users are extremely interested in implementing the technology, creating exponential growth. Within the last four years, VoIP minutes increased from less than 0.5 to 2 percent of outbound international calls, according to research from TeleGeography. Additionally, predictions as to the size of the market itself vary, with Allied Business Intelligence projecting the VoIP market to grow from $3.7 billion in 2000 to $12.3 billion in 2006 and Synergy Research Group projecting the VoIP equipment market to grow to $13.3 billion by 2005.

There are many misconceptions about VoIP. It's not just for mammoth Fortune 500 companies. Governments and non-profit organizations now use these telephony services as are retail establishments like restaurants and car dealerships, even banks.

Eng says some of that misconception can be traced to the high profile, "household names" organizations such as Merrill Lynch and Dow Chemical that were among VoIP's early users.

"We've actually seen activity not only across business sizes, but also across different verticals," he says. These include education, financial services, insurance, retail and government. "We've also seen a lot of activity in the midmarket," says Eng. "We have a lot of customers in the less than 100 user configurations. All businesses have the same needs. They have different price sensitivities and scalability issues as well as other internal operating guidelines." The only difference between these different-sized businesses seems to be, Eng says, that larger companies tend to have more resources to deploy VoIP.

What doesn't change is the cost savings. Less money is spent on equipment -- infrastructure, telephones and switches -- as well as toll calls. Administrators quickly point out they're spending less time and money on training as well.

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