Talking It Over

Joan Vandermate, Siemens Communications, Inc, and Eric Schummer, CorpoTel, go head-to-head on the rise and rise of VoIP.

BMUS. What trends are you seeing right now in VoIP development, and what are the drivers?
Joan Vandermate. We are seeing more interest in standards, particularly SIP. There is considerable interest in integrating voice into business applications and processes, using SIP as a key enabler. There is an increasing focus on changing how voice is deployed in the enterprise, so voice truly becomes an application like any other, independent of the IP infrastructure.

However, the market always lags the technology. Most customers are still getting a handle on putting voice traffic in packets and running it over enterprise networks. Customers are pragmatically focused on bottom-line ROI; they aren’t yet thinking about voice as an IT application used to improve business processes.

BMUS. Do you think companies investing in VoIP are fully prepared for what is involved? Do they fully assess their own capabilities and requirements before taking the plunge? What are the consequences if they don’t?
Joan Vandermate. It varies from 100 percent ready to so unprepared it’s a train wreck waiting to happen. Fortunately, we’ve reached the point where the latter is a rarity. A few years ago, there weren’t really any best practices – people were doing VoIP for the first time. Today, there are best practices you can study and implement. Plus, there are many more successful deployment examples, and fewer and fewer implementation disasters.

If you jump in unprepared, you can end up with a bad implementation that cripples your company for years, or a project you can’t finish at all, forcing you to revert to the old system while you regroup. The cost of such mistakes can be huge. However, there are now plenty of education resources, and no excuses for not being ready.

BMUS. What complexities might companies encounter when trying to deliver effective VoIP? How can companies better prepare for this?
Joan Vandermate. Security mechanisms add complexity, so you need to understand the security policies on the IP network and make sure the requirements of voice have been taken into account. Other issues include engineering appropriate bandwidth, QoS, and SLAs with VPN providers; if you are going to send voice across your WAN, you must look at all these things. VoIP has been used in production environments for nearly five years, and the technology is well documented.

Less well documented are the cultural complexities. If your company has a strong telecom department separate from the IT department and you haven’t merged the two, do it first. You need a single budget and plan that look at the combined infrastructure holistically, and you need a cultural convergence as well as a physical one. If yours is a large company that leaves telecom decisions and telecom budget control in the hands of individual business units instead of centralizing them within IT, migrating to VoIP can be a big challenge.

BMUS. What weaknesses still exist in the technology and how are these problems being addressed?
Joan Vandermate. The technology itself is mature, it’s robust, it’s here, and it works. However, we still haven’t made packetized voice as pervasive as other applications; there are too many interoperability problems.

Packetized voice hasn’t reached the point where we can mix and match phones, gateways, servers and applications from different vendors with confidence. Voice still doesn’t have the level of interoperability and plug-and-play readiness we take for granted in the computing industry. Everything is still too proprietary. You worry about whose gateways you are going to use, whether your messaging system will work with your groupware, and whether you are going to need proprietary phones and terminal adapters to make your fax machines work. It shouldn’t be that way.

BMUS. What sort of ROI can a company expect from VoIP? How would you sum up the benefits?
Joan Vandermate. It can be difficult to justify an ROI calculation based solely upon capital expenditures. However, if you have several sites and are paying maintenance on individual PBXes, you may be able to reduce op-ex significantly by moving to a single distributed VoIP system. Plus, users at the remote sites now get all the same features and functions enjoyed by the main office.

VoIP deployment often results in soft dollar savings and productivity gains, largely due to the inherent mobility in VoIP systems. Think about the insurance adjuster in the field who can use a softclient on a PDA or notebook PC to simultaneously transmit photographs of the damage, speak to a claims manager back at headquarters, and settle a claim on the spot. That sort of process improvement speeds up business, and can immediately improve the company’s bottom line.

BMUS. What differentiates solutions? How do your own offerings stand out from the competition?
Joan Vandermate. Siemens’ vision is of a robust telecommunications industry working like the Internet: highly dependent on standards and interoperability. The vibrant business culture characterizing today’s internet would never have materialized if industry standards hadn’t broken the stranglehold proprietary technologies had on computing in the ‘70s and ’80s. We can now break that same stranglehold in the telecommunications industry. Voice technology no longer needs to be vertically integrated, providing us all with a huge opportunity.

And, unlike some of our competitors, Siemens is not just giving lip service to this horizontal orientation. Look at our HiPath OpenScape and HiPath 8000 products, which both use native SIP for call control. We are also SIP-enabling our HiPath 3000 and 4000 platforms and enabling all of our other applications to work with our own and third-party SIP softswitches. We are starting to create custom solutions for vertical markets, including a healthcare system that integrates voice into the entire hospital IT infrastructure. All of our vertical solutions use industry standards to integrate components from third parties rather than requiring that customers use Siemens products end to end.

BMUS. What do you think will be the big issues surrounding VoIP in the next 2-5 years? How about the longer-term scenario?
Joan Vandermate. The big question is whether we will have succeeded in demolishing this vertically integrated tradition that goes back to when the PBX was first invented. It was a vertically integrated, proprietary, closed, soup-to-nuts platform. We need to exchange it for a standard, open, multivendor system built with best-of-breed elements. If five years from now we are still selling proprietary IP PBXes, then shame on the industry for squandering an opportunity.

But if the industry becomes horizontal, we could see a renaissance. We will have lots of companies developing innovative products and applications. There will be many more choice for customers, and many opportunities to maximize the impact of voice and real-time communications on businesses.

BMUS. What trends are you seeing right now in VoIP development and what do you think is driving this?
Eric Schummer. The marriage of VoIP-WI-FI and Mobile VoIP push-to-talk is moving VoIP to the end users and the devices they use the most, accelerating the adoption rate. In my opinion, VoIP in its current state needs to become more mainstream with a greater number of deployments before new ideas will take hold (i.e. ‘the killer application’). Despite the success of VoIP companies like Vonage, Skype and AT&T in the residential market, service providers are still trying to understand how to sell, bill and manage services and deal with unclear regulations with VoIP.

The fact is that VoIP still has a very low recognition factor in the mindset of business owners. Studies I have read indicate that a large percentage of business owners cannot differentiate VoIP from a brand of Vodka.

However, the market is beginning to wonder what VoIP can do for them and we do see a greater number of businesses who are ‘testing VoIP’ with the intent of a gradual migration. The driver is the perception VoIP will reduce their costs supported by a compelling ROI, coupled with the fact that the current position on the VoIP adoption curve has moved beyond the ‘early adopters’.

BMUS. Do you think that companies investing in VoIP are fully prepared for what’s involved? Do they fully assess their own capabilities and requirements before taking the plunge and what are the consequences of not doing so?
Eric Schummer. This is a very good question, and for the most part I think they are not. VoIP systems allow for a number of new ‘business tricks’, such as VoIP trunking, transactional integration, smart routing, centralized auto-attendants, distributed operations, unified communications, PC-based communications, and many other that can be deployed in support of business operations.

Most providers and businesses are still not capable of delivering solutions and integrate VoIP offerings with the business requirements beyond Dial Tone, regardless of the marketing machines out there.

Most people underestimate the complexities around providing, implementing and consuming VOIP services. This applies both to customers and vendors alike. It’s not really about VoIP, it’s about convergence, and it has ramifications inside the business and IT department, it affects the network by creating the need for QoS and such, it also crosses across various disciplines: the network, the PBX system and the mail system to deliver unified communications, at a minimum…

It is difficult for IT organizations to embrace VoIP. The motivation to embrace these projects needs to be driven by the economics or the value proposition. Even so, most managers are understaffed and overworked, which means VoIP is not going to be their number one priority. It needs to be undertaken and then executed right or it will be sharing the long list of failed IT projects because it was designed to fail. Very few companies perform an assessment for VoIP readiness, or develop business requirements, but this is a key aspect of deploying VoIP.

BMUS. What complexities might companies encounter when trying to deliver effective VoIP and how can companies better prepare for this?
Eric Schummer. First and foremost the question needs to be: Why VoIP? What are the business requirements and the desired functionality, cost savings, improved operating environment, etc. Know what you want and then go for it.

Key concerns IT folks have when thinking of VoIP are:

Reliability: Is the network and the VoIP solution reliable and well architected?
Is there capacity and quality of service available for the new traffic? Can it grow?

Survivability: Most businesses cannot tolerate losing phone service if the Internet connection goes down. Therefore solutions must include fail-over capabilities. Redundancy of equipment and other key critical components is required to achieve a state of survivability.

Quality of voice: Planning, measuring and reporting it is important. Having a network that properly supports quality of voice is critical.

Security: Is my conversation secure?Does the technology provide the means for security; is it inherent to the VPN or the tunnel network the VoIP conversation runs on? However it is done, it needs to be addressed.

BMUS. What weaknesses still exist in the technology and how are these being addressed?
Eric Schummer. The technology is now very robust and, if properly installed, it works very well. The weakness is mostly on the how it is conceived, deployed and managed, as well as the choices customers make when selecting their solutions (not all providers are the same).

Security should ideally be a function of the device and not the network where content would be encrypted using public or private keys.

BMUS. What sort of ROI can a company expect from VoIP and how would you sum up the wider benefits?
Eric Schummer. VoIP, being just one more strategy for cost reduction, can provide a company with 20-60 percent savings, when combined with other strategies and based on the mix of services taken into consideration. In terms of VoIP specific wider benefits some examples are:

• VoIP trunking is a great solution between branches with large expenses, especially international, and for moving traffic from sites with high local costs over to sites with lower costs (i.e. Mexico – US).
• VoIP Termination: It is very easy to connect with ANY VoIP termination provider, bypassing traditional carriers – provided the chosen entity delivers quality traffic – it can reduce the cost of termination all the way down to ONE or TWO cents a minute.
• Multi-branch integration: Eliminate the payment for calls between frequently called places, especially international. Many offices call each other continuously, paying every time.
• Applications: Receiving voicemail in your email, VOIP conferencing,
• Bridging ISDN trunks using VOIP.
• Centralized management.

BMUS. What differentiates one solution from another – how do your own offerings stand out from the competition?
Eric Schummer. At Corpotel, we differentiate ourselves because of our relentless pursuit for cost savings that has earned high level recognition amongst our clients. We have also developed a mid-market program that includes on-demand communication services providing hosted VoIP and Telecom Management services.

It is different because rather than pursuing the sale or replacement of equipment, we pursue a – use as you need – hybrid combination that accommodates headquarters, branches and the budget, looking holistically at the whole environment for a seamless transition to VoIP – independent of carriers and existing technologies.

BMUS. What do you think will be the big issues surrounding VoIP in the next 2-5 years? How about the longer-term scenario?
Eric Schummer. I’d divide this into three parts, the first of which concerns US telecom regulations. VoIP is disrupting the entire status quo and is challenging the legal enforcement of telecom regulation in the US and other countries. In other words, how to control a call originating in Atlanta, with a platform located in Canada, that will terminate in China with circuits provided by a supplier in California, and so on.

Then there is the convergence between mobile and VoIP. Mobile deployments and unified communications will be more widely used and accepted, with presence-based and location-based services being part of the routing process, making communications a much more dynamic, effective and productive service.

Finally, we will see changes concerning transactional communications. As PBX systems become applications and application solutions become commonplace, communications will become integrated with ERP, websites and intranets, databases, sales force management, and business processes in all verticals, delivering new and exciting services, and further lowering transactional costs.