Value, Risks and Rewards of VOIP

1
Value, Risks and Rewards of VOIP

• Zeus Kerravala
• Vice President, Enterprise Infrastructure
• The Yankee Group
• zeus_at_yankeegroup.com

2
the Yankee Group

• the Yankee Group
• The Premiere Global Telecom, Technology,
  Wireless, Media and Internet Commerce Market
  Research and Consulting Firm bridging the old and
  new economies
• 30 years as strategic adviser to many of the
  worlds largest network service providers,
  equipment suppliers and enterprise e-businesses
• More than 100 Technology Analysts with a Special
  Focus on Enterprise and Carrier Networks,
  Internet Commerce and Infrastructure, Wireless
  Technology Services

• Zeus Kerravala Vice President
• Oversees Yankee Groups Enterprise Infrastructure
  services
• Focus on enterprise hardware and software
  infrastructure, Internet data center
  infrastructure, carrier edge

3
the Yankee Group

• Core Practices Extend Worldwide
• Europe
• Latin America
• Asia Pacific
• Customer Focus
• Investment Banking and VCs
• Buy-side Investors
• Vertical Markets

4
Enterprise Challenges

• Improve user productivity through the use of
  technology.
• Competitive advantage vs. necessary evil
• Increase revenues while lowering cost.
• Mobilization of the workforce
• The need to unify all communications platforms.
• Conversable technologies
• Align IT with business process

5
The New CIO Mandate
Now Time
6
State of VoIP

• Adoption Results
• 2002 10 penetration of line shipments
• 2003 Forecasting 25 for 2003
• 1 Million IP Phones sold in 2001
• 2 Million IP Phones sold in 2002
• Projecting 3 Million in 2003
• Projecting 10 million in soft phone for 2003
  

7
Telephony Line Shipments
(Millions)
18
Total Phone System IP Telephony
16
14
12
10
8
6
4
2
0
2002
2003
2004
2005
2006
8
Adoption Results for VoIP

• 2002 adoption was 10
• Respectable, but held back due to
• Legacy vendors have been slow to develop IP
  Telephony solutions
• Reliable VoIP has been difficult to manufacture
• End-users have not been properly educated on what
  exactly is available, and what the true costs of
  owning a phone system are
• Indirect channel either from voice world or data
  world have not quickly adapted to new environment

9
What is the status of VoIP in your organization?
Hosted by

• No Interest
• Not deployed, but interest
• Deployed in trials
• Departmentally deployed
• Fully deployed across the company

Cross-Tab Label
0 / 500
10
IP Telephony Value and Risk
Risk
Value

• Gain a competitive advantage
• Lower TCO than running separate systems
• Improve efficiency of end users
• Will increase user productivity by unifying
  collaborative apps
• Its about voice OR data

• Competitive disadvantage if performance is
  erratic
• Increase TCO if pre-work and analysis is not done
• Will lead to inefficiency if not deployed
  correctly
• End-users will not use new applications if the
  experience is not consistent
• Its about voice AND data

11
The Changing Value Proposition

• What we have been saying
• VoIP, Convergence, Multicast, Layer2, Layer3,
  QoS, Switching, TDM, PSTN, etc.
• Value Proposition TCO savings, IT improvement,
  etc
• What we should be saying
• Its about managing and using information and
  communications better
• Value proposition Driving business value
  through productivity improvements

12
Tomorrows Requirements Extending the Enterprise
Employee
Using and Managing Information
Partner
13
The New Value Proposition
Competitive Advantage
Streamline BP
Increasing ROI
Improved IT Process
Lower TCO
14
IP Telephony Benefits
TCO Savings Less cabling, equipment, savings on
toll costs, network savings
Improved IT Process Reduced MACDs, ease of
configurations, streamline staff
Streamlined BP Unified messaging, collaboration,
travel benefits
Competitive Advantage Presence software, speech
req, IPT apps
15
Audience ResponseWhat savings/premium do you
expect VoIP to yield?
Hosted by

• Greater than 125 the cost of TDM
• 101 to 125 the cost of TDM
• The same as TDM
• 75 to 99 the cost of TDM
• Less than 75 the cost of TDM

Cross-Tab Label
0 / 500
16
Networking Trends will Drive IP Telephony Adoption
Networking Trends
IPT Impact

• Networks will be packet optimize
• Web services continue to drive app. integration
  
• Network and computing platforms will be
  simplified through standards

• Voice platforms will be adapted to packetized
  networks
• The phone and PC become key voice/data
  integration points
• Third-party software vendors will develop
  vertically oriented deadly applications

Telephony will be come an application on the data
network
17
Phone-Based Integration
Source Cisco Systems
18
PC-Based Integration
Integrated Video
Presence
Application Integration
Source Mitel
19
What This Does to the Business
Talking
Collaborating
Delayed
Real Time
Media Restrictive
Media Adaptive
Delayed
Reactive
Proactive
20
Pervasive Communications
21
Productivity Impact of IP Telephony

ROI from increasing employee productivity
ROI
ROI from decreasing IT cost
IT Investment
22
Convergence Risks

• Voice and video are real-time applications
  extremely sensitive to delay, jitter and packet
  loss
• Businesses demand five-nines availability for
  voice
• Need PSTN-like call quality
• New features and functionality do NOT compensate
  for poor call quality
• Large networks require network audits and
  upgrades
• QoS must be implemented
• Best practice on the LAN
• Mandatory for WAN
• Inaccurate TCO and ROI calculations

23
Who Is Your Preferred VoIP Vendor?
Hosted by

• Cisco
• Avaya
• 3Com
• Nortel
• Other

Cross-Tab Label
0 / 500
24
Recommendations

• IP Telephony will happen be ready
• Perform a network assessment
• LAN, WAN, servers, cabling, management, power
• Choose a test bed for deployment
• Assess what you learn from the test bed
• Review sample business cases, calculate TCO and
  ROI
• Success depends on planning and having an
  effective management infrastructure
• Measure twice, cut once (and proactively manage
  the quality of the cutting)

25
Thank You!

• Zeus Kerravala
• Vice President
• Enterprise Infrastructure
• The Yankee Group
• 617-956-5000 phone
• zkerravala_at_yankeegroup.com
• http//www.yankeegroup.com