Peterson delivers VoIP ROI message

Avaya’s CEO Don Peterson delivered one of the keynote addresses at last month’s Canadian Telecom Summit in Toronto. Network World Editor Michael Martin sat down with Peterson to discuss what trends Peterson is seeing in the rapidly expanding voice over IP market.

Voice over IP is considered more of a mature technology now. When you go out and talk to customers are you still finding some that are hesitant to move to VoIP?

They’re not hesitant to look. Sceptical about the payoffs and so forth sometimes, because the original ROI concepts were to save money on long distance telephony, MAC changes and so forth and those things are true, but the cost of those things has been reduced, particularly the long distance. So the qeustions today have more to do with showing how to generate the ROI and tell the customer how they can avoid some of the problems other people have had.

There were a lot of customers who got burned in the early stages of VoIP. Is that still causing perception problems?

It’s caused problems with people’s accounts. It varies with how fast you fixed it. I think in all our accounts, people are satisfied with it after a while. There are others – my brother works at a large industrial firm in the U.S. and he has two phones on his desk and has had for nine months. One is an intercom, because they won’t attach it to the external network yet. I don’t know of any we have are in a situation like that that’s taken that long to resolve, but unfortunately there are cases out there like that.

How do you convince a customer the ROI is there?

Don: We start from understanding what they want to do from a networking standpoint and add up those obvious savings. Wide area savings; moves, adds and changes; simplification of administration – what we often find is those will provide two or three year payback. When we take it the next step and show them what can happen integrating applications with it, so using it to simplify what they do, or extend the reach of their customer service people, then the returns can become quite a bit compressed from there, often under a year. But the company has to be prepared to embrace new processes, which means you’ve got either the sales person or the service vp involved outside of the IT department in order to embrace the process change, so it’s a more complex sale.

When you’re going out to customers, are you finding customers want one vendor end-to-end, or are they interested in multi-vendor environments?

It varies. Cisco has a bit of a marketing machine. They have terrific influence on a number of accounts. I think if you took the brand names off and said, “Would you like to be single vendor or multi-vendor?” almost everyone would say multi-vendor. Then you say, “Would you like to let Cisco do all of this?” a fair number of people would like to give the problem away, even though they’re paying pretty steep prices for the value they get from Cisco. So our job is to appeal to those instincts that originally make them want to be multi-vendor and show them why it’s a very manageable process.

Are people still investing in new TDM equipment?

Oh yeah. In fact I’d say the TDM market is lasting much longer than we had thought. It’s had a resurgence in the last couple of quarters to the point where our messaging strategy, which has been exclusively on IP, probably needs to extend a little bit and pick up some TDM messaging. I don’t think it’s a long term issue, although I think TDM’s going to be around a long time. I think in terms of an interesting market for us, it’s going to last a couple of years. We can’t neglect it, but I belive the trend is pretty well established in favour of IP-based transport.

Why do you think TDM is sticking around?

I think people find it simple. A lot of the market is an extension of existing stuff. It’s not a replacement. So having stuff that works, buy more of it if you don’t feel you can get a differntiated utility out of it, then why change. TDM is a very well understood technology. The power and emergency situation is very clean. It’s been perfected over decades. So if you’re looking for dial tone and that’s all, then it’s not a bad solution.

Are you finding with customers that there’s a struggle between the data side and telecom side, or is that not as big a deal as some people have made it out to be?

It’s a strange situation. The war is over. Battles go on. In virtually every company there’s a CIO in charge of both so in that sense, quote, unquote, data won. What the data people are finding is voice is really different, not withstanding what they said during those battles. So when they go to deliver voice on the network they find they don’t understand the IP network itself very well, as measured by its actual performance moment to moment as measured by things like latency and jitter and so forth. So the things that gave you a solid IP network, like re-sending lost bits, you can’t do that in a voice-enabled network. You’ll lose the voice transmission…On the other hand the data guys are ultimately in charge and the smart voice guys have realized they have something to offer, but they have to offer it into the data world. So the voice guys are learning data as fast as they can, the data guys are learning voice as fast as they can and they’re helping each other out.

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