There’s been a lot of hype over the last few years about the merging of voice and IP (VoIP). At first, vendors and analysts touted IP’s ability to get around long-distance toll charges. But with long-distance pricing at or near record-low levels, switching to a new, relatively unestablished technology like VoIP didn’t seem like a prudent decision for the average business that considered telephony a life-or-death service.
In 2004, service providers are still pitching Voice over IP to business customers. But they’re not emphasizing its ability to save companies a couple of bucks on their long-distance bills. Instead, they’re highlighting the productivity-enhancing applications VoIP enables. Saving money, by moving from separate voice and data networks to one unified network, has taken a back seat.
A new wrinkle to service providers’ VoIP pitches is that they’re offering to manage the VoIP service for customers. Businesses don’t have to invest in their own IP PBXs. Instead, they can pay a monthly per-line, per-feature fee to a provider, much like they would for a Centrex service. New services being launched by Telus and Bell Canada will even allow PBX customers to continue using their traditional telephony setup for most employees, while rolling managed VoIP services out only to those workers who are going to see the most benefit from VoIP applications.
What’s the appeal?
Will managed VoIP services spell the end for PBXs? Probably not, says Iain Grant, managing director of telecom consulting outfit Seaboard Group in Montreal. Centrex services and PBXs have co-existed for decades, he notes. The only difference in the future might be that Centrex will be replaced by managed VoIP offerings and PBXs will be replaced by IP PBXs.
“You’re always going to have the people who want to do it themselves and the people that don’t,” Grant said. Companies that manage their own PBXs like the ability to create their own custom voice applications and that’s not likely to change, he explains. Managed IP voice will appeal to some Centrex customers, as well as smaller key system users, Grant believes. For starters, moving to managed IP voice can save companies money on their network infrastructure and management expenses.
“You take the multiple networks you have now as a corporate user and you shrink that down to one,” Grant says. “So right off the bat you’re saving money.” While there’s still no killer VoIP application, moving to a converged system can boost productivity, Grant notes.
“The way you can manage calls is gorgeous,” he says. “Plowing through your e-mail/voicemail box, looking for those things that are flagged as important. Looking for external customers versus internal housekeeping. All that stuff is really easy now with a VoIP implementation.”
A better feature set is what convinced QIEM, a Toronto-based management consulting and technology services organization focused on sales, marketing and customer service, to move from a key system to Telus’s IP-One Innovation managed VoIP service. A managed VoIP service makes it easy to reach QIEM’s employees, who are often on the road throughout North America, no matter where they are, says Jonathan Schloo, QIEM’s CEO.
“With the dialing trees, anyone on our team throughout North America can now easily be reached regardless of whether they’re in New York, Miami, Toronto or Scottsdale,” he explains. “You can call any one of their numbers and it will simultaneously ring on their office, their cell phone, their home office numbers, all at the same time. That was really important to us.” The VoIP service has also allowed QIEM to tie its phone system to its customer relationship management software.
“I can synchronize from the airport or hotel room and see new voice mails that are automcatically attached through Outlook to the right contact inside our CRM system, on my laptop or even on my Blackberry,” Schloo says. “What that means is anyone from sales, service to management of the company with the correct security clearance…can see and hear the latest client interaction.”
While QIEM had been writing some of its own voice applications before going to IP-One, Schloo says the company doesn’t miss the ability to customize. “In the past we installed our own phone systems and we even wrote our own voice mail programs,” he notes.
“But our internal IT is very busy focusing on increasing the value they deliver to clients.” QIEM, which has been using IP-One for over two months, decided to go with Telus for its managed IP voice, because Telus is a trusted brand, Schloo says. Brand recognition and service reputation are going to be critical to service providers’ success in offering managed VoIP, Grant believes. Customers are going to expect more from their vendors than they did from plain old voice services.
“I’d expect you to take some risk with me,” Grant says. “You’re not just a common carrier any more. You’re my business partner. So if you screw up, I want you to feel my pain. On the other hand, if you bat it out of the park, I’ll share my joy. That’s a different model.” The landscape Several providers already offer managed VoIP services to business users. Most of these offerings are geared towards small- and medium-sized companies.
Newer services on tap from Telus and Bell Canada are targeted more towards larger enterprises and will allow customers to integrate managed VoIP services into their existing voice networks, meaning they won’t have to swap out their entire voice infrastructure at once.
One of the providers focusing on the small- to mid-size market is Toronto-based OneConnect, founded in early 2004. Unlike Telus and Bell, which are initially targeting Centrex customers with their managed VoIP services, OneConnect is going after key system and PBX users, says Ron Dekker, the firm’s founder and CEO.
“That nine per cent of the market that turns over year after year is what we’re going after,” he says. “We compete with the premises-based providers,” OneConnect can also work with existing PBXs. “They can keep that thing there if they so choose and just do a department, or their mobile sales force,” Dekker notes.
There are three reasons for companies to move to managed VoIP, Dekker says. The first is cost reduction on long-distance bills.
The second is network simplification as a result of going from two networks to one.
And the third is improved employee flexibility and productivity. On the cost reduction side, Dekker says OneConnect’s customers save between 15 per cent and 30 per cent on their monthly telecom bills. OneConnect’s also able to charge less for its managed VoIP service than Bell or Telus, Dekker notes, because Bell and Telus are forced by regulators to offer a set, tariffed price.
On the feature side, managed VoIP offers advantages particularly suited to mobile workforces, Dekker explains, such as ‘find me, follow me’ features that allow mobile workers to be contacted through one number no matter where they happen to be. Like other managed VoIP providers, OneConnect offers a network assessment as part of its service. This is a necessary step to ensure a potential customer’s data network is capable of supporting voice traffic.
So far, Dekker’s been pleasantly surprised with the results of the assessments. “In the original business plan, we thought we’d run into a lot of networks that needed upgrading and it might be a barrier to successful sales,” he says. “That really hasn’t been an issue though.”
Like OneConnect, Telus’s IP-One Innovation service is aimed at small and medium businesses. But in the new year, the company will roll out IP-One Evolution — an offering targeted at large enterprise customers currently using Centrex. “Evolution allows them to adopt IP on an evolutionary basis, rather than one a wholesale change basis,” says Tony Geheran, vice-president of IT solutions with Telus.
Geheran believes the real advantage of moving to a managed IP voice service is increased flexibility and mobility for employees. “It shouldn’t be seen as a cost savings,” he says. “IP isn’t the right thing for every user. And it’s a value-add for us.”
While Geheran thinks managed IP voice services will appeal to customers who are ready to swap out old key systems, he doesn’t believe the services will appeal to all large PBX users.
“On the larger PBX side, there are likely to be certain complexities around the setup, the configuration and the functionality that’s being used, that may not in its initial phases be replicable on the hosted IP solutions.” Bell Canada is in the process of rolling out an offering similar to IP-One, called Managed IP Telephony (MIPT). Like Telus, Bell is looking to draw existing Centrex customers to the service.
“The value proposition is the combination of IP telephony and taking away the complexity that’s creeping into the environment,” says Paul Rowe, vice-president of enterprise marketing with Bell. “Now companies can look at outsourcing and eliminating some of that complexity from within their own organizations.” MIPT could appeal to some existing PBX customers, Rowe notes, even if they’re not ready to completely get rid of their exisitng infrastructure.
“We can show those traditional PBX customers how an integrated environment of hosted in some locations and PBX in others works well together,” he says.
Bell is still working on coming up with more unique managed VoIP application for customers, Rowe says. In the meantime, he expects the idea of “presence”, generally defined as being always available, will help sell managed VoIP.
“We think there’s a big opportunity to drive the use of presence to make collaboration easier,” he says. “So if you and I need to connect, you could end up leaving me a series of messages. But now through presence, you can go on your soft client and see I’m in my office, but on the phone, and send me an instant message.”
