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Published: September 28th, 2004

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Should my business consider Voice-over-IP?

A recent Yankee Group

SMB Convergence Survey looked into SMBs’ plans to upgrade their telephone systems to converged voice and data telephony systems, the key drivers motivating these planned purchases and factors that would deter them from adopting converged solutions.

The survey found:

  • Approximately 25 to 29 per cent of surveyed SMBs with 50 to 500 employees plan to upgrade their phone systems in the next 12 months.

  • At least 55 per cent of all surveyed businesses with plans to upgrade intend to consider a converged solution.

  • Businesses with multiple locations have a greater interest in converged solutions and propensity to spend than do businesses with a single location.

End-user scepticism and unreliable, featureless and expensive first-generation products have slowed the adoption of converged solutions. In addition, information about converged solutions has been limited and end users have been unable to assess their value. Now converged telephony products have improved significantly and end users have become less resistant to adopting them.

The Yankee Group’s August 2003 survey, which sampled 350 small and medium businesses with a PBX, key telephone system or Centrex service, targeted companies with 20 to 500 employees. These SMBs said they have aggressive plans to upgrade their phone systems. Businesses with multiple locations have the most aggressive plans to upgrade. Clearly, the strain of supporting disparate phone systems across multiple business locations forces these businesses to consider a more flexible phone system that can meet more complex business requirements.

But the reasons for not yet having adopted a converged solution, regardless of future plans, centre on cost and a lack of information. SMBs are always very focused on the near-term costs and ROI of any upgrade. In this case, long-term benefits are least-cost routing, reduced conference-calling costs and lower management costs. SMBs also must look at possible opportunities to save by cutting traveling expenses and staffing, consolidating voice and data network maintenance and re-using data assets.

Our recommendations:

  • Determine whether a rigid time division multiplexing (TDM)-based environment can support your business communications needs for another seven to 10 years. (TDM is the process of digitizing a number of analog voice channels and allocating a specific timeslot for each link.) Your organization is becoming more dependent on multiple modes of communications that include the phone, Internet, e-mail and instant messaging. Can your business afford not to have an integrated platform to manage your telephony and IP-based communications?
  • The bottom line is not the only line. For SMBs, every penny matters, but ample evaluation should be given to the productivity enhancing features of converged solutions. What is the financial benefit of a quicker more professional response to a customer? What if you can increase the productivity of an employee?
  • Think about long-term costs as well as upfront costs. Although migrating to a converged solution may result in significant up-front costs, it is important to evaluate the long-term benefits of going to a converged solution. Can you reduce the number of phone lines, benefit from least cost routing, and reduce conference-calling expenses?

Helen Chan is senior analyst, small and medium business strategies, at The Yankee Group in Boston. She can be reached at hchan@yankeegroup.com.

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