Manulife Financial joined the ranks of large enterprises hoping to lower their costs by moving to voice over IP (VoIP) through a seven year, $140-million deal with Bell.

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IP phones and related network equipment to Manulife’s operations both in Canada and the U.S., where it operates under the name John Hancock.

Four branch offices have been set up so far, and the head office in Toronto has been piloting voice over IP for almost a year.

John Mather, Manulife Financial’s CIO, said the decision to move from its traditional private branch exchange (PBX) network was driven primarily by the firm’s belief that tariff costs will be dramatically reduced in the next three to five years. This deal will involve non-tariff services, but the idea is that inter- office long distance and local access expenditures will fall as a variety of IP phone carriers enter the market.

This year, for example, has seen the debut of Primus Canada, Vonage Canada and others.

Ready for prime time

Manulife spent 18 months watching the VoIP market before moving ahead with its strategy, Mather said, concluding that the technology was finally ready for prime time.

“”We’ve been able to, if you will, harden our computer-based IP network to the point where we think it’s equal to or even surpasses what our voice network can provide.””

For example, Mather said, Manulife has only one PBX in many of its branch offices. “”If you lose that one PBX for some reason, the whole phone system goes down. As opposed to our computer network, where we always have a redundant server, and if the server goes down, your e-mail will continue to work.””

Isabelle Courville, group president of enterprise markets at Bell Canada, said the company’s internal move to VoIP has set an example for its customers.

“”It’s a migration strategy — this deal is the perfect example,”” she said. “”We take the network as is, and we will migrate both the network and the data to the IP platform.””

Manulife has a number of inbound call centres for producers, broker/dealers and customers. IP will make it much easier to integrate its custom applications to the phone system, Mather said.

It should also make it easier to redirect calls during an outage, which is an important part of meeting the firm’s disaster recovery and business continuity plans, he said.

“”A lot of people move to IP to save a bit of money. But after that, you are in a brand new world,”” Courville said.

“”You can deploy IP-enabled applications, and solutions. Security could be better.””

Mather said about 30 Manulife employees have moved over to Bell through the deal, which, he added, would be critical as the two firms develop a migration strategy for the IP system.

“”It’s unlikely that anyone can take everybody — for example, in our head office, it’s about 3,500 people — and switch them in one weekend,”” he said.

“”That requires a program and several link methods to allow the IP users to continue to operate within the company network — so voice mails could be forwarded, directory views are the same.””

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