Convergence: VOIP/UC Business Case - etouches · Convergence: VOIP/UC Business Case ... TCO Overview for IP Telephony ... an overview of the cost benefits of this technology. $3,003,840

Convergence: VOIP/UC Business Case

Robin GareissExecutive Vice President, Sr. Founding Partner

www.nemertes.com

Agenda

About NemertesBusiness Case for VoIP & UChDriversDrivershGetting StartedhTeam ApproachTeam Approach

Implementation and Management CostsRecommendationsRecommendations

© Copyright 2010 Nemertes Research

About Nemertes

Analyze business value of emerging technologiesAdvise Fortune 100-2,000 b i iti l IT t t ibusinesses on critical IT strategiesBenchmark realityh 2,500+ IT executives share strategies,

costs, vendor satisfaction.

A l h 1 30 Analysts have 17-30 years experience, including operationalF d d 2002Founded 2002


Pre-Approved Business Case: Required?

Pre-Approved Business Case Required?


Why Create a Business Case?

85% of organizations 85% of organizations are working with

decreasing or flat IT budgets.g

Organizations that Organizations that require a business

case are less likely to put projects on hold.put projects on hold.


Building a Business CaseAccurate assessment of current costsh Implementation operational capitalh Implementation, operational, capital

Identify business & process benefits h Engage business units to understand problems your technology can solveEngage business units to understand problems your technology can solve

– We didn’t need to schedule a follow-up call to answer that question? – We didn’t have to search for that information? – We had the benefit of X’s insight when we needed it on this project?

Confer with business process owners to validate improvement & gain buy- inTest-drive a prototype to uncover problemsMeasure “before” and “after” results!Measure ROI, TCO, NPV


Sample

HQ & Branch Analysis

$3 003 840

TCO Overview for IP Telephony

Your annual IP telphony savings with Avaya:

Prepared for: IT Staff Large Global Company

Cost Analysis The Nemertes Cost Analysis Tools has calculated the following results for your organization. This section provides an overview of the cost benefits of this technology.

$3,003,840

$1,978,447

$2,907,905

7

$15,019,199 with Avaya

Years for cost analysis:

Five-year financial gain

Your annual IP telphony savings with Avaya:

Your annual IP telephony savings with Cisco:

Your annual IP telephony savings with Nortel:

0.06%1%Percentage of IT budget

Percentage of revenue

Annualized VOIP Cost Savings

$3,003,840 $2,907,905

$$2,500,000$3,000,000$3,500,000

Cost Analysis

$30,000,000

Avaya Cisco Nortel Existing TDM

$1,978,447

$0$500,000

$1,000,000$1,500,000$2,000,000

Avaya Cisco Nortel$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Your MAC Costs will be reduced by…………...…. $1,502,514Your Voice trunks will be reduced by…..………. $75,262

$171 429

Benefit Highlights The Nemertes Cost Analysis Tools has calculated the following annual savings with an Avaya solution:

Your Equip Maintenance will be reduced by……..… $171,429Your Local Loops will be reduced by……..….…. $52,185

You can establish 5-digit dialing, intercom, transfer calls, and implement other features between sites.

Your mobile workers can 'log on' to phones in any office receive calls & voicemail there

Additionally The Nemertes Cost Analysis Tools has calculated the following productivity benefits with an Avaya solution:

Standardizing on a VOIP product family will prepare your network for collaborative applications.


Your mobile workers can log on to phones in any office, receive calls & voicemail there.Your mobile workers can use wireless VOIP phones to enable mobility within the corporate LAN.

© Nemertes Research 2009

Team Approach

Identify business/technology liaisons within ITId tif “ t ” h lIdentify “grassroots” helpBudget time for discussions with business-unitshLeaders in HR, sales, finance, customer service, legal, etc.Leaders in HR, sales, finance, customer service, legal, etc.hAlso discuss with managers and staff

Don’t ask technology questions—focus on what problems with their jobs, processes customer relationships revenue generation etcprocesses, customer relationships, revenue-generation, etc.Understand business problems, and relate your technology knowledge to solve themAssemble UC teamhMulti-disciplinary team—network, telecom, application development, contact

center, security, business unitsEngage team in all UC-related decisions


Steps for Success


VOIP Business Case

Is a VOIP business model still necessary?hYes! Now seeing 12-month paybacks as crucial in many industries for any

new IT investmenthExecutives want to see hard- and soft-dollar costs/savings.hLooking for ROI, TCO, and NPV

Challenges existhDo I need to budget for network upgrades? (54% do upgrade)hWhat are the true implementation and operational costs?hDo I need third-party management tools?hHow much should I invest in training?hHow quickly should we move to unified communications?


VOIP Costs: Key Findings

Overall, capital costs are droppingh Vendors are becoming much more competitive h Large companies saving 30%-90% off list price

when dealing directly with vendor-manufacturerwhen dealing directly with vendor manufacturer

Implementation/operational prices 20% higher the first 2 years when compared to TDMh As expertise grows, costs decrease

IT training (and cross-training) importanth Troubleshooting IP takes 1x-4x longer than TDM

More companies spending budget on management toolsmanagement toolsCost details available separately


VOIP Cost/Benefit CriteriaCosts

Implementation

SavingsImplementationImplementation

h Time/expertise

Capital

Implementationh Cabling costs

Capitalph Switch, Handsets, Gatewaysh Network upgrades

ph Softphones v. handsetsh Centralizing voicemail/UM, servers

h Management toolsh Cabling

Ongoing operational

h Hosted Offeringsh Audio bridges

Ongoing OperationalOngoing operationalh Network/WANh Staff (internal/outsourced)

Ongoing Operationalh MACsh Staff Reductions & Retention

h Maintenance & Licensingh Training

– IT, receptionists, CC turnoverh Network, FMCh SIP trunking


SIP trunking

Nemertes Data: Cost Components

Implementation: hPlanning, installation, troubleshooting. Internal + consulting

Capital: phCapital costs for IP switches, phones, gateways, network upgrades related to

the VOIP implementation, IP video and audio bridges, management tools, unified messaging and traditional voicemail For comparison here we unified messaging, and traditional voicemail. For comparison here, we included only VOIP switches and phones (hard phones & soft phones).

Ongoing operational: Ongoing operational: hTime and money companies spend managing and maintaining their VOIP

systems.


Average VOIP Costs

VOIP Costs 2009Implementation 135$ Capital 408$

VOIP Costs 2009

p $Operational 570$

Fi 1 113$First-year costs 1,113$

*Figures for Avaya Cisco Nortel ShoreTel rollouts

Average Profit MarginsH d / ft 15% 38%

Figures for Avaya, Cisco, Nortel, ShoreTel rollouts

Hardware/software: 15% - 38%Professional Services: 50-55%


VOIP Management Tools Spend

Average number of employees managing employees managing VOIP range from 1 for small companies to 10 for very large companiesy gWhen managing in-house, they add between one and six tools just to jmanage VOIP!43% buy tools 3 years after deployment (20% p y ( %between 1-2 years)


How Did WAN Costs Change With VOIP Project?

Average WAN savings:

23%23%


LAN Upgrade Costs

IP Telephony Implementations

Cost per end unit* Less than 500 501-5,000 More than 5,000 All sizesNumber of End Units

p y pCapital Costs Per Person

IPT Hardware $667 $411 $342 $554 LAN Upgrade $553 $280 $159 $421

LAN Upgrade: Total Average Capital $1,220 $691 $501 $975 LAN Upgrade: % of Overall Capital 45% 41% 32% 43%*End unit is IP handset, audio bridge, softphone or other end-user device.

Includes pricing for all vendors


Closing Thoughts: Best Practices to SuccessUnderstand business problems UC can solve.Don’t rush! Spend time up front educating IT, business units, executives.h Win support internally.pp y

Tie VOIP to the overall UC project.Tie UC to corporate green initiatives.h Enables telecommuting, conferencing

Understand vendor roadmaps & alignment with your strategyy gyh Architecture & scalabilityh UC app supporth Virtualization plansh Partner expertise


Thank You

Robin GareissExecutive Vice President & Sr. Founding Partner

www.nemertes.com

Documents

Convergence: VOIP/UC Business Case - etouches · Convergence: VOIP/UC Business Case ... TCO Overview for IP Telephony ... an overview of the cost benefits of this technology. $3,003,840