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Value, Risks and Rewards of VOIP
Zeus KerravalaVice President, Enterprise InfrastructureThe Yankee [email protected]
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the Yankee Group
the Yankee Group The Premiere Global Telecom,
Technology, Wireless, Media and Internet Commerce Market Research and Consulting Firm bridging the old and new economies
30 years as strategic adviser to many of the world’s largest network service providers, equipment suppliers and enterprise e-businesses
More than 100 Technology Analysts with a Special Focus on Enterprise and Carrier Networks, Internet Commerce and Infrastructure, Wireless Technology & Services
Zeus Kerravala Vice President
Oversees Yankee Group’s Enterprise Infrastructure services
Focus on enterprise hardware and software infrastructure, Internet data center infrastructure, carrier edge
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the Yankee Group• Core Practices Extend
Worldwide• Europe • Latin America• Asia Pacific
• Customer Focus• Investment Banking and
VCs• Buy-side Investors • Vertical Markets
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Enterprise Challenges
Improve user productivity through the use of technology.• Competitive advantage vs. necessary evil
Increase revenues while lowering cost.
Mobilization of the workforce
The need to unify all communications platforms.• Conversable technologies
Align IT with business process
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The New CIO Mandate
NowTime
Tactical Strategic
Bu
sin
ess
Val
ue
Importance of Technologyto the Enterprise
Past CIO Metrics:Bandwidth, CPU, Memory,Database/System Availability
Future CIO Metrics:Productivity, Revenue,Cost, Profitability, Process
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State of VoIP
Adoption Results• 2002 – 10% penetration of line shipments
• 2003 – Forecasting 25% for 2003
• 1 Million IP Phones sold in 2001
• 2 Million IP Phones sold in 2002
• Projecting 3 Million in 2003
• Projecting $10 million in soft phone for 2003
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Telephony Line Shipments
0
2
4
6
8
10
12
14
16
18
2002 2003 2004 2005 2006
Total Phone System
IP Telephony
(Millions)
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Adoption Results for VoIP
2002 adoption was 10%
Respectable, but held back due to:
• Legacy vendors have been slow to develop
IP Telephony solutions
• Reliable VoIP has been difficult to manufacture
• End-users have not been properly educated on what exactly is
available, and what the true costs of owning a phone system
are
• Indirect channel either from voice world or data world have not
quickly adapted to new environment
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67%
0%
33%
0% 0%
1 2 3 4 5
1.No Interest 2.Not deployed, but interest 3.Deployed in trials 4.Departmentally deployed 5.Fully deployed across the company
What is the status of VoIP in your organization?
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Value Risk
IP Telephony Value and Risk
Gain a competitive advantage
Lower TCO than running separate systems
Improve efficiency of end users
Will increase user productivity by unifying collaborative apps
It’s about voice OR data
Competitive disadvantage if performance is erratic
Increase TCO if pre-work and analysis is not done
Will lead to inefficiency if not deployed correctly
End-users will not use new applications if the experience is not consistent
It’s about voice AND data
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The Changing Value Proposition
What we have been saying: • VoIP, Convergence, Multicast, Layer2, Layer3, QoS,
Switching, TDM, PSTN, etc.
• Value Proposition: TCO savings, IT improvement, etc
What we should be saying: • It’s about managing and using information and
communications better
• Value proposition: Driving business value through productivity improvements
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Tomorrows Requirements: Extending the Enterprise
Partner
Employee
IP Voice
TDM Voice
Web Information
Call Center
Faxes
Voice Mail
MobilePhone
Messaging
IVRUsing and Managing Information
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The New Value Proposition
Lower TCO
Improved IT Process
Streamline BP
Competitive Advantage
Incr
easi
ng R
OI
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IP Telephony Benefits
TCO Savings: Less cabling, equipment, savings on toll costs, network savings
Improved IT Process: Reduced MACDs, ease of configurations, streamline staff
Streamlined BP: Unified messaging, collaboration, travel benefits
Competitive Advantage: Presence software, speech req, IPT apps
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50%
25%
0% 0%
25%
1 2 3 4 5
1.Greater than 125% the cost of TDM 2.101% to 125% the cost of TDM 3.The same as TDM 4.75% to 99% the cost of TDM 5.Less than 75% the cost of TDM
Audience Response:What savings/premium do
you expect VoIP to yield?
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Networking Trends IPT Impact
Networking Trends will Drive IP Telephony Adoption
Networks will be packet optimize
Web services continue to drive app. integration
Network and computing platforms will be simplified through standards
Voice platforms will be adapted
to packetized networks
The phone and PC become key
voice/data integration points
Third-party software vendors
will develop vertically oriented
“deadly” applications
Telephony will be come an application on the data network
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Phone-Based Integration
Source: Cisco Systems
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PC-Based Integration
Integrated Video
Presence Application Integration
Source: Mitel
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What This Does to the Business
Talking Collaborating
Delayed Real Time
Delayed
Media Restrictive Media Adaptive
Reactive Proactive
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Pervasive Communications
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IT Investment
RO
I
ROI from decreasing IT cost
ROI from increasing employee productivity
Productivity Impact of IP Telephony
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Convergence Risks Voice and video are real-time applications extremely
sensitive to delay, jitter and packet loss
Businesses demand five-nines availability for voice
Need PSTN-like call quality
• New features and functionality do NOT compensate for poor call quality
Large networks require network audits and upgrades
QoS must be implemented
• Best practice on the LAN
• Mandatory for WAN
Inaccurate TCO and ROI calculations
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75%
0%
25%
0% 0%
1 2 3 4 5
1.Cisco 2.Avaya3.3Com4.Nortel5.Other
Who Is Your Preferred VoIP Vendor?
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Recommendations IP Telephony will happen – be ready
Perform a network assessment
LAN, WAN, servers, cabling, management, power
Choose a test bed for deployment
Assess what you learn from the test bed
Review sample business cases, calculate TCO and ROI
Success depends on planning and having an effective management infrastructure
“Measure twice, cut once” (and proactively manage the quality of the cutting)
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Thank You!
Zeus Kerravala
Vice President
Enterprise Infrastructure
The Yankee Group
617-956-5000 phone
http://www.yankeegroup.com