COLT Telecom - Voice Services Managing the transition to an IP Network

ContentsExecutive summary 2Deployment trends 3Cost efficiency 4Definitions 4Flexibility 6Convergence 6Productivity 8IP Gateways 8Challenges 9Voice over IP or voice over the internet 9Choosing a vendor 11Session Internet protocol 11Conclusion 12

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ManaGInG thE tranSItIon to an IP nEt work

VoICE SErVICES

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VoICE SErVICES ManaGInG thE tranSItIon to an IP nEt work

the effort which organisations are currently expending on the transition to IP voice will, in the long term, be rewarded with lower infrastructure opex costs, reduced telephony tariffs and increased productivity for their employees.

ExECutIVE SuMMary

Ref (1) 200 or more employees

Despite having been discussed for nearly a decade, mainstream implementation of voice as a service on so-called converged IP data networks has finally begun in earnest among large and medium-sized organisations (1) over the last 12 months.

through the use of voice over IP (VoIP), organisations aim to achieve significant cost efficiencies in infrastructure opex, telephony tariffs and total cost of ownership (tCo).

Beyond cost-cutting, VoIP services promise to make productivity enhancements, such as conferencing and unified messaging, more easily available to employees than with conventional voice systems.

organisations will reap the full benefits of VoIP when they address the issues throughout their entire infrastructure, which may favour a hosted solution. If they pursue piecemeal migration the optimal position of cost efficiency and raised productivity is not guaranteed.

the key to corporate success is the ability to respond quickly to changing market conditions, new competitors and emerging customer demands. therefore, organisations should be wary of the potential pitfalls of locking themselves in to an inflexible VoIP solution which limits their growth potential or is unable to accommodate radical changes. they must look for the most flexible end to end solution.

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74 percent of large organisations expect to fully migrate their voice networks to IP-based by the end of 2008. By December 2005, 28 percent had taken the first steps. (IDC)

In the third quarter 2006, shipments of IP telephones rose 15.7 percent over the previous quarter in western Europe. (IDC)

By 2010, there will be 48.5 million VoIP connections. (IDC)

In the third quarter 2006, shipments of IP telephones rose 15.7 percent over the previous quarter, according to IDC’s survey among 16 western European countries. the top three vendors, in order, were Cisco, avaya and alcatel.

Despite the prevalence of email, instant messaging and SMS (short message service), voice is still the leading business communication tool. Voice applications can consume up to 25 percent of an organisation’s ICt (information and communications) budget, according to ovum, a market research firm.

the notion of ‘IP (Internet protocol) everywhere’, whereby organisations adopt IP throughout their entire data and voice infrastructures, has been talked about since the early days of the internet boom in the late-1990s. and while some early-adopter organisations took up the challenge immediately, it is only in the last two years that significant numbers of large organisations with extensive infrastructure investments have begun to deploy VoIP as the first step towards pure-IP networks.

In December 2005, 28 percent of large enterprises had already implemented some converged

IP services, according to market analyst firm IDC (2). the majority of these - 81 percent - are IP-based telephony solutions at some or all of the companies’ sites and 36 percent involve enabling VoIP calls over their wan.

three-quarters of these companies (ie one in five of the total surveyed) began this transition in the period from Jan – Dec 2005.

however, having waited six or seven years to begin the process, organisations now expect to move forward quickly. according to IDC’s survey, 74 percent of large firms expect to fully migrate their voice networks to IP-based by the end of 2008, that is, to replace all tDM voice with IP services.

there are three main factors driving this upsurge in activity to implement VoIP: cost efficiency, flexibility and employee productivity.

DEPLoyMEnt trEnDS

Ref (2) Voice and Data Convergence Hits the Mainstream: Why Enterprises are Quickly Migrating Their Networks, IDC.

the survey was conducted among 440 large companies in Spain, Germany, Belgium, the netherlands, Ireland, Italy, France, the uk and the uS.

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What is IP?

Internet Protocol (IP) is a communication language that enables a network of computers to communicate so we can send emails and share documents and other files. IP is the underlying mechanism for the worldwide network of computers that make up the internet and the language that browser software uses to access websites.

What is Voice over IP (VoIP)?

VoIP is the technology used to transmit voice conversations over a data network using IP. the data network involved might be the Internet or a corporate intranet. VoIP takes an analogue voice, encodes it digitally, converts it into

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CoSt EFFICIEnCy

Modern organisations experience increasing pressure to be more efficient so as to thrive in today’s fiercely competitive business climate. Economic and technological globalisation means business runs 24/7; new competitors emerge in the form of well-funded start-ups or existing businesses moving in from other sectors; organic growth is supplemented by mergers and acquisitions; customers are more knowledgeable, networked and vociferous than ever before; and the battle for talent – capable people with commercial and technical skills and a sound work ethic – further exacerbates the pressure on companies to be more efficient, to do more with less.

In the constant search for smarter ways to do business and, more importantly, new streams of revenue, organisations rely heavily on their ICt infrastructure.

network savings

For historical reasons organisations have operated two distinct networks, one for voice and one for data, which have evolved in parallel as business requirements have changed. a desk in a conventional company has three wires running to it: one for power, one for data and one for the internal phone system.

Leaving aside power distribution, this requires maintaining two infrastructures, with all the ensuing operational expenditure, managing two distinct sets of suppliers and employing support staff with skills in PBx and data networks – which are rarely combined in the same person.

Furthermore, organisations with more than one building have frequently evolved with a single data network but a separate PBx for each building. the result is a web of complexity which, even if well-managed, can inhibit growth and flexibility and increase costs per site.

By carrying voice as a service on the data network, these operational costs can be reduced. the operational costs of maintaining the PBx network(s) will be eliminated, as will any costs that would have been incurred by changing the voice network when the organisation expands or otherwise changes operations.

By running voice across a single IP network, branch offices need no longer maintain separate PBxs and all equipment associated with voice traffic can be centralised. according to a recent study of large uS companies, once the converged networks had achieved ‘steady state’, annual operating costs were 30 percent lower for a single IP network

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packets, and transmits them over the data network to their destination using the most efficient path. at the destination the packets are reassembled and reconverted to the format they started in: analogue voice.

What is IP telephony?

as the use of IP has evolved, so has the range of applications and devices that can be supported. the use of IP is now common in multimedia communication and can also be used with telephones and telephone systems to make phone calls across the internet. this technique is most commonly associated with low-cost phone services via the public internet promoted for residential or home use.

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than for separate voice and data networks (3). Moreover, the capital cost of equivalent services, such as a voicemail server, tends to be much lower for IP systems than for PBx.

however, the organisation will still need to employ support staff who understand data networks and understand how voice works as a service on an IP network. this may require an increase in support staff numbers rather than a reduction during the transition from separate voice and data networks to a single IP network.

obviously this will not be the case if the PBx is hosted: the cost of support staff will be born by the service provider.

allied to the cost-reduction equation is the fact that as legacy PBx systems reach the end of their serviceable lives, firms are faced with the decision of whether to invest in a new PBx or make the transition to a VoIP system. Given the advantages, it is natural that they should choose to retire the legacy PBx and switch from dual infrastructure to a single IP infrastructure.

telephony tariffs

another source of cost reduction realised by VoIP is lower telephony tariffs. using conventional PBx systems, calls from one branch office to another would be routed over the PStn once they leave the PBx,

incurring per minute call charges.

But if the organisation operates a single IP network, a VoIP call from one part of the organisation to another, no matter how geographically dispersed, will be free of charge (that is, the call will not incur a cost per minute, although it will share the burden of network operational costs). VoIP systems enable least-cost routing, so that calls are routed to “hop on” the enterprise wan using the IP PBx and then “hop off” again at the location that offers the most savings. Dedicated client software provides this service transparently to caller and called party.

For highly distributed organisations with multiple branches, these telephony cost-savings can be significantly large enough to justify the move to VoIP.

applications

the advantages described above can also be applied to mobile phones, so that when travelling abroad, for example, the client software on the handset knows to make the call using the appropriate roaming agreement via the enterprise or hosted IP PBx, so that the call is made using the lowest-cost route. the IP PBx deals with the QoS (quality of service) issues, ensuring that voice traffic is given priority over less critical applications, such as email.

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Ref (3) Choosing a Communications Managed Service Provider: Strategies for Decreasing Risk and Cost in Converged Networking, Lippis Consulting

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What’s the difference between IP telephony and VoIP?

VoIP and IP telephony are closely related: IP telephony is dependent on VoIP. VoIP is the building block for delivering conversations over an IP network. to avoid confusion, the use of IP to enable business and telephony applications is referred to as IP telephony, whereas VoIP is the underlying technology.

another attraction of moving to VoIP is the ease with which additions moves and changes can be executed and new voice services deployed.

the demand for flexibility in business is, in part, the realisation of what late-nineties business gurus, like James Martin, dubbed business agility (4): harnessing technology to provide an organisation with the ability to respond quickly to the demands of its customers and changing competitive position.

For organisations that have followed this line of reasoning furthest and divested themselves of the physicality of manufacturing, their business comprises of pure knowledge workers - people operating in streams of information that feed their decisions and the business processes.

Even for organisations that retain more traditional structures, such as manufacturing and distribution, their employees require greater flexibility to make accurately informed

FLExIBILIty

Ref (4) Cybercorp, James Martin, Amacom, 1996

Conventional separate voice and data infrastructure versus converged infrastructure

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Convergence is a word used by telcos, infrastructure vendors, service providers, analysts and the press as a catch-all to imply a mystical alloying of voice and data networks. In reality it often means replacement of the voice infrastructure rather than a merging of the two.

For example, in a converged IP network, voice will be a type of data traffic running over the IP network, and telephony applications, such as multiparty conferencing, will be services embodied by software and configurable from a PC.

decisions in near-real-time, bringing products to market more quickly, and responding to customers and suppliers appropriately.

Infrastructure changes

Given these high-paced conditions of modern business, many organisations are finding that their premises are in a constant state of internal construction, breakdown and reconstruction with teams allocated dynamically to M&as, new projects, spin-offs or ‘fire-fighting’.

Changing desks, adding new people or operations and eliminating unused lines due to layoffs is an arduous process of hardware and software changes with conventional PBx systems. on an IP PBx, effecting moves, changes and additions is much simpler.

Configurable applications

allied to the flexibility of IP networks to accommodate changes and additions is the increased ease with which they can deliver configurable voice applications, such as conferencing, redirection and follow-me services. after cost reduction and flexibility, the promise of greater employee productivity is the third factor driving the adoption of VoIP.

Few office workers master the functions of the PBx system available on their desk phone. In fact, office workers are increasingly using mobile phones at their desks because these offer a familiar interface with an easily accessible list of contacts. according to a study conducted by Strategy analytics in august 2005, 22 percent of workers use mobiles while at their desk. Some estimates are even higher: that four out of 10 calls made from an office are made from mobiles.

however, an IP PBx offers the chance to reinvigorate the desk phone with a host of services configurable and accessible from the familiar interface of the PC. office workers will no longer have to remember which esoteric keypad combinations are required to set up a conference call, they can select conferencing functions from their screens, pull in callers and engage in IM sessions with participants during the conference.

an IP PBx can also integrate with mobile phones and applications. within the campus a mobile phone can be made to operate as if it was an extension of the IP PBx. For remote and mobile workers, soft phones can provide all the facilities of an IP PBx extension from a laptop.

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to connect a company’s VoIP system to the public network requires an IP gateway running h.323 protocol or SIP (session initiation protocol – see page 10) which deals with the interface between packetised IP and the circuit-switched PStn.

h.323 and SIP provide similar functionality.

Beyond the office environment, a VoIP system also makes it much easier to accommodate mobile and remote workers and provide them with the same telephony services as if they were sitting at their desks.

In businesses such as professional services firms which rely on highly mobile knowledge workers, customers expect to be able to contact consultants and account managers immediately - wherever they are.

Deploying an IP PBx can improve customer service by providing seamless transparent mobility with facilities like follow-me and a single direct-dial contact number which connects to the called party regardless of whether they are at their desk or at a remote location.

Economic and societal changes towards hot-desk policies, home working and remote working are becoming the norm rather than the exception. organisations will have to cope with increasing numbers of employees based outside the traditional office environment.

Business analysts agree that the organisations that will be most successful in the future are those which harness the greatest human talent. But ‘talent’ - educated people with technical and/or commercial

skills, sound work ethic, broadband web access and a grasp of at least one language other than their mother-tongue – is in short supply in developed nations with ageing demographics.

organisations have to cast their nets wider and wider to recruit and retain talented people. that inevitably means offering flexible and remote working to build teams connected in the virtual world rather than the physical office.

Consequently, the number of employees fulfilling some aspect of their role in mobile and/or remote conditions is increasing dramatically. Industry analysts at IDC estimate there were some 650 million mobile and remote workers in 2004. By 2009 that will have risen to 850 million, or about one in four of the total global workforce.

organisations have to accommodate these fundamental changes when planning their ICt infrastructures. running voice as a service on an IP network can help provide this flexibility. For example, a remote worker using a ‘soft phone’ on her laptop can make and receive calls over an IP virtual private network (VPn) with the same facilities and at the same call rates as if she was using a desk phone in the office.

ProDuCtIVIty

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IP GatEwayS

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Some vendors offer voice calls using the internet, but this raises quality of service (QoS) issues.

IP packets suffer from delay (lag in transferring data packets from one point to another), jitter (variations in delay) and loss (packets don’t arrive at all), all of which can compromise real-time voice.

Voice over the Internet treats voice data like any other packet. under peak loads voice frames will be dropped equally with data frames. non-voice data is not time-sensitive and dropped packets can be corrected by retransmission. Voice needs to be real time so dropped voice packets cannot be corrected thus.

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Given the challenges detailed previously, how should organisations respond? Let’s look at some alternatives.

1. Do nothing.

For the organisation where separate voice and data networks happily coexist, doing nothing is a tempting route. Voice is a critical business tool and transferring it from a conventional network to an IP network will cause disruption and require skilled staff and project management.

however, organisations which opt to do nothing will miss out on the opportunities to reduce capex and opex ICt costs as detailed previously, and find their growth and flexibility inhibited by the complexity of the dual network. accommodating flexible, remote and home workers will require a significantly higher level of expense and effort, and services which raise the productivity of employees, such as unified messaging, conferencing and remote softphones, will remain beyond reach.

the organisation which does nothing will increasingly lose out to leaner more flexible competitors who use the flexibility of their VoIP facilities to reap the cost-efficiency benefits, respond to market changes more quickly and serve their customers better. Eventually, the do-nothing approach will lead to reduced profitability and poor value for the business owners.

Besides, at some point the PBx will come to the end of its serviceable life and it is now almost impossible to purchase PBx equipment without some form of IP technology incorporated. Even if the strategy is to do nothing for now, wise managers will be planning for the day when a decision has to be made because operating with the current equipment is no longer feasible.

ChaLLEnGES

remote workers can have the same functionality as office-based workers

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VoICE oVEr IP or VoICE

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2. Invest in a new IP PBx only.

to maximise the shift to IP organisations have to consider their whole infrastructure at the same time. Purchasing an IP PBx and connecting it to a tDM line to the outside world without an efficient IP gateway, or using conventional handsets instead of IP handsets, is not maximising the IP PBx or the potential of VoIP.

3. Single-vendor vision

another danger is that organisations commit themselves wholeheartedly to one vendor’s vision of the future. this is particularly a danger with VoIP services where vendors have created a lot of excitement in the press with epic visions of ‘convergence’.

Convergence is not the holy Grail. organisations do not need another technological marketing concept but a cost-efficient flexible infrastructure which provides a stable platform on which to conduct dynamic business.

retaining flexibility in the infrastructure is vital: surviving and thriving in the modern competitive world depends on it. the dangers of opting for cul-de-sac voice systems which inhibit growth or will prove expensive to adapt should business operations change cannot be over-emphasised.

4. Internet telephony

organisations may also be tempted by the promise of reduced telephony costs to outside parties into adopting internet telephony as the only means of carrying voice to the outside world. But pure Internet telephony is not a carrier-grade service yet in terms of quality and reliability in the same way as circuit-switched technology is.

that is not to say that pure internet telephony will never achieve this standard. In the meantime, organisations that require the same high levels of quality and reliability as are available on the PStn should keep their options open.

5. Consider whole infrastructure

organisations will not reap all the benefits of VoIP through piecemeal migration, but only when they address the issues throughout their entire infrastructure. they should also look at support costs. a voice solution which requires esoteric support knowledge is also a dangerous route for an organisation to take, even if the system fulfils all the other requirements of quality, reliability and flexibility. Specialised staff are expensive to recruit and can be even more expensive to retain if they decide to use their position as lynch-pin to hold the company to ransom.

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Voice needs alternative paths to guarantee a continuous flow of packets regardless of congestion on the network. within a company’s intranet, IP telephony facilitates the delivery of voice packets across the network with speed, control, and plenty of options.

organisations using the internet to route external calls do so without the means to manage the traffic, assure the quality of the conversation, and without advanced features enabling the end user to control the calls.

Voice over the internet services may soon be enterprise quality but are not there yet.

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Session initiation protocol (SIP) is an open multi-media signalling standard, a ‘rendezvous’ protocol, which allows endpoints on the Internet to discover, locate, negotiate, and establish sessions. SIP allows carrier voice equipment to interoperate with enterprise voice equipment over an IP network. SIP sets up and tears down voice calls to and from the enterprise over this IP data network.

SIP provides the communications directory server with the means to reach each individual’s desk phone, mobile, PDa, email and instant messaging (IM) programme. It supports multiple forms of real-time communication, including voice, video, and instant messaging, and allows for ‘presence’ information (see page 11) on the network.

SIP is published by the Internet Engineering task Force (IEtF) and is supported by all major vendors of IP PBxs, IP phones, IP gateways and call managers.

SIPSo, given the potential dangers above, what should an organisation look for in a voice-solutions vendor? In today’s economic climate businesses cannot predict the future. arguably, they never could.

“humans whether acting as individuals or in collective fashion in a firm or government, face massive inherent uncertainty about the effect of their actions,” says Paul ormerod, theoretical economist and founder of the henley Centre for Forecasting. “whether it is the great characters of tragedy or the giant corporations such as Microsoft, the future remains covered in a deep veil to all. Species, people, firms, governments are all complex entities that must survive in dynamic environments which evolve over time. their ability to understand such environments is inherently limited.” (5)

therefore, the foremost attribute required is flexibility. organisations can buy or lease equipment which claims to be upgradeable, but how upgradeable is it in reality? how many people will be working at headquarters in three years time? how many branches will the organisation support? what will be the policy on home working and hot-desks? If swingeing carbon taxes make extensive business travel unfeasible, how will the organisation adapt to video conference meetings? will the organisation require a contact centre? how will

the organisation recruit and retain sufficient project managers for the implementation of the solution and support staff for its day to day running?

Dealing with this uncertainty points heavily in favour of a hosted solution for VoIP which is managed 24/7 leaving the organisation to focus on its primary business purpose. this is why IDC’s survey (2) found 20 percent of large enterprises currently use managed services for separate voice and data networks, but in the future, 39 percent expect to use managed services for converged voice and data.

Migrating to a VoIP solution using a hosted service provider means the vast majority of capex costs and risks are borne by the provider. Security of the system, resilience and disaster recovery and the recruitment and retention of project management and support staff will also fall to the provider.

opex costs will be known and predictable and the organisation can choose between per user or flat call rate charges. the effects on the VoIP system of changes to the business can be calculated with the provider on a what-if basis.

Even if the organisation chooses the hosted service route to VoIP, it still has to ensure that it chooses a provider which not only suits their

ChooSInG a VEnDor

Ref (5) Why Most Things Fail, Paul Ormerod, Faber & Faber, 2005

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For further information on finding the right VoIP solution

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current business position but has the flexibility to cope with emerging business needs, in terms of network infrastructure and new telephony applications, even if these are quite radical. therefore the systems the provider offers will have to be scalable and modular with the ability to design a solution which fits the business as it evolves, rather than a one-size-fits-all solution,

the provider should be able to identify precisely where savings and efficiencies from migrating to VoIP will occur for the organisation and offer a uniform experience to all users, regardless of where they access the system from.

a single provider is unlikely to be able to offer the range of equipment and services that a large organisation requires for its changing needs, but a strong partnership with an industry-leading hardware and infrastructure vendor should be in place.

Voice communication is such a vital business tool that organisations may balk at relinquishing control of it to a service provider. But with well-managed service level agreements struck with the right provider, organisations can smooth their transition to VoIP and benefit from a resilient and flexible solution.

ConCLuSIon

Copyright Colt and IDG Global Solutions 2007

all trademarks are the property of their respective owners

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the effort which organisations are currently expending on the transition to VoIP will, in the long term, be rewarded with reduced tCo of their telephony systems from lower infrastructure opex costs, reduced telephony tariffs and increased productivity for their employees.

however, an optimal outcome for these firms will be achieved in the modern competitive environment only if they consider flexibility a top priority and look to address all infrastructure issues, not just deploy a piecemeal solution. Voice is the leading business communication tool and thus will be central to integrating

employees and virtual teams in the highly distributed organisations of the future.

the fact that an organisation cannot predict what its business will look like in the timeframe of the life of its infrastructure points heavily towards a hosted managed PBx as part of the solution.

Convergence is not the holy Grail. organisations do not need another technological marketing concept. they require a cost-efficient flexible infrastructure which provides the right platform on which to conduct dynamic business.

Technology

COLT Telecom - Voice Services Managing the transition to an IP Network