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Eric Krapf
Eric Krapf is General Manager and Program Co-Chair for Enterprise Connect, the leading conference/exhibition and online events brand in the...
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Eric Krapf | May 14, 2008 |

 
   

Reality Check on IPT Opex

Reality Check on IPT Opex We've written a fair amount this year around the topic of operational expenses (opex) of IP Telephony. I say written "around" the topic because we've mostly discussed whether the potential for opex savings could be what's driving the market to continue investing in IPT despite the overall economic slowdown. But we haven't really taken a systematic look at the opex picture. That's why I was so glad to get Robin Gareiss of Nemertes Research on a VoiceCon webinar on this topic (go here to get the replay, and here for the archive of recent webinars).

We've written a fair amount this year around the topic of operational expenses (opex) of IP Telephony. I say written "around" the topic because we've mostly discussed whether the potential for opex savings could be what's driving the market to continue investing in IPT despite the overall economic slowdown. But we haven't really taken a systematic look at the opex picture. That's why I was so glad to get Robin Gareiss of Nemertes Research on a VoiceCon webinar on this topic (go here to get the replay, and here for the archive of recent webinars).

We've written a fair amount this year around the topic of operational expenses (opex) of IP Telephony. I say written "around" the topic because we've mostly discussed whether the potential for opex savings could be what's driving the market to continue investing in IPT despite the overall economic slowdown. But we haven't really taken a systematic look at the opex picture. That's why I was so glad to get Robin Gareiss of Nemertes Research on a VoiceCon webinar on this topic (go here to get the replay, and here for the archive of recent webinars).Robin presented the results of survey work that Nemertes has done with enterprises, and they looked into an important issue: Not just how much you project you'll save as you go into the deployment, but what the actual reality turns out to be.

On average, Nemertes found, an enterprise will save 24% on opex in the form of moves, adds, changes; software updates; routine maintenance; and monitoring. That's the good part.

The down side, however, is that Nemertes found, "it takes 1- to 4-times longer to isolate, resolve IP voice problem than TDM." This is logical; when there's a problem with voice communications, you now have to troubleshoot not just the PBX, but the whole IP infrastructure. Robin said she expects this time issue may ease somewhat as enterprises get more familiar with the common problems and develop efficient troubleshooting routines and get the right tools in their hands. But at least at the outset, expect troubleshooting to get more complicated. Enterprises can expect to spend 20% more time and money in the first 12-24 months of a deployment on opex, she concluded.

So while your opex will eventually improve with IPT, it very likely could be a wash in the short term.

There's better news on related cost fronts: Nemertes found an average savings of 23% on wide area network costs, thanks to the concurrent move from frame relay to MPLS networks that's been going on, accompanied by the ability to combine access lines and/or leverage underutilized capacity on your WAN links. Furthermore, Nemertes found 40% savings on capital, thanks primarily to reducing the cabling and leaving only 1 or 2 drops per station instead of 3 or 4. Undercutting this benefit, however, is the potential capital cost of purchasing new telephones. Also, one of our questioners in the webinar suggested that, while it's nice to think you can reduce the number of drops, you might (depending on your enterprise) be living somewhat dangerously if you actually go that route. Cabling is basically forever, so if you're given to erring on the side of caution, you may wind up choosing not to leverage that savings via fewer drops.

Nemertes's bottom line for annual opex costs with IPT was as follows:

  • Fewer than 300 end stations: $1,152 per station
  • 300-999 stations: $133 per station
  • 1,000-4,999 stations: $157 per station
  • More than 5,000 stations: $37 per station

    One item that may relate to these costs is that Robin showed some Nemertes data that found big growth in managed services for the enterprise. The share of enterprises using managed services rose from 27% in 2006 to 46% in 2007 to 63% in 2008--and Robin said she expects the number to go even higher. The reason? Budgets, and the desire to use "selective outsourcing" to handle routine tasks so in-house staff can concentrate on strategic issues. At branch offices, Nemertes found, the most common type of service purchased was managed routers (49% of respondents had this); next was IP telephony management, which was used somewhere in the network by 22%.

    So the message here is that opex savings will come with IP telephony, but not without some effort by the enterprise.





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