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Escalating VoIP Service Bill

By Gary Audin, Delphi, Inc. | Jun 19, 2008 | No comments yet ...

The cost for VoIP/IP Telephony service calls is 150% more than every other category of IT technology--higher than cabling, software, servers, PCs, you name it. This translates into $449 for the average service professional work order as compared to the next highest work order cost of $282 for wiring and cabling followed by software at $255. This is according the report just published by OnForce covering the first quarter of 2008. The report, "State of the IT Industry Report", covers a wide range of analysis, by locations and IT categories.What does this mean to the enterprise? That the VoIP/IPT support bill will a much bigger hit in the near term than any other IT service calls. Even if the enterprise has a fixed-cost maintenance contract, the enterprise can expect a significant increase in the maintenance contract price when it comes up for renewal. Those enterprises that elect to pay per service call will see considerable service call cost escalation in the next year. For the service call provider, there is the old adage, "Where there is mystery, there is margin".

This first report, in a planned series of quarterly reports, analyzed 750,000 work orders. The report covered January 1 to March 31, 2008. Over 1,000 VARs, solution providers and IT service firms were included in the study. The report does not try to draw a lot of conclusions. The data tables can easily be interpreted by the reader.

One of the measurements in the report is the Average Work Order Value (AWOV). This is the average price of a work order. Another measurement is the Hourly Rate Index (HRI). The HRI is a comparison/ratio for the per on-site work hour cost. Assume that the national average HRI is 1.00. Then an HRI of 1.5 means that it is 50% more expensive and an HRI of .75 means that it is 25% cheaper. The HRI varies greatly by work category and where (i.e., geographic location) the work was performed.

Here are some of the report results:

  • The most expensive state is Wyoming with an HRI of 2.28, followed by Vermont with a 1.91 HRI.
  • Surprise: New York and New Jersey are at an HRI of 1.00.
  • Oklahoma is cheapest at a HRI of .59.

    The factors that influence the HRI are:

  • The lower the number of service professionals available in your area, the higher the HRI.
  • The service provider resident density--more service professionals per square mile--reduces the HRI.
  • The cost of living in any geographic area does not seem to have any noticeable influence.

    The volume of service calls correlates with the local population. California, Florida, Texas and New York top the list for service call volume. Vermont, Delaware and Rhode Island are at the bottom of the list. When the report analyzed the cost for different cities, there were some surprises. The HRI for Akron, OH is 3.76, Topeka, KS is 3.62 and Irvine, CA is 3.48. It appears that the state average HRIs mask the significant difference among the cities. Manhattan was not even on the city-by-city list of expensive HRIs.

    New York City, as expected, has the highest volume for service calls in the U.S. This was followed by Houston and Chicago with, surprise, Las Vegas as fourth on the list. This correlates to business calls for tourist/visitor driven IT in Las Vegas, but is high considering the local population size.

    The most expensive IT sub categories really demonstrate the cost of VoIP/IPT service calls. A complete VoIP/IPT system has an Average Work Order Value (AWOV) of $2,449 and an HRI of 5.49. Dealing with VoIP/IPT hardware and routers is an AWOV of $542 and HRI of 1.60. VoIP/IPT network connectivity is an AWOV of $236 and HRI of 1.52. The next biggest AWOV was for wiring and cabling at $591 and 1.89 HRI.

    No matter how you view the report results, VoIP/IPT service calls, in a least the near term, will be the most expensive IT calls. Further, the fewer qualified service professional in your area, the more expensive the service calls. Have you put this cost into your TCO? I doubt many IT organizations have even considered the costs of the VoIP/IPT system long term maintenance in their TCO analysis. What do you think the VoIP/IPT service call will cost in three years?

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