THE PLAN
Your Plan to move your organization is not an easy one, yet rewarding in the end. Your mission, “should you decide to accept it”, is to do the following:
1. Identify areas of risk in your current environment – capacities, manufacturer discontinuance, parts availability, technician knowledge, risk of a multi-day outage. All systems implemented over 7 years ago should be considered,
2. Review the corporate and IT strategic plans so that you can align the new replacement system technology with these plans, thus taking the replacement from strictly an operational need to one that is strategic,
3. Engage the help of industry experts who can help identify your organizational technology needs and facilitate the process, including the points listed in this plan,
4. Identify and brainstorm those VOIP technologies that your organization can benefit from that can differentiate you from the competition and set you and your organization apart from others in the market.
5. Ensure that the technologies you are considering integrate well with your organization’s needs and wants, and break out applications accordingly,
6. Review your voice and data closet requirements and any investment required in cabling, UPSs, space, and HVAC to support the new infrastructure,
7. Review your current data switch and router infrastructure. Are data components VOIP-ready? POE-capable?
8. Review your Wide Area Network requirements enabling VOIP, audio conferencing over IP, and videoconferencing over IP, and determine how you can leverage Return-On-Investment strategies in the overall system replacement. Include redundancy and network resiliency as a part of your WAN strategy. Consider the current service available and consider newer WAN technologies such as MPLS and Ethernet Private Line Services that can improve on infrastructure cost by as much as 30-40%,
9. Identify budgetary requirements of the system replacement based on number of endpoints, growth, number of sites, technologies to be considered (required vs. want). In addition to capital requirements, include software subscription costs and maintenance as part of ongoing support recurring cost requirements. Prepare a 7-10-year Total Cost of Ownership (TCO) schedule. Consider creative financing options available from the manufacturers and VARs (some of the latest creative financing options are significant – some include:
a.) One manufacturer is currently offering ZERO percent financing for 48 months or the first 90 days at ZERO payment (for promotional and incentive purposes).
b.) $1 buyout and Fair Market Value (FMV) leases are available. FMV lease provides the option at the end of lease to (a) continue leasing, (b) give back to the vendor, or (c) purchase the systems at a Fair Market value (note for this type of lease, I recommend forcing a “cap” percent buyout at the beginning of the lease, otherwise the leasing company could ask for an excessive percentage at the end of the lease term). Straight operating leases are also available (but rare), where the system is returned at the end of the lease period (or term extended) and the customer is never given an option to purchase.
c.) For larger, staggered implementations (multiple buildings/sites over 24-36 months), some options available include:
--Option 1 – Fund the entire amount at one time. Doing so allows capital allocated to systems implemented in future phases to be placed in high yield interest-bearing accounts, thus reducing the net interest on the lease
Option 2 – Based on a staggered two phase installation, obtain lease funding as two sub-leases: one sub-lease at lease start, and the second sublease starting at Month 13 for the remainder of the lease term. In this case, only the system portion implemented (one-half during year one) will be financed for the entire lease, while the second half will start in year 2, tied to the remaining lease period. For example, for a $10 million project for 72 months, $5M will be leased for 72 months and the remaining $5M will be leased for 60 months. The advantage here is to keep payments down in Year 1, providing an avenue to facilitate the implementation short term. The lease will end for both halves concurrently, or co-terminus.
Option 3 – Same as Option 2 but semi-annual, quarterly, or monthly payments. Note that this lease’s payments over 12 months will be higher than the single annual payment in Option 2.
Option 4 – Variations on Options 2 or 3 above, but with the implementation staggered over a 36 month period, and thus 3 sub-lease arrangements.
For any of the above, it is important to work closely with your CFO’s Office and Finance Department, as different lease options may be more financially advantageous to your organization’s accounting practices relative to capital and operating funding.
10. Determine timing requirements for deployment purposes and number of sites involved for the deployment. Will the project replacement take place over a weekend, several months, or even a 24-36 month period based on the size and timing requirements of your organization?
11. Obtain management approval for the capital project, and then seek to procure a new system based on the development of system specifications and Request For Proposal.
