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The State of North American Business Customer Adoption of IPT and VOIP: Page 4 of 4

Suppliers and service providers hold the key to stimulating enterprise customer adoption of CPE and Hosted systems
April 01, 2008

  • INHIBITORS TO CONTINUED ADOPTION

    Although adoption of IPT and VOIP technologies and services continues, organizations aren’t yet sold on their complete migration off of legacy voice systems and services. For instance, 23% of North American enterprises said they have “no plans” to use IP PBXs, and 45% had no intention of using IP videoconferencing. Only 42% of the companies who said they were interested in VOIP provided a timeframe for their migration to hosted VOIP services and 53% could do the same for WAN VOIP services (see Figure 5).

    FIGURE 5: Planned North American Enterprise Migration To Select VoIP Technologies And Services

    “In what year do you anticipate completing your company’s migration to each of the following technologies?”


    Base: 348 technology decision-makers at North American enterprises
    Source: Forrester Research Enterprise Network And Telecommunications Survey, North America And Europe, Q1 2007

    WHAT CAN SUPPLIERS DO TO IMPROVE CUSTOMER RECEPTIVITY?

    Factors Impeding North American Enterprise Adoption of IPT and VOIP

    Uneven adoption levels of new services technologies are quite normal. However, in the case of managed IP telephony and WAN VOIP services, providers could do a great deal to lower barriers to adoption. Some of the most important current inhibitors for enterprises include:

  • The math can be challenging. Companies that had assumed an easy back-of-the-envelope ROI for either IPT or WAN VOIP find that it’s not a slam dunk. According to our research, the payback window for IP PBXs typically ranges between 24 and 60 months. Since Hosted VOIP or managed IPT services can avoid many capital expenses, the window shrinks appreciably—which can provide them with a distinct financial advantage compared to owning IP PBXs. However, as we’ve seen, overall enterprise interest in managed and hosted IP telephony services lags considerably behind use of other managed network services, such as managed MPLS –which has a 35% adoption rate in North America. It’s entirely possible this reflects lingering enterprise customer perceptions about legacy Centrex services—whose capabilities distinctly lagged those of major brands of digital PBXs. Many service providers have done very little to-date to fully disprove the same problems won’t apply to IP Centrex. And on WAN VOIP, the business case is still much easier for international calls than it is for domestic calls.
  • Managed IP telephony offers are immature. Like many other managed service providers, not all facilities-based telecommunications services providers support the same IP PBX manufacturers, so choice is limited. More importantly, carrier support for inter-vendor feature interoperability is extremely limited. Current capabilities of hosted VOIP services are comparatively limited to those of IP PBXs. And providers are slow to deploy important new hosted VOIP features, such as 2G (cellular) extensions. SLAs are often very limited in scope – they are far from reassuring to a company seeking to outsource voice desktop functionality.
  • WAN VOIP offers are immature. SIP trunking services are very new---so new that many providers have yet to deploy standard backup and overflow capabilities. PSTN feature parity typically is lacking; SLAs are reactive and often focus on data-performance metrics. IP toll free services are also quite new, and many providers have yet to introduce complementary capabilities, like network-based IP ACDs or IP IVRs. Most companies have never used managed PSTN services, and so they often fail to appreciate the value of using managed WAN VOIP services until they are well into trying to deploy this service on top of their MPLS networks. As already seen, adoption of IP videoconferencing is in lock-step with WAN VOIP; customers will evaluate this technology more closely as their WAN VOIP deployments proceed.
  • Migration is prolonged. At this time, migration to IPT and VOIP is highly customized—it all starts with the legacy products, services and infrastructure currently in place. Each migration plan uses this as its foundation. Although customers prefer incremental change, upgrading legacy infrastructure, products and services are very great challenges. But suppliers have yet to offer meaningful alternatives to this type of approach.
  • Converged networks require converged organizations. VOIP suppliers aren’t the only inhibitors to adoption—enterprises themselves can also stand in their own way. Inside an enterprise, employees who have different types of network expertise, such as voice versus data or LAN versus WAN, often reside in different organizations. Some may report to the CIO’s organization, while others may report to the CFO’s organization. But the nature of VoIP deployments and convergence requires that these groups all work seamlessly together — permanently. Often, companies find the optimal way to accomplish this is to reorganize. Such significant change takes time to identify, appreciate, accomplish, and then move forward with key VoIP and other convergence initiatives.

    PROVIDERS CAN BE KEY ENABLERS OF GROWTH

    Among the range of activities that providers should consider to stimulate adoption, I strongly recommend that they

  • Improve VOIP reliability, and stand behind it. The SLAs for PSTN service are implicit—the price of a call is refunded if the call attempt is blocked, terminated prematurely, or of poor quality. No major facilities-based provider offers aggressive, easy to understand and measureable per-call VOIP SLAs. Compared to these woefully inadequate SLAs, SLAs for carrier-managed IPT and hosted VOIP services are even worse. No wonder customers are leery. If suppliers put themselves in customers’ shoes, they would be too.
  • Recognize the reality of company budgets and appetites. Companies don’t have unlimited resources to throw at IT or network projects. They have priorities, and often take a phased approach to implementing VOIP and IPT. Today, many companies worry about the effects of a recession, so an effective VOIP migration strategy may even require additional phases – or other types of remedies (see below).
  • Make migration less painful than it is today. At the very least, suppliers should give companies a choice between an extremely protracted process that is highly incremental and makes the greatest use of the company’s current infrastructure, or one that is much faster, and gets the pain over with much sooner. It’s possible that since productivity benefits also will accrue faster with the second approach, it could yield the greatest ROI.
  • Target early users inside of larger organizations. Providers should supply companies with modular solutions that make use of hosted or managed services that are highly reliable, affordable and which provide key features and functions that revolutionize their departments. To borrow a phrase—“nothing succeeds like success”.

    Lisa Pierce, a Vice President at Forrester Research, specializes in enterprise-class fixed and mobile telecommunications services.

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