NOW: Vote for the Winning Side
With the positions laid out by Sorell and Marty, and commenters having weighed in, we want to ask you to vote on which position you think was advanced more convincingly by all those who contributed their ideas to this forum. Take the poll below and see the results:
Just Reading this Debate for the First Time? Start Here:
Welcome to the No Jitter Great Debate series. Our topic for this week is, "Are SIP Trunk Cost Savings Being Overstated as a Justification for Migrating?" and our debaters are:
* Marty Parker of UniComm Consulting and UCStrategies.com; and
* Sorell Slaymaker of Unified IT Systems.
Each of our debaters states his position on a following page; there are links to both posts on this page, so you can start with either one.
When you've read the two sides of the debate, we ask you to join in: Leave a Comment telling us whose position you are more in agreement with and why; amplify and add your own arguments. Early next week, we'll post an online poll asking our readers which position they most agree with--not necessarily which of the original debaters, but which side of the argument, Yes or No. So if you want to sway that vote, leave Comments advocating your position.
Here are the two debate posts to get us started:
YES: SIP Trunk Cost Savings Are An Overstated Reason to Migrate Your PBX
By Marty Parker
NO: SIP Trunking Cost Savings Are Real
By Sorell Slaymaker
YES: SIP Trunk Cost Savings Are An Overstated Reason to Migrate Your PBX
By Marty Parker, UniComm Consulting/UCStrategies.com
Since the advent of IP Telephony (voice communications based on Internet Protocols) in the late 1990s, the reduction of telephone toll costs through Voice over Internet Protocol (VoIP) has been one of the major justifications offered by the vendors for migrating to a new IP PBX. As the market progressed, Session Initiation Protocol (SIP) became a leading protocol for VoIP transmission. Soon, the carriers began offering "SIP Trunks" to carry the SIP packet streams between enterprise locations as well as to and from the public switched telephone network (PSTN). Thus, SIP Trunking became the name for this telephony services and toll cost savings justification.
Sorell Slaymaker makes a clear case that significant savings of 30% to 70% are available by adopting SIP trunks. While we agree that savings are available by using SIP trunks, my view is that the SIP Trunk justification is an overstated reason to migrate to an IP PBX. Here are three major reasons that a PBX migration should either be for better reasons or need not be considered at all.
1. Save without Migrating: The savings from SIP trunks or IP transport in general are available without migrating to an IP PBX. Even before IP PBXs and SIP trunks, multi-location enterprises had figured out that they could route at least their internal voice traffic over their enterprise Wide Area Networks (WAN). This included IP connections to their employees in home offices who could connect to the WAN through a Virtual Private Network (VPN) appliance or software package.
Now, an abundance of gateway manufacturers provide appliance-type products that convert traditional Time Division Multiplexing (TDM) voice media streams from T1 format to IP packet format (SIP or H.323) for transmission over the WAN. So an enterprise could use SIP trunks connected to the gateway without a migration to an IP PBX. Also, some PBX vendors produce circuit packs for their TDM PBXs to deliver IP packets (e.g. in H.323 format) to the WAN without the need for an intermediate gateway translation. Clearly, the ROI will be much greater if an enterprise can get the telephony services and toll cost savings of VoIP-based communications without the expense of a PBX migration.
2. UC Solutions Transform Communications: UC transformation of communications may minimize the importance or value of SIP trunks and may also avoid PBX migration. Unified Communications (UC), including Collaboration and Social Networking, changes how enterprises communicate, both within the enterprise and with the enterprise's customers, partners and suppliers.
For example, presence and instant messaging have been shown to dramatically reduce voice communications (and voice mail usage) within the enterprise. Social networking tools and collaborative workspaces further reduce real-time voice communications via posting and sharing rather than calling or conference calling. If the enterprise can federate with the UC systems (including collaboration and social) of their customers, partners and suppliers, then many of the voice calls to and from those constituencies will be eliminated, as well. Further, for the remaining voice communications, most new UC software platforms support peer-to-peer IP communications (IM, voice or video) both within the enterprise and with federated users. Those UC-based communications (including voice) can flow over the WAN or over Ethernet backbone services and do not require SIP trunks.
Thus, the implementation of UC software platforms is often a far better investment than a migration to an IP PBX based on the justification of SIP trunk and toll cost savings. Use of a UC platform can show how much voice traffic can be replaced by more efficient UC options; an enterprise may realize traffic and toll savings of as much as 50% by just discontinuing the unnecessary TDM trunk services and related tolls. Thus, selection and installation of a top notch UC platform (alongside an existing PBX) is likely to be a much better investment than a migration to SIP trunks or an IP PBX. Enterprise Connect Orlando 2012 will feature this option in the "RFP: UC without a new PBX" session on Wednesday, March 28 at 2:30 PM.
3. Better, Lower-Cost Options Exist: There are far lower-cost IP media transport options than SIP Trunks. Once an enterprise decides that either IP gateways or UC solutions are better investment options than migrating to IP PBXs with SIP trunks, they can look for the lowest cost transport mechanisms for IP communications, including VoIP.
The No Jitter article "SIP Trunks: Least Cost Routing--Not A Route to UC" points out that, as reported to me by networking experts such as Tom Marsh of Dataflow Management, "A savvy midsized enterprise can source North American WAN services for less than US$10 per megabit per second per month." One megabit per second of bandwidth is the equivalent of about 8 VoIP sessions using G.711 or about 16 VoIP sessions using G.729 while still holding maximum network bandwidth usage at or below 60% of capacity.
SIP trunks seem to be positioned by the major carriers as logical, one-for-one replacements of TDM (T1 or PRI) trunks when connected to a new IP PBX. SIP trunks appear to have been priced in relation to PRI trunks, offering reasonable savings when priced at around $20 per SIP trunk per month. At this $20 per trunk price point, it would cost $160 per month ($20 x 8 VoIP sessions) to $320 per month ($20 x 16 VoIP sessions) to carry the same number of conversations as provided by 1 megabit per second of Ethernet backbone service for only $10 per month. It certainly seems that most enterprises would much prefer to save 94% or more of their PRI/TDM trunk and toll costs by converting to Ethernet backbone services without the need for PBX migration, rather than settling for telephony services and toll savings of 30% to 70% less the cost of migrating to a new IP PBX.
Of course, if you already have an IP PBX, that's fine. You can still use UC software solutions to minimize the total number of simultaneous voice channels (trunks) that you need. And, you can still run your SIP sessions over an Ethernet backbone service rather than over SIP trunks. But if you don’t have an IP PBX, SIP trunks are not the best justification for the significant investment of time, talent and capital that a PBX migration always requires.
THE OTHER SIDE
NO: SIP Trunking Cost Savings Are Real
By Sorell Slaymaker
NO: SIP Trunking Cost Savings Are Real
By Sorell Slaymaker, Unified IT Systems
Enterprises are seeing a 30-70% decrease in their Telecom costs by moving to SIP trunking. The question is not if there are savings, but the magnitude of the savings. The top 5 factors that influence the magnitude of the opportunity for an enterprise are:
1. Competitive Carrier Contracts--A lot of enterprises have been with the same carrier for decades. While pricing negotiations may have occurred, there was little incentive for the incumbent or competitive carrier to offer the best price, since the odds of changing were small. With SIP trunking, an entire new infrastructure is put in place, so the competition is real. Also, SIP trunking contracts allow for an enterprise to pay for only what is used. Most organizations have 50% more trunks than they need due to the legacy distributed architecture of trunking and separating out local, long distance, and toll free trunks. In the past, enterprises would benchmark their rates on cost per trunk and cost per minute of usage. The new model is to take the total telecom monthly bill and divide it by total monthly minutes with 1.5-2 cents/minute as the new benchmark, which includes access costs, features, usage, and taxes.
2. Size of the Enterprise--An enterprise that has a lot of users and sites, especially small ones like banks and retail stores, has a significant opportunity due to economies of scale and the aggregation that SIP trunking enables. An enterprise that has just a few large sites like a manufacturer or university will not see as great an opportunity.
3. Conferencing Strategy--Traditionally, audio conferencing uses LEC trunks along with per minute toll free rate and audio conferencing rate. If an enterprise has a requirement to provide a conferencing capacity to handle all employees for a CXO town hall, then an enterprise must have a very large number of LEC trunks, which are expensive. With SIP trunking, the selected SIP Carrier also can host the conferencing bridge and can waive the trunking charge. This is especially beneficial when the SIP carrier is also the MPLS network provider.
4. International--As enterprises go global and more employees are overseas and mobile, international LD phone bills surpass domestic ones. SIP trunking allows enterprises to bring in multiple carriers, including IPSPs (IP service providers) like Skype, along with having a global IP/SIP telephony backbone to offer least cost routing. The cost of a mobile user in the U.S. talking with a mobile person in India can go from $1.50/minute to 15 cents/minute. Large enterprises are starting to peer with in-country cellular providers (in countries that allow this), bypassing the IXC.
5. IP Maturity--An enterprise that has already made the investment in IP Telephony and an IP WAN will find that SIP trunking just impacts the size and usage of the existing environment. Organizations that are still running legacy TDM PBXs and/or using Frame Relay/ATM on their WAN will need to upgrade both of these in order to fully utilize SIP trunking. SIP trunking is best deployed in a "cloud" model where all the trunking and services are in data centers, and offices with users just have end points. Cloud computing is built on the premise of a very robust IP network.
Sixty percent of the typical enterprise Telecom budget goes to transport. Organizations that have not upgraded their legacy PBXs may see upwards of 75% savings. Thus, if an organization wants to cut costs, cutting transport costs using SIP trunking offers the biggest bang. Investing in infrastructure required for SIP trunking can be depreciated over 4-5 years, thus most SIP trunking projects have a payback in less than 12 months.
Figure 1--Typical Enterprise Telecom Budget
I have worked with many organizations over the past 6 years in building their SIP trunking business cases. The only organization that did not have a significant enough ROI to proceed was a mid-sized college with 3 campuses, with legacy PBXs that were fully depreciated and running rock solid, and had recently switched to a CLEC.
Click here for a detailed whitepaper and calculator on how much your enterprise could save by going to SIP trunking.
