The payback from VoIP in fancy phone features can be elusive.

Making the case for VoIP based on features alone is a tall order. End-to-end VoIP systems are high-ticket items. In-house network upgrades usually involve new cabling, routers and switches. IP-enabled PBXs aren't cheap. Depending on features, smart phones can run as much as a low-end PC. And communication lines typically need to be reconfigured and tested.

All that makes it tough to explain to a CFO why his company should take the leap if all it means is that employees can program their own vacation messages. According to Jeff Pulver, founder of Pulver.com and widely regarded as VoIP's loudest cheerleader, "I don't think users give a damn about [VoIP] functionality. They care about ROI." That's seconded by Jeffrey Snyder, vice president and chief analyst for enterprise communications at Gartner Dataquest. "The vast majority of businesses out there are waiting for a true and credible ROI," he says. "And the vendors are hard-pressed to deliver that to the client."

Pulver and Snyder are mostly talking about end-to-end installations, however. In many cases, strategically chosen VoIP installations can make sense. Though legacy communications systems are usually rock-solid reliable and fully depreciated, it's not uncommon for IT departments to have to jump through lots of hoops to keep their aging gear alive, thanks to hard-to-find parts and lack of expertise. Some legacy PBXs can be connected to VoIP-enabled equipment that lets companies send voice over digital connections between two or more corporate locations in hopes of reducing costs and without having to dedicate a leased line to voice alone. But when overcoming the limitations of older systems is no longer possible, replacing PBXs with VoIP equipment may be the most cost-efficient alternative.

VoIP is also worth considering when the addition of new facilities or big changes in a company's communications costs forces IT to search for alternatives. Analysts maintain that the 40 percent of a company's communications fees that typically go to access lines is projected to increase to 60 percent within two years. "If that's the case," says David Willis, vice president of global networking strategies at analyst firm Meta Group, "then people are going to want to reduce the number of circuits going into a facility." One of the best ways is to eliminate separate communication lines for voice and data, since VoIP can let users more efficiently manage bandwidth by moving all-or-nothing voice channels to shared voice-and-data packet transmissions.

Finally, even though the cost of making long-distance calls keeps going down, VoIP can also make sense for companies with high call volumes. Some carriers are offering lower rates when customers send them their voice calls as IP packets. Some users report savings of up to 25 percent on their monthly phone bills, even over the carriers' already low rates, by sending VoIP to their phone companies.

Ask your business units:

Is there real value for you in such features as one-stop customer dial-in and unified inbox?

Ask your communications team:

How much could we save if we consolidate voice and data lines between our offices?

Tell the CFO:

Unless we can quantify the value of increased customer or employee satisfaction, we probably can't justify VoIP on new features alone.

This article was originally published on 10-02-2002
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