Taking Flight

By CIOinsight  |  Posted 10-01-2004 Print


EUC with HCI: Why It Matters

Taking Flight

Now for the good news: VoIP can save your company money, but not how you thought it would.

Analysts now recommend running the ROI numbers for VoIP based solely on the cost savings that will be realized through converging the voice and data networks, without including long-distance call savings.

The Boeing Co. announced in June that it would replace its entire aging phone network with 150,000 IP telephony nodes running over a Cisco Systems Inc. network, but executives at the Chicago-based aerospace and defense company don't even mention cheap long-distance calls when extolling the virtues of VoIP. To them, it's just another application to fold into the network.

"We look at it as investing in technology futures," says Cliff Naughton, Boeing's director of network services.

Boeing first started pilot testing of VoIP in 2001, after three years of studying and evaluating the technology. The test began with just 800 employees in a new office building in Issaquah, Wash., and it has since grown to about 4,500 employees in five states.

With offices in 48 states and 70 countries, the idea of saving money on interoffice calls was compelling. But of far more importance was the ability to get employees to collaborate by combining high-end video, data and voice.

"If you look at Boeing's core business, it's large-scale systems integration, bringing together very complicated systems," says Naughton.

"That requires heavy collaboration on a global basis."

Naughton says the company wanted to be able to hold design sessions that brought together employees from every division—design, manufacturing, sales—without their being in the same physical place.

Using the converged network, the sessions, it is hoped, will be far more productive than simple videoconferencing, because employees will be able to display designs, make alterations, and share data and graphs, all in real time.

End-to-end IP deployment

Enterprisewide IP, network management savings, advanced functionality, converged environment

Requires costly network upgrades and forklifting existing equipment
Hybrid PBX
Combination of TDM and IP lines

Easy to deploy, cap ex costs are incremental, ability to leverage existing equipment

Managing two networks, reduced features and productivity

Source: The Radicati Group

But the decision was by no means a no-brainer.

Lingering problems with the quality of VoIP service forced the company to upgrade much of its network equipment, and at huge cost. And the so-called "soft-client"—using a PC running phone software to place and receive phone calls—was troublesome due to the inherent limitations of the PC architecture.

But since the early pilot, Naughton says, a lot of the technology has matured enough that Boeing felt comfortable expanding the rollout company-wide.

Like the University of Kentucky Hospital employees, Boeing executives feel the technology will produce a massive cultural shift throughout the company. It envisions a design and engineering workforce that can work from home until their presence is required during final assembly.

Boeing also anticipates a work schedule that "follows the sun," as Naughton puts it, operating on a true 24-hour-a-day schedule. "I think it's going to have a great cultural impact."

In addition, the costs of running a converged network can be significantly lower than managing two separate communications networks.

Boeing estimates that moving employees from office to office, or hiring and firing—a process known as move/add/change, or MAC—can cost them hundreds of dollars per transaction on the circuit-switched network. With more than 150,000 employees moving, on average, a little more than once a year, the costs add up quickly.

With IP phones, the process requires only a quick data entry from the main control panel, which is virtually free. Factoring that in, Boeing estimates a complete return on its VoIP rollout—a five-to-seven-year project itself—will be realized in just three to four years.

Of course, all that convenience is going to cost you, especially in the near term. IP phones are expensive, sometimes as much as $800 per phone, depending on features. And IP PBXs can cost as much as 20 percent more than traditional PBXs.

All of which doesn't begin to address the bottlenecks that sending voice traffic over the network inevitably creates.

Like Boeing, more than 50 percent of companies deploying VoIP also need to perform some level of network upgrade, according to Paul Butcher, chief operating officer at Mitel Networks Corp., a leading manufacturer of VoIP equipment.


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