TCO and credibility top list of VOIP selection criteria

CIOs the outliers, MDs and FDs of all company sizes agree

“Informal research among voice over IP (VoIP) clients reveals an interesting dual mindset when it comes to selecting Internet-enabled communication solutions and providers,” says David Meintjes, MD of Connection Telecom. The bottom line is that companies of all sizes want solutions that offer a lower total cost of ownership (or TCO – upfront capital cost added to ongoing operating expenditure). But there’s a condition – the supplier and technology must also enjoy a high degree of credibility in the market.

Why credibility?
Misgivings about the quality of VoIP have all but disappeared since the technology debuted at the turn of the century. According to market research firm Telegeography, more than 50% of global long-distance voice between telcos today is done using VoIP.

Quality is a function of proper network planning – most new-age PBXs are Internet-enabled  to provide site ‘failover’ (redundancy) for traditional switched voice installations (Telkom), in instances of line failure arising from e.g. copper theft or inadequate redundancy planning by the infrastructure supplier. Further quality measures can include software to improve VOIP quality on the local loop (up to the local exchange).

Objections to VoIP fall back on dated arguments about the reliability and quality of IP calls – in reality, large companies such as FNB and Ellerines have effectively deployed VoIP technology.  Indeed, not embracing the VOIP technology puts companies at a disadvantage relative to their competitors, as they miss out on advanced application capabilities and cost savings.

However, reliability of provider and product will always merit consideration, and determining this must be part of the evaluation of any new technology.

TCO – first thoughts
VoIP has long been marketed on the basis of its low call costs, so call charges are not currently a significant differentiator between different VoIP systems. (In time, calls may cost nothing, at which point cost competition may again become viable.)

Nevertheless, companies are highly likely to pick one VoIP system over another because it offers low upfront cost of acquisition and implementation, as well as low ongoing running, support and maintenance cost.

How can one system offer significantly different TCO form another? The difference comes with cloud delivery of VOIP, as opposed to physically-present infrastructure. Whether your PBX is hosted on-site or off-site, owned by you or your provider, the fact that it is a virtually provisioned, managed service means the problem of ownership (maintenance, support, upgrades and scaling) is not yours, but the provider’s.

VoIP in the cloud is a great way of getting flexibly-provisioned, high-quality voice capacity that is always at the cutting edge at a predictable monthly charge. In addition, it allows clients to set up multiple ‘zero–rated’ routes to their most frequently-dialled numbers, such as suppliers.

Points of agreement and dissent
As can be seen from the table below, both small and large companies agree, by and large, with the aforementioned premise – that low TCO and credibility go hand in hand, particularly among managing directors and financial directors. Naturally, this group is firstly concerned with TCO, and only secondly with credibility.

CIOs are more divided: Some CIOs (of smaller companies) pay close attention to TCO, while their counterparts in larger companies are less concerned about it. For this group, credibility, scalability and flexibility are more important, which is clear recognition of the mission-criticality of voice for them. Smaller-company CIOs, in turn, aren’t bothered with credibility so much as with the aforementioned factors of TCO, features and support.

It’s a question of resources.

Private clients
Currently the most advanced VoIP-in-the-cloud installations are private cloud configurations. Given the sophistication of these solutions, TCO is of particular interest to those entrusted with a company’s commercial interests – the MD and FD. CIOs take a more defensive position with procurement; concerned with making the correct technology decision, this customer segment wants a safe investment that will scale and offer top-notch performance and reliability.

New-age IP communications solutions providers offering a good balance between these considerations will turn the market on to this truly enabling technology.