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VOIP, how does it save money over PBX

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by sikki 2 views

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I get the main gist of how VOIP systems work. But, what I need help with is how it saves money over the standard PBX system currently in use and already wired into a building. You still need to buy the phone lines, and numbers from the phone company. IP phone systems aren't cheap either, and support is about equivalent to paying for PBX support. I'm all for moving into the future and think that IP telepony systems are the way to go; they have excellent features, and with some they are getting closer to being one phone for everything in and out of the office.
How do I show my boss and up the ladder how spending 60 to 100k on this new system will be better than just updating what we have currently?

24 replies

by tbragsda

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I don't have much time right now, but I just went through (6 month) switch replacement project. Don't go with a VOIP switch without knowing about QOS problems. Look at hybrids. VOIP to the internal handsets is not a good use of the technology.

I have lots of junk I gathered over the last year, and if you would like, I can email you some of the stuff.

TBR

by house

There are admins and there are VoIP admins. Dealing with VoIP is more of an art form than a science at this point.

1) use clustering on the backend for redundancy

2) be aware that packet loss can cause voice mutilation (even though it's UDP) - you can experience echo, and inconsistent tone - but then you can adjust the frequency of the packets (jitter)
We have a default of 20ms which basically means that a packet is sent 50 times per second. We can drop this as low as 80ms or approximately 12 packets/sec without losing too much in regards to quality, resulting in a much cleaner sound

3) Volume levels can be adjusted on the backend accordingly in order to kill the echo if you are being routed through 1001 networks - especially when dealing with VoIP -> POTS and back to VoIP

a few golden rules of the internal office VoIP network....
-do not use DHCP
-dedicated line (goes without saying... a per usage based backup would be ideal too)
-throttle and dedicate bandwidth
-server redundancy
-somebody who knows this stuff... outside of the books
-multiple DID trunks

edit - oz has made me aware that you can only use dhcp with proprietary systems... maybe it's ok then... I should do some research into these systems that are being discussed... the only thing I know is the way things work technically (not proprietary) - hence our beautiful network

by oz_media

Have you ever worked with a proprietary system, even though I know you are in the VoIP industry.

You have no control network side on most of these issues, the system simply won't start without those parameters first being checked and approved by the system. Tweaking your network side will ensure a NEAX never boots.

In these high end products, such as I assume the original poster is using (has a pBX not a Key System now) you MUST MUST MUST MUST MUST have the manufacturer trained techniciann complete the ENTIRE install. Failure to do so, void your warranty on a large investment. And you will get NO phone support with out a licence code. In fact most can't be configured/features unlocked etc. period without a licence code provided by the manufacturer for everyone who has completed their training, even then they are checked for the level of training they have and if they don't meet standards for specific line cards they can't even get the codes themselves.

People have always TRIED to circumvent this by saying they have unstalled networks and home sytems for years, blah,blah,blah but they can't even get it to power up. The manufacturer won't even take their calls as you need a code just to place a call to tech support, the warranty is null and void instantly and it will NEVER be covered even if the equipment is resold, once it is touched by unauthorized hands it's all over.

They offer system management consoles for IT staff to play with, and that's it.

The system REQUIRES a Virtual Network and creates it's own, while also utilizing it's own QOS to ensure your lines are installed and configured correctly. It is out of the admins hands (thank god) for MANY reasons, MOST IT staff even those with communications training do NOT understand how these products work and funble through them with nothing but problems and end up saying the system sucks because it doesn't sound right, features wont work etc. Even being trained two years ago, I am not authorized to install NEW NEC VoIP PBX's or Nortel BCM's unless using older software versions.
If they update the software level, ALL techs need to upgrade skills and get new certification. All clients MUST also upgrade their systems before any further warranty work will be performed.

So unless they are looking for a smaller, bridged or outsourced solution, it is a TERRIBLE idea to even begin setting up a network to be VoIP complaint, it will only make the real installers job a little harder and costly to the employer.

Let the instalers arrange and configure line services, let them cable your system and let them configure your PBX. THey won't mess with your network, if you don't mess with their PBX. And yes it is regarded as THEIR PBX, you just pay for it and use it, other than that it it out of your hands. I have yet to meet a single IT person, who knew how to PROPERLY install a PBX, yet alone VoIP in proprietary systems. I have spoken and worked with some real long term GURUS of IT, they just knew better right from the get go and left it up to the provider to install.

EDIT: In all fairness though you are right on these issues and you have also mentioned there is a difference between an admin and a VoIP Admin. As for packet tweaking, this is handled automatically by most PBX based systems and when it comes to DHCP, hate to break it to you but that is the ONLY service that an NEC will install, it handles the static addressing from that point in the form of a virtual network, where it also controls QOS.

by oz_media

Here's the industry leader so far:
http://www.necunifiedsolutions.com/cng/Products/ProProduct.asp?prodid=224&searchtext=voip

or you can get into the entry level Hybrid PBX and have a mixed environment.

But cost savings is long term, not short as with any telephone system.

Just don't get sucked into the little Ayaya or 30Com solutions, they just don't stack up for business use. Remember the phone system is your company's spinal cord, how LITTLE do you wich to spend on one of the most important aspects of your business? It's like trying to buy a cheap motorcycle helmet, it doesn't make sense and although it seems the same,when your head hits the pavement you'll be happy you spent the extra money.

Nortel's BCM is beter than it USED to be but still quite problematic.

I had a NEAX2000IVS at home for about a year, then a 2400 and manaed the VoIP network for some large chains of stores. THese products stand the test of time and save costs, but they have aplications that work and if you don't fit them, you are simply wasting money.

They have very good information online and they won't keep bugging you like hungry sales reps if you ask for information or suggestions.

They will gladly point you to some worksheets for claculating your ROI or comparing with your current equipment.

But unless you are a good sized medium or large business, that does a lot of long distance between branches or to suppliers a VoIP PBX is a big investment. 60-100K? Keep digging in those pockets.

ONE LAST point, beware of VoIP wannabe's. Make sure you are using TRUE VoIP and not network to pots systems that merely pretend to offer VoIP in a standard PBX.

by jellimonsta

Where VoIP systems save money over a PBX system is in toll by pass. Toll by pass enables companies with branch sites connected via WAN to communicate with each other over that WAN (dependant upon hardware, bandwidth and users). If you have multiple sites, VoIP used w/ MPLS could be a good ROI down the line, especially if there is probability of VC (video conferencing) needs down the line.
Don't expect to see instant cost saving factors in small to medium scale IPT rollouts though. If you are not in need of replacing your PBX it may not make sense to move to IPT for a few years.
In order to roll out IPT (VoIP) you will need to make sure you have a sufficient data network infrastructure, this includes cable (cat5e and enough of it for redundant links for a true core/distribution campus LAN design). You also need the appropriate switching and routing hardware in place.

by amcol

I switched my organization, highly international in nature, to VoIP and am saving somewhere between $8k-$10k per month in international roaming charges.

by oz_media

While MOST companies seek VoIP as a way to save on LD, it is also cheaper in many other areas too, over a traditional Key sstem or PBX.

Least Cost Routing, Station Detail Recording and an ensured Class or Service are all ways to rduce operating costs. Hardware is more flexible and expandable than a PBX or Key system, feature set is more robust, maintenance (once proprly configured) is FAR lower, system management time is reduces, user effort is also reduced when coupled with an integrated UM system.

While initial and obvious costs would be saved in toll calls, this is just a scrtch on the surface of the long term savings.

by house

...for defending ld in the VoIP world. I hear a lot of bickering and hard feelings from Telecom veterans.

by house

I've never worked with a proprietary system, you're right... we are innovators ;)

Don't expect me to type as much as you... we are on different spectrums when it comes to VoIP. You know quite a bit about proprietary netwroks... that is not my game.

by oz_media

Not to discount you or your work, the INNOVATORS are what has caused all the VoIP garbage. EVeryone want s to jump on board, now there are $300.00 solutions or $30,000.00 soldutions, which is mileadingcustomers and causing them to lose fistfulls of money. I have had to bail them out by buying back the Avaya's, 3-Coms and Cisco's only to break the news that they need to spend another $50K to get what they need.

Home solutions are one thing, network solutions are another thing, but the Business Phone industry has only been made successful by those that HAVE developed and been innovative with millions in R&D for decades.

Computer hardware or software manufacturers for example don't have the SLIGHTEST clue what businesses need in a phone system, most BUSINESSES don't know as they take the simplest things for granted, only to find they don't exist elsewhere.

It's a tough racket and many billion dollar globally successful companies have gone bye bye because they can't provide what is needed for business clients, Nitsuko (actually WAS really good at one time), Samsung no longer viable in teh industry,Toshiba and Panasonic even fell apart trying to compete but are now left with a small market share of the small business industry.

I understand that what you do is completely different as do you also, unfortunately many businesses do not, due to the influx and confusion in the VoIP market.

I find people just aren't positioning themselves in a marketplace properly. Whether this is due to poor market development or pipe dreams of 'I can do that too' I don't know. The end result in most cases is that the customer is on the losing end more often than not.
Whether over or underinvesting, of course. Many people don't need a NEAX 2400 and a simpler, less costly solution does the trick, this market separation is not defined due to all the confusion though, and it needs to be.

by house

We deal with the public network... therefore... mostly with single point solutions and ld

..just throwin' out some technique

by house

...is the only thing above water

don't gimme the 1000 word essay... just pokin' at ya ;)

by oz_media

It was free and easy: and no, I haven't even read it myself.

In philosophy, as in most fields of the humanities, texts produced by others are typically the immediate focus of inquiry. One of the standard inquiry practices in the humanities is known as "close reading" -- the practice of examining a text line-by-line in order to explore its implications and nuances and to resolve problems relating to its meaning and interpretation. What I call "text-focused" essays are designed to give you the occasion to develop the skills proper to the art of close reading. Writing exercises of this sort are naturally of special value to students who plan to pursue professional careers in the humanities. But, ideally at least, such writing exercises should be of value to every college student, regardless of career plans.

As a worker in any professional or managerial field, you will often have occasion to exercise your inquiry skills on written texts -- whether those texts are memos, sales reports, business plans, legal briefs or whatever. To do this well, you must be good at three different sorts of intellectual operations or tasks: (1) ascertaining and communicating precisely what is stated in the text; (2) exploring and clarifying the meaning or implications of what is stated in the text; and (3) discovering and constructing arguments both for and against the claims contained in the text. In practice, of course, these three kinds of intellectual operations or tasks are executed more or less concurrently and usually are not neatly distinguished from one another. For purposes of instruction, however, it is useful to conceive of and practice them separately.

The text-focused essays that you produce for this course will require you to identify clearly which of these operations or tasks you are engaging in and to adopt in your writing the appropriate logical structure and format. The three different kinds of essays assigned - analytical, interpretive and argumentative essays - correspond to the three different intellectual tasks described above. An analytical essay is an essay that focuses primarily on the task of ascertaining and communicating what is said in a given text. An interpretive essay is one that seeks primarily to explore and clarify a given text's meaning or implications. An argumentative essay is one that undertakes primarily to discover and construct arguments either for or against the claims contained in a given text.

:D

by jaqui

is the best selling point.
that savings is what causes companies to migrate to voip.

the rest, as Oz detailed, are bonus savings as far as most companies are concerned.

figure a company like ibm going all voip, save themselves huge money every month.
the rest of the savings are just gravy on top of that.
IBM spends hundreds of thousands a month ( globally ) on long distance.

by sikki

VOIP is something we've been looking at from a distance for the past couple of years. Our current PBX is getting long in the tooth, so we kind of indulge ourselves by looking into it every 6 months or so.

Right now, I think if it comes up again I'll suggest that unless our whole building want's to switch over (there are 4 different phone systems for 4 different agencies), it's not really worth it for our use. We are about a 150 person agency split among 3 locations at least 30 miles apart. We could use this but not for the money that it costs now and the state of the tech isn't there yet to do this as a smooth switch.

I understand about getting into a system that isn't the right solution. I kind of support a 3com nbx for one of our clients, it goes down about 2-3 times a year and the only way to get it back up and running is to cut power and restart. Even with a connection into the console non of the console commands work. After doing some research on my own into the system, I found out it wasn't meant or made to do some of the things they bought it for (being the base of a larger system, having it work for more than one business entity). And not exactly a great time working with the vendor.

Again, thanks for your insights and info.

by mllwyd

My company has a corporate headquarters and 15 satellite companies around the US all connected by a WAN. There is one IT department, at Corporate. Currently, every one of these 16 companies has its own PBX, and the PBXs aren't standard (because we've grown by acquisition). We can manage some of them remotely, but most of the time when we have repairs/MACs we have to call in the vendor. That costs a lot of money over the year. Our idea is that centralizing the phone system at Corporate (using Cisco Call Manager) we can save that money by being able to centrally manage all of the systems. These savings are on top of the toll by-pass.

Since you're asking about savings, I assume you know about the costs. As mentioned by others, you'll need a QOS enabled network, like MPLS. You need to make sure you have sufficient bandwidth to handle your traffic. If you're running data on the same network, you're going to probably need at least a 768k port (depending on the amount of traffic). If you are considering a centralized system like we are, you need to implement redundancy in case the central location goes down.

by rstokes28

You have a great case for VoIP! Inter-Tel's solution has done great by us. Using digital sets over existing wiring in the offices and using good point-to-point networked cloud for routing calls to other offices. Everyone is an extension away and all inter-office calls and conferencing is free. You could probably even collapse some of your Internet infrastructure into the cloud and reduce cost and increase central control and management.

by rpruett

We just completed a a transition from a mix of PBX and key systems at the begining August.

We went with a ShoreTel PBX system.

http://www.shoretel.com/STCorp/

Though it is advertised as so easy to use, we were still put in a support contract from the vendor for longer than I cared for. My feelings were a year to get the system bugs worked out, they wanted 5 years, our CFO compromised on 3 years. We have 5 locations, with only about 10 to 15 users at all but our main location. Comparing the cost of our current POTS lines and LD along with support cost for our older systems it came up as a wash over a 5 year period. I would highly recommend this system as it has worked very well. We did however, have an issue with faxing that was basicly all the fax machines were as old as dirt to! We have seen a 15 to 20k phone bill reduced to 2k immediately. We still have some phones yet to change over.

by oz_media

"My feelings were a year to get the system bugs worked out, they wanted 5 years, our CFO compromised on 3 years."

Sounds like you should have spent the extra money on a high end PBX instead. My clients would have a heart attack if the system wasn't installed and bug free within a week! YEARS!!! Sounds like a pretty sad company to me, especially after looking at the website and seeing what they offer, But if it works in the end it works I guess.

You could have bought a few line cards instead of an extended contract though.

by tejota

We are currently looking at implementing some VOIP long distance. We have a Lucent PBX in place, which is fairly new, and it would be quite costly to just outright replace it. Instead, there are companies that will setup a gateway so that you can make all long distance calling over your managed WAN. We have companies sites throughout the US that are connected to the WAN over an MPLS Frame network. We normally use this for data, but we can now use this WAN for voice too. This is where we save our money; calling between all the offices. The company we are lookin at is Avaya and these gateways cost about 7k. Hope this gives you a different perspective.

by rstokes28

VoIP is a great technology - if used where appropriate. For instance my company has a call center and I would never use VoIP in that environment because I can't guarantee that network has at least the same percentage of uptime as a traditional PBX. However 5 of our U.S. offices are on common phone system. We've accomplishd by placing an Inter-Tel PBX in our main office with Digital phones over the existing wiring. The offices are connected over a dedicated point-to-point network over which we use VoIP to distribute calls to other offices. We have a single receptionist, one voicemail system to backup and one place for all administration. In this scenario a hybrid VoIP-Traditional such a Inter-Tel's works is more affordable that 5 seperate phone systems and provides many great features you'll not get on a PBX. If you are a single office and can't afford downtime I don't know that I'd look at VoIP unless your network is at 99.9999's of uptime.

by oz_media

THat has been my largest, ONE of my largest, markets this far.

Downtime? What the hell do people BUY these days?

You can save tens of thousands EVERY month in a high volume call center with VoIP, your system ays itself off in les sthan a year.

I have yet to see a decent VoIP PBX crash any more than a Novell Network does.

by sikki

You expressed incredulity about buying a support contract for years. Don't you normally offer one just to cover the hardware/any major outages that the staff onsite can't resolve? I know on most of our big budget items especially we buy support contracts just cause they are the things that would kill us if they go down (mostly hardware related). I agree that a year to work out bugs is a lot of time though. I would expect it done within a month at most after install.

by oz_media

In the case of equipment I have worked with it is NEVER maintained onsite anyway. Any onsite tech that touches a propritary PBX will son find he is SOL and it will not be covered by any expressedmanufacturer warranty or service contract anyway.

In the case of larger contracts, ROUTINE maintenance is not an issue, it is not needed. Failure is covered by the manufacturer and repair or parts is covered by the company responsible for the original install, or another authorized third party. SO there is no need for a service contract.

If it is a concern of hourly costs and giving a company a break to close the deal, this lower service rate is negotiated at the time of sale but is not on a term contract, it just means that any support needed is performed at a predetermined hourly rate.

Bugs should be worked out LONG befor equipment is installed, that's all part of finding the right product and company to support it. Systems I've sold DO go down, but only due to local network probelems, configuration is done BY the system and the qualified tech when it is installed, from that point on it is fire and forget unless hardware fails or MAC's are needed.

If not, you have purchased equipment, that like MOST VoIP PBX's, have been released with a Microsoft mentality, it works for the most part but will take some ime to iron out individual issues. With GOOD equipment, this has been done over the last 100 years of business telecom R&D, not onsite. WIth VoIP, the major telecom manufacturers have been FAR more successful becaus ethye understand the issues to be addressed more than newer player would, they understand business telecom NEEDS and meet them before releasing a product. THey don't work it out as they go, it works and it is released....with the exception of NOrtel's FIRST BCM that is, but that was a coporate issue not an R&D one.

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