Enterprise Technology: IP Telephony Goes to Work
Net-based phone systems are finally catching on for business use. Here's the good, the bad, and the future.Michael Desmond
Like many a good idea before it, IP telephony has proved to be a late bloomer. For years, merging voice and data networks has promised an array of benefits, ranging from cheaper calls to simpler phones. So what's kept most companies from ditching their traditional phone switches and services? Cold, hard reality--in the form of today's already-overloaded networks.
In this month's Enterprise Technology, we look at why that situation is changing, especially for internal calls in far-flung organizations. Here's the inside story on how to make a voice-over-IP phone system work for your business--from managers who've made the leap.
A lot of things have changed in the office over the past 25 years. Fax machines transformed document transmission, PCs turned managers and administrators into "knowledge workers," and wireless technology is ushering in a new era of mobility. We've even seen cappuccino makers replace coffee machines.
Yet the telephones gracing the desks of most workers have changed remarkably little. Voice mail is an enduring scourge of the workplace, with cryptic forwarding and conferencing features that flummox even savvy employees. Now Internet Protocol-based data networks--ranging from small local area networks to the Internet--offer a solution: Replace dedicated voice-based systems with phones that connect directly to data networks.
It's an appealing vision. Calls within the business, even among offices at different locations, ride the local or wide area network to bypass phone company fees. Outbound calls pass through a gateway and onto the public switched telephone network (PSTN), ensuring that IP phones can complete calls to any destination.
IP telephony can deliver big-ticket features even to cash-strapped businesses. Voice mail can flow into the same in-box where e-mail and faxes reside, making it easy to track, sort, play, and forward messages. Conference calls and call-forwarding can be set up using intuitive PC-based interfaces. Mobile workers can make calls over the Internet, sidestepping the premiums charged by cell phone service providers and calling cards.
The list of potential benefits is long, but companies haven't rushed to place voice communications on their data networks. Executives have balked at the risk of shifting crucial, established phone operations to failure-prone networks. IP telephony also requires voice-aware network gear such as switches, routers, and gateways that can recognize voice traffic and move it along without delay. Often, companies simply haven't been able to justify expensive upgrades to recently acquired network hardware and software.
Ballistic Growth
Those objections fall by the wayside as network reliability improves and voice-capable network gear proliferates. Market research firm International Data Corporation projects that paid IP-based call minutes from businesses will skyrocket to nearly 230 billion minutes in 2005, up from 328 million in 2000 (see the "IP Telephony Use" chart below).
Much of the growth is likely to come from enterprises with more than 500 employees. IDC expects IP call-minutes for large businesses to leap to almost 128 billion in 2005 from just 13 million in 2000. In the past, says IDC analyst Elizabeth Farrand, almost all call-minutes came from consumers and small offices. Farrand identifies Net2Phone, an early provider of consumer-oriented voice-over-IP services, as a key player in the consumer and small-business market.
High hopes are hardly new to IP telephony. A 1998 IDC report projected that it would be "widely deployed" in businesses by 2001. But Erin Thompson, an analyst for telecommunications industry think tank Allied Business Intelligence, believes the logjam is on the verge of breaking. "It's definitely taking a little bit longer than some people had expected," she says. "A lot of the activity has just happened in the last six months."
While most IP growth today is concentrated in smaller, more nimble organizations, some large deployments are under way. Dow Chemical is in the process of rolling out 40,000 IP telephones, and Lucent has begun a trial installation of 2500 phones at its facility in northern Illinois. Cisco Systems, a leading IP telephony vendor, has more than 25,000 IP phones on its desks worldwide. After all these years, IP telephony appears to be poised for success. But why now?
Ken Camp, a senior member of the technical staff at telecommunications training firm Hill Associates, is a specialist in IP telephony. Camp says that enormous growth in available bandwidth has set the stage for adoption. At the same time, big and small companies alike are assessing the potentially large cost savings of moving phones onto the IP network.
High Price, No Dice
For growing small businesses--200 users or more--the affordability of an IP system over a personal branch exchange (PBX) phone system is the key issue, according to Camp. "Cisco makes [an IP] gateway that's about $25,000. But when you look at an investment into a PBX, it's typically $150,000 to $200,000 for comparable hardware," he says.
Tom Stephens, network group leader for supercomputer manufacturer Cray, cites cost as a main reason the company rolled out 650 IP phones at its offices in Chippewa Falls, Wisconsin, and Mendota Heights, Minnesota. Cray had split from its parent company--Silicon Graphics--in April 2000, and was deploying a new data network and replacing an existing PBX system in the process. When Stephens compared costs between a PBX upgrade and an IP telephony deployment, the numbers weren't even close.
"We got a traditional PBX quote, and since we had to put in an all-data network too, we put them together," recalls Stephens. "The cost of going with a traditional PBX was about equal to the cost of a whole data and voice network. So basically, we got the data network for free."
Of course, your current phones aren't going to cut it on an ethernet network. IT departments should plan for sticker shock when it comes to outfitting employees with IP phones equipped with ethernet jacks and network components. 3Com's SIP Phone, for instance, retails for $395, which is about twice the cost of a high-end traditional desktop phone.
Reliability Rules
Despite technological advances, migrating to IP telephony is not a move to be taken lightly. Performance lags that would go unnoticed on a data network can significantly degrade IP voice quality. Bill Erdman, director of product management in Cisco's Enterprise Voice and Video Business Unit, says that the onus falls on IT departments to keep their networks in top working condition.
"You need to run a tight ship in the IT organization," Erdman emphasizes. "[IT departments] have to have a consistent policy on how they will prioritize applications and telephony."
In fact, the lack of traffic prioritization on the public Internet is a key reason why IP telephony exists primarily within private networks. IT organizations can deploy equipment and software to ensure a satisfactory level of service on their managed networks, but no such capability exists on the Internet.
Camp believes that IP coverage and service quality on public networks is too spotty for businesses to tolerate. "If I've got six offices and they are all on Sprint's backbone and Sprint will offer 50- or 60-millisecond delivery, then okay," he says. "But if you pass from AT&T to UUNet to Genuity, all bets are off."
Despite these problems, an emerging standard known as multiprotocol label switching (MPLS) promises to deliver high-quality voice capability over the public Internet. In essence, MPLS lets systems create virtual switches over the network, creating a stable pathway that eliminates delay.
The sticking point, says Camp, is that support for MPLS must be designed into Internet routers. "From a technical perspective, MPLS sounds like a wonderful solution. From a reality perspective, how many routers have to be replaced to make this [system] fairly ubiquitous?"
That is not to say that you can't make IP telephony work for you on the PSTN. Using advanced equipment and software, an employee working in Atlanta can call a vendor in Seattle and have that call routed through a corporate gateway in Bellevue, Washington. A coast-to-coast connection becomes a local call.
Cray's Stephens says that his company is saving $1000 to $2000 per month by routing calls from the Wisconsin office through Cray's Mendota Heights, Minnesota, facility. Not only are interoffice calls handled by the wide area network, but calls made to other companies in the Twin Cities region hop off the WAN and become local calls as well.
Camp also urges companies to carefully consider equipment choices. "Think about a call to 911," he says. "Okay, I've got an IP address. How does that tie into the 911 database so the emergency crews can find us? How do you do caller ID if it's gatewayed through an IP network?"
Order Out
Any move to IP telephony raises the age-old dilemma of buying versus building. Do you bring in your own staff and telephony gear and manage the systems yourself, or do you buy IP telephony as a service from an outside provider? For many companies, the answer is to outsource.
"There are powerful arguments for the whole concept of hosted voice," observes IDC's Farrand. "Enterprises can focus on their core competencies. This is the case for the ASP [application service provider] model as a whole. They don't have to be responsible for upgrades on an ongoing basis. They don't have to lay out dollars up front for equipment."
Nor is outsourcing phone services unheard of. Regional Bell companies have marketed the Centrex telephony service to small and medium-size businesses for years. Businesses pay a monthly fee for phones, service, and Centrex phone lines. The provider handles call and line management at its central office, eliminating the need for an expensive PBX.
Service providers are now bringing this model to IP telephony. Companies like GoBeam and Shoreline Communications host servers and gateways that process and route client calls. Besides maintaining all the hardware and software, the provider works with third-party integrators to establish dedicated network connections between customers and its facilities.
The cost advantages can be dramatic, according to Bob Musor, vice president of worldwide sales for Viaquo, a 50-person Internet security start-up that uses the GoBeam service.
"We had a small PBX that we'd outgrown," says Musor. "We'd have had to pay $40,000 for an upgrade. Taking into account the cost of the equipment and amortizing it over a period of time, I'd say our savings are at least two-to-one."
Of course, any outsource decision carries risk. Rocky economic times have seen many ASPs go under or sell out to other companies, sometimes resulting in service disruptions. Customers may also find themselves at the mercy of their provider's upgrade and service maintenance schedules, sometimes leaving glaring shortcomings unaddressed.
Ultimately, outsourcing offers many companies a way to move into IP telephony incrementally. "There's nothing to say, when a company chooses an outsourcing solution, that they can't choose later on to do an internal solution," says Farrand.
Business Class
IP telephony is by no means a one-size-fits-all solution. In fact, it should particularly appeal to small businesses, which typically have more-flexible infrastructures and lower capital migration costs than their larger counterparts. Small companies can tap into outsourced services as a way to jump over to IP-based telephony. Camp points to providers like NeTrue, GoBeam, and Shoreline Communications as key players.
"Companies like [those] are making pretty significant inroads into what we call the Unfortunate Five Million. Everyone concentrates on the Fortune 500, and the rest are on their own," Camp says.
Outsourcing is also an option available to larger companies that want to test IP telephony in a remote office. But limited service areas are likely to frustrate plans to link offices spread over wide distances, Farrand warns.
For larger firms, IP telephony is likely to be a build-your-own proposition. Larger firms can benefit from consolidated data and voice network operations, but few observers believe that the transition will happen overnight. In fact, according to Kurt Jacobs, director of marketing for telephony equipment provider Sphere Communications, many enterprises will wait as long as they can afford to.
"For the biggest companies, [IP telephony] is probably five to seven years off. They really have to go through a long process," says Jacobs. "One of two things will change them: First, the midlevel companies that are fast growing will have this technology and will have applications that give them a competitive advantage. Second, they may get a true visionary with political clout in the organization. But those types of people are pretty few and far between."
In the meantime, the technical and cost obstacles to IP telephony are falling fast. As voice capabilities are built into contemporary network routers and switches, companies find that more of their network infrastructure is ready to carry voice communications. Still, Jacobs expects that most large networks will need updating to make them universally voice-aware.
Not surprisingly, many companies find that a move to IP telephony makes the most sense on brand-new networks. Lucent, for example, undertook its 2500-seat trial when the company occupied a newly built office building outside Chicago.
Similarly, Cray launched its effort when it moved into new offices after splitting from its parent company. Stephens found that his IT organization had little trouble getting the phones to work, despite unforgiving deadlines and an initially difficult learning curve. In fact, IP telephony has improved Cray's data operations.
"It actually makes your data network better," Stephens says. "If a data network is slow, people are tolerant of that. But they are not tolerant of problems on a voice network. So problems get cleaned up faster than before."
Farrand says that most enterprise-class businesses will take Lucent's approach of trying out the technology in a single business unit or locale before betting their entire company on it. "Most corporations aren't going into this thing wholesale, although some have. But they are trying it out," says Farrand. "That's a familiar theme across the board."
Future Proof
While the reality of making end-to-end IP-based calls over the Internet remains years removed, businesses can achieve big gains by converging phone networks with managed local and wide area networks. Access to advanced features, intuitive user and management interfaces, and the ability to use the corporate WAN to bypass the PSTN combine to make IP telephony a compelling option. Factor in the considerable cost savings of maintaining a single network and network staff, and the math for IP telephony seems to add up.
"We sold the system to our executives on the futures," says Cray's Stephens. "The potential is so big...that if you're thinking about a PBX upgrade you really need to think about this."
Tell us what you think of this Enterprise Technology special report. E-mail suggestions and feedback.
Michael Desmond is a frequent contributor to PC World.IP Telephony Tips From Experts
Lessons Learned: Secrets of IP Telephony Success
So you're considering a switch to IP telephony. Before you make the leap, learn a thing or two from the people who make the gear and have survived the process.
Stay staff savvy: Companies should not jettison their telephony staff. IT personnel may know IP, but they won't have mastery of call-related issues like setting up dial plans. Companies will also need a plan to merge their IT and telephony staffs.
Avoid chitchat: IP phones aren't passive devices. They talk to the network and trade information frequently. The result is a lot of overhead that can make network management a chore. Putting your voice operations on a virtual local area network is an easy way to prevent your data network operations from bogging down.
Know your integrator: The most important party in an IP deployment is the systems integrator. Make sure that you're comfortable with your integrator and that the project manager on the job is ready and willing to communicate with your company regarding project undertakings and issues.
Train, train, train: From telephony and IT staff to end users, everyone in the company will need training on the new IP phones and systems. If you don't get end users up to speed quickly, you could face an ugly backlash as users blame the equipment for problems. Cray set up a teaching lab with 20 IP phones, where an instructor could step employees through the new system.
Don't take chances: Unless you have the benefit of a clean-slate start, consider deploying an IP telephony trial before committing your business to the system. Lucent is taking this approach by deploying IP phones to all 2500 employees at a newly opened building. The company is acquiring valuable experience with the technology that it can later transfer to the rest of the business.
Tighten up IT: People simply won't tolerate problems in their phone system. Make sure that your IT department has the tools, skills, and discipline needed to finely control bandwidth prioritization, voice quality, service levels, and overall network health. Conducting an in-depth review of network traffic patterns before deployment will help IT identify staffing and equipment needs.
Respect the culture: Is your business ready for IP telephony, and does it need to make the switch? Review your business's IT skill sets and try to gauge whether your employees need a more advanced phone setup.
Be smart: Seek the insight of people in your IT and phone organizations who understand the IP technology and its implications. Look beyond immediate cost issues, and listen to your IT and telephone staffs. Your business and technical staffs will have to work together to develop a realistic vision for the new system.
IP Telephony Names to Know
Equipment Providers
- 3Com: Network and telephony gear for businesses, IP phones. 800/638-3266
- Avaya Communications: Telephony hardware and solutions for enterprise customers. 908/953-6000
- Cisco Systems: Network and telephony gear for businesses and service providers. 408/526-7208
- Lucent Technologies: Network and telephony gear for businesses and service providers. 888/458-2368
- Nortel Networks: IP telephony gear for service providers. 800/466-7835
- Sphere Communications: IP PBX, PBX extension, and integrated solutions for businesses. 847/247-8200
- Sylantro Systems: Hardware and software for service providers. 408/626-2300
Service Providers
- GoBeam, 866/462-3269
- Net2Phone, 973/412-2800
- NeTrue Communications, 714/870-0861
- SBC Communications, 800/562-8000
- Shoreline Communications, 408/331-3300
New Web Accelerators Speed E-Business
There was a time when America Online had performance issues--serious performance issues. AOL couldn't buy its way out of the cellar when it came to serving up Web pages quickly and reliably. Or maybe it could.
By the fall of 1998, the Internet giant had bought and deployed Inktomi Traffic Server software for its entire network, and performance picked up. Recent benchmark tests conducted by Visual Networks rated AOL among the top Internet service providers at downloading Web pages. Such results have sparked greater interest in Web caching appliances--devices that store frequently visited Web sites to help accelerate access.
In May, IBM announced that it would roll out a line of EServer XSeries Internet caching appliances based on Excelerator software developed by Volera, a subsidiary of Novell. Similar products from Compaq and Hewlett-Packard based on technology from Inktomi are on the way as well. (Compaq also has appliances based on Novell software.)
These new devices will compete with products from companies like Dell, Network Appliance, and CacheFlow. With so much activity, it's no wonder that research firm IDC sees appliance server revenues growing at an annual rate of 56 percent between now and 2005.
Speed gains aside, appliance servers also "address ease-of-use and deployment [issues]...to deliver a solution that reduces the demands being placed on IT personnel," says Mark Melenovsky, IDC's manager of enterprise server research.
Accelerators In Action
Caching appliances are designed to be easy to set up and manage. All the necessary parts--hardware, software, and operating system--come bundled and ready to operate. The appliances typically sit in a couple of places along the network (see figure)--between the Web site and the Internet, or between ISPs and Web users.
That lets them speed a Web site's response to end users by storing content close to the user and eliminating the need to send requests over the Internet. By most estimates, caching appliances handle 35 to 60 percent of user requests for data at sites where they're installed. They also protect a site from surges in network traffic that might overwhelm it.
In addition, caching appliances can cover a site's backside in the event that a server goes down. If the Web site itself is inoperable, caching devices will continue serving up data until the central server is repaired. And any caching appliance worth considering should have built-in failover capabilities so that if one malfunctions, another will pick up the load.
Cache Questions
When navigating the crowded field of caching appliances, look for products that can handle the traffic you expect your Web site to draw and that can grow to meet future demands. Ask vendors about such issues as the number of requests per second that their products can accommodate. And consider your site's content: Downloads such as large media files are good caching candidates, while data that changes constantly may not be.
Like other servers, caching appliances are available in various configurations and prices, depending on how much power you need. For instance, Compaq's TaskSmart C600 starts at $5170 for a unit with a 667-MHz processor and 256MB of memory that can handle roughly 250 requests per second. At the high end, the TaskSmart C2500 starts at $39,950 for a model with an 866-MHz processor and 4GB of memory that handles about 2400 requests per second.
But you don't need to buy caching appliances to realize some of their benefits. Many sites outsource caching to content delivery networks like Akamai and Digital Island. These service providers deploy armies of cache servers throughout the world.
A number of large sites such as CNet.com, CNN Interactive, and Yahoo use Akamai, while others (like Reuters and MSN) use Digital Island. For maximum acceleration, you could use caching appliances in front of your Web servers along with a content delivery network.
The more global your reach, the more likely you are to need a content delivery network, but for intranets and smaller-scale Web infrastructures, caching appliances make sense. Ultimately, any enterprise can benefit from Web caching.
--Brad Grimes
Where to Get Information About Caching Appliances
Videoconferencing Gets the Picture
You still don't have a videoconferencing system at your company? No surprise, really. Serious videoconferencing systems used to run to five figures, were hard to set up, and had limited functionality. But with its latest release, PictureTel may cause companies to reconsider videoconferencing as a way to enable workers in remote offices to collaborate.
Bud Parer, IS manager for the Compumotor Division of Parker Hannifin in Rohnert Park, California, says his group used to spend a lot of time flying to meetings with a related group in Milford, Ohio. "Now we've set up a virtual hallway using a couple of PictureTel 600 units," he says.
Codeveloped by Sharp Electronics, the PictureTel 600 Series, which starts at $6995, is a compact (15 by 12.7 inches) and lightweight (11.5 pounds) videoconferencing system and PC in one. Tight integration of its functions lets you share slide shows and other documents on screen during your conference. The unit comes with a 566-MHz Celeron processor, 128MB of RAM, a 10GB hard drive, an ethernet 10/100 port, two USB ports, and Windows 2000.
You transfer data to the PictureTel 600 either by hooking your notebook to the base unit or by using a LAN connection. There is no CD-ROM or floppy drive, which makes loading software tricky, but if you have apps like PowerPoint on your notebook, you can share data with the group. "Our people are comfortable plugging their notebooks into projectors, so plugging into the PictureTel unit is a no-brainer," explains Parer.
The device is easy to shuttle from room to room, and if you have a flat-panel LCD on your wall, you can detach the camera/microphone and rest it on top of your thin display. You can also operate the system with its bundled remote control or wireless keyboard. All in all, the PictureTel 600 offers an economical and versatile way to delve into videoconferencing.
--Brad Grimes
Dell Rolls Out Enterprise Services
Any IT manager will tell you that deploying new enterprise applications and servers can be a labor-intensive, time-consuming process. Before Dell popularized its build-to-order model, the same could have been said for rolling out new PCs.
So it makes sense that Dell is pushing further into enterprise services with its Infrastucture Accelerators program, in which the company builds and deploys custom solutions based on software from I2, Microsoft, Oracle, SAP, and others.
For companies that need the quickest implementation, Dell offers off-the-shelf Infrastructure Accelerator solutions. For example, data centers in need of a database setup yesterday can order Dell's Oracle 8i Database Appliance. It's built around the Dell PowerEdge 6450, a rack-optimized server with one, two, or four Xeon processors running at 700 MHz. The server is validated by Dell, and a Dell technician can install it.
Once the boxes are in place, Dell will offer companies a new line of high-level Premier Enterprise Services. Although the company has long provided enterprise services, including standard problem resolution and software support, Dell's Premier Enterprise Services division promises the kind of attention that large data centers need.
At the Gold level, for example, Dell assigns a technical team to your account. Bump up to the Platinum service level, and you get a dedicated technical account manager. The basic Bronze and Silver packages--and the Gold package--are sold in three-year contracts based on the server. Dell's Platinum service is based on a one-year, custom-bid contract.
Recently the Cornell Theory Center, a research center at Cornell University's Ithaca, New York, campus, moved to Dell servers running Microsoft Windows 2000 Advanced Server. Installation--from cutting the purchase order to flipping the switch--took just seven days. And Dell is instrumental in keeping the network running.
"Our [Dell] technical account manager knows us completely," says David Lifka, CTC systems director. "He understands what we're talking about, and is able to pull in the appropriate Dell and Microsoft contacts when required. He truly knows our environment as well as we do."
--Brad Grimes