In Hong Kong, international enterprises, banking and finance, and hospitality industries are leading the IPT deployment trend--because they need rich communication applications to increase productivity and enhance collaboration, according to Yue Vivian Li, associate analyst, telecommunications, IDC Australia.
She added that most international firms with branch offices in Hong Kong roll out IPT to help form a consistent organization-wide global communications network. Li also pointed to mobility as a driving factor for IPT deployment as mobile employees in Hong Kong have realized the benefits of cheaper telephone bills and increased productivity while traveling.
Migration mania
Timothy Mak, country director for Avaya Hong Kong and Taiwan, cited Citibank and JP Morgan as two major banks in the process of deploying company-wide IPT systems. "We're seeing a lot of migration projects-IPT is no longer just for new offices and greenfield site developments."
The more widespread adoption of IPT today is because it's easier to build a strong business case for the technology. Many firms in the past struggled to justify migrating to a new network and communications system just for cheaper long distance phone calls and the promise of lower network management costs. IP equipment and handsets were also quite expensive in past years, so as a direct comparison of system costs, it was invariably cheaper to stay with a traditional TDM-based voice system.
"But now customers are looking deeper into IPT and finding significant productivity gains as well as cost savings when they consolidate networks," said Mak from Avaya. "Emerging new applications on the desktop and in customer service centers are creating new capabilities and opportunities."
Larry Wong, director of marketing and products, Commercial Group at PCCW agreed that this year's growth in IPT has been driven by new applications and functions. "Many early adopters of IPT didn't really make use of the functions of the handsets or systems," said Wong, "but emerging applications have created new services."
He noted that some firms are embedding IPT into other tools like salesforce automation and CRM. Some firms even use IP phones as a hotdesk login mechanism where salesmen who don't require a permanent desk come into the office, login via the phone, and have immediate access to their data and services.
Wong added that while IPT has definitely climbed in demand, this has not been reflected in overall revenues from voice systems. "Hong Kong is a mature market which means it's a replacement market," he said. "We see a lot of gradual replacement of old voice systems with new IP equipment."
Mak agreed that Hong Kong's mature market means overall voice revenues have not grown much. "But the revenue mix has shifted significantly," he said. "It's much more IP-based now and TDM revenues are falling."
Across the Asia-Pacific region, the IP telephony market grown steadily while traditional telephony declined gradually in 2006, according to Li at IDC. The latest research from IDC shows that Asia Pacific IPT market revenue had 28 percent year-on-year growth whereas the traditional telephony market had 5 percent year-on-year decline in Q2 2006.
Li noted that IPT equipment contributed more than 40 percent of the overall Asia Pacific telephony equipment market shipment revenue in Q2 2006. "Hong Kong is above this average figure, as its IP telephony market is more mature than that in PRC and Taiwan. She predicts the Hong Kong IPT market to grow at a compound annual growth rate of 16.4 percent to 2010.
Mobility push
A key trend has been the application of IPT to enable a more productive mobile workforce. Major vendors are integrating their IP PBX products with desktop applications and mobile devices to extend IP telephony features to desktop and mobile phones, noted IDC's Li.
"Unified communications is the shining star of 2006 with major vendors putting efforts into showing their commitment to this development," said Li. "But vendors still have much work to do on refining their solutions, as well as offering better end-user education."
Wong at PCCW also believes that as service providers push through with fixed mobile convergence, there is likely to be even more integration between unified communications tools and wireless networks as they can be used to access even more powerful applications via 3G and WiFi networks.
"IPT will be seen moving further into the wireless space and handheld devices space," said Wong.
Avaya's Mak agreed that IPT will be applied more aggressively to mobile application areas. Vendors like Avaya and Alcatel are working with mobile vendors to enable converged mobile offerings that bring IPT features to the mobile worker. Both Avaya and Alcatel have worked with Nokia to extend many IPT functions to the Finnish firm's handsets and software platforms.
One possible scenario for users is enabling employees to manage just one business number and control where, when, and on which device they receive their calls, said Marc-Alexis Remond, director of marketing & business development, Enterprise Solutions Division, North East Asia, Alcatel Asia Pacific. In addition, all the benefits of an office phone, such as call conferencing, call back, and dial by name can also be delivered via a mobile phone within the enterprise environment, noted Remond.
Declining cost conscience
While companies are increasingly eyeing productivity gains and new service capabilities, cost is still an important element in the IPT equation. "Cost is still high on the enterprise customer's agenda, though they are now realizing the advantages of IPT beyond mere cost savings," said Li at IDC. "They are now demanding seamless convergence between multiple devices (desk phone, laptop, PDA, mobile phone) with easier operation and management."
Li emphasized that cost is declining in importance in 2006 as compared to previous years, as enterprise customers look at IPT beyond cost savings. "IPT deployment has also been driven by users' experience and business demands, rather than customers simply buying technology for technology's sake," she said.
Wong at PCCW also stressed the need for companies in Hong Kong to target IPT benefits based around productivity and new capabilities.
"The equipment is still fairly new and not necessarily cheap relative to traditional TDM systems," he said. "Therefore the upgrade costs are still high but the potential benefits are much greater-so purely from the cost perspective companies should not expect huge savings." He suggested companies should look at potentially better bandwidth, faster response times and new features for staff and customers-which all contribute to top line revenue growth.
Charleston Sin, general manager for Hong Kong and Macau, Cisco, said that customers are reaping gains by marrying IPT with business processes.
Fast food provider Fairwood has deployed Cisco technology to help consolidate voice and data onto an IP network which has improved customer service. Sin noted that Fairwood is now able to allocate additional phone hotlines in real-time to deal with spikes in demand. That was not possible before, resulting in unanswered calls and missed orders. Fairwood is also planning to integrate the new IPT systems with its ERP platform to enable real-time stock taking and tracking.
"It's clear that embedding IPT into workflow and business processes creates quantifiable gains," said Sin.
Another Cisco client, shipping giant OOCL, has consolidated its 100-plus TDM PBX systems into a single IP platform to save costs and enable a complete call center integration allowing for better resource allocation and customer services.
Management challenges
Even traditional IT service providers are also jumping on the IPT bandwagon as they leverage their systems integration and systems management skills to help deploy and configure IPT systems for enterprises.
IBM is helping its customers who are interested in upgrading their voice and data networks to IP without negatively impacting service levels, according to Victor Fung, executive, IBM Global Technology Services, IBM China/Hong Kong.
In the last few months, IBM helped AEON Credit Services in Hong Kong to roll out a centralized IP contact center platform and IPT system for the whole company.
"The resulting system improved AEON's ability to scale, simplified its infrastructure and considerably improved productivity of the service agents," said Fung.
According to Edwin Ho, director for enterprise, Greater China, Nortel, interest in IPT is now very broad and extends right across the verticals. "Many firms see their peers making use of IPT and encouraged to deploy it-they don't want to be left behind," said Ho.
While migration to IPT is a certifiable trend, it's important to note that firms may be seeking new functionality, but not necessarily by replacing all their old TDM equipment. Ho noted that customers are often going for a gradual migration process, often running IP and TDM systems side by side. "Complete replacement of TDM voice systems is a very challenging management exercise," warned Ho.
The promise of simpler network management with voice and data on a single platform also presents issues for IT staff. "There is still a shortage of skills in this area as most communications experts are in voice or data," cautioned Ho. "Not many individuals can manage both traffic types on an IP network." He added that the situation is improving, but as demand for IPT skills goes up, users should expect the price of such skills to rise too. "Most will look to retrain and tool up existing staff rather than recruit from outside," said Ho.
According to the most recent forecast from IDC, IPT will outperform traditional telephony and become more mainstream in Hong Kong during 2007. Li also predicts that unified communications will be better understood and more well-defined in 2007, and she noted that higher broadband penetration will enable more remote workers, consequentially driving IPT mobility integration. "Higher bandwidth will also support growth in video conferencing," she concluded.