In annual surveys of companies conducting VOIP deployments, the average time a company devoted to upfront planning, installation, troubleshooting and training in 2004 was 52 minutes per user, which increased to 133 minutes in 2005, according to Nemertes Research Inc. in New York.
"Companies in 2005 had the realization that they needed to spend more time on upfront tasks," said Nemertes analyst Robin Gareiss, in an interview today. "Implementations are now getting more complex."
Gareiss said that adding more time for upfront activities will obviously increase costs for a project and cut into the return on investment an IT management team projects when lobbying higher management for VOIP funding.
The findings, which have not yet been published, indicate that companies generally "are realizing how much time it really takes" to implement VOIP, Gareiss said. She gathered her data from interviews with 90 IT executives in 2004 and another 90 IT executives from different companies in 2005. The companies were based in the U.S. and abroad and reflected a range of sizes.
Some of the data has been shared with communications vendor Avaya Inc. and might have been what prompted recent keynote comments by Avaya CEO Don Peterson at VoiceCon Spring 2006 in Orlando. "We don't believe IP telephony is a cost-reduction case," Peterson said in his address on March 8. "I fundamentally believe that the real value is how it changes the business."
Despite Peterson's comments, Nemertes and other analyst firms have consistently indicated there are many areas of communications cost reductions with VOIP, including savings in adding or moving a phone for an employee or lowering toll-call costs. At new offices, IT managers can sometimes run a single cable instead of two to each desktop, also cutting costs.
Nemertes' research shows that the average cost for one "move/add/change" (MAC) of a phone running on a traditional circuit-switched system is US$124, compared to $10 per move with a newer VOIP system. "Typical MAC costs drop drastically with VOIP," Gareiss said. "So, we're absolutely seeing significant cost savings in some areas."
By running only one cable to a desktop instead of two, installation costs can drop an average of 40 percent, she said. In addition, VOIP customers are seeing drops in the cost of audio- and videoconferencing. Traditional circuit-switched audioconferencing can cost 6 cents to 12 cents per minute, compared with 1 cent to 2 cents per minute with VOIP audioconferencing. Similar reductions are being seen for videoconferencing, which run $200 to $300 per hour for traditional sessions. (Gareiss has not yet calculated the exact cost for VOIP videoconferencing.)
VOIP deployments have also resulted in a need for fewer IT and telecommunications staff. The average reduction on a project is 1.45 people, which might not result in a layoff, but might prevent the hiring of added personnel anticipated with older technology.
In addition to the added costs for time to plan and install VOIP, Nemertes also found that companies are trying to accomplish much more than setting up VOIP, so they find they need to add network management software which they hadn't anticipated early on. "You're not just setting up VOIP in one to two years," Gareiss said. "You're starting an overall convergence project.
"It's important to be realistic and realize there are some upfront costs," she said.
In the big picture, Gareiss said IT managers feel that convergence and VOIP projects improve worker productivity with unified communications and mobility integration, although the empirical data is not yet available to support such a finding. "Anecdotally, VOIP and convergence are absolutely creating greater productivity," Gareiss said.
IT managers in the midst of rolling out VOIP and unified communications applications can point to cost savings but feel less certain at making an overall conclusion about the overall value of VOIP.
"It's kind of hard to quantify productivity" from having an IP network for voice and data, said Bret Jones, director of technology operations at George Washington University in Washington.
Jones said he didn't have to prove cost savings, although he is expecting that replacing Centrex connections with VOIP in more than 1,000 locations will lower costs from $48 to $45 per month per location. But with the recent installation of several large IP-based switches from Avaya that cost in the low millions of dollars, return on investment will be difficult to estimate, Jones said. Part of the difficulty is not completely knowing what different communications applications will become popular and will enhance productivity, he said.