CIOs See Value in VoIP

Voice over Internet protocol (VoIP) has been poised for its breakout since 1998. Now, after years of fits and starts, numerous enterprises have announced VoIP rollouts aimed at linking voice and data as well as increasing efficiency and lowering costs.

Companies are choosing VoIP for many reasons, and three examples provide a good sense of the choices available on today’s market. One implementation is practical: At dental consultancy Consani Seims, VoIP provides a virtual presence in four Northwestern states and Alaska. Another implementation is sensible: Hat manufacturer New Era Cap uses VoIP to connect five disparate facilities while simultaneously slashing long-distance costs. The third could be classified as critical: In Nevada County, Calif., VoIP technology was the only rational solution when the county government’s private branch exchange (PBX) was near death.

No matter why organizations decide on VoIP?nor which vendors they choose to implement it?the days of switched-circuit telecommunications are coming to an end, say experts. “This is the future,” says Walt Magnussen, director for telecommunications at Texas A&M University (see “Beyond VoIP,” Page 103).

If that’s true, the only remaining question is, Are you ready?

A New Era at New Era

New Era Cap began operations in 1920 with a handful of people working out of a factory in Derby, N.Y. The outfit grew modestly during the next 80 years, patenting its famous “59Fifty” fitted caps?which became the standard for all 186 major and minor league professional baseball teams?and opening one additional factory in Buffalo, N.Y., to meet its niche audience. But when the company began an aggressive marketing campaign in the 1990s, everything changed. Surging demand forced the company to quickly open three facilities in Alabama, pushing Vice President of Information Systems and CIO Dan Marmion into a “telecommunications nightmare.”

“We were spending thousands in long distance alone. Our phone guys were charging us $130 a pop just to come in and add another line,” Marmion says. “It was insane.”

Marmion decided to unify communications under a new PBX. Rather than purchase traditional analog equipment, however, Marmion opted for a digital PBX and VoIP equipment. In the end, Marmion settled on tiny AltiGen Communications to craft an all-inclusive approach.

The heart of the AltiGen solution was what the company calls its AltiServ2 IP telephone system, a series of IP-based PBX boxes at each location that communicate with each other over a VPN for secure transmission of data and voice. Equally critical were new AltiTouch Plus telephones, analog phones designed to offer simple extension-to-extension calling over IP, as well as advanced voice-mail features including the capability to check messages as e-mail attachments. New Era also signed on for AltiGen’s AltiConsole product, a unit that lets company receptionists forward calls from a toll-free number to any extension on the network without incurring the fees the company once paid to its old provider. Together, Marmion says, the tools create an effective and inexpensive solution to the challenge of linking remote offices.

The transition was not without its pratfalls. Marmion says it took New Era nearly two months to establish good voice quality, and three months beyond that to convince internal users to adopt the new technology. Today, no matter how New Era officials perceive their VoIP system, no one can deny that the technology is yielding huge dividends. Marmion says communication quality between facilities is better than ever, and brags that he calls the facilities in Alabama from his office in Derby at least 10 times a day, all for free. What’s more, whereas New Era used to pay per change for even slight modifications to the old PBX, administrators now can use AltiGen software to make fixes such as adding new extensions and rerouting calls. The new system already is also showing major ROI. Though Marmion declines to say exactly how much he spent on VoIP, he reveals that he expects to save nearly $15,000 per year in long distance alone, and nearly $50,000 per year overall. You have to tip your cap to those kinds of numbers.

The Dentist Is In

Availability is everything in the medical practice business, and at 11-employee dental consultancy Consani Seims, representatives live and die by their telephones. Consani consultants spend their days dialing dentists to chat with them about buying or selling a practice. When these dentists return their calls, it’s critical that someone at Consani Seims answers. President and chief technology decision-maker Paul Consani describes the challenge as “minimizing phone tag,” and admits that he’s tried everything, including 24-hour answering services, to make it work.

“Most of our business goes down on the phone,” he says, noting that the company abandoned 24-hour answering due to mixed results. “If we lose the ability to field incoming calls, we lose everything.”

For years, Consani Seims paid long-distance tolls to route callers from a PBX box at company headquarters in Vancouver, Wash., to field offices in Alaska, Idaho, Montana, Oregon and elsewhere in Washington state. Last year, when dropped calls rendered this method ineffective, Consani himself started looking for alternatives he could implement on the fly. He had read about VoIP in the local newspaper and figured it would be too expensive to implement at a business as small as his. Still, he decided to give it a whirl and contacted nearly a dozen providers to see what they’d say. The response to these initial RFPs was overwhelming?all of the vendors came back with bids. In the end, he chose a product from Zultys Technologies.

On the back end, the Zultys solution revolved around an MX250 Enterprise Media Exchange?an IP server that combines the features of a PBX, voice-mail server, voice gateway and Internet gateway. On the front end, Zultys deployed Zip 4×4 phones, which essentially integrate the traditional business phone with a 100-megabit Ethernet switch. With the system, Consani’s consultants can plug their IP telephones into any Ethernet Internet connection and talk away. They also can quickly program the devices to forward calls to cell phones. When dentists ring, the calls come through the MX250, which automatically routes them over the data network to the appropriate extensions. What’s more, because the phones can behave as routers, traveling consultants can plug computers into them as well, piping data and voice over the same connection from remote locations.

“VoIP has become our entire network,” quips Consani, who notes that the most challenging aspect of the transition was teaching employees to adopt an entirely different method of communication. “Now that we [can always] answer our phones, our clients get the impression that we’re working harder, that we’re in the office a lot more, and that there are more of us.”

An increasingly professional image isn’t the only ROI that Consani Seims has experienced from its foray into VoIP. First, because the Zultys VoIP system is easy to manage from any phone on the network, Consani and his wife, Debi, the company’s office manager, say they recover up to 10 hours a week that they formerly spent handling technical issues with their old PBX. More important are the cost savings. Consani says that he was willing to spend up to $200,000 on a new telecom system, and notes that he’s spent no more than $60,000 on hardware and software to date. Factor in additional thousands of dollars in long-distance savings between offices, and Consani estimates that VoIP has scored him a quarter-million-dollar ROI. Those kinds of figures should make anyone smile.

The Wild, Wild West

Pay a visit to Nevada City, Calif., and you’ll feel as if you’ve stepped back to the summer of 1849, when men with gold pans and golden dreams descended on the town to prospect for treasure. The Nevada Theater, built in 1865, still shows movies on Sunday nights. The National Exchange Hotel, circa 1880, still rents clean beds for the night. Indeed, downtown Nevada City today looks very much as it must have looked back then, complete with hitching posts, old-fashioned storefronts and other relics of the days gone by. And until recently, Nevada County’s telecom infrastructure was a relic too?before Desktop Services Manager Bill Miller stepped in and addressed a crisis situation with VoIP.

In the late 1990s, to describe the telecommunications situation in Nevada County as dire would have been an understatement. The largely rural county, which encompasses 978 square miles of the Sierra foothills east of San Francisco, was running all of its communications over a Siemens Saturn2E PBX purchased during the Reagan years. The PBX was so old that Siemens had stopped supporting it. Miller would spend nights fixing it with wire, electrical tape and spare parts he bought on eBay with his own money. Finally, when the device failed to reboot for a full 24 hours one weekend in 1999, Miller knew it was time for a change.

Miller had been following VoIP for years, and decided immediately to migrate county telecommunications systems over to the new technology. After a brief but legally mandated RFP procedure, he selected 3Com to provide the hardware, and purchased a series of NBX 100 products for gradual deployment over three years. The first NBX 100 system was installed in the county courthouse, an implementation that cost $14,000 and consisted of 80 phones. By the beginning of 2002, 10 different county facilities were transmitting voice traffic alongside data?1,200 VoIP phones in all. High-end features on the new system included standard VoIP options such as call forwarding and remote management, as well as the capability to listen to e-mail messages through an application that reads them over the phone. Later that year, after consistently spotty service from the out-of-the-box NBX system, Miller signed up for network monitoring and management capabilities from VoIP software company Qovia to sharpen general clarity and ensure quality of service (QoS) across the board.

The QoS deal with Qovia paid huge dividends; Miller says that since early 2002, the county’s system has operated almost flawlessly. Overall, he notes that ROI on the move to VoIP has been even more impressive, netting the county an estimated $1.5 million in savings in long-distance and hardware costs. Miller adds that by eliminating his need for telephone technicians, the new system has freed thousands of dollars in his budget to reallocate to other jobs or additional IT expenditures. Case in point: After months of research, Miller plans to install his own switches at routers in Sacramento, San Francisco and Los Angeles later this year so that all of Nevada County’s calls to those cities will become free calls too.

“Wherever Nevada County influence is, that’s where our VoIP telephone system will be,” Miller declares, predicting that expenditures on expanding the system should pay for themselves by December 2004. “After years of living in the dark ages, now that we have technology to use to our advantage, I want to make sure we do just that.”