VoIP

What is VoIP?

VoIP means Voice over the Internet Protocol.*1

It works by allowing people to use the internet to communicate rather than ordinary telephones. 

VoIP is also referred to as IP Telephony (Internet Protocol Telephony).

Some manufacturers refer to VoIP technology as convergence. Convergence is the way of describing the integration and development of VoIP together with ordinary telephone lines and therefore potentially getting the ‘best of both worlds’, i.e. when two different types of technology merge. Currently, the vast majority of VoIP installations use a mixture of the internet and analogue telephone lines. Over a period of time, this looks likely to change to VoIP only.

Undoubtedly, the most well known form of VoIP is Skype which allows subscribers to call each other free of charge over the internet. The downside with Skype is that it cannot be used with other VoIP systems.

The future of VoIP

Many companies use VoIP to reduce their phone and network costs whilst increasing efficiency, competitiveness and productivity. This is achieved through reduced call and maintenance costs, but also because when individuals are using their PC to make calls, other people can see whether they are available. This is unlike traditional phones where it is impossible to know if someone is available to speak or not.

As access to the internet becomes more widespread and prices are reduced for broadband access and internet call technology; VoIP will increasingly become a viable option. According to Ovum, a technology analysis organisation, some 20 percent of companies in the UK have already adopted VoIP.

Another area of growth is the onset of mobile VoIP. With mobile VoIP you can take your handset anywhere in the world and enjoy the same benefits as using VoIP from your office.

There are a number of mobile phone handsets and Personal Digital Assistants (PDA’s) that allow you to use either your usual mobile operator or connect to a wireless network*2

VoIP is without doubt, here to stay!

Why VoIP?

The main reason for a business to change to VoIP technology is to save costs.

Naturally, calls using the internet are generally perceived to be free of charge. However, this is not always the case as calls at some point have to be transported across a Public Services Telephone Network (PSTN) *3

In many instances savings can be made against phones and landlines, especially if an organisation is making many international calls or has multiple offices, where savings can be made from making internal calls from one office to another using VoIP rather than landlines.

Benefits of VoIP

Organisations can gain a number of benefits by implementing VoIP but these will depend on the requirements, the situation and the type of organisation.

o    If an organisation is moving to a new office without a telephone system already installed then it may make sense to implement VoIP immediately rather than investing in a traditional Private Automated Branch Exchange (PABX) *4. It is possible to then save money on cabling because both data and voice calls can use the same infrastructure, rather than having two sets of cables, one for voice calls and one for sending emails.

o    If organisations have a small office without a PABX but with only one or two incoming lines, and already have an internet connection, it would be wise to approach your Internet Service Provider (ISP) *5 in order to see what they offer. At this stage you may find that there is very little price difference between using VoIP and a traditional phone system on the basis that the major telecommunications companies, or carriers as they are often known, are reducing their prices and becoming extremely competitive.

o    Having multiple offices or working remotely is where the benefits of VoIP can be really achieved. Normally each office will need a PABX system, which will no longer be required as all calls can be routed or directed across one internet connection. This means that internal calls across the company can be free, helping you make considerable cost savings.

o    VoIP can have an impact on improving work within an organisation and improve efficiency. This is because VoIP treats voice as if it were any other kind of data such as email, documents or presentations. This means that users can, for example, participate in online meetings via high-quality video whilst working on the same material, going through the same presentation or revising the same document, simultaneously. An example of this is people working in different parts of the world, collaborating on a particular project by using VoIP as a low cost method of communicating ideas regularly without worrying about the cost of calls.

o    Using VoIP can potentially lower the costs of managing your overall network because you only have one system to support and manage.

Potential pitfalls

o    You need to be aware that with VoIP, your organisation will potentially be using the same network for transfer of all files, emails and voice communications.

o    It is sometimes the case that because of the above, the quality of calls may not be as clear as traditional voice systems. However, recent technological advances make this less likely to happen.

o    As a result, you need to ensure that the infrastructure, such as cabling, your server and internet access, is able to handle voice as well as a high volume of data. VoIP, unlike many other applications, doesn't require much bandwidth but it is advisable to check that your system can cope. These days, getting more bandwidth is simple (and inexpensive). Just speak to your current supplier who can easily increase the capacity.

o    Your voice and data are tied into one network and you'll require access to the internet, so if there is an issue with either one of these, then you will lose voice communications too. So, if you lose internet access then you will lose the ability to communicate using VoIP.

o    Another point worth bearing in mind is that because VoIP utilises the internet, the system is susceptible to the same potential security threats as any other internet service.

internet, the system is susceptible to the same potential security threats as any other internet service.

Alternatives

One alternative to VoIP is to use a hosted or managed telephony service. This means that a third party organisation rents their VoIP facilities and infrastructure to you, for example a server, software and handsets. A hosted alternative helps you reduce the internal overhead of support, implementation and potentially having to purchase new equipment.

There are a number of benefits to a hosted service:

o    Monthly rental - easy to budget and you know exactly how much you will pay on a month by month basis. That way, there should be no surprises.
o    Flexibility - allows you add further functions as and when your organisation requires them.
o    ‘Future proof’ – you can upgrade or access new equipment and software as it becomes available, without the capital outlay of a new purchase.

What can I expect to gain by implementing VoIP?

It is difficult to give a typical figure that you should expect as a Return on Investment (ROI) because there are a number of factors that influence this calculation. For example:

o    It will depend on the size of your organisation and the type of calls that you make.

o    It will depend on whether you have multiple offices – companies that have several offices will benefit more because they will save money on the costs of calls between offices by using VoIP.

o    It will depend on your call patterns e.g. whether your organisation makes a great deal of outbound international calls, what your current service charges are, and the maintenance of any equipment that you may have.

You will need to analyse your current spending charges and patterns. Most companies who supply VoIP will be able to calculate this for you by investigating usage and type of calls against the cost of implementing a new system. We suggest that you ask a couple of suppliers to conduct an investigation as part of your purchasing process in order to find out what saving you could make by using VoIP.

There is absolutely no point in spending money on a VoIP system unless the costs can be entirely justified!

Conclusion

There are many VoIP systems and options available and needless to say, what you and your organisation should purchase ultimately depends on your requirements and plans for growth.

Initially it may make sense to introduce VoIP as an addition to your existing phone system (assuming you have one) and then gradually increase your level of sophistication as and when you need more functionality.  

For many small businesses, perhaps a managed or hosted option might be the preferred option, but for larger organisation, it is unlikely that this would be adequate.

The key issue here is whether VoIP is best for your company. Make sure you fully investigate traditional call services before taking the plunge.

Glossary of Terms

*1 IP – Internet Protocol is the way in which information is passed across the internet.

*2 Wireless Network - a network connected by radio waves to keep communication rather than using wires or cables. This allows users to travel and communicate either by phone or by their mobile computers rather than having to find a specific place in order to connect to the internet.

*3 Public Services Telephone Network - PSTN is the way that we have always communicated by telephones that transfer the voice signals over copper cables.

*4 Private Automated Branch Exchange - PABX allows a single telephone number to offer multiple lines to outside callers while providing a range of external lines to internal callers or staff. A company often has a general telephone number into a switchboard that can divert the call to users across departments and locations.

*5 ISP - Internet Service Provider. This is a company that lets you or your organisation access the internet for a monthly or annual fee.