When systems integrator Kanbay Inc. made the jump to voice over Internet protocol, it was looking to save money, and while some experts disagree on whether companies can really save money this way, Kanbay has no doubts.
The Rosemont, Ill., company has multiple offices in the United States, as well as offices in India and Australia. With offices spread across the globe, Kanbay was spending as much as $10,000 a month on long-distance phone bills. Its conference call bills were also running close to $10,000 a month.
Mark Livings, Kanbay's chief information officer, said that he was looking for a way to contain the costs of voice communications. "The idea of implanting VoIP was to drive down costs from office-to-office communications," he said.
Kanbay put in IP PBXs from Alcatel at its sites in New York, Chicago, Australia and India. With the new system, all voice traffic ran across the company's local and wide area networks.
As with any VoIP deployment, Kanbay had to assess its own network to ensure that it was capable of handling voice traffic without latency or jitter. That step is crucial, Livings said, because no one will tolerate poor voice quality on calls. As part of the preparation for VoIP, Kanbay had to ensure that network priorities were set correctly so that voice traffic received priority over data traffic.
Livings also had to hammer out service-level agreements with his wide area network provider to make sure that delay on the WAN transmission was not longer than 400 or 500 milliseconds. Thanks to the fiber links between its overseas sites and its U.S. sites, Kanbay has seen consistent quality in its voice communication.
In fact, Livings said, now that he is simply dialing a three-digit extension to reach India or Australia, the voice quality is much better than it was over the public switched telephone network.
Livings said that there were concrete cost savings from the start. The $10,000 monthly long-distance bill largely disappeared. Kanbay has also been able to centralize its voice mail system and bring its teleconferencing in-house, which saves the company an additional $8,000 to $10,000 a month. The system should pay for itself in less than a year, Livings said.
Joe Gagan, a senior analyst with the Boston research firm the Yankee Group, said that companies such as Kanbay that do lots of international calling to remote sites can see significant savings from VoIP, despite inexpensive long-distance rates.
But he said the real saving comes over time because VoIP systems are much more simple to manage than traditional proprietary PBXs. Traditional voice resellers get 28% of their revenue from calls for maintenance and phone line additions and changes, Gagan said. With the easy-to-learn user interfaces on VoIP systems and the more scalable systems, these service calls and bills largely disappear.
Jeanne Bayerl, director of IP PBX marketing programs for Paris-based communications products maker Alcatel, said that additional savings can be gained through the centralized management of the system. Companies will need fewer support people at remote sites and they will need to make fewer trips to service those sites.
Gagan said that most companies with more than 20 employees can likely see some cost savings from a VoIP system, unless it is the kind of company that rarely rotates through staff and therefore would rarely make changes to its phone system.
But many benefits of VoIP systems are less tangible. Livings said that one of the biggest benefits from the VoIP system is that employees use the phone more. Rather than being concerned about justifying an $80 phone bill to Australia, employees just use the phone as a tool to do their jobs. If they need to talk for two hours to get a job done, they do.
The one drawback to this, Livings said, is that without a long-distance bill, it's hard to quantify how much additional money Kanbay is saving.