Businesses warming up to VoIP, say experts

After years of talk, voice over IP (VoIP) is fulfilling its promise and being used by businesses in significant numbers, according to industry experts.

Predictions for the future are bullish. By 2008, the number of corporate telephone lines that use IP telephony will reach 44 per cent, according to analyst house the Radicati Group. And by the end of 2005, 45 per cent of European companies surveyed by IDC say they will have integrated voice and data traffic.

So what's changed that businesses are implementing a technology that's been hyped for the better part of the last decade?

It has to do primarily with the acceptance of Session Initiation Protocol (SIP), an industry standard for enabling communications between multiple users involving voice, video, instant messaging and other elements, according to Clive Longbottom, service director at analyst house Quocirca.

"Previously when there was no standard, you were buying [VoIP products] in blind faith that what you got would work with what you had," he said at a recent roundtable discussion in London.

Now that SIP is becoming widespread, IT departments are more willing to take the plunge and switch at least part of their phone network to IP-based technologies.

Longbottom is quick to point out that "the hybrid approach is king" - meaning most companies aren't moving to pure IP voice systems but are using the new technology in conjunction with their standard phone equipment.

Cost has - and will continue to have - an impact on the rise of VoIP as well. Equipment has come down in price considerably, making the technology more attractive to businesses. By 2008, says the Radicati Group, installation will cost corporations $75 to $600 per line, down from the current $375 to $1,000 per line.

The phones themselves are coming down in price due in part to the economies of scale created now that more companies are purchasing them, according to Quocirca's Longbottom.

The VoIP solutions taking hold in businesses are open-architected, software-based and run on Intel-based servers. They provide companies with savings in part because they do not require experienced personnel to implement them.

John Morris, IT director at Fellingham Ltd said: "I can hire a kid out of school for £15,000 a year to set up [a software-based VoIP system]. I no long need expensive telecom engineers." Morris has experience installing a VoIP system from Interactive Intelligence.

Quocirca's Longbottom said that while large firms are beginning to understand the benefits of merging voice and data systems - such as low call charges, an abundance of features and the ability to easily add video to the mix - small and medium-sized enterprises still need more education for VoIP to continue growing.

Many SMEs are concerned with reliability and security, both of which can be remedied, according to Longbottom. For example, if a server crashes it can roll over to a backup, so the phone system is always on. And SIP communications can be encrypted.

Tony Martin, director of marketing for VoIP software vendor Interactive Intelligence, said that another reason for the growth of VoIP is that business managers are becoming "more savvy and astute" and realising the savings possible with the technology.

In the long term, IP telephony promises not just to save money but to improve key business functions, such as interacting with customers. If voice is integrated into the data network, then it can also work with a company's CRM software and allow all types of customer interaction - whether from a phone call, email or visit to the company website - to be tracked and analysed.

"This would make workers not only more efficient but also more effective," said Martin.