Enterprise Telephony – Looking Beyond Cost Savings

Frost: Customers of Internet protocol (IP) telephony are increasingly moving away from just implementing IP for cost savings or basic applications. They are looking to derive maximum benefit out of their telephony deployment through productivity applications and customized features that that enhance their business process.

North American Enterprise Telephony System Markets earned revenues of $2.87 billion in 2005 and estimates this to reach $4.11 billion in 2010.

The enterprise premise-based telephony market continues to exhibit growth year-after-year, offsetting the decline in the time division multiplexing (TDM) and IP-enabled telephony market. Vendors such as Cisco, Avaya, and Nortel have invested millions of dollars in product development and marketing initiatives to encourage customers to switch to IP telephony and this is leading to a surge in IP phone and line shipments.

Telephony vendors are adopting open standards and creating solutions that are backward compatible with legacy equipment and also facilitate migration to next-generation networks. Converged systems that support both packet and circuit switching are best suited for these systems accommodating connection to analog and digital telephones as well as to IP endpoints. In 2005, a number of vendors also either introduced new products or upgraded their solutions to standards such as session initiation protocol (SIP).

To combat challenges in the future, telephony vendors need to develop strong and quantifiable return on investment (ROI) models in a business case for IP telephony.

Since initial investment required for moving to IP telephony is significantly higher compared to having a TDM solution, the investment should provide adequate benefits in the form of increased productivity and integration with new applications and not just plain cost savings associated with convergence of networks.

The following points are key for continuing success of market participants. Firstly, vendors need to take a much more proactive approach in evaluating network infrastructure and in monitoring the network, post implementation. Secondly, with the networks converging, staff will have to first converge and also upgrade their own knowledge and capabilities. Finally, migration for large businesses requires appraising existing telephony gear, and developing a sound strategy to decide software retention, additions, and upgrades.

North American Enterprise Telephony System Markets Publ 20060613