Home Asia-Pacific III 2001 Harnessing the Power of Networks for IP Telephony Benefits

Harnessing the Power of Networks for IP Telephony Benefits

by david.nunes
Tom CheongIssue:Asia-Pacific III 2001
Article no.:6
Topic:Harnessing the Power of Networks for IP Telephony Benefits
Author:Tom Cheong
Title:Regional Managing Director
Organisation:Avaya – ASEAN region
PDF size:24KB

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Article abstract

Internet telephony is in its infancy across the globe. Here Tom Cheong, Managing Director ASEAN for Avaya, regards the lull provided by the dot.com failure as a breathing space for the development and acceptance of new technology. One example of IP telephony being prepared for is at Singapore Press Holdings, where an IP-ready communications hub has been installed in advance of widespread usage. Savings and reduced professional IT maintenance are two of the prime benefits offered by IP telephony.

Full Article

Advances in telecommunications and the Internet are transforming the world into a global village. While human civilisation grew up in indigenous pockets, the move to globalisation is creating a homogenous human society. Low cost and easily available telecommunications – and the Internet – make it easy to communicate with loved ones halfway around the world. They also open the door to remote markets in every corner of the globe. Globalisation, though, means global-scale competition as well. The recent dot.com explosion drove home one point: no business can operate in blissful isolation, for large predatory competitors could easily access the same markets. The only reprieve to the rapid expansion of the dot.com phenomenon is the temporary implosion of the market as business models failed to yield fruit and funds dried up as investors took another look. The sudden lull-expected to be brief-gives Asian manufacturers and marketers a brief respite to catch up with their counterparts from the West, particularly in the areas of marketing, fulfilment and customer relationship management. They have wasted no time and there has been a flurry of activity as companies invest in new technology and infrastructure to compete better in the new economy. The recent slowdown in the world economy has hit Asia as well, but companies continue to be bullish about investing in technology even though the urgency has been blunted. One example is Singapore Press Holdings (SPH), Singapore’s largest media group and publishers of the national daily, The Straits Times. The Group recently invested some US$2.8 million for an IP-ready telecommunications hub at its new corporate headquarters building which will link up its over half-dozen facilities in the country. While it remains cautious about implementation of IP Telephony, the company has gone ahead to invest in state-of-the-art infrastructure to ensure that it is able to can opt at any time to implement IP-based applications such as web-based e-commerce, Internet contact centre, customer relationship management and IP telephony. SPH typifies the Asian mindset. Companies are willing to invest heavily in technology to leapfrog the competition, but take a considered and more cautious roadmap in the implementation and rollout of new services. Also, while Singapore has a liberalised telecommunications market, this is more the exception than the rule in Asia where governments are still highly protective of the rights of the often-government-controlled PTT. In some countries-notably Vietnam and India-voice traffic must still be driven over PSTN networks and IP telephony is permitted only for Intranets. China, always seen as a marketing Xanadu with its one billion population, has similar restrictions. VoIP services arrived in the middle kingdom two years ago, and these are provided by only five carriers: China Telecom with the lion’s share of 65 per cent, China Unicom (20 per cent), China Jitong (10 per cent) and China Netcom (5 per cent). China Mobile is the fifth VoIP licence holder, though as a mobile operator, it is considered a “niche” player. Still, with China’s population, even this niche player has more than 70 million users. The potential for the world’s largest national marked is undoubtedly huge. After all, in spite of its large population, the populace is found in pockets strewn across a huge area, and VoIP promises to be a cost-effective way to link all the pockets. Still, even as these carriers work our the benefits of VoIP against the potential downside of cannibalised sales on their traditional long-distance services, it is not likely that private companies would be allowed to set up enterprise-wide VoIP applications in the two years. In spite of all this and the fact that PSTN services in many Asian countries is patchy outside of the capital cities, the IP telephony is set to grow rapidly. According to Frost & Sullivan’s Asia Pacific IP Telephony Services Equipment and Market Report, Southeast Asia is expected to generate total revenues of US$2.1 billion in VoIP by 2006, a compound annual growth rate of 57.1 per cent. VoIP traffic, at 261 million minutes last year, is expected to leap 42 times over the next five years, to 11 billion minutes in 2006. For companies, though, the concerns about adopting IP Telephony are divided in two areas: Reliability and the financial impact of implementing a converged network. Financial impact concerns initial capital investment, ongoing costs, and protecting existing investments, upgrading the data network infrastructure and integration with existing business operations. An Internet telephony solution can range from an enterprise VoIP gateway costing less than US$900 for each small remote office, to a full-fledged VoIP PBX system with sophisticated IP-PBX phones costing more than US$100,000. Recent return on investment models based on research by Renaissance Worldwide and Gartner Group show that implementation of IP Telephony can deliver 3-year ROI yields exceeding 100 per cent, with returns potentially positive even at the end of year one. With fewer legacy issues than their western counterparts who have been investing in technology earlier, Asian companies have not been as concerned about financial issues as much as reliability issues. Current telephone systems are reliable, to the order of five nines or 99.999 per cent. Pick up a phone and it always works. Not necessarily so a data network. Thus, many enterprise technology managers are reluctant to provide less reliability unless the benefits are so clearly seen to outweigh the pitfalls. The quality and reliability of voice over packet networks, especially IP networks, is one of the biggest questions companies have about converged network reliability. After all, today’s Internet was neither designed nor managed for reliability or performance. One way that we have allayed reliability fears is the ability of the system to switch traffic back to the PSTN when IP network performance is not up to par. Nonetheless, recent field trials by a number of Fortune 500 companies have demonstrated that current systems-including our IP600, 3Com NBX100, Siemens ICN HiPath 5000-deliver quality of service that is on par with high-performing traditional telephony systems. Compelling Reasons for IP Telephony What are the compelling reasons to go IP telephony? Savings are the biggest reason, with the promise of new applications as a close second. Savings can be realised from four areas. Of these, reduced moves, adds, changes – or configuration costs – are the largest saver. The reduced need for professional staff to man the IP telephony system is another huge savings factor, accounting for 30 per cent of total savings. In Asia, more important than saving on the wage bill is the reduced dependence on scarce IT professional resource. Toll bypass, surprisingly, ranks third, at 23 per cent, though this would vary from company to company. Companies with a huge long-distance phone bill will find this savings to be a major driving factor for IP telephony adoption. For example, one web-hosting firm reported a US$30,000 annual savings – and that for a company with just 25 employees! Contact centres, or call centres, that are based on converged networks and IP telephony would also enjoy tremendous savings. Consider an example of a 40-strong agent contact centre operation with US$21,600 in monthly long-distance charges. Converting that traffic to IP telephony would eliminate over US$9.000 in costs; or over 40 per cent of costs. More important than savings, converged networks and Internet telephony open up new applications for users, paving the way for better customer and other relationships. One of these is the Internet contact centre. Web surfers can access the entry simply by clicking on an icon on the web page. This brings the surfer in touch with an operator who can communicate with the surfer via IP telephony and even take control of the surfer’s web browsing and bring the surfer for a guided tour. We have had such a product for some years now and more and more companies are finding it a critical tool in e-commerce. A recent finding by Yankelovich Partners was that 63 per cent of web purchasers indicated that they would not conduct regular business over the web until the sites provided the capability for human interaction. Unified communications are another benefit of converged networks with a significant potential to improve the efficiency and effectiveness of the enterprise workforce. A time and motion study by The Radicati Group estimates that an average employee can reclaim 40 minutes a day of lost productivity by using some form of unified communications for voice-mail, fax and email. Conclusion Finally, converged networks also offer “in office-like” capabilities for remote workers, especially for call centre agents and remote or mobile employees. In this respect, we have set new benchmarks. At CommunicAsia in June 2001, the company announced new IP telephony functionalities, such as using personal digital assistants to enhance telephony capabilities; and a new version of its IP Agent to make the remote contact centre agent more efficient and effective. Over the next two years, the market is going to see a further maturing of VoIP technologies and applications, especially as new standards fall in place. While early adopters willing to pay a premium to get a leg up on their competitors have largely implemented Internet telephony, convergence technology has moved out of this phase and is ready for “early majority” enterprises seeking to aggressively leverage this new technology to their advantage. In Asia, with the need to grow faster to close the gap with Western competitors, companies are heeding the clarion call to adopt-and at least study-the benefits of IP telephony.

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