Should You Outsource VoIP Or Manage It In-House?

Going to VoIP is a given. But how can you decide whether to do it yourself or go with a provider? The pros tell you how to make the best

May 31, 2005

5 Min Read
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With voice over IP (VoIP) growing at a furious pace, the question facing enterprises won't be "should I or shouldn't I?" for much longer. VoIP will be a given and the choice will boil down to whether companies should do it all themselves or send out to one of the dozens of managed VoIP service providers.

"There's already a good uptake of IP voice," says Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics Research. "Most organizations right now are taking the in-house approach, but service providers are signing up clients. That doesn't really show up on the radar yet, though, because it's still an early market."

The problem is that managed VoIP services can be almost anything, from a complete hosted solution, to outsourced management of the corporate IP PBX. "It's a bit of an issue in the industry, with everyone describing it differently," says William Stofega, research manager of VoIP services at International Data Corporation. "This is actually something of a problem; if the people who sell the stuff can describe it, you can understand the confusion among their potential customers."

Indeed, a big part of the decision over whether to go with a managed IP voice solution is to ask the question "how managed?" says Machinowinski. "Because it's such a broad definition, one of things you have to do at the outset is to start defining it for yourself," he says. "Organizations are not one-size-fits all, so they are all going to approach the question differently."

The decision has to start with an assessment of what network assets you already have and what, exactly, you want from VoIP. The latter is not an idle consideration, either, whether you opt for a managed solution, or do it all in-house. For a technology promising so much --- network consolidation, cost savings, advanced messaging and call management features --- it's important to be absolutely clear about what you're getting."The first thing that attracts companies to VoIP is the promise of cost savings," Stofega says. "But that's a tricky proposition. Yes, companies can reduce toll charges by keeping calls inside the corporate network; and there's the promise of network convergence, and the idea of collapsing two networks into one. But you have to upgrade the data network to do this, and that's where the trouble comes in."

Of course, Stofega points out that your local area network (LAN) probably needs an upgrade anyway --- most enterprise networks do, he says --- so the effort and expense might be necessary in any case. All the same, network upgrades and the acquisition of VoIP network equipment requires capital spending and, for many organizations, anything that can help them avoid capital expenses is a good thing.

In theory, managed VoIP services allow enterprises to trade capital expenses for regular fees, but in practice, things are a little more complicated. "What if your service provider says his service only works with Cisco equipment, and you're not a Cisco shop?" Machinowinski asks. "All of a sudden, it's a big expense."

Indeed, ultimately the decision should, and usually does, boil down to two things: Do you have the in-house expertise to deploy and maintain VoIP yourself, and do you trust a managed VoIP service provider to maintain what is, after all one of the most critical systems of any business? "The big argument around managed services is whether you trust someone to come in and manage your stuff," he says. "One thing that tilts things in favor of managed services is that VoIP is not just data. It adds all kinds of complexity, and you have to ask, do you really want to do all of this stuff yourself?"

The problem, Stofega says, is that doing it all yourself often means acquiring new expertise, and that's never and easy thing. "Typically, people say that VoIP is all just packets, but there are things about voice that the telephony guys have always known, and that make managing voice more than a question of managing packets," he says. "At the smaller end of the business spectrum, you simply may not have the expertise in the company anyway. You have to wonder if you'd rather outsource VoIP, or have someone on the payroll every month with that expertise."

Indeed, that consideration makes manages VoIP a particularly attractive option to smaller organizations, but the same thing can attract large enterprises seeking to offload yet more of their IT operations. "If you have a large organization, then it usually makes sense to have It people on staff, and some of them can certainly be voice people," Machinowinski says. "But a lot of large organizations outsource a lot of the IT already, so this could be part of that. There's not easy equation between size and inclination to outsource."Machinowinski says that in the long run there will be almost as many managed service options as there are customers for managed services. They will range from hiring a service provider to maintain your IP PBX, to having him take care of linking all of your remote locations together, to outsourcing everything but the phones themselves. "Ultimately, it's a backbone decision," he says, "and I think enterprises are approaching it that way."

Indeed, Stofega says that VoIP will never be either an entirely in-house or outsourced technology, and neither will there ever be a single approach to managed voice services. "It'll be a mixture of approaches," he says. "That's what we've seen so far. There's no such thing as a perfect solution."

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