Small Businesses Turn To Hosted VoIP

Small companies like Brooklyn Brewery are turning to hosted VoIP solutions to save time and money.

March 10, 2006

6 Min Read
Network Computing logo

Back in late 2003, the Brooklyn Brewery was looking at some big changes. In addition to selling off its distribution arm in order to concentrate on its core business as a micro-brewer, it also was looking to streamline its technology infrastructure, specifically by simplifying and improving the telecom side of the business. "We had an old, patched-together PBX system that was on its last legs," said Eric Ottaway, general manager of the Brooklyn Brewery, which was founded in 1988 and employs 27 workers. The brewery sells its beers domestically on the East Coast of the United States, from Massachusetts down to Georgia, and also ships its products internationally to Japan, Hong Kong, the United Kingdom, Denmark, Sweden, and Finland.

Brooklyn Brewery had already been considering its various telecom options when its aging PBX caught fire. "Luckily, we were here," said Ottaway. "We heard a pop, a strong smell of smoke, and the box on the wall was literally on fire." Although quickly put out with no damage done to the premises, the need for action was paramount: like most small businesses, telephone and internet access were extremely important to Brooklyn Brewery's operations.

Ottaway called M5 Networks, a provider of on-demand VoIP systems, with which he had already been in touch. Within two business days, the business was up and running on the new IP-based telecom system.

"We're a brewery, not a phone company, and we believe in sticking what we know how to do, and to outsource everything else to people who know their businesses better than we do," said Ottaway. "Sure, you can buy systems to install yourself, but at the end of the day, you have to maintain and fix those systems yourself. With a hosted service, we get a lot more functionality, and better service, at a lower cost."

Hosted solutions are increasingly popular for software applications, as smaller enterprises decide that they would prefer to pay an all-inclusive monthly fee than invest in software, necessary hardware and infrastructure, and pay for ongoing support and maintenance. But hosted VoIP is a relatively new phenomenon. Still, small business owners are turning to hosted VoIP vendors like M5 to avoid buying or maintaining a phone system and the phone lines connected to it. As a single provider, companies like M5 replace the usual multiple telecom vendors that businesses have to deal with--sometimes as many as five when you consider long-distance carriers, local carriers, and Internet providers--and become accountable for all aspects of the system, from reliability, to service, to upgrades and new feature deployment. Perhaps most importantly, the costs are predictable from month to month.

"The quality has been excellent," said Ottaway. "The Verizon lines in this neighborhood are in bad shape, there's lots of dropped and crackling lines. They really need to do a wholesale replacement of the infrastructure. But we don’t have to worry about that any longer. Now, whenever we have any maintenance issues at all, we call the M5 service desk and they take care of it."Typically, a small business owner when moving into a new office will have to buy a phone system that sits in their closet, and which handles voicemail and transferring and managing the various extensions, said Dan Hoffman, president and CEO of M5. An expensive piece of hardware, it's also very costly to maintain. "It typically costs several hundred dollars every time a business wants to do something even as mundane as moving a desk," said Hoffman, adding that "everyone hates their phone system. Once you have bought the hardware, then you have to contract for the local and long-distance services as well as for Internet access. There are all these vendors that you are paying each month, and all these different people need to coordinate with each other if something goes wrong."

Berkery, Noyes & Co., an independent investment bank based in New York that serves the information, publishing, and communications industries, was moving, and forced to look into a new phone system. "We were moving into a gutted location, and were able to run a new infrastructure rather than POTS [plain old telephone system]," said James Berkery, the chief information officer for the firm, which employs 35 workers. He decided he wanted to go with VoIP, and evaluated a number of vendors, include three firms that offered hosted solutions; one that sold you a PBX system that you had to manage yourself; and one that offered a traditional key system. Berkery went with M5 because it was the most established of the hosted service providers, and also the cost was right: he spends about $3,200 a month for all of his firm's telecom needs, and he doesn't have to worry about fixing or maintaining the system.

Berkery was no stranger to telecom outsourcing. When his firm had its old key system, it outsourced maintenance. "If we'd bought our own VoIP system, we would definitely have outsourced the servicing of it," he said. "But the problem is, even if you've outsourced it, you have to wait for someone to come in and work on the boxes. Sometimes that's a two-hour and sometimes a two-day wait. With this hosted solution, I just call them up and the problem is solved.

The telephone is the lifeblood of most businesses, and most businesses just want it to work. "It gets tricky, however, with all these hands involved," said Hoffman. "Buildings are complicated, and streets are complicated."

The cost of VoIPThen there's the whole issue of VoIP. Everyone is saying that VoIP is the way to go, but small businesses are often shocked at the price tag. Where are the hoped-for cost savings?

In fact, there are savings, but it's a myth that you'll save a huge bundle, said Hoffman. "When you grow your system to 50 people, 100 people, it gets much more expensive and complicated and requires some very tech-savvy people to run it."

What M5 offers is simplicity. It runs it own central phone system so companies don't need to install their own. They simply buy the IP phone headsets; the M5 IP system connects seamlessly to their LAN and they're up and running for a monthly flat fee no matter how many local or long-distance calls they make or how many changes they make to the service.

The M5 System VoIP service includes a complete high-end phone system that rivals that of enterprises, including an auto attendant, a unique phone number and voicemail for each end user, multiple locations, unlimited local and domestic long distance calling, Internet service, redundant phone and Internet access, and free support. Sharing the cost across many clients enables M5 to locate redundant servers, routers and voice gateways in carrier-grade facilities.

"The biggest pro for me is that if we decided we didn't like the system, we'd only bought the phones, and they are Cisco phones that are universally used by hosted solutions. So if we didn’t like M5, we could switch, without buying new PBX boxes," said Berkery.0

SUBSCRIBE TO OUR NEWSLETTER
Stay informed! Sign up to get expert advice and insight delivered direct to your inbox
More Insights