Unified Communications: Making The Business Case

Companies should consider the business value of speeding up transactions when evaluating UC solutions, suggested a panel at Enterprise Connect.

David Carr

March 3, 2011

4 Min Read
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Unified Communications and IP telephony can help speed business processes and save money for companies, according to a presentation at the Enterprise Connect conference in Orlando, Fla. Robin Gareiss, senior founding partner at Nemertes Research, lead a discussion about "Making the Business Case for IP Telephony and Unified Communications" based on survey data and her work coaching clients on soliciting and evaluating vendor proposals.

"Talk to business units and find some transactions that have some measurable value, then figure out the business value of speeding up those transactions," she said. Often this is a matter of showing how faster access to expertise within the organization can help close sales or answer customer questions without endless rounds of phone tag.

Unified Communications has the potential to speed up those processes by making it easier to locate someone, using presence detection, and contact them in the most efficient way -- for example, by using an instant message rather than calling if you see the person is on the phone. The "find me, follow me" functionality in these systems can also make it possible to have one phone number to call, regardless of whether the person is in the office or travelling. Gareiss suggested building a business case for UC around questions like: What would it be worth to our company if we didn't have to make so many follow-up calls and answer these questions the first time?

At the beginning of the project, it's important to carefully gather current cost and productivity metrics "because otherwise it's really difficult to document success," Gareiss said.

One enterprise client reported saving five minutes per meeting on average after implementing Web conferencing, which translates to potential annual savings of $3,700 per user -- assuming, of course, that employees put the time they save to productive use.

Unified Communications networks that combine voice, video, mobile phone integration, and other data and multimedia services were a major topic of discussion at Enterprise Connect. However, Gareiss said the actual use of these technologies is still fairly limited, with only 6% of survey respondents saying they had UC fully deployed. Another 27% reported having limited UC deployment and the rest were either just starting to think about it or in the early stages of planning.

She advises those organizations that move ahead with UC to double the amount of time allotted in their implementation plans, as it generally turns out to be more complicated than anyone expects.

Although cloud-based VoIP and UC products are gaining more attention, they typically aren't the best choices for large enterprises, Gareiss said.

To illustrate the difference, she sketched scenarios for two companies -- a small firm with about 80 users and little VoIP expertise, versus a large enterprise with 5,000 users, substantial networking expertise, and the budget for capital investments. For the smaller firm, a hosted option would cost about $480 per user per year and makes the most sense. The larger firm would have to spend about $813 per user during the first year for an on-premise implementation, but that option would still make more sense because the company ought to be able to drive down the annual cost to about $309 per user in subsequent years.

The smaller firm, lacking economies of scale, would tend to spend more in total over 5 years with an on-premise solution -- about $440,000 versus $360,000 for the hosted solution. For the large enterprise, the situation is just the opposite, with the on-premise solution weighing in at about $11.3 million over 5 years, compared with $13.6 million for a hosted solution, according to Nemertes Research.

These comparisons will probably change with the evolution of hosted and cloud communications products, Gareiss said. Even today, the right decision will vary depending on the networking competency within a given organization and the pricing it can negotiate with service providers, she said.

Her estimate was also based on average pricing for on-premise equipment. Nemertes pegs the first-year cost of a VoIP implementation at $1,413 per end point. That includes $537 in capital costs, $135 for implementation, and $741 for operations. Smaller companies tend to pay more -- for example $667 per person for an organization buying fewer than 500 units, versus $342 for an organization purchasing more than 5,000 units.

Ed Flavin, CIO of the oil exploration company Modec, and Jaime Libow, an engineering director at Travelers, joined Gareiss in a follow-up session to discuss their experience to date. Both have deployed Microsoft's Office Communications Server and are evaluating moves to Microsoft's newer Lync UC platform. Libow said OCS is fully deployed to 3,400 users and is allowing Travelers to manage internal voice calls without dependence on the public phone network.

Both also described support for mobile phones as a major element of their plans. "Our cellular bill annually is $1 million plus," Flavin says. "That's because they don't have us drill for oil in glamorous places," and roaming fees in remote areas can be steep. So he wants the ability to let engineers working on an oil platform route calls over Wi-Fi to an enterprise network that can relay them as toll-free VoIP calls.

About the Author(s)

David Carr

Editor, InformationWeek Healthcare and InformationWeek Government (columnist on social business)

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