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Executive Considerations on VoIP

(Editor's Note: This article was submitted by consultants at DiamondCluster.)

Many CEOs will be keeping a close eye on Boeing Company's efforts to roll out Voice over Internet Protocol (VoIP) voice, video and data services to more than 157,000 employees worldwide and Verizon's July 22 announcement to launch a similar phone service for consumers.

The recent announcements could be just the tip of an iceberg of pent-up demand among corporations for a seamless network of digital capabilities. But the complexity of getting real value from a VoIP initiative could also put companies on a slippery slope towards a multi-million mistake if they race to keep pace with innovation without managing the effort effectively.

The Fortune 500 spend on average $116 million annually on telecommunications expenses, according to a recent estimate by the Aberdeen Group. "Cutting that budget looks attractive but it's really only a one-time dividend -- any cost advantage will eventually be competed away," said John Sviokla, vice chairman of management consulting firm DiamondCluster International.

"The larger reason why the CEO should care about voice over IP is because opportunities to structurally change their cost base and capabilities don't come around very often in a CEO's career. This could be one of those opportunities," Sviokla said.

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