Can you hear me now?

by Bob Boyles

When thinking about business improvements, distributors spend most of their time focusing on business software or warehouse technology solutions. But there are other parts of your technology infrastructure that need occasional attention. One major piece is your communications network.

The future is now in the world of telecommunications. Voice Over Internet Protocol (VoIP) is the rapidly emerging standard for new phone systems. The ability to convert voice tones into digital signals, break them into small packets and route that information over the same networks that support the Internet to their destination, then re-assemble them into recognizable speech is changing the landscape of telecommunications. In fact, Gartner, the research group that tracks such things, predicts that VoIP-capable phone systems will constitute 97 percent of equipment shipments by 2007. As with any major initiative, the reason driving the change is potential cost savings.

VoIP offers tremendous savings
It is not unusual for inter-company phone calls (from branch to branch) to make up 25 percent of a multi-branch company’s total call volume. Imagine being able to route your inter-office calls over the Internet and completely bypass the local and long distance companies.

If you’re moving into a new building, this technology is ready-made to save you some cash! Look next to the desk where you are sitting as you read this article. Three wires run to your desk: electric, telephone and computer. As you replace your wiring and convert to a VoIP system, the phone and computer will use the same wire. Your wiring costs for a new building just dropped in half.

But the savings don’t stop there. Traditional computer networks required you to purchase a separate leased line for the network communications between branches. Now that both voice and data are bundled in data packets, you can purchase a larger bundle of data-switching service rather than purchasing each separate. Your service provider doesn’t have to dedicate a line to your communications. So, it’s free to use that space more efficiently and you’ll see packet prices significantly lower than leased line costs.

Take all of these price cuts together and it is not unusual to see savings of at least 50 percent over traditional leased line setups and paybacks with a time frame of one year or less.

What really sets this type of service apart from traditional phone services are the additional features, such as the ability to control the phone system from your desktop. Whether someone moves their desk from one end of the building to another or even across the country, the phone system can be configured to handle the move in a few keystrokes. No more calling the phone company to come out and punch down new wires in the cable room. Cisco, one of the major providers of this type of technology, has more than 50,000 employees using this technology.

The other side of the coin
No opportunity to save comes without some pitfalls. Early adopters of VoIP suffered through poor voice quality as the technology of slicing and dicing your spoken words into bits and bytes, then pushing them back together again on the other end, took time to evolve. Today, VoIP systems offer nearly the same quality as traditional phone lines.

Perhaps the biggest problem you’re likely to face is that the reliability of your phone service now depends on the reliability of your network. You’re used to the computer re-booting every once and a while. If the computer goes down for a while, you resort to hand-written tickets and shipments keep rolling because the phones keep ringing. With VoIP, that same system also handles your phone calls.

One of the biggest unknowns is how the taxman will treat VoIP. Today, these services are tax-free, since they fall outside the traditional  telecommunications tariffs. However, someone once said, “Giving the power to tax to the government is like giving a teenager the keys to the car and a bottle of bourbon to go along with it.” A major loss in tax revenue for government entities will undoubtedly cause some change in the tax treatment in the future.

Now that your mouth is watering, you’re probably wondering, how do I do something like this? Most surveys indicate that less than 24 percent of you will call traditional telecoms (big bells and little bells) for VoIP service. Most of you will contact a local VoIP provider. The traditional phone service providers are offering this service but have not been the leaders (wonder why?).

Summary: A successful technology strategy consists of solid up-to-date pieces of application software, speedy, reliable hardware AND a speedy and versatile communications network.

This article originally appeared in the January/February 2005 issue of Progressive Distributor. Copyright 2005.

back to top                                    back to e-business archives