VoIP for Dummies 2005

178 Part III: Making the Move to VoIP

Using the PSTN gateway with PRI lines ensured that Bremer would be able to maintain connectivity to the PSTN as they reduced their dependence on POTS lines. Essentially, one PRI at $325 per month equals twenty-three POTS lines. They were paying $65 per month per POTS line. If you do the math, not counting their horrific intralata usage costs and local calling usage, they were paying $6435 per month just for the POTS lines. The cost for eleven PRIs, one per site, cost them only $3600 monthly (11 x $325). It’s a no-brainer!

The plan provided on-net telephony calling, which eliminated their horrendous intralata calling charges. It provided a dedicated Internet gateway, a state-of-the-art firewall, and an intranet at the main site. All the other LANs have access to this intranet as well as the Internet through the LAN at the main location. Even with the increased functionality, Bremer’s overall monthly operating expenses were substantially reduced.

The new VoIP network integrated telephony systems and computer data systems onto the same infrastructure. As a result, the company raised their capabilities to a never-before-seen level, all while lowering their overall costs.

Putting your plan into action

To implement the VoIP plan, Bremer Healthcare needed six essential components:

Ethernet network interface card (NIC)

VoIP gateway

VoIP server

VoIP-compatible switches

VoIP voice mail

Internet firewall

The first component was an Ethernet network interface card in each telephone system (PBX). With their existing telephony systems connected to the Ethernet, they could make use of all their existing digital telephone stations. This does not in itself provide each user with all the new and exciting features

180 Part III: Making the Move to VoIP

Obviously, these six components have costs associated with them, but many of these costs are one-time startup costs. Figure 12-3 shows the details of Bremer Healthcare’s VoIP startup costs, taking into account the six components they needed.

182 Part III: Making the Move to VoIP

Managing downtime

In any VoIP conversion, there is downtime, and the best way to manage it is to anticipate when it could happen and then plan for it. Unfortunately, downtime always seems to be the result of factors you can’t control.

The major downtime with Bremer Healthcare’s conversion was coordinating with the local exchange carrier to switch over the T1 lines. The carrier was apparently not happy with the new design that Bremer planned. As part of the conversion plan, Bremer had provided the carrier with a spreadsheet of scheduled dates, times, and locations for the changes to the dedicated T1 lines. Basically, the conversion called for keeping the existing T1 lines but changing them from a frame-relay configuration to a dedicated, private T1 service.

Coordinating this change was the biggest headache in the conversion. Only two of Bremer’s eleven locations were converted on schedule. Fortunately, Bremer was not using the frame-relay service for much of anything anyway and didn’t have a problem with the downtime that occurred.

Reviewing the Effect

Your IT folks can tell you technically how well your converged network is running and how to keep it humming, but only your workforce and your customer base can tell you if it is truly working. More companies are going to VoIP than ever before because of two primary benefits: increased features and reduced expenses.

Features and costs of the new VoIP network

In the case of Bremer Healthcare, all the players — doctors, clinical staff, administrative staff, patients, and even suppliers — were overjoyed with the results of the VoIP conversion. The new network had an immediate effect on monthly expenses, and the numerous call features inherent to VoIP promoted enhanced productivity, employee mobility, and new options for communications. Figure 12-4 shows the revised cost structure for Bremer’s circuit-switched network after the VoIP conversion.

184 Part III: Making the Move to VoIP

If you compare Figure 12-4 to Figure 12-1, you’ll notice the sharp reduction in the number of POTS lines required: from ninety-nine down to forty-nine. The addition of the PRI transport lines, to maximize bandwidth for off-net calls, helped to consolidate much of the old POTS configuration.

Maintenance services were also added to the picture, which provided a safety net that Bremer didn’t have before. Lastly, the big-ticket item that was virtually done away with was the costly intralata expenses. With the VoIP network, most of the intralata traffic was put on-net, thus bypassing the metered expenses of the PSTN.

It’s not just a new way to do circuit-switched

The circuit-switched aspects of the VoIP network are only half the picture. To connect all the sites and enable them to use the Internet, a private dedicated infrastructure was needed. The plan called for converting Bremer’s underutilized frame-relay network to a dedicated private network. Figure 12-5 details the postconversion costs associated with the packet-switched side of the network.

If you compare Figure 12-5 to the preconversion amounts in Figure 12-2, you notice that the costs didn’t go down much. Most savings were due to the VoIP design eliminating one of the two T1 lines at the Bremer main site.

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The big story with the dedicated side of the network is that the carrier was taking advantage of Bremer. They used to have twelve T1 lines running

frame-relay services, and four of their sites couldn’t even connect. After the conversion, Bremer had eleven T1 lines with full, dedicated bandwidth available to them — and the overall costs didn’t go up. Moreover, all eleven sites had Web access through the main site’s Internet gateway.

Bottom-Line Analysis

In the end, it is the cost of business that determines if you can continue to do business. The good news is that VoIP helps you continue business like never before. If you’re having trouble justifying the productivity-enhancing features of VoIP (increased mobility, agility, and customer satisfaction), look at the bottom-line financial analysis.

For example, Figure 12-6 provides an executive summary of before-and-after costs related to Bremer’s communications and data networking.

Before their VoIP conversion, Bremer had no one in-house who could manage their communications, and only one young employee to fix computer problems. With the savings from VoIP, Bremer was able to hire several technicians so they could develop the in-house network expertise they needed.

As Bremer’s IT manager stated, “VoIP’s value is priceless.” What they gained was much more than what can be expressed in dollars and cents, even though the dollars and cents are impressive. Bremer’s immediate savings paid back their startup costs in approximately ten months — faster than they had expected. Even with startup costs, Bremer saved $158,000 in their first year of using VoIP. This provided an unadjusted projected return on investment (ROI) of $948,000 for the second year.