"We have phone equipment breaking down from companies that don't even exist anymore," said Hughes. "We can try to repair the phones we have, we can go to a digital environment, or we can look into the future."
Banking on the future, Hughes has joined the growing ranks of CIOs turning to voice over Internet protocol (VoIP) in search of lower phone bills and/or alternatives to obsolete phone equipment. Switching to VoIP "is very challenging," Hughes concedes "[b]ut it is clearly the direction technology is moving to. It will be mainstream within 12 months."
Others seem to agree. According to a 2004 report from Gartner, VoIP will continue to expand at strong double-digit rates in 2005. Estimates from Forrester Research indicate that shipments of new VoIP private branch exchange (PBX) equipment increased 34% in 2004 from 2003, and this year shipments will increase 44% over last year.
To be sure, firms large and small are signing up. In September, for example, Ford Motor Co. announced the design and implementation of a VoIP system at its headquarters and other Ford facilities in southeast Michigan over the coming three years.
The implementation will converge Ford's disparate communications networks into a single IP-based network, carrying voice, video and data, according to SBC Communications, which is spearheading the installation.
To be sure, trimming down one a single network often means service and maintenance savings, said Steve Koppman, a principal analyst at Gartner Research. Also, VoIP can make many new applications possible, from video conferencing to unified messaging, notes Lisa Pierce, a vice president in Forrester Research's telecom and networks research group.
Choosing a Vendor
But as Hughes said, VoIP can pose challenges along with its benefits. "I would urge any CIO to clearly define the business case for VoIP first," he said. "Don't just switch to VoIP because it's the latest thing."
If the argument for VoIP wins at a company, Forrester's Pierce recommends that CIOs start by deciding if they want to implement VoIP on their LAN or over a WAN to integrate wide-area traffic.
It's an important question as the different approaches require different suppliers. If the CIO is turning to VoIP to replace an aging system, a LAN-based IP PBX may be the answer, she said. But if cutting costs with flat-fee calling rates is the main reason for VoIP, then WAN-centric VoIP may be the answer.
"It is likely ... that many enterprise customers will elect to use a vendor for IP-PBX systems and a service provider for the vast majority of WAN-VoIP calls," Pierce said.
Both Gartner and Forrester also recommend a full-blown request-for-proposal (RFP) and evaluation process before settling on any vendors.
In most cases "[i]ssuing an RFP is an absolute must," Pierce said. "Delineate your functional and support requirements." Once the RFP responses come in, it's important to focus on providers with diagnostic tools for identifying and solving service problems.
Once a vendor is chosen, analysts also recommend a layered installation so systems can be tested and users effectively trained in new features.
"You don't want to go overnight from one (service provider) to another," advises Koppman. "I think you should take your time and study the situation."
At the SSA, for example, Hughes began with a pilot with four vendors installing VoIP in 20 SSA offices. Starting slowly has allowed Hughes' staff to consider questions of firewall protection, packet management, end-user training, latency and software updates.
Frequently, Hughes turns to his partners for guidance and assistance.
"Keep your vendors very close to you," Hughes recommends. "Test (the VoIP system), pilot it, evaluate it and then, perhaps, pilot it again. The vendor's capabilities are still evolving."
"One thing that's important and often overlooked is that companies make the mistake of thinking they can do this all on their own," notes Pierce. "The processes are so involved and distinct that companies will need to outsource one or more processes to do (an installation) in a timely manner."
But this complexity is balanced by the dual benefits of growth and innovation VoIP provides, said Koppman.
"VoIP is great for laying a good foundation for the future," agreed Pierce.