Putting it all Together�Part III: Implementation Tips, continued

Tuesday Sep 13th 2005 by Mark A. Miller

Some careful analysis of cost-related issues will help keep VoIP implementation free from unpleasant financial surprises.

Our last two tutorials considered the design of the VoIP network, and the resources and tools that would be required for a successful implementation. This tutorial will look at some of the financial considerations of the network implementation, so that the bean counters in your organization continue to be satisfied members of your project team:

Review your existing carrier contracts: Many net managers have existing service contracts with their carriers that should be reviewed prior to jumping into VoIP service. A significant number of minutes may need to be diverted from existing carrier commitments to new IP services in order for the economics of the new hardware investments to be favorable. And when that diversion occurs, you may end up paying more for your existing (legacy) voice services.

For example, assume that your existing service agreement specifies a rate of $0.05 per minute if you use one million minutes per month, and $0.03 per minute if you use two million minutes per month. Assume that you have recently used over 2 million minutes per month (at $0.03), but you estimate that you will drop substantially below this amount when you divert some of your voice traffic to data transport. In this new scenario, the existing (non-IP) voice traffic will cost you $0.05 per minute because you have dropped below a price point. In other words, while reducing costs with new IP services, you may increase costs for the remaining voice services. A word to the wise: look at the inter-related economics before you commit. In addition, a Service Level Agreement (SLA) that specifies uptime, throughput, and point-to-point latency objectives should be included in that carrier commitment.

Consider international vs. domestic long distance: One of the early driving factors in the VoIP marketplace was the promise of "free" or very low cost long distance service. But before you take this promise at face value, get a good handle on your calling patterns, and determine what percentage of your traffic is international versus domestic. With international rates in excess of $1.00 per minute to some destinations, VoIP rates that are only a few cents per minute look very favorable and make some compromises in quality worth it. The domestic story may paint a completely different picture, as most managers of enterprise networks are able to negotiate voice contracts that are comparable to the VoIP quotes. Clearly understand your traffic destinations so that your economic model is not inaccurately biased.

Be realistic about audio/video conferencing: Many network managers make the assumption that a significant portion of business travel can be eliminated by installing an audio/video conferencing system, thus deriving a substantial economic benefit from the installation of the new system. But old habits such as business travel perks die hard, and new systems take some getting used to. Therefore, don't overestimate the cost savings, at least in the early stages

Look at your cabling system: You generally don't have to think too hard to realize that designing, installing, and maintaining two cabling systems—one for the voice network, and another for the data network—is more expensive than maintaining one integrated system. But before you act on this conclusion, consider carefully whether the cable that you have installed in your building meets the specifications for the system you are considering. Is your cable plant documentation up-to-date, such that you know where the cable goes? Does that cable, or specifically the cable pairs, go where you need them to go? If you can't answer all of these questions, then you may want to do a little more homework, as rewiring a building can add substantially to the cost of a VoIP network implementation.

Factor in the (hidden) start up costs: Did shopping for your last new or used car take more time than you anticipated? Did you have to take it back to the dealer a few times during the warranty period? If so, then extrapolate that experience by several times over, and you will have an idea of some of the hidden start up costs for a VoIP network that you need to consider. For example: vendor evaluations, reviewing system proposals and bids, lost employee productivity due to office disruptions during installation, user training on the new system, and configuration glitches are only a few examples of hidden costs that can impact the bottom line. Suggestion—add a generous "contingencies" line item to your implementation budget, so that everyone on the project team knows that you are anticipating a few bumps in the road.

Our next tutorial will conclude the discussion of various aspects of VoIP network implementation.

Copyright Acknowledgement: © 2005 DigiNet ® Corporation, All Rights Reserved

Author's Biography
Mark A. Miller, P.E. is President of DigiNet ® Corporation, a Denver-based consulting engineering firm. He is the author of many books on networking technologies, including Voice over IP Technologies, and Internet Technologies Handbook, both published by John Wiley & Sons.
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