by Sheldon Gordon

Call it Voice over IP (VoIP). Call it IP telephony.

Or call it the convergence of voice and data networks. Sending telephone calls as data packets over Internet Protocol (IP) networks is a telecom option that Canadian businesses may increasingly choose when it’s time to replace legacy systems.
By turning to carrier-hosted IP networks, they can (for the first time) obtain the same sophisticated telecom applications without having to buy expensive routers and switches.

IP telephony’s early adopters tend to downplay the significance of long-distance savings and emphasize the flexibility and functionality of IP telephony with new applications being the most compelling driver.

Envision Financial, the third largest credit union in B.C., opted for VoIP in 2001, and expects to have it installed at all 27 of its offices within the next two to three years. The catalyst for adopting VoIP was Envision’s creation through the merger of two smaller credit unions — Delta and First Heritage.

The legacy phone system at the 10 former First Heritage branches had to be replaced, says CIO Jeff Connery, «and why put in old technology? We started with the idea that we should look to the future and how we could integrate more of our product. It wasn’t a purely financial argument.»

Certainly, the long-distance phone-bill savings were not an overriding factor, because a majority of the credit union’s branches are within the same calling area. «The consolidated dial plan — being able to do four-digit dialling among all of our branches — is considerably more important,» says Connery. «That puts everybody on to a similar way to connect.»

Envision is also integrating its company phone directory from Microsoft Outlook with its VoIP network so an employee can use the phone to search the directory, obtaining the same information that could be retrieved from his global address list in Outlook.

Common voice mail is another key application. «We’re able to take a voice message in one branch, and if it needs to be transferred to another branch, we can share that voice mail with anybody that’s on the system,» says Connery. «If the CEO gets a message from a client that wants to do business with us, that voice mail could be routed to the person that needs to have it to (deal with) it.»

While such features could have been introduced without VoIP, says Connery, «it would have been very, very expensive and not always all that easy.» He anticipates introducing additional features providing phone integration with Envision’s CRM, e-mail and human-resources databases and with its helpdesk.

Another major gain for Envision is the flexibility that VoIP permits. Consider an employee who decides that today she should work, say, at the data centre rather than at the operations centre. She can take her phone, plug it in at the data centre and punch in her number code. The system will find her and route her calls to her new location. No need for call-forwarding. No need for rewiring by a phone company technician.

Sir Sanford Fleming Community College was one of the first colleges to adopt IP telephony, installing it in 2001 at the new residence at its Peterborough, Ont., campus. The college had also recently built a robust IP network and, partly because of its expertise in the technology, decided to make VoIP the strategic direction for all its voice services. «The second factor,» says CIO Jim Angel, «was that the price point [for IP telephony] had dropped enough that we could build a multi-year business case for collapsing voice and data into one network.»

He has now rolled out VoIP at both the Peterborough and Lindsay campuses, although only in new additions to those sites. With 50 per cent of the college’s install base already VoIP, Angel estimates that over the next two years, the legacy telephone system will be completely replaced. He relishes the savings, both existing and future.

«My network support analysts can deploy a phone now just like they deploy a computer. You plug the phone into the drop beside the computer drop. It’s another IP device. From a service-contract perspective, I’ve been able to decrease my costs associated with third parties. It varies, depending on the provider, between $60 and $100 an hour.»

The big benefit, though, says Angel «will be when we don’t have to upgrade our main core phone switch because we’ve been busily upgrading the rest of the infrastructure. Next year is when it’s actually coming due, and we won’t have to do that upgrade.»

Angel also foresees the day when IP telephony is sufficiently widespread at other colleges that Fleming users will be able to make direct IP phone calls to these sister institutions and avoid long-distance charges. As for new phone features, however, Fleming is in no rush. «Right now, we’re just building people’s confidence that this VoIP phone is as solid and reliable as the ’regular’ phone,» says Angel.

McMillan Binch, a Toronto law firm, adopted VoIP in December 2003.

«We were moving from one side of Bay Street to the other,» says Chris Duncan, McMillan Binch’s IT director. «It would have cost us $150,000 to move an antiquated ROAM (remote operations administration and maintenance) system that was probably 15 years old, versus buying a new switch that could be put into the space ahead of time and being assured that it works prior to our moving in there.»

The law firm is in the early stages of introducing new applications. One of its first: access to the firm’s CRM database through its phones. «If I

had you in our CRM,» says Duncan, «I could be looking up your number through any phone in the firm and have it dial you. I wouldn’t have to enter any of the digits for your number. That’s not part of a traditional PBX.»

Another VoIP-enabled application tracks the time on long-distance calls and sends the data in a text file to the accounting system, which bills clients accordingly. The application could be used for tracking all phone time logged with clients (though the law firm currently has no plans to do so).

Having invested several hundred thousand dollars in IP telephony, organizations are pleased with its functionality, but are unsure of the return on investment.

«(Vendors) seem to believe that it’s easier to justify than it is,» says Duncan. «I’m not convinced that the ROI is a whole lot different than any traditional PBX. It came down to ease of use, which is critical in a law firm. Law firms use every single feature of a phone.»

Envision’s Connery adds, «The productivity gains, we feel, are quite large and worth it, but they’re a lot harder to measure. How do you measure the ability to route e-mail to the right person?»

The lack of hard numbers, however, does not deter the carriers from marketing IP telephony as a user-friendly and productivity enhancing service.

«The average employee uses only six per cent of the features available on a traditional PBX,» says Boris Koechlin, portfolio director of VoIP at Telus. «The typical Nortel phone in an office has some 380 features available, but the average person doesn’t know how to do anything with it.

»But if I put a Web portal for IP telephony in front of them and say, ’point and click,’ `drag and drop,’ now all of a sudden it’s easy to create, for example, a distribution list for voice mail.

«We did a trial for the federal government a year ago where, after six weeks, average workers were using 60 per cent of the available features.»

Are functionality and productivity enough to close the deal for IP telephony? If so, the coming business communications renaissance may not be on hold any longer.