Hosted VoIP solutions fall broadly into two categories:
a) Basic (SIP) trunking with minimal features
b) Full-featured hosted PBX phone systems or hosted Centrex.
According to AMI Partners, these services have grown quite significantly over the past few years with the number of seats deployed increasing from 394,000 seats in 2006 to 3,000,000 seats by 2010. However, virtually all of these seats are deployed in small or medium sized businesses. To a large extent, enterprise customers have not adopted hosted VoIP services. Why is this, and is the time right for them to do so now?There are a number of reasons why larger enterprise customers have not adopted hosted VoIP to the same extent as the SMBs. First, there is an inherent inertia inside a large business driven by the mindset that only PSTN trunks can provide the kind of quality and reliability demanded by the users (and most importantly the CEO). The fear of the unknown and resistance to change is palpable; no one is going to get fired for installing a new AT&T PRI trunk, but they might get fired if they install a new (unknown and scary) hosted VoIP service! Secondly there are some genuine concerns about the real availability of the services, the end to end QOS and even the viability of some of the new service providers.
So, has the time come for enterprise to move to hosted business VoIP services?
Clearly, times have changed from just a year ago. We are in the depths of a deep, worldwide recession and almost all businesses, especially large enterprises, are feeling significant pain. No longer can they accept the status quo; they must look for ways to cut costs and become more efficient. For hosted VoIP providers, this is an opportunity that had not previously been afforded. But just cutting costs is not going to win an enterprise contract as the genuine concerns outlined above must be addressed. Let’s look at these in more detail:
a) Scalability. Is the system scalable for large enterprise? How can this be shown? Are simulated results good enough or is an enterprise deployment needed before you can win one (chicken and the egg problem)?
b) Availability and reliability. Does an enterprise really need five 9’s? Is four 9’s sufficient based upon the reduced costs and the ability to route calls elsewhere in the instance of an IP network failure issue, for example?
c) Manageability. Is the system manageable for many thousands of extensions? For example, the interface to manage 100 extensions may not be adequate for managing 10,000 extensions.
d) Quality. Most enterprises are probably not going to rely on a single IP connection for both voice and data (though with the availability of MPLS circuits and guarantees of QOS from the access provider and the VoIP service provider, there is certainly no reason not to finally merge the two), so the VoIP service provider needs to guarantee some level of QOS based upon a Layer 2 or private peered arrangement with the access provider (assuming they are not one and the same). Voice quality can actually be improved over the PSTN with the deployment of wide-band codecs or “HD voice” as it is sometimes referred to.
e) Security. Are security-conscious enterprises going to allow un-encrypted voice over a public Internet phone system? Probably not, so a plan for encrypted authentication and encrypted voice will likely be needed in any enterprise proposal.
f) Viability. Is a $100B (or maybe $10B nowadays) enterprise going to trust its mission critical phone services to an unprofitable, cash poor service provider? Any smaller service provider will have to make a case that it is just as viable (or even more so) as the customer’s previous vendors. With the recent bankruptcy of Nortel, perhaps this case isn’t so hard to make?
In conclusion, the time is ripe for service providers with products and services that can meet the criteria described above to market to enterprise customers. In all likelihood, SIP trunking will make the first inroads, as this is the least disruptive to the enterprise and any installation can be quickly reversed if problems are encountered. But enterprise is also ready for penetration by hosted PBX and hosted IP Centrex, especially if they have not already invested in an enterprise IP-PBX or are looking for integration with multiple smaller branch offices. The cloud of recession could indeed have a silver lining for our industry. IT
