June 2001

BY CAROL DRZEWIANOWSKI

According to a January 2001 study from The Phillips Group InfoTech, 17 percent of U.S. businesses began the implementation of IP LAN telephony in 2000 to replace their existing phone systems. The study states that this number is 30 percent more than previously anticipated. What happens over the next several years when shipments of older generation legacy PBX equipment decline (as predicted)? The market for IP LAN telephony will continue to increase. The Phillips Group states that it could increase by nearly 90 percent a year.

Another InfoTech study shows that during 2000, U.S. shipments of PBX systems dropped 10.7 percent from the record levels seen in 1999. An indication of things to come? Perhaps. The study cites that the emergence of IP telephony as an alternative to traditional PBX technology has also had a major impact on end user purchase decisions.

There appears to be a growing consensus that IP telephony represents the future of corporate phone systems, but not all end users are convinced that IP-PBXs currently provide the same features and reliability of traditional PBXs. "This uncertainty has put the market in a holding pattern. Many end users delayed purchasing a new PBX in 2000 because of fears that new IP telephony solutions might obsolete their investment before the end of its useful life. However, there was also a feeling that many of the available IP telephony solutions were still unproven," said Frank Stinson, InfoTech senior product manager.

So how can providers of IP-PBXs and IP Centrex services prove their worth? Well, take for example the Shoreline Communications case study in this section of the magazine. Avanade chose them for a 17-site global deployment. Shoreline also recently announced their Enterprise Starter Kit for IP Voice Communications. The Starter Kit, a complete hardware, software, and support package for a 24 - 48 user system, is designed make it even easier for larger enterprises to migrate to IP voice. As a standalone system, it can be installed in hours and is interoperable with legacy equipment.

Another company that is making headway is AccessLine, who provides an advanced suite of telecom services geared toward small businesses. AccessLine basically offers an outsourced PBX that handles all incoming calls for a business, and reroutes calls to any direct dial telephone. The service also includes voice mail, phone access to e-mail (using text-to-speech technology), and many other features.

The news items in this month's section reflect some of the recent developments and innovations in this space. In addition to the Shoreline case study, you'll also want to read Fred Yentz's piece on the outlook for IP-PBXs. On a related note, this month Brian Strachman has written his column on some of the new LAN telephony applications that have caught his attention.

Packetized voice technology is really beginning to come into its own, and at the current rate of adoption, it might find its way into the mainstream before we know it.

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Avanade, a joint venture between Microsoft and Accenture, was created to develop and deliver enterprise technology solutions based on the Microsoft Windows 2000 platform. Avanade customers -- primarily Global 2000 companies and emerging market-makers -- benefit from Avanade's deep technical integration expertise and experience designing, building, and deploying customized, reliable, cost-effective solutions.

Within 12 months of its launch in April 2000, Avanade has effectively established 17 offices in 11 countries with over 1,100 total employees. Talk about a busy CIO and ITS team.

Put yourself in the place of Avanade CIO, Sean Jazayeri. You've been charged with building the IT infrastructure for an $800 million joint venture between two of the world's most respected names in technology and strategic consulting. Within 12 months your company has added 1,000 employees and 2,000 more will be added in the near future. You need a flexible, powerful, and future-proof voice communications system. Beyond the typical table stakes of reliability and QoS, you need to keep a very close eye on productivity; you don't want to spend too much time on support and maintenance issues that could slow down your organization and increase expenses.

What did Avanade do about voice communications?
The Avanade ITS team started by immediately looking beyond the existing legacy PBX, with its site-based limitations and high maintenance costs. "Signing a long-term contract for an old technology made no sense to us," said Jazayeri. After looking at offerings from several of the large vendors in the marketplace, he chose Shoreline.

Avanade started its deployment with a pilot in the Seattle office, and quickly expanded to their New York City and San Francisco offices, while outlining installation plans for offices in Dallas and Chicago, and full deployment in Seattle. Eventually, the system would include Avanade's offices in Europe and Asia. Avanade is also scheduled to go live in Europe and Asia with continent-wide systems managed from a single location on each continent in the second half of the year.

By the end of the year, Avanade will have merged each of its continental systems into a single-image global system supported by a mere 1.5 ITS managers. Compared to the typical PBX management infrastructure for a 17-site network, this move means considerable savings, especially considering the costs that come with typical vendor support and maintenance contracts.

Reliability has been a hallmark of the legacy PBX and Jazayeri also was not willing to settle for lower reliability in order to save money. Shoreline's distributed architecture has no single point of failure when it comes to call management. In case of network or power failure, voice calls can still get through.

What led Avanade to make this choice?
"While reliability was one of Shoreline's strongest selling points, we also knew that because of their Windows 2000 compatibility, the TCO would be lower than proprietary systems," said Jazayeri. "We also liked the option of having the pick of the litter' when it came to selecting the best phones from around the world."

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BY FRED YENTZ 

Some people say the only guarantees in life are death and taxes. In the telecom world, some would name packetized voice technology as similarly inevitable. Headlines in the past year have tracked rollouts by traditional PBX suppliers who are beginning to make legacy PBXs IP-enabled (Alcatel, Avaya, Mitel, Nortel, NEC, Vertical, et. al). The trades are also full of news about stand-alone IP-centric systems (Cisco, Sphere, Shoreline, et. al). Just what is an IP-PBX? According to Rob Smithers, president of Miercom and host of a recent TIA TeleForum on IP-PBX products, an IP-PBX is a system that maintains call control on customer premises, provides a full set of basic PBX features, and has the ability to support some level of voice over IP.

The move to packetized voice may not have everyone brimming with confidence yet, given users' uncertainty about costs, reliability, performance, and scalability. But more indicators point to the industry's ultimate conversion to IP networks and IP-centric solutions for the sake of efficiency. Remember the convergence we saw in computer telephony integration a few years ago and how it revolutionized the way business is conducted over the phone? Well, that convergence was achieved with a fraction of the resources brought to bear by network service providers and enterprises for the next round of convergence.

The buzz around IP should not distract us from the fundamentals. Users, as always, will be looking for a faster, cheaper, and more effective way to conduct business on or offsite, and suppliers need to be ready to sell IP systems on that basis. And as time passes and users become more knowledgeable about the IP products available, we will also see a greater focus on the management aspects of networking products. Configuration, moves and changes, reporting, real-time monitoring, and alarm logging are all aspects of management that IP-PBX manufacturers are continuing to improve, and I think you will see that any competitive edge these systems offer will begin to play a bigger role in a buyer's decision to move to IP-enabled or IP-centric systems.

State Of The Market
At the TIA's winter meeting, members of the organization's Global Enterprise Market Development (GEMD) Council discussed the conversion to an IP world. Over the past several months, this conversion had resulted in more capable IP-PBXs. They are more highly featured, their performance against test-lab criteria is higher across the board, and they are larger and more scaleable.

As is common among emerging technologies, however, there is a gap between expected and annual rates of adoption. Expectations have been widely publicized for a three-year time frame for IP-PBX shipments to represent 50 percent of new systems sold. But one of the event's speakers, Fred Knight, editor/publisher of Business Communications Review, indicated that a survey of VoiceCon attendees suggests this rate of market penetration will not take place prior to the seven to ten-year range. This tracks with TIA's own projections in the 2001 MultiMedia Telecommunications Market Review and Forecast for IP systems to comprise 17 percent of new system sales in 2004. The timetable notwithstanding, it is evident that suppliers will need to become versed in both IP and telephony platforms because customers will want their evaluations and opinions before deciding what is best for their business needs.

Other research results discussed at the event emphasized the reasons customers might convert to IP. For example, citing analysts' research, Knight enumerated, in order of importance, the following considerations:

1. Cost savings, if any, of establishing one network rather than two.
2. Relative expense and ease of moves, adds, and changes.
3. Relative ease and expense of administering/maintaining one network rather than two.
4. Features such as unified messaging and fax over IP.

Looking Forward
Industry heavyweights are pouring more resources into IP solutions research and development than into R&D of legacy systems. Therefore, it is important to recognize that anyone who is not either prepared to offer these or compete against others who do offer IP-centric or IP-enabled technology will be left in the dust. Suppliers should continue to review and acknowledge end-user concerns for reliability, voice quality, features, CPE to support, mobility, messaging options, call center applications, cost and billing, time and processes for repair, the process for getting help for trouble calls, as well as their own role as a resource/project manager.

Universities appear to be a most promising market, given their desire to position themselves as technology savvy. Other enterprises appear less likely to undertake a "forklift" approach to conversion. No move this dramatic is ever easy for enterprises, nor does it tend to happen overnight. Two things are clear. One is that the changeover will be for business reasons, not for the sake of technology. The second is that new IP-centric solutions are raising the ante for convergence for all who sell and support solutions to the enterprise. Everybody has to know what it can do for customers' business operations.

Fred Yentz is vice president and general manager, enterprise systems division, RadiSys, and chairman of TIA's Global Enterprise Market Development Council.

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