RETURN ON INVESTMENT: Cut Your Communications Costs by 50% This Year!

There are two approaches to cutting costs. Approach I

is ‘Evolutionary’. This would be taking small pragmatic steps to

"manage" costs. This is essentially through using alternate forms of

communication to cut costs with no new investment required.

Approach II is ‘Revolutionary’ and involves taking a more dramatic route,

which allows multimedia communication using a common converged network. Of

course, there are some investments required upfront to get the RoI benefits

which accrue over a number of years.

"In business, it’s useless to be a creative original thinker unless you can also sell. Management cannot recognize a good idea unless it’s presented to them by a good salesman" David M Ogilvy

How to execute Approach I: Evolution



Cut STD and ISD costs by using e-mail, chat and instant messaging, with or

instead of voice. Instead of tele-conferences, use instant messenger software

for chat applications. This is especially useful when the enterprise has already

invested in leased lines, which are not currently being optimally used. IM has

become a powerful tool, and there are several applications like technical

support where a combination of text chat with some intermittent voice

connectivity makes dramatic improvements in quality and speed of communication.

This is specially useful in small- and medium-sized enterprises, where

existing investments on LANs and WANs, as a proportion of the toll traffic, is

low.

How to execute Approach II: Revolution



Approach 2 envisages moving to converged networks. The first and biggest

application of this would be using Voice over IP (VoIP).

The Benefits Voice and data communications services can be made a convenient target for cost-cutting, since they constitute the third-largest overall operating expense in most businesses. CIOs are, therefore, looking for alternate communication solutions, which offer them the following: Cost-savings Better customer service Reliable communication Faster business decision making Ease of deployment Key Contributors ISD calls–multi-location or bridge-based tele/ video conference to... Customers Own Office/Colleagues STD Calls Customers Own Office/Colleagues Faxes E-mails (group and cc mails with attachments)

In its present form, IP telephony requires a separate managed network similar

to a LAN network using separate cabling. But for mass usage in large corporate

environments there would be a need to integrate voice and IP-based telephony so

that a corporate executive needs only one user terminal or telephone set on his

table. The switch, on the other hand, would have to be intelligent enough to

route certain set of calls (typically outbound long-distance calls) on the

internet protocol and another set of calls on regular circuits. Similarly, all

incoming calls–irrespective of the media of transport–should land on the

same table at its usual connectivity and access instrument.

According to an industry estimate, 70% of any enterprise’s communications

costs are in the form of intra-office STD bills. By implementing a VoIP

solution, a company can actually reduce intra-office communications costs by as

much as 60%.

Besides cost-savings, VoIP also presents value-added services like

integrating voicemail, video, e-mail and fax (universal Inbox). Another

advantage that a CIO gets from such an approach is considerable savings in the

maintenance of a voice-carrying IP network, as against maintaining legacy

switched networks.

Additionally, with the proliferation of VoIP from a limited application set

to a larger one, the number of users, as well as the cost of user terminals

would become significantly cost-effective.

For instance, mobile telephony is growing faster worldwide than fixed

telephony. And this is inspite of a huge difference in the cost of a handset.

The key value here is simple–anytime, anywhere access at affordable costs.

When other typical features like address book, SMS messaging etc. are added on,

this provides an unbeatable value proposition for the user.

Similarly, in the converged network, though the primary reason for

implementing IP telephony solutions would be cost. The sustainable value

proposition lies in the value-add solutions, which allow seamless integration of

voice, video and data and thus enhance efficiency within an organization.

IP and switched networks: Bringing them together



Presently data networks and circuit-switched voice networks are essentially

independent units with limited interconnect. There is a great need to develop

cost effective systems that would carry voice and data over the same existing

set of copper cables at speeds that would meet the requirements of data

communication and voice communication within an enterprise. This would allow a

much more efficient use of bandwidth, even within the office premises. Since, IP

telephony is based on the bedrock of data packetization, a given bandwidth on

the corporate LAN is shared for multiple channels of communication, while in a

circuit switched environment each communication channel would require and

consume dedicated bandwidth.

But that doesn’t suggest that an enterprise which has already invested in a

circuit switched network needs to completely replace it with an IP network.

Despite the transport cost the circuit switched environment cannot be ignored

because of the vast availability of this legacy telecom network and also because

the end customer premises equipment (telephone instruments) on these networks

are extremely cost effective. What it means is that the telephone or a device to

convert our voice signal into a transportable form on circuit switches are much

cheaper than their generic substitutes for doing the same on IP or data

channels. Additionally, circuit-switched networks continue to score on quality

of service.

What lies beneath?



So, as the first step, an enterprise, should try for an efficient intermix

available through an integration of the two networks to take advantage of

cheaper transport on one side and of cost effective end customer equipment like

analog telephones, faxes and answering machines on the other hand. This can be

achieved by investing in the right software solutions, that would provide

transparent interconnect between the existing copper, with the other elements in

the network.

VoIP becomes cost-effective for enterprises that already use leased lines on

a WAN. Vendors have anticipated this requirement much in advance and the market

is flooded with VoIP solutions. There are IP phones, VoIP gateways and

interfaces available, and network integrators can tie all this into the existing

enterprise WAN. One can choose either an end-to-end solution or just

voice-enable existing routers and interface these with existing EPABX equipment.

The idea is to provide integrated solutions for circuit switching and data

switching needs of corporate business houses using a single device. Using VoIP

hardware is one way this can be achieved. An in-built Voice over IP card can be

used for supporting long distance communication over Internet. These VoIP cards

have powerful DSPs for doing voice compression, echo cancellation, comfort noise

generation and packetization.

Hardware cards, as a concept, are about developing the packetizing capability

into the switch itself so that it is used as a shared resource instead of

providing this capability at the customer end through a SIP phone or H.323

device. Some network integrators are following this concept of shared resource

development to bring down the costs offering VoIP cards along with the simple

telephone instrument as an alternative to the SIP or H323 device connected to

the Internet.

The switch will essentially have the router capability, whereby it would

allocate IP addresses to each analog and digital extension user to be able to

integrate data switching and dynamic bandwidth allocation to the user

extensions. Such router capabilities providing independent IDs can have

additional advantages like setting up a pool of extensions for receiving fax,

voice mail or modem calls. Router capabilities would further allow telephone and

data calls to be routed by name as well.

Such voice and data servers would also essentially shrink the intra-corporate

telecom world much the same way as Internet has brought people together.

The most common corporate business application for VoIP is its preferred use

as a mode of communication for long distance telephony. This is the only

integrated solution that does not require a separate data network for VoIP calls

and would allow usage of existing low cost analog telephony equipment for

transparently receiving or making calls. Alternative solutions are expensive

requiring separate data networks using computers with multimedia kits or IP

phones for voice communication that makes the solution not only expensive but

also difficult to operate as the user will have to make and receive calls from

the circuit switched world on separate telephones.

The solution, however, will need to be intelligent enough to automatically

route certain calls over IP networks and others over circuit switched channels.

It will envisage using the same telephone instrument for accessing both channels

and hence reduce the need for separate networks.

Converged networks for integrated communications



Integrated communication solutions allow enterprises to combine different

types of communications, such as voice, video, data, email, web and fax over a

single packet-based infrastructure. By combining this traffic on a single

network infrastructure, enterprises can dramatically reduce their communication

costs. Network topologies are simplified and networking components are

eliminated or standardized. In some cases, enterprises can reduce their

communication costs by up to 50 percent.

Phones and PCs become the nodes of an integrated communication solution

supporting data, voice, fax, web and video. Using such an integrated

communications solution, an enterprise will enable higher employee productivity,

enhance customer service and encourage greater collaboration. In addition,

network managers can minimize the cost and complexity by managing just one

integrated multi-service network.

Internet VPN solutions



As more and more enterprises begin to migrate their decision tools like

supply chain management through CRM, ERP to the Internet, an increasing number

of enterprises have begun to migrate their existing wide area network

infrastructure to an Internet-based VPN implementation. An effective IP-based

VPN solution enables not only site-to-site communication and information sharing

over the public data network like the Internet but also addresses critical

issues like security, quality of service and manageability.

Using such a VPN makes dramatic cost savings possible as leased lines and

expensive private network infrastructure is not required. Additionally, the

inherent efficiencies of having decision-making data and communications on the

move, make this a must-have for a number of CIOs planning to improve business

communication RoI.

The road ahead



But for sustainable cost-savings from reduced communication costs and

enhanced business efficiencies from greater real-time decision-making through

faster, cheaper anywhere, anytime, access CIOs need to plan on migrating to

all-IP networks. In addition to the IT/ telecom and BFSI sectors, companies with

huge communication overheads, or customer-service-oriented companies like call

centers will be major adopters of such converged networks.

A move to an all-IP network not only addresses the need for reducing

connectivity costs but also facilitates enhanced connectivity and multi-media

access. Network enhancements today, should be thought through with a roadmap for

implementing wireless LAN compatibility and should take into account the

benefits that are and will continue to be available and enhanced through GPRS

and 3G public mobile networks. These not only offer savings in communication

costs but also many value-added services. That's why more enterprises worldwide

are upgrading their WANs for voice and video over fixed line and wireless.

With the communications industry gearing up to meet the demand, an increasing

number of solution vendors and network integrators offering VoIP based solutions

and with increasing competition, we can expect equipment costs to become more

cost-efficient. Vendors are aware that enterprises want to protect their

investment in communications infrastructure, so they will offer solutions that

interface with legacy communications equipment.

Manoranjan Mohapatra



The author is the chief operating officer of Hughes Software Systems.

The VPN Formula

A virtual private network (VPN) is a private data network that makes use of

the public telecommunication infrastructure, maintaining privacy through the use

of a tunneling protocol and security procedures. The main purpose of a VPN is to

give the company the same capabilities as private leased lines at much lower

cost by using the shared public infrastructure. Phone companies have provided

private shared resources for voice messages for over a decade. A VPN makes it

possible to have the same protected sharing of public resources for data.

Companies today are looking at using a private virtual network for both

extranets and wide-area Intranets.

The three important VPN technologies are trusted VPNs, secure VPNs, and

hybrid VPNs. It is important to note that secure VPNs and trusted VPNs are not

technically related, and can co-exist in a single service package. Before the

Internet became nearly universal, a VPN consisted of one or more circuits leased

from a communications provider. Each leased circuit acted like a single wire in

a network that was controlled by customer. The communications vendor would

sometimes also help manage the customer’s network, but the basic idea was that

a customer could use these leased circuits in the same way that they used

physical cables in their local network. The privacy afforded by these legacy

VPNs was only that the communications provider assured the customer that no one

else would use the same circuit. This allowed customers to have their own IP

addressing and their own security policies. A leased circuit ran through one or

more communications switches, any of which could be compromised by someone

wanting to observe the network traffic. The VPN customer trusted the VPN

provider to maintain the integrity of the circuits and to use the best available

business practices to avoid snooping of the network traffic. Thus, these are

called trusted VPNs.

Seeing that trusted VPNs offered no real security, vendors started to create

protocols that would allow traffic to be encrypted at the edge of one network or

at the originating computer, moved over the Internet like any other data, and

then decrypted when it reached the corporate network or a receiving computer.

This encrypted traffic acts like it is in a tunnel between the two networks.

Networks that are constructed using encryption are called secure VPNs.

A secure VPN can be run as part of a trusted VPN, creating a third type of

VPN that is very new on the market: hybrid VPNs. The secure parts of a hybrid

VPN might be controlled by the customer or by the same provider that provides

the trusted part of the hybrid VPN. Sometimes an entire hybrid VPN is secured

with the secure VPN, but more commonly, only a part of a hybrid VPN is secure.

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