Smith Barney snip on IP transition
<snip>
Currently, Cost Savings Is The Real Driver Of VoIP Demand In The Enterprise,
Not New Services/IP Phones. This sentiment was echoed by many conference
participants. Early implementers of VoIP cited its potential for cost
savings as the main reason for its deployment. IP trunking, which enables an
enterprise to place voice calls over the data network within its VPN, was
cited as one of the more popular applications spurring demand. By
implementing IP trunking, on-net voice calls transmitted in IP are invisible
to the service provider, enabling the enterprise to garner significant long
distance cost savings on interoffice traffic. According to many of the
network integrators and managed services providers at the conference, the
actual implementation of IP phones, which would fully enable many of the next
generation services IP promises to bring to the forefront, has yet to gain as
much traction in the market place to date. Overall, we believe this trend is
constructive for Nortel and Avaya as they seek to leverage their installed
base of equipment within the enterprise via a hybrid VoIP strategy that does
not implement the use of IP phone sets.
IP's Impact On Managed Services In The Enterprise Calls For Longer Contract
Terms And More Front End Loaded Deals. At the conference, we were able to
speak at length with some representatives from Lucent's Managed Enterprise
Services organization. In the TDM world, service contracts tend to be annual
renew contracts that provide a fairly steady, evenly recognized revenue
stream to the managed network service provider. Customer relationships in
the TDM worlds tend not to be profitable unless they last longer than 12 to
18 months due to heavy discounting at the beginning of the relationship.
According to Lucent, IP oriented contracts tend to be longer term in nature,
ranging in the 3-5 year territory. They also tend to be more front end
loaded due to the initial network assessment and planning that has to take
place on the onset.
This planning and implementation stage takes anywhere from 4--7 months to
complete depending on the size and complexity of the organizations network.
The first 2-4 weeks of this planning and implementation stage is dedicated to
data gathering as to the enterprises needs and resources, another 4 weeks
dedicated to the solution's development, the next 2-4 weeks dedicated towards
transitioning more and more of the responsibilities for implementation and
management going forward from the managed service provider's staff to the
enterprise's IT professionals, with the last two months or so dedicated to
the actual implementation of the solution. Lucent's team estimates that
enterprises are saving anywhere from 15%-40% per year in operating expenses
by going with a managed service provider versus going at it alone. Of all
savings, Lucent believes enterprises yield 40% of all savings in the
transport and circuits, 30% in the network platform, and another 30% from the
operations.
<snip>
In the enterprise arena, conference participants cited the desire to garner cost savings via IP trunking, as the number one driver of demand for VoIP, and not IP phones or the promise of highly touted new services. This should play directly into hands of Avaya and Nortel, who are implementing hybrid approach that leverages their installed bases, versus Cisco's greenfield approach.
<snip> |
