Making the case for VoIP

As companies seek to justify IT projects in an era of cost-consciousness, infrastructure initiatives often get short shrift because it's difficult to show value. Companies group budgets into opportunity categories of regulatory initiatives, operational enhancements, revenue generation and infrastructure, generally prioritizing in that order.

Convergence is a strategy that many organizations want to pursue today. VoIP rollouts can generate savings and help streamline processes, organizations and management  tools. These are all good things, yet they lack the glamour of an operational improvement or revenue-generating initiative. For a VoIP initiative to compete with these other projects for resources and funding, you must create a strong business case, ROI and budget.

Making a budget and budget case for an IT project requires a five-step process of opportunity analysis, infrastructure analysis, process/organization analysis, tool analysis and project analysis. While each step merits attention, let's drill down into opportunity analysis. Determining the cost, savings and resulting ROI for the VoIP initiative provides the data you need to sell the project. What follows is a guideline of cost elements to consider.

Long-distance

This analysis examines domestic and international long-distance billing by physical location. Pick an analysis period that is representative of the norm and look at "on-net" calling (location to location on the company WAN ) and "off-net" calling (to the nearest logical node on the company WAN in order to hop off from there).

Domestically, with long-distance rates in the sub-penny-per-minute realm, the potential savings will be small. For multi-national organizations, however, the potential for savings can still be great ... for a while. Companies that need the long-distance savings to fund hardware requirements and project implementation to facilitate a convergence strategy likely have, at most, three years to execute before the fall of international long-distance rates bears resemblance to the domestic U.S. market.

Figuring your costs lets you see what you'd save by reducing long-distance billing. A representative example is 1,000 minutes of international long-distance at a public switched telephone network rate of 53 cents per minute, totaling $530 per month in current international toll charges. Using VoIP, the rate would be, on average, 2 cents per minute or $20 with a service provider, and potentially less over customer-owned infrastructure. At this traffic volume, there likely would be no increase in bandwidth required. Therefore, from a business-case perspective, the savings that could be achieved from this single site example is $510 per month or more.