5 reasons to deploy a cloud based voip system041714

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White Paper

5 Reasons to Deploy aCloud-Based VoIP SystemExecutive Summary

The cloud has been a dominant technology trend in 2013 and isnt showing any sign of

slowing down in 2014, especially for hosting communications applications such as voice over

internet protocol (VoIP). Until recently, VoIP solutions were primarily premise-based, which

made for easy adoption given their similarities to legacy phone systems. This has proven anattractive option, especially among SMBs, who tend to prefer the path of least resistance.

While this trend will likely continue for some time, cloud-based VoIP offerings are definitely

gaining favor with SMBs. A key reason is the lack of in-house expertise to properly support

VoIP, but increasingly, businesses are recognizing that hosted offerings bring more flexibility,

not just for ease of management, but also in adapting to how employees prefer to work today.

If youre thinking about VoIP as being more than a solution to reduce telephony costs, then

the cloud will hold particular interest. Aside from its inherent strengths as a form of telephony,

cloud-based VoIP brings a range of adaptability that allows your employees to stay connected

wherever or however they may be working. As employees spend less time at their desks, youll

need to find new ways to ensure they can be accessible and engaged, both to support their

co-workers but also respond to the needs of your customers.

This guide has been prepared to help you understand how hosted VoIP can bring these

capabilities into your business today, and if youre not sure about which deployment model

to follow, youre about to come away with five strong reasons why the cloud is right for your

business.

About Ziff Davis B2B

Ziff Davis B2B is a leading provider of research to technology buyers and high-quality

leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over

50 million in-market technology buyers every month and supports the companys core

mission of enabling technology buyers to make more informed business decisions.

Contact Ziff Davis B2B

100 California Street, Suite 650

San Francisco, CA 94111

Tel: 415.318.7200 | Fax: 415.318.7219

Email: [email protected]

www.ziffdavis.comCopyright 2014 Ziff Davis B2B. All rights reserved.


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Ziff Davis | White Paper | 5 Reasons to Deploy a Cloud-Based VoIP System

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Deploying Cloud-Based VoIP 5 Key Reasons

There may have been many factors and considerations behind your decision to adopt VoIP.

Whether this decision was quick or a long time coming, the next decision will be about the

deployment model. In most cases, the choice is between remaining premise-based or adopting

a hosted solution. Each has its merits, and our focus here is on the latter. This section is based

on an extensive review of business drivers among SMBs, and has distilled our research into

five key reasons for a cloud-based VoIP deployment.

Reason #1 - improved cash flow management

The economics around VoIP are a key reason for adoption, and in some cases, theonly one. However, there is more to consider than having a lower cost base for

telephony, not just in the decision to go with VoIP, but also which deployment model to

choose.

With our target audience being SMBs, we understand the everyday challenges

of staying competitive. Not only is staying competitive difficult, but so is getting

competitive. Some businesses have learned over time what it takes to become

competitive, and are always looking for ways to either maintain or enhance that. On

the other hand, there are also businesses that have lost their competitive edge, and

we would need a dedicated guide just to explore the reasons for that happening.

Regardless, SMBs in particular find that economic and financial elements are keydrivers for being competitive. Truly successful businesses find ways to make this a

sustainable advantage, either by keeping costs down and by extension giving them a

pricing edge, or maintaining strong margins that come from disciplined cost control

measures.

Most businesses arent so fortunate, and are simply happy to take any price

break they can get. This typically happens when the ongoing pressures of market

competition cause declines in sales and/or profits, at which point, decisions become

reactive rather than proactive. Theres nothing wrong by being in this state, which

tends to be common for SMBs. Many businesses simply become accustomed to fire

fighting, and while this is no way to run things long term, in a strange way, its part ofthe SMB culture.

In extreme situations, this state is akin to survival mode, where any form of advance

planning gives way to the immediate pressures of meeting payroll or paying suppliers.

Where businesses have more of a safety net, this reactive mode is defined more by

the ongoing need to cut costs in the hope that sales will pick up soon.
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Whatever example resonates with you, these scenarios all point to a fundamentaldriver that is the lifeblood of almost all SMBs cash flow. When VoIP turns up on

the radar for SMBs, the initial response is usually about saving money on telephony.

During the course of exploring deployment models, this is where the cloud starts

getting attention. Reducing cost may be the big draw, but when decision makers learn

about the hosted option, the impact on cash flow takes the discussion in a different

direction.

Hosted VoIP can take several forms, but a common characteristic will be the monthly

charge format. This is the norm for any type of leasing arrangement, but its very new

for telephony. In the legacy world, telephony was built around a premise-based phone

system, and was really seen as being a product as much as being a service. Being

based on the utility model of pay-as-you-go, cloud-based VoIP is totally a service,which means that all the associated costs are tied up in a fixed monthly payment.

This payment is like a software license, where a cost is charged on a per-subscriber

basis, and rolled up into an overall monthly charge based on the number of end

users tied to the service. The only variable cost factor that could cause this charge to

fluctuate would be international long distance calling, but in the vast majority of cases

for SMBs, the amount would be nominal. Many hosted VoIP plans actually included

fixed cost options for international calls, so even here, the impact can be covered by

the monthly charge.

Regardless of your calling patterns, the hosted VoIP model will be of interest

not just for IT decision makers but also financial decision makers, and of course,top management. The more chaotic your cash flow, the more appealing the fixed

cost basis of hosted VoIP will be. Not only is the monthly net cost of these plans

affordable/manageable, but the associated cost certainty means that with telephony,

this is one less thing the business has to worry about when it comes to managing

cash flow.

Reason #2 - moving away from Capex model

This factor is very much related to cash flow, but is distinct enough to warrant its own

analysis. Managing cash flow is often a day-to-day issue, and in that regard, hosted

VoIP provides peace of mind. For that reason, it has been presented first in this

section; SMBs are often caught up in micro-level issues that demand in-the-moment

attention. Anything that alleviates this ongoing pressure will get on the radar of

decision makers quickly, and savvy hosted VoIP providers understand this.

The key for these providers comes from learning how to position telephony as a

service instead of a product. There is a totally different mentality here, especially for

SMBs with a legacy mindset. So long as a service has perceived utility, businesses

dont mind paying for it, and hosted options make VoIP pretty affordable. Conversely,
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however, since the business doesnt have much invested in telephony with hostedVoIP, providers are susceptible to other offerings from competitors that are even less

costly.

Given the fact that many such options exist, along with the inevitable downward

pricing trend for VoIP, the buyer SMBs holds all the cards. This puts the onus

on hosted providers to somehow add value and keep their VoIP offering fresh

otherwise their service becomes a commodity, leaving them very little market power.

One way to preserve that market power as well as create it or enhance it, depending

on the situation is for hosted providers to focus on the shift away from Capex to an

Opex model. The more steeped your business has been in legacy telephony, the more

attractive this driver becomes. When premise-based telephony was pretty much theonly option available, the Capex model was just a standard means of doing business.

When it came time to acquire a phone system, the business case was made, and once

the capital budget was in place, the purchase moved ahead. From that point on, from

a financial perspective, the phone system was managed like any other capitalized

asset, and amortized over time. Once this was off the books, aside from ongoing

maintenance costs, the business more or less had a free ride expense-wise. Given the

long life of legacy phone systems, its not surprising to see businesses keep these in

place as long as possible.

Utilizing a high value asset with hardly any continuing cost is a win-win for the

business, and once accustomed to this, the idea of starting over with another Capexoutlay doesnt hold as much allure as it used to. There are really two factors at play

here. First is the fact that with VoIP, there are many viable options for telephony that

do not require Capex, and chances are this is a new situation for you. If your last

phone system purchase was in the last millennium which will be true for many of

you chances are you would rather not repeat the Capex process unless you really

had to.

Related to that is the second consideration todays economy. Chances are also likely

that the present business climate is tougher for you than when you last purchased a

phone system. Todays SMB environment is hyper-competitive, and getting any form of

capital budget approved is more difficult. This would be especially true for something

like telephony, which has been on a downward pricing curve for years. All signs point

to this trend continuing, and most businesses will see little reason to invest capital

dollars in assets that will only decline in value especially when most of that value is

tied to services instead of hardware.

This prompts the cue for hosted VoIP, which requires little or no Capex. For all the

reasons cited above, this path meets the criteria for being funded out of an Opex

budget. Any opportunity to move away from Capex will likely be welcome, but beyond


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that, hosted VoIP is not really a costly Opex line item, making this an attractivesolution from a financial perspective.

Reason #3 - limited or diminishing IT resources

While the first two reasons in this analysis pertain to financial drivers, other

considerations may be just as important depending on your situation. There will

certainly be scenarios where VoIP economics trump everything, especially for the

cloud, but other, more practical factors have a role to play in choosing the right

deployment model.

As noted earlier, choosing the cloud confers a loss of control, and this could be by

design or perhaps mandated by management. More than any other reason, this factor

is a byproduct of the relationship between IT and executive management. Each willhave their own motivations, and a number of scenarios are possible.

The most clean-cut justification is the case where the business has limited or even

zero IT expertise. This would apply most to micro-SMBs or SOHOs, and given how

VoIP is a major technology departure from TDM, the business case for cloud-based

VoIP is clear. For the business to continue maintaining control with a premise-based

VoIP solution, a skills upgrade would be in order. To justify this, the business would

have to carefully weigh the trade-offs in both time and money to ramp up IT, not to

mention the ongoing investment needed to stay current with such a new technology.

As the speed of business keeps increasing, this can be an easy decision to make,

especially for supporting an application doesnt really have much strategic value. After

all, if you view VoIP as commodity in-the-making, there isnt much upside in acquiring

new expertise, especially if your IT team is juggling many priorities, many of which are

more challenging than VoIP.

Another scenario is one where IT has historically commanded a solid base of

resources, deemed necessary to support capabilities that the business viewed as

having strategic value. In this case, IT is able to manage VoIP, but going forward, there

may be less will to do so. More often than not, IT teams are under increasing pressure

to reduce costs, be more accountable and demonstrate a better ROI to management.

This is especially true with telephony, where the high costs of legacy are now very

difficult to justify with less-costly VoIP options being so readily available.

On top of this, budgets are not growing, and IT is left with a do-more-with-less

mandate. This often comes with an implied message that if this cannot be achieved,

management has viable options to outsource most or almost all of IT. As such, the

willingness to manage VoIP may not be there, especially if IT is fighting for its life,

and there is little upside in risking that on a new technology they have hardly any

familiarity with.


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Whatever case applies to you, it should be clear that managing VoIP in-house will notalways be the best option, especially if IT is under scrutiny by management. Legacy

standards for determining the support needed from IT are getting harder to defend,

and if you view the challenge of keeping up with a constantly evolving technology too

daunting a challenge, then the decision to go hosted will be an easy on to make.

Reason #4 - leverage Web-based innovation

Once you have considered the cloud in terms of its financial virtues and implications

for IT, there is a broader set of advantages that will not come as easily with premise-

based VoIP. Both go beyond the VoIP service itself, and speak more to the strategic

side of cloud-based communication.

As noted earlier, there is nothing wrong deploying VoIP for VoIPs sake, and in thatcase, it really doesnt matter much if you remain on-premise or go with a hosted

offering. If the service alone is all youre really interested in, then the rest of this guide

wont be of much use; unless of course, youre open to new ideas. Our purpose here

is not to tell you what to do rather, these guides serve to update SMBs on the latest

trends in communications technologies, and in turn help drive decisions on what is

best for your business.

On that basis, this factor wil l have more relevance. If VoIP is still new to you, then

youve probably been using the same telephone service for a long time. Legacy

telephony has endured because it is very well engineered, and until VoIP came along,

nothing was going to displace it. A key reason why TDM has become so entrenchedis its segregated nature. These phone systems have dedicated networks and

operating environments, and while this ensures a highly reliable service, telephony

remains in its own world.

While legacy telephony has not evolved in over 30 years, the communications

world around it has, especially with the advent of VoIP. Today, VoIP works well as a

standalone service much like TDM but is capable of doing so much more. TDM

does one thing extremely well, but things have changed, and we now use a multitude

of modes to communicate. Not only does VoIP provide a comparable experience

to TDM but at a lower cost but it can seamlessly integrate with all these other

modes.

This is probably the most fundamentally different way you need to think when

it comes to VoIP, especially when considering the hosted model. First, you need

to accept that innovation around VoIP and the broader scope of Internet-based

communication will be an ongoing part of the technology landscape. Then you must

embrace this as a good thing, after which youll recognize that VoIP is really just

another application in a data network, and from there, the possibilities really open up.

If you view those possibilities as opportunities to communicate in more powerful ways,


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then VoIP has business value that goes well beyond telephony. To unlock that value,though, you need to assess which forms of innovation will really help your business.

Some businesses will have enough IT expertise to develop these innovations

internally, but most will not, especially among our readers here. For those businesses,

youre better off evaluating what comes down the road rather than focusing on

creating them.

This could be the best reason of all to choose the hosted path, as most providers

are by nature focused on staying ahead of the curve. After all, if all you offer is plain

vanilla VoIP, you will not stay competitive over time remember, unlike TDM, VoIP is

still evolving and weve only just started to see whats possible. Simply put, the Internet

is far more conducive to innovation than the world of TDM, and if you believe this can

help employees be more productive, then you will want to stay ahead of the curve as

well. Your chances of doing so will be far greater with a hosted VoIP solution than

managing it onsite with little help from those who know the Internet world the best.

Reason #5 - better organizational agility

This factor builds on the previous reason, and speaks to how the cloud can benefit

your entire operation. VoIP provides good value on its own, and being hosted allows

the service to be managed with minimal demand on your IT team. These will be

enough for most businesses, but if you take a holistic view of hosted VoIP, there is a

bigger picture to consider.

Whereas a premise-based VoIP solution will likely be telephony-centric, a hostedversion can more easily break away from this model. VoIP is typically associated with

desk phones because that defines its predecessor, TDM. Desk phones still have a

role to play, but hosted VoIP is defined more by the Internet, whereby this is just one

mode of doing telephony. When coming from the cloud, VoIP can as easily be used

on mobile devices, via Web applications, or from soft phone clients on your PC. By

shifting the connectivity channel from hard-wired phone jacks to Ethernet cables or

WiFi hotspots, VoIP can now become used wherever your employees are as opposed

to where the phone jacks are located.

In short, todays workers are more mobile and less tethered to their desks, making

legacy telephony infrastructure less relevant to meeting their communications

needs. To some extent, these needs can be met perfectly well by premise-based

VoIP, but hosted versions are by nature more Web-centric and integrated with other

communications modes. Given the declining role of desk phones, it stands to reason

that your employees will be more productive when given the tools that suite their

needs and changing workflow patterns.

Add to this the fact that workplace itself is becoming increasingly decentralized,

and even among SMBs, its getting harder these days to round up an entire team


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to meet in a conference room. Organizational agility has become a top priority formanagement, and to enable that, you need a flexible communications environment.

VoIP is a core building block here, and when the solution is hosted, you get maximum

coverage to support employees wherever they are. All they need is broadband access,

and whether at home, at a branch office or helping customers halfway around the

world, they can be just as responsive as being at their desk. If you see that a key

driver for organizational agility, then you probably need look no further for a reason to

deploy VoIP from the cloud.

Conclusion

By reaching the decision to deploy VoIP, you have taken a big step forward in getting your

business aligned with todays communications technologies. You may have been drawn to VoIPfor the cost savings, but as you explore the merits of a cloud-based solution, hopefully a bigger

picture opportunity has emerged.

Depending on your situation, a case can be made either way for cloud or premise-based VoIP.

Some of this depends on the state of your network and IT resources, but that can easily be

trumped by higher priorities dictated either by IT or executive management. A cloud-based

solution can certainly be justified by virtue of your technical limitations, but even where IT has

the capacity to support VoIP, this can still be the best path overall.

Much of this has to do with the role you view VoIP playing in your business. At face value, the

cost savings may be enough to warrant moving on from TDM, but if you are looking to VoIP to

drive productivity gains and make your business more competitive, the cloud offers a variety ofadvantages over a premise-based solution.

This guide has been prepared to support such a scenario, and is one that we believe will

resonate with SMBs. The five factors analyzed herein should provide sufficient justification for

almost any situation, and if you are leaning in this direction, it is our hope that this guide will

help get you off the fence so you can move forward with VoIP.

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5 reasons to deploy a cloud based voip system041714