Convergence is the linking of telephone and data networks together, and running both services on the same set of equipment. It’s often known as Voice over IP (VoIP) because the new system sees the telephone network running on the data network’s Internet Protocol (IP) technology.
In the past couple of years, VoIP has moved firmly into the mainstream and has become the norm for major data infrastructure upgrades. Sales of converged, IP-based private branch exchanges (PBX) now exceed their conventional equivalents. Lloyds TSB announced in December a £500m deal with IBM to converge its data network with a phone network supporting 70,000 phones. Other firms have also gone down this route, including Marks & Spencer, which in 2003 announced plans to start a gradual adoption of VoIP. But many smaller companies have opted for convergence as well, simply because new deployments aren’t such a financial risk.
“Small systems account for about half the market. That’s the same around the world,” says Steve Blood, vice president of research group Gartner. “There is a much greater demand for applications that have proven return on investment. It is possible for SMEs to adopt VoIP, but it has to be simple.”
The arguments in favour of this approach are two-fold. Instead of having two separate networks, and two sets of switching equipment, you can have a single one. In addition, both networks run on the same communications protocol – IP. So IT and telecoms staff only need one set of skills, and only need to maintain one set of equipment.
VoIP has the added benefit of cheaper phone calls between offices. If a company already has a data link between two offices, then it might as well run its inter-office phone calls along it too, at no extra cost. A company might have to add some extra bandwidth, but there are still large potential savings.
One area where convergence is definitely taking off is the trend towards home working. A data network gives home-based workers access to office data applications, from email to sophisticated call centre applications. Incoming calls to their office phone numbers can be routed to their homes directly over a broadband link. Other staff can call them at no cost just by dialling their extension number.
While many of the cost-saving features of VoIP are important, vendors are increasingly selling the systems on the basis of enhanced features that IP-based communications can bring. “It is the features and applications that really sell it,” says Patricia Hume, group vice president of Avaya. “The return on investment is predicated on the applications, not the fact that you have IP trunking into the office.”
Running computers and telephones on the same network makes integrating the two very straightforward. Simple enhanced messaging applications, such as sending voicemails via email to an international worker’s computer, become easy. It becomes easy to integrate instant messenger-style presence systems into worker’s computers, allowing them to see instantly when a colleague is on line and available to take a call, thus putting an end to phone tag. Phone systems can be integrated into email programs such as MS Outlook, making it possible to launch a phone call from the contacts’ page. The list of possible features is growing all the time.
One major saving is the reduced cost of administration, a particularly attractive feature as hot-desking becomes increasingly widespread. With conventional telephone systems, moving, adding and changing telephone extensions has to be done by engineers, and this can become expensive. With VoIP phones, however, users can be set up for free by IT staff, and moving a phone extension is a simple matter of logging in with a new PIN number.
Once an organisation reaches a certain size, telecoms and IT are often dealt with by separate teams. The telecoms people look after the phones and the IT department deals with the data network and the computers.
Running a systems upgrade, which involves combining the two, is going to require a major shake-up of the way those two departments operate. Telecoms managers may well see it as a threat so may drag their heels. At the same time, other parts of the business may have projects in their in-tray which have a bearing on the future of the network. For example, HR may be planning intranet-based employee self-service applications, which may require a significant network upgrade.
The FD will become involved in convergence projects for two reasons. First because the basic data/telephone convergence project may well be justified in financial terms. Second, because the finance department is the only part of the business with sufficient authority to force the various parties to set their differences aside and make the changes happen. “When you go to a large business, you have the voice group and the IT group. There is a lot of politics. Unified messaging never took off for that reason,” says Steve Blood, vice president of research group Gartner.
Ivor Kendall, general manager of IP infrastructure at BT, has seen this trend evolving over half a decade, from the very first sales of converged data and telecoms networks. “What has changed is that the FD is usually very involved in the decision to converge. He needs to bring together an IT function, the telco function and the application function.
“Five or six years ago, the IT guy would do most of the work and the FD would get involved only at the end to decide between the various players. Now FDs are getting involved much earlier and their level of understanding has vastly increased.”
It’s a trend which he refers to as ‘budget convergence’. The technology changes are only part of a wider story, or often three or four projects across the business.
The desire to modernise the telephony system and cut network administration overheads might not make sense on their own. However, when viewed alongside a more general move to home-based and flexible working, and a plan to deploy new data applications on the office network, projects that didn’t make sense on their own may add up to a compelling package.
Not that all the projects ought to be undertaken at once. Convergence can be a platform for so many disparate projects that it’s a difficult task to prioritise them all. Ultimately, the decisions will be financial, and that’s something the IT director has to take care of.
“The process of converging has to take into account the current situation,” says Ian Cox, principal analyst at research house TelecomView. “And where you have separate administrative budgets and networks, the process of converging those support budgets and networks will take several stages.”
In any event, the FD has a key role bringing an enterprise-wide perspective to the project, which will be essential to making it happen. “The FD is aware of all those different budgets and how they overlap,” says Kendall.
Convergence has had a number of benefits for First Response Finance, including the ability to replace their office networks with a single IP network. A key benefit was the ability to enable home-based workers to take calls as if they were in a call centre.
First Response is a provider of vehicle financing for poor credit risk clients most companies would normally turn away. Their call centre workers have a highly skilled and demanding job, so keeping staff turnover to a minimum is essential. Allowing them to work at home was seen as a way to retain them.
Using a VoIP call system from US-based telecoms equipment vendor Avaya, installed by NT Voice and Data, First Response has been able to allow a first wave of six-to-eight home-based workers to use the same call centre software as office workers.
“This system integrates the remote agents into the call centre management system,” says Chris Groom, IT manager at First Response. Calls are routed from the central offices to the agent’s homes over broadband, saving on telecoms costs. Groom estimates the system has saved 20% of the company’s call costs.
An issue with many converged rollouts is the cost of IP-based phones, which exceed the cost of conventional equivalents. “We turned our noses up at the price of some of the Avaya handsets,” says Groom. First Response chose instead to give its workers laptops, which run software that acts like a phone.
Between First Response’s three offices, the number of calls is relatively low, so the company has not yet moved them to IP.
“The justification is never wholly financial,” says Groom. “It is a case of deciding whether the extra benefits justify the cost. We had to get all the key decision-makers around the table at once.”