Hard facts on IP PBX savings

By Robin Gareiss, Nemertes Research

How organizations are spending money when it comes to VoIP is clear, but how are they saving it?

Despite published reports to the contrary, companies are saving money with VoIP, but those savings may not show up immediately. We still find companies saving money on WAN costs, cabling, ongoing operational costs and administrative duties. Companies also are spending more money in other areas, including operational start-up, repair and handsets.

Organizations save 15% to 40% on their WAN costs when they move to VoIP, and the average saved is 23%. Three primary areas of saving are:

1. Migration to Multiprotocol Label Switching (MPLS), typically from frame relay, asynchronous transfer mode or leased-line networks. VoIP is the driver to switch to MPLS, but the overall costs for the same-speed circuits are less.
2. Integrated access, whereby companies combine voice and data over the same access lines, eliminating underused pipes.
3. Integrated core circuits. Organizations combine their voice and data networks, resulting in an average use of 60% and peak use reaching 75% to 85% on extremely well-managed networks. They eliminate the need for idle, higher-speed circuits in the core.

What's more, cabling a new building for an all-IP network continues to save organizations about 40% compared with wiring for time-division multiplexing (TDM) and IP. In some cases, companies even consider using all-wireless networks that eliminate the need for many desktop drops. But for now, the majority are using Category 5 or Category 6 cable, with one or two drops per desktop, rather than TDM's three or four drops.

MAC continues to be a big cost-saver when a company switches from TDM to VoIP. The trouble with large enterprises is that they don't see all the savings at once, because their rollouts evolve. Companies are spending $124 per MAC, on average, with a range of $65 to $400, depending on the city where the MAC takes place and whether a third party is handling it. By switching to VoIP, those per-MAC costs drop to less than $10.

Overall, when we factor these numbers combined with the additional training -- and often staff -- required in the early days of VoIP, the net savings are 20% to 30% compared with TDM. This includes overall monitoring, maintenance and updates on the VoIP system, but it does not include problem isolation and resolution. These savings also reflect the first two years of operation. After that, we expect the savings to increase because internal expertise improves

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