By Randy Garland, Director of IT,
Kentucky Employers’ Mutual Insurance
Voice communication is the lifeblood of any industry. Stability and reliability are essential when you start talking about replacing your phone system. Imagine taking your traditional TDM PBX and moving it to the same hardware and physical wire that handles
all of your computer and network traffic. This is exactly what the next generation of phone systems has done.
VoIP stands for Voice over Internet Protocol, which essentially takes your voice and converts it to data packets that can be routed over a traditional network. Your voice is transformed into data traveling over your network. Sound risky? It can be unless you work with a qualified vendor and choose a quality product.
You may ask how many companies have made this transition. Just to give you an idea of how the market place is shaping up, according to the Gartner Group, the ratio of IP PBX to TDM PBX was 50:50 during Q3 of 2003. Today this ratio has risen to approximately 90:10 with IP based systems now having 90% of the market share. This equates to a $9B dollar industry.
In today’s world, many companies have made this transition and have been very successful. KEMI is one of these companies. Back in 2001 we started looking into replacing our current phone system. We had begun to have issues with available parts, and administrative overhead associated with maintaining the current system. But at that point, the technology was in its infancy, only a few standards existed, and it appeared to be a risky proposition. But by 2003, it seemed to be the right time to take a hard look at the “best of the best” and make the decision to go forward. So that’s exactly what we did! We took a look at several of the market leaders, did the demos and evaluations, and decided to go with Cisco’s Call Manager product.
Our implementation time was approximately one year. We took advantage of the timing of the implementation and support of this project to also upgrade to an all switched network with integrated PoE (Power of Ethernet). It was also great timing because we had begun renovations of our building one floor at a time. This meant we could replace our network cabling and remove all old telephone cables since now only one network cable would supply connectivity for both the phone and the computer. This began our ROI as we did not have to run two completely separate wiring components or hire the labor to install them. Once we replaced our network, configured the system, put in dedicated lines, configured our ACD call routing, trained our staff and completed testing, we rolled our number over and went live November 1, 2004.
To date we have seen a great return on our investment. I’m including several key benefits and cost reductions we have had with our implementation. As I mentioned above, we were able to reduce our renovation costs on wiring and labor, which was around $27,000. We also reduced our monthly reoccurring local line charges by replacing more expensive Centrix lines with T1’s for local and dedicated long distance. With these dedicated lines for local and long distance, we were able to negotiate significant toll savings. This realized an average annual return of approximately $90,000. We eliminated costly repairs and the technicians dedicated to servicing our older system. We also eliminated the need for a third part conference bridge, and the administrative costs associated with adding, changing and deleting phones for our staff.
The cost savings for your organization will increase even more when you have remote offices and satellite facilities you want to tie together. You will eliminate the duplicate phone system equipment, phone lines and toll costs between offices. Not to mention the ease of calling a satellite office just like any extension within your own office. This extension of the phone system can even be pushed out to your mobile users. Users can work from home with a virtual phone running on their laptop just like a regular phone, and they can be reached by an extension right in their home. We have been able to push this technology out to our field staff working from home.
In summary, we have had much success with our system and the implementation. We saw immediate cost savings and continued savings of approximately $232,000 since April 2004. Our estimated annual return going forward should be in the neighborhood of $90,000 per year. We believe this system has given us the foundation to expand our communications functionality, given us greater communication options, increased customer service and increased our flexibility during a crisis.
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