Making the Business Case for Unified Communications & IP Telephony

Transcription

1 Making the Business Case for Unified Communications & IP Telephony Robin Gareiss Executive Vice President & Sr. Founding Partner Nemertes Research

2 Introductions: About Nemertes Analyze & quantify the business impact of emerging technologies Prove/disprove compelling hypotheses annually Benchmark reality: Conduct in-depth interviews with IT leaders Nemertes 200 benchmark profile 16 industries; range of company sizes More than half have global operations Advise Fortune 100-2,000 businesses on critical IT issues, such as: Unified Communications & Social Computing Next-generation WANs Wireless & Mobility Data Centers Cloud Computing & Managed/Hosted Services Application Delivery Optimization & Virtualization Security Cost models, RFPs, architectures, strategies Founded 2002

3 Agenda Overview UC Business Case IP Telephony Business Case Cost Model Sample Business Case Lessons Learned Case Studies Recommendations

4 Unified Communications Integration of any or all communications, collaborative, and business applications. Presence guides users to the most appropriate means of communications Mobility extends applications and integration of applications Communications-Enabled Business Processes improve productivity

5 VOIP Adoption

6 UC Deployment: Little Change from 2010 Little change:12.5% No Plans in 2010

7 UC Capabilities in the Branch (in use today)

8 C Business Case Required? Most say No.

9 Determined a Business Benefit for UC? 71% growth 2010 Quantify UC benefits 2011

10 Agenda Overview UC Business Case IP Telephony Business Case Cost Model Sample Business Case Lessons Learned Case Studies Recommendations

11 The UC Business Case The problem: business justification for collaboration technologies comes down to soft dollars Productivity Better teamwork Better customer service How do you define better? What is its business value to the company? Too squishy!

12 How Do You Measure UC Success?

13 How To Build A Business Case Identify transactions & processes that could potentially be improved by making them faster or richer. What if We didn t need to schedule a follow-up call to answer that question? We didn t have to search for that information? We had the benefit of X s insight when we needed it on this project? Confer with business process owners to validate improvement & gain buy- in Test-drive a prototype to uncover problems Measure before and after results!

14 Best Practices for Creating ROI Models Look for transactions that have measurable value that you re already tracking (project times) Break down components of transactions into time spent: Locating resources Providing context Communicating information Determine value of Enriching transactions (better context, more resources) Expediting transactions (getting closure faster) Select appropriate technologies for Locating resources (presence, knowledge management) Providing context (messaging, backchannel communications) Communicating information (conferencing)

15 Just-In-Time, Fetch-The-Expert Challenge: Obtaining realtime subject matter expertise Solution: Integrating data devices with presence Outcome: Measurable increase in close rates and decrease in sales cycles

16 Step 1: The Transaction Every human interaction can be modeled as a transaction during which a human: Recognizes or accepts a request from a colleague, third party, or system To fulfill that request, makes additional (iterative) requests for supporting services from colleagues, third parties, and systems Delivers response to initial request Examples: Support for field researchers Improving communications for distributed research teams

17 Step 2: The Transaction Result Request Result Request Result Request Result Request

18 Step 2: Improving the Transaction Collaboration delivers two main benefits: 1. Faster transaction speed (lower human-to-human latency) Faster = more transactions per timeframe; greater likelihood of success (improved course of treatment; more likely to recommend product) 2. Richer transaction value (more effectively leveraging brainpower & resources of multiple individuals). Richer = greater likelihood of success, however defined Faster and richer do have quantifiable business benefits!

19 Step 3: Measuring The Impact Before Collaboration Time } Benefit of Collaboration After Collaboration } Before Collaboration After Collaboration Success Rate

20 Example: Web Conferencing Enterprise client reported on average saving five minutes per meeting after implementing web conferencing Translates to potential annual savings of $3,700 per user Obvious caveat, gained time must be put to productive use Average Hourly Rate Cost Calculator Per- Minute Rate Five Minute Savings 1000 Worker Savings Daily Savings 5000 Worker Savings Worker Savings $44 $0.73 $4 $3,667 $18,333 $36,667

21 Reducing Travel Costs Telepresence Cost Model Number of Telepresence rooms 5 Per-unit Costs Total Costs Capital Costs $375,000 $1,875,000 Operational--service $90,000 $1,080,000 Operational--T3 $60,000 $300,000 First Year Costs $3,255,000 Average length of trip (days) Average # of executives at meetings Airfare (business class) per trip 7 12 $10,000 $10,000 Hotel per day $300 $2,100 Per diem $400 $2,800 Miscellaneous $2,000 $2,000 Total per trip $16,900 # of trips to replace w/telepresence--1st year # of meetings to replace with telepresence--1st year # of trips to replace--subsequent years # of meetings to replace--subsequent years

22 Agenda Overview UC Business Case IP Telephony Business Case Cost Model Sample Business Case Lessons Learned Case Studies Recommendations

23 Building a Business Case Gather accurate assessment of current costs Identify business & process benefits Confer with business process owners to validate improvement; gain buy- in Test-drive prototype to uncover problems Benchmark before and after results (satisfaction, technology performance, business value) Measure ROI, TCO, NPV

24 VOIP Cost/Benefit Criteria Costs Implementation Time/expertise Capital Switch, Handsets Gateways, SBCs Network upgrades Management tools Ongoing operational Network Staff Maintenance & Licensing Training Implementation Cabling Costs Capital Softphones & handsets Centralizing voic /um Server virtualization Hosted offerings Ongoing Operational MACs Staff Reductions WAN circuits & SIP trunking Fixed Mobile Convergence Conferencing (audio, Web) Benefits

25 Nemertes Data: Cost Components Implementation: Planning, installation, troubleshooting. Internal + consulting Capital: Capital costs for IP switches, phones, gateways, network upgrades related to the VOIP implementation, IP video and audio bridges, management tools, unified messaging, and traditional voic . For comparison here, we included only VOIP switches and phones (hard phones & soft phones). Ongoing operational: Time and money companies spend managing and maintaining their VOIP systems.

26 Average VOIP Costs VOIP Costs 2010 Implementation $ Capital $ Operational $ First-Year Cost $ 1, Average Profit Margins Hardware/software: 15% - 38% Professional Services: 50-55%

27 Midsize & Large Organization Pay Less Per Unit Midsize & Large IP Telephony Costs, Per Unit, 2010 Capital Annual Operational 250-1,000 >1, ,000 >1,000 Alcatel $ 476 $ 440 $ 859 $ 82 Avaya $ 316 $ 370 $ 188 $ 195 Cisco $ 563 $ 451 $ 468 $ 141 Microsoft $ 795 $ 513 $ 878 $ 193 Mitel $ 624 $ 280 $ 238 $ 330 NEC $ 769 $ 571 $ 156 $ 183 Siemens $ 379 $ 470 $ 1,121 $ 597 Average $ 468 $ 439 $ 664 $ 239

28 Monitoring & Management Lifecycle Change Management Version/feature upgrade New technologies M&A integration New delivery mode Planning Architecture & Configuration Dial Plans Asset management Network assessment Traffic simulation Reporting Trend analysis Business impacts IT, end user training Implementation Installation, testing, activation Data migration & cleansing Dialing plans Feature enablement Voic set-up Operations Monitoring performance Problem Isolation Trouble-ticket tracking Automation Administration Moves, Adds, Changes Policy enforcement Mailbox rules

29 Operational Costs Correlated With Management Operational Costs of IP Telephony (per end unit) by Management Strategy Specialty tools $585 IP PBX tools $758 No tools $1,194 $- $200 $400 $600 $800 $1,000 $1,200 $1,400

30 Implementation Costs With Correlation Implementation Costs (per end unit) by Management Strategy Specialty $300 IP PBX $384 No tools $523 $- $100 $200 $300 $400 $500 $600

31 Why the Savings? Initial configuration Standardize on design, naming conventions, dial plans Load configuration data once, propagates through IPT, UC, voic Asset management Voic deployment Automation of administration changes Predictive analysis When is the environment ripe for problems? Root-cause analysis Why is this problem happening? Knowledge base helps

32 Agenda Overview UC Business Case IP Telephony Business Case Cost Model Sample Business Case Lessons Learned Case Studies Recommendations

33 Virtual Contact Center Agents Large healthcare company runs contact centers for Ask a Nurse programs. Exhausted talent field in given geography; constantly opening new call centers. Half of all call-center reps work from home using IP softphone and VPN link into nearest center. Decreasing costs and employee turnover. Avoided opening $3 million facility by hiring enough nurses in telecommuting program.

34 Inventory Look-up Women s clothing store with 600 locations IP phones installed to crosscheck inventory at nearby stores Benefits: IP phones about 50% the cost of a computer; lower support and maintenance. Improved customer service, faster response time.

35 Case Study: Hospitality Revenue Increase High-end hotels Installing IP phones in hotel rooms to market specials in restaurants, stores on premise. Ability to make reservations from phone keypad Benefits: Increased business in restaurants, stores (Currently running financial analysis) Why not on TV? Not everyone turns it on.

36 Case Study: Conferencing Financial Services Extensive costs for hosted audio and web conferencing. Desire to reduce costs due to budget cuts. Implemented SIP-based on-premise audio and web conferencing Reduced conference spend by 90%, even after adding additional lines for external participants We saved hundreds of thousands of dollars a year by eliminating a hosted service, plus we got better integration into both our phone and desktop applications and implemented meet-me conferencing --CIO, Global Financial Services Organization

37 Agenda Overview UC Business Case IP Telephony Business Case Cost Model Sample Business Case Lessons Learned Case Studies Recommendations

38 Closing Thoughts: Best Practices to Success Converge your staff or assemble project group; select one person to run project You need a UC Director Cast a wide net for vendor/carrier selection Understand business problems VOIP & UC can solve Develop ROI that is all-encompassing Budget for IP telephony management tools Don t overlook savings for MACs, conferencing, UC Dashboards, circuits, personnel Spend time up front educating IT, business units, executives

39 Thank you! Robin Gareiss Executive Vice President & Sr. Founding Partner Nemertes Research