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The Strategic Advantage of VoIP

This isn't your father's communications environment -- or your grandfather's for that matter. Now in the era of the Internet, everything is changing: from the use of email to replace memos, instant messaging to take the occasional place of phone calls, and BlackBerrys to keep employees connected at all times.

The Internet has clearly changed the way companies do business, making the world smaller and allowing for greater efficiencies. Surprisingly, however, one vital communications link has been unchanged for over 80 years -- the phone system.

Since the days of Alexander Graham Bell, companies had few choices when it came to their telephone systems. Selecting from a limited number of options controlled by major phone carriers, companies have been constrained for years. Previously, typical business options included the number of rollover lines, automated reception, forwarding, and the number of designated lines in an office. Legacy phone system constraints become more apparent during a merger or acquisition when it can take weeks to integrate the extensive analog communication systems.

Today, companies have the option of Internet telephone technology, better known as Voice over Internet Protocol (VoIP).

While VoIP has been embraced mainly by consumers -- who now account for an estimated 10% of international phone traffic -- it is still in a nascent phase among business users. This is quickly changing, however.

"This year, U.S. companies bought more new Internet phone connections than conventional phone lines. In 20 years, perhaps sooner, the global telephone system will run predominately on the Internet," says Kevin Werbach, founder of Supernova Group, a technology analysis and consulting firm based in Villanova, Pa., and assistant professor of legal studies at the University of Pennsylvania's Wharton School.

Most companies, however, don't realize that VoIP isn't just another phone system, albeit a far cheaper one. In fact, VoIP can be a strategic tool, giving innovative companies a competitive advantage.

"It can be the flagship product for all vendors -- soon the traditional PBX system will be grandfathered. Secondly, there are real financial benefits with systems integration; management of the system; moves are easier; reduced network expenses. It is more flexible and easier to modify and expand," explains Elizabeth Herrell, an analyst with Forrester Research.
"Because Internet network-based design allows common controls across the system, it allows for better backup and reduces the number of failures. You can also share media gateways and interfaces."

But the most important reason to integrate VoIP, according to Herrell, is that it creates new applications and services. For instance, with email and instant messaging, employees can point and click to activate the telephone. They will also be able to determine whether someone they are trying to contact is available by phone. Conferences will become streamlined without relying on a conferencing phone line -- integrating phone and Internet presentations.

A flexible and competitive asset

The benefits of VoIP include the obvious factor of its much reduced cost, but it is also a very flexible system that allows for the creation of new services to streamline costs and offer better services to customers, creating strategic tools to better compete. VoIP's many benefits include the following:

  • Integration-friendly VoIP is Internet-based; therefore, in cases of corporate mergers or acquisitions, different systems don't have to be integrated because they'll all be on the same, neutral Internet-based system.
  • Ease of adoption VoIP is easily installed and modified.
  • Cost savings VoIP is cheap. It's pay-as-you-go: instead of paying a flat fee to a service, VoIP charges pertain only the amount of broadband used.
  • Disaster-proof In the case of an emergency, calls can quickly be rerouted to another facility, rather than taking weeks or a month as with a traditional phone system.
  • Virtual office VoIP allows you to quickly create home offices or virtual call centers anywhere in the world. For instance, an employee in Europe on business can still receive calls on her office number. Clients never need know she is actually off-site.

A key strategic asset

Besides its ability to reduce costs and offer a more flexible option to traditional phone systems, VoIP has strategic benefits:

  • VoIP is part of the information system Instead of using one system to make a call and another to access key files needed during the call, VoIP can pull both together at once, in the same environment.
  • Customization is easy Click and choose online and your phone-based system can have a variety of options from background music, recorded voices, prompts, news reports -- whatever you want can be swapped daily.
  • Customer service can reach new heights with VoIP Busy executives and employees in a variety of fields can use voice commands to access phone and email messages, listen to a calendar and schedule changes or initiate conference calls. All of these can be recorded for manager review -- to better improve customer communications and employee training.

While these benefits are clear, some skeptics point out the potential of increased security risks with VoIP, which lives in the unprotected Internet environment, not a closed, secure system like traditional phones. Therefore, organizations must carefully implement VoIP in a way that maintains the integrity and security of their networks. Securing VoIP infrastructure should be approached in the same manner as other Internet-based systems such as email, intranets, and employee databases.

As VoIP is still in its early days, it is critical for CIOs who implement this technology to stay in touch with a variety of technology vendors to keep up with all the current research about security. With VoIP, new types of viruses, worms, and even voice spam may appear. But as Werbach notes, securing VoIP is no different from securing other aspects of the IT infrastructure. And with the strategic benefits of VoIP so great, Fortune 1000 companies should consider adopting it for their own organizations.

Laura Roe Stevens is an Atlanta-based freelance writer who has covered business and technology for The New York Times, Los Angeles Times, and the Atlanta Business Chronicle.

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