Business Value Analysis - SMP Corp · mixture of TDM and IP, and cloud (Please see Figure 1.)...

N e m e r t e s R e s e a r c h G r o u p I n c . w w w . n e m e r t e s . c o m 1 - 8 8 8 - 2 4 1 - 2 6 8 5

BusinessValueAnalysisCiscoUnifiedCommunicationsManagerPhybridgePoLRENemertesBusinessValueAnalysisindependentlyevaluatestechnologyproductsandservicestoidentifythevaluetoenterpriseorganizations.Throughdetailedinterviewswithtechnologyprofessionalswhousetheproductsorservices,Nemertesanalyzesandquantifiesthereal-worldbenefitsandimprovementstotheefficiencyoftheirorganizations.

March16

08Fall

ByRobinGareissPresident&FounderNemertesResearch

©NemertesResearch2016!www.nemertes.com!888-241-2685!DN5000 2

BusinessValueAnalysis

TABLEOFCONTENTSExecutiveSummary...................................................................................................................................3TechnologyAdoptionandChallenges.................................................................................................4IPTelephonyBusinessValueAnalysis................................................................................................6CiscoUnifiedCM,PhybridgePoLREBusinessValueAnalysis.....................................................8ProfileofResearchParticipants................................................................................................................................8SummaryofResearchFindings.................................................................................................................................8MTTRReduction.....................................................................................................................................................8EquipmentMaintenanceReduction...............................................................................................................9MACCostReduction............................................................................................................................................10FTEReductions.....................................................................................................................................................10TimetoDollarValue...........................................................................................................................................10

CaseStudies................................................................................................................................................12Conclusion...................................................................................................................................................23Methodology...............................................................................................................................................24



ExecutiveSummaryThoughIPtelephonyhasbeenavailablecommerciallysincethemid‘90s,itremainsanemergingtechnologyformanyorganizations.Onlyabout28%ofcompanieshavemovedallendpoints(handsets,softphones,audiobridges)toIP,accordingtoNemertes’researchdata.TherestoforganizationsareeitherintheprocessofmigratingfullytoIP,stuckinahybridrolloutrequiringthemtomanagetypicallymultipleTDMandIPproviders,orfirmlyplantedinTDM.InhibitorstowardmovingtoafullIPdeploymentincludelackofbusinesscaseorbudget,nouserdemand,costofnetworkupgrades,andphysicalbuildingissues.Asorganizationsrundisjointedtelecommunicationsinfrastructure,theircostsarehigherandefficiencieslowerthanthosewhohavemovedoraremovingtoafullIPenvironment,accordingtotheresearchdata.Throughinterviewswith10companies,Nemerteshasidentifiedandmeasuredthefollowingbenefitsofmovingtoanall-IPenvironment:

• 22%reductioninFull-TimeEquivalents(FTEs)requiredtomanagethesystems• 34%reductioninthecostofequipmentmaintenance• 31%reductioninthecostofMoves,Adds,andChanges(MACs)• 71%reductioninMeanTimetoRepair(MTTR)

ThoughfullIPmaybethegoal,someITleadersbelieveitnevercanbereality.That’sbecausetheirbuildingsorbudgetsmaynotaccommodatethemigration.Inthosecases,companieshavefoundsuccessusingPoweroverLong-RangeEthernetsolutions(PoLRE).Amongthe10companiesinterviewed,threeareusingorevaluatingswitchesfromPhybridgetobridgethegapbetweenTDMandIP,andtwoareevaluatingthetechnology(layer2switchesthatdeliverPowerOverEthernetoverasinglepairofwireswithfourtimesthereachoftraditionalswitches,transformingTDMvoiceinfrastructureintoanIPpathwithpower).Amongtheanecdotalbenefitsidentified:

• ReductionincablingandhardwarecoststoupgradeLANinfrastructure• Reductioninlaborforthoseinfrastructureupgrades• LessdisruptiontothephysicalbuildingnormallyrequiredforfullLANupgrades

Thisreportreviewstheissuesandbenefitsassociatedwithmovingtoanall-IPenvironment,basedoninterviewswithITprofessionalswhohavemovedtoallIPorareintheprocessofdoingso.



TechnologyAdoptionandChallengesThoughIPtelephonyhasbeendemonstratingbenefitsfor20+years,mostcompanies—particularlylargeenterprises—continuetooperateamixedenvironmentofbothlegacyTDMandIP.Amongallcompanies,allsizes,thathavebegunusingsomeIPtelephony,45%operateamixofIPandTDM,while31%haveon-premises

deploymentsthatarefullyIP.(PleaseseeFigure1.)

Thosewithlarger,moredistributed,andmorecomplexenvironmentstendtostaywithamixedtelephonydeploymentforlonger.Amonglargecompanieswithmorethan5,000employees,54%arerunningamixofIPandTDM.Amongthatdemographic,theestimatedtimeframeforfullIPdeploymentfor24.4%isnotexpectedtohappenuntil2017to2025.“Wemayormaynotevergetthere,”saystheITdirectorforatransportationcompany.

DuringinterviewswithhundredsofITprofessionalsoverseveraldifferentresearchprojects,NemerteshascharacterizedthefollowingchallengesoffullIPdeployment:

• Awareness–ITleaderssometimesarenotawareofthebenefitsofmovingallcommunicationstothesameIPplatform.Notonlydooperationalcostsdrop,butalsofeature-functionalityimproveswhenallemployeesareusingintegratedcommunicationscapabilities.Additionally,somearenotawareofthevalueofPoLREsystemsinenablingIPinprohibitivebuildings(i.e.,oldbuildingswithconcretewalls,buildingsthatrequirecostlypreparationtorunnewcabling,etc.)orwherebudgettoupgradetheLANand/orassociatedinfrastructuredoesnotexist—yettheneedforIPtelephonydoes.

• Budget–SeveralITleaderscouldnotjustifythebudgetrequiredto“fixwhatisn’tbroken.”TDMisworkingandcontinuestobesupported,sononeedtorocktheboat.Onlywhentheequipmentbecomesend-of-lifeandthecompanycannolongerfindsupportorsparepartsdoesbudgetbecomeavailable.However,thosewhodomovetoIPfindimmediatebenefitsinemployeeproductivitybystreamliningfeaturesets,centralizingmanagement,andreducingmaintenanceandoperationalcosts.

All IP On Premises

31%

Mix of IP, TDM 45%

Cloud 24%

Deployment Among Those Using IP

Figure1:DeploymentDifferences,AllSizeCompanies



• Abilitytochangeinfrastructure–Insomecases,organizationscannotupgradetheirinfrastructure.Forexample,installersmaynotbeabletopenetratethestonewallsofoldbuildingsonuniversityorcorporatecampusestoupgradecabling.Orinothercases,suchaswheninstallationsmustrequireovertimepay,itmaybecost-prohibitivetoperformtheupgrades.

• Nouserdemand–Someorganizationsrequiredocumenteduserdemandpriortospendingmoneytoaddanewtechnology.Employeesoftendonotseethevalueofmovingtoanall-IPenvironmentfromafunctionalTDMworld,soITcannotgetbudgettoupgrade.

ThoughtherearemanyreasonstomovetoanallIPenvironment,mostorganizationssaythecatalystforthatchangewasendoflifeforexistingequipment.Otherreasonscitedincludeconsolidationofdisparateequipment;easeofmaintenanceandtroubleshooting;vendorinvestmentinthetechnology;andtheabilitytoofferintegratedfeaturesets.Sometimes,themovesimplycomesdowntoacommonsensefinancialdecision,aswasthecaseforoneuniversity,whichwasrunningahybridenvironmentofCiscoIPandagingRolmTDMPBXs:“WehadanoldRolmsystemandaskedourprovidertoestimatehowmuchitwouldcosttomoveit.Itwasgoingtobe$4milliontomovethenodetoanewsystem,pullnewcable,anddothenewpunchdowns,withdowntimeoftwoweeks,”theleadtelecomengineersays.ThosefiguresledtheuniversitytosolvetheproblembymovingitsexistingCiscoUnifiedCommunicationsManagerstoanewdatacenter.“Therewasnooutage,andittookus30minutes,”hesays.



IPTelephonyBusinessValueAnalysisThosewhomovetoanall-IPenvironmentfindcompellingcostsavingsinallmetrics.InadditiontothestudyNemertesconductedspecificallyforthisreport,wealsopulleddatafromadditionalresearch—namely,theNemertes’2015-16UCTotalCostofOwnershipstudy,nowinits11thyear.Forthatresearch,Nemertesgathersreal-worldcostdataoncompaniesusingavarietyofarchitectures.Specifically,wegatherinformationoncapital,implementation,andoperationalcostsusingthefollowingmetricsandcalculations:

• Capitalcostperendpoint:IncludesPBX,endpointdevicesandlicenses,servers,otherhardware.Insomecases,bundledlicensesincludecertainUCapps

o =Capitalcosts/numberofendpoints(handsets,softphones,etc.)• Implementationcostperendpoint:Includesstafftimeandthird-party

consultantsandintegratorso =((Stafftime*loadedhourlyrate)+third-partycosts)/numberof

endpoints• Operationalcostperendpoint:Includesstafftime,equipment

maintenance,third-partymanagedservices,trainingandcertificationo =((NumberofFTEs*averageannualloadedsalary)+equipment

maintenance+managedservices+training/certification)/numberofendpoints

Wethensegmentthisdatabythetypeofdeploymentcited—allIPonpremises,amixtureofTDMandIP,andcloud(PleaseseeFigure1.)Overall,organizationssave8%ontheirtotalcostsforIPtelephonywhentheymovetoallIP,accordingtothedata.Thisincludescapital,implementation,andoperationalcostsforallcompanies,allsizes,andallvendors.Figure2showsthetotalmediancostperendunitat$734.68forthose

stillrunningamixedenvironment,comparedto$676.64forthoserunningallIP.(PleaseseeFigure2.)Segmentedbysize,thetotalcostsavingsis9%forrolloutswithmorethan1,000endpoints,butmoreimportantly,theongoingoperationalcostdropsby21%.Extrapolatedoutbythousandsoflocations(aswellasevenoneyear,ifnotmultiple),thecostsavings

Figure2:MedianCostPerEndUnit,AllCosts,AllSizedRollouts

!$734.68!!

!$676.64!!

!$600.00!!

!$650.00!!

!$700.00!!

!$750.00!!

Mix$of$TDM,$IP$ All$IP$

Total$Costs$Per$End$Unit$



becomesverycompelling.Drillingdownfurtherintothecomponentsofthecosts,it’sclearthatacrosseachmetric—capital,implementation,andoperational—organizationssavemoneyinanallIPenvironment.Thoughmanyorganizationsreducestaffwhengoingall-IP,themostsignificantcostsavingscomesfromequipmentmaintenance(48%)andtraining(26%reduction),accordingtothedatafromthe2015-16study.ThoughtheactualnumberofFTEsdropsby42%onaverage,thesalariestendtobehigherforthosemanagingIPvs.thosemanagingTDM.Asaresult,thetotalcompensationcostsfortheITstaffarethesameorslightlylowerintheresearch.



CiscoUnifiedCM,PhybridgePoLREBusinessValueAnalysisThoughmanycompanieshavestartedtheirjourneyswithIPtelephony,relativelyfewhavecompletedtheirdeployments.Inhibitorsincludecostandstaffconstraints,legacynetworksthatcannotsupportIPtelephony.PhybridgepartnerswithCiscotofacilitatethemovetoIPwithouttheneedforinfrastructureupgrades.Forthisproject,weinterviewed10companies,usingaconsistentsetofquestions,todeterminethebenefitsinreplacingTDMwithIP.

ProfileofResearchParticipantsAmongtheresearchparticipants,theirdeploymentsofIPtelephonystartedbetween2002and2015.Weinterviewedamixtureofcompaniesfromavarietyofindustriesandsizes.Thenumberofemployeeswithintheorganizationsrangesfrom1,000to110,000.AlloftheparticipantsuseCiscoforIPtelephonyandthreeusePhybridge(twoothersareevaluatingthetechnology).Between5%and100%oftheirendpointsareonIPtelephony,withanaverageof59%ofthetotalendpointsonIPtelephony.ThosewhoalreadyarenotrunningallIPhaveplanstodosowithinthenextonetofiveyears.

SummaryofResearchFindingsInthe10interviewsconducted,eachcompanydiscoveredbenefitsregardingreductionintimeand/orcosts,thoughthespecificsourceofthebenefitsvariedbycompany.TheycenteredaroundreductionsinMeanTimetoRepair(MTTR);equipmentmaintenance;Moves,Adds,andChanges(MACs);andFull-TimeEquivalents(FTEs)requiredtomanagethesystem.(PleaseseeFigure4.)ThosewhousedPhybridgesawsavingsinthecosttoupgradetheLANinfrastructure—eachfordifferentreasonsdetailedinthecasestudies—rangingfrom80%to300%.

MTTRReductionThoughseveraloftheparticipantshadnotspecificallymeasuredthechangesintheirMTTR,nearlyallsaidtheynoticedanimprovementmovingfromTDMtofullIP.Amongthosethathadmeasured,theyfoundMTTRdroppedbyanaverageof71%.Inanall-TDMorhybridTDM/IPenvironment,theyspentanaverageof20.8hoursidentifyingaproblemexisted,determiningtherootcause,andfinallyresolvingtheproblem.Byfar,themajorityofthetimewasspentrepairingtheproblem.Thereasonsforthedelay?Trackingdownpartsand/orwaitingforoff-sitetechnicianstoarrivetoresolvetheproblem.Inhybridenvironments,theyhadtoanalyzedatafromboththeTDMandIPsystemstoisolatetheoriginoftheproblemanddeterminetherootcause.WhentheyeliminatedTDMentirelyorfromspecificregions,theywereabletoreducethattime.



OncetheymovedintoanallIPenvironment,theaveragenumberofhoursforMTTRwas4.65hours—muchmorereasonable.Givenit’snewertechnologywithpartsandexpertisereadilyavailable,thereductionintroubleshootingtimemakessense.

Figure3:AverageSavingswithFullIPDeployment

EquipmentMaintenanceReductionAnotherareaofsavingsisequipmentmaintenance—thoughnotforalloftheresearchparticipants.Onaverage,thesavingswas34%,drivenprimarilybyeliminatingcostlyserviceagreementsforagingequipmentthatrequiredsignificanttimeandattentiontokeeprunningortotrackdownparts.WithIPtelephony,moreplayersareinthemarketforequipmentmaintenance,soit’smorecompetitive.Asaresult,theyareabletonegotiatemoreaffordablemaintenancecontracts.Some,however,saidtheywerenotgoingtosaveanymoneyonmaintenancebecausetheirTDMequipmentwassoold,theycouldnotfindanyonetomaintainallorpartoftheequipment,ortheircompaniesnolongerbudgetedformaintenance.SobyupgradingthetechnologytoIP,theywereaddinganewcostorspendingthesameastheywerespendingforlimitedlocationsthatwerestillcoveredundermaintenance.

22%

31%

34%

71%

FTE reduction

MAC cost reduction

Equipment maintenance reduction

MTTR reduction

Key Findings: Savings With Full IP Deployment



MACCostReductionMACs,alongwithtoll-chargereductions,wereoneoftheearlybenefitscompaniesmovingtoIPusedtojustifythecosts.Atthetime,TDMMACswerecommonly$350to$400each.Now,mostoftheresearchparticipantssaidtheyspend$50to$150perMAC,butthecoststilldropsbyanaverageof31%whenmovingtoIP.Inpart,thisisbecauseit’sfastertodoanIPMAC(15minutesvs.45minutes),butmorefrequently,it’sbecauseemployeescansimplypickuptheirownphonesandmovethemwhentheyswitchoffices.OnlywhenasoftwareoradministrativechangeisrequireddoesITevengetinvolved.Additionally,manycompanieswerepayingthirdpartiestodoTDMMACsbecausetheyweremorecumbersomewiththepunch-downsthatwererequired.EveninahybridTDM/IPworld,theystillneededtheirserviceproviderstohandlethosechanges.ButthosewhohavemovedfullytoIPhandleallMACsinternallyandspendlessmoneydoingso.

FTEReductionsOnaverage,researchparticipantsaresaving22%intheFTEsrequiredtomanageIPsystemsvs.TDMorhybridTDM.Whenisolatingthosewhohavegonetoatleast90%IP,thatpercentageincreasesto38%,indicatingthemovementtofullIPgeneratesmoreefficiencieswiththeITstaff.Eightofthe10companieswhoparticipatedintheresearchreportedsomereductionintheFTEs,rangingfrom13%to44%.Theyreducedstafffromanaverageof10.5FTEswithTDMtoninewithIP,overall.

TimetoDollarValueTimegenerallytranslatesintodollars.Incaseswherecompaniesactuallyreducestaff,oreven

Figure4:TimetoDollars

IT#staff#members#managing#(FTE)

Hours#per#year

Average#hours#saved

Value#of#time#saved

0.5 $$$$$$$$$$$$$$$1,040$ $$$$$$$$$$$$$$$229$ $$$$$$$$$$$$$$$$10,214$1 $$$$$$$$$$$$$$$2,080$ $$$$$$$$$$$$$$$458$ 20,428$$$$$$$$$$$$$$$$2 $$$$$$$$$$$$$$$4,160$ $$$$$$$$$$$$$$$915$ 40,857$$$$$$$$$$$$$$$$3 $$$$$$$$$$$$$$$6,240$ $$$$$$$$$$$$1,373$ 61,285$$$$$$$$$$$$$$$$4 $$$$$$$$$$$$$$$8,320$ $$$$$$$$$$$$1,830$ 81,714$$$$$$$$$$$$$$$$5 $$$$$$$$$$$$$10,400$ $$$$$$$$$$$$2,288$ 102,142$$$$$$$$$$$$$$10 $$$$$$$$$$$$$20,800$ $$$$$$$$$$$$4,576$ 204,284$$$$$$$$$$$$$$25 $$$$$$$$$$$$$52,000$ $$$$$$$$$$11,440$ 510,710$$$$$$$$$$$$$$50 $$$$$$$$$$$104,000$ $$$$$$$$$$22,880$ 1,021,420$$$$$$$$$$

100 $$$$$$$$$$$208,000$ $$$$$$$$$$45,760$ 2,042,841$$$$$$$$$$

Time$to$Dollars:$22%$Reduction$in$Time

Calculations+assume+2080+hours+par+year+and+average+salary+of+$71K;+30%+loading+factor



reassignpeopletonewdepartments(andcorrespondingbudgets),thehard-dollarcosttomanagethesystemdrops—insomecasessubstantially.Figure5showstheactualannualcostsaved,usingthedocumentedaverageof22%timereductionamongtheseresearchparticipantswhenshiftingtofullIP.Thefiguresarebasedonanaverageannualsalaryof$71,428and30%loadingfactorresultingfromthisresearchproject.Ofcourse,inmanycases,organizationsmaintainthesamestaffsize,butshiftpeopletonewresponsibilitiesorreplacethemwithpeoplewhohavenewskillsets.Ifthecompaniesmovepeopletonewroles,theyindirectlysavemoneybyavoidingthecostofhiringnewpeopletohandlethosenewresponsibilities.Morebroadly,efficienciesgainedbyenablingafullIPdeploymentfreeuppositionstohelpITfocusoncorporateinnovationordigitaltransformationprojects—helpingbusinessleadersidentifyhowtechnologycanimprovethebusiness.Meanwhile,employeesbecomemoreefficientandproductivebyusingconsistentfeaturesets(abbreviateddialing,consistentdiallogs,mobileenablement,integrationwithUCandcollaboration,etc.).



CaseStudies Asstated,Nemertesinterviewed10companiestodeterminethebusinessvaluetheydiscoveredmovingtoortowardaCiscoall-IPenvironment.Innearlyallcases,thecompaniessawmeasurablesavingsinthenumberofFTEsneededtomanagethetechnology.Inothers,theysawsavingsinequipmentmaintenance,MACs,orWANcosts.SomediscoveredchallengeswhentheytriedtoupgradetheirLANinfrastructuretoenableIPeitherthroughoutmostoftheorganizationoratselectlocations.ThoseorganizationsleveragedPhybridgetoenableIPbytransformingtheexistingtwo-wireinfrastructureintoanIPpathwithpower.Thenextseveralpagesprovidedetailsoneachofthecompanies.



niversity:A30,000-studentuniversityhaslongrunonenterprise-wideIPtelephony.Backin2002,theuniversitywaslookingatoptionstoreplaceits20-year-oldRolmsystem,likemanyorganizationsatthetime.Withgreatforesightforthetime,theseniorvoiceengineerrecallstheITleadersthinking

TDMwouldnotlast.“OneofourrequirementswasthatanyreplacementwouldhavetosupportanIPsolution.Sometriedtosellusonhybrid.Cisco,atthetime,wasthe

onlyonetoofferusafullIPsolution,”hesays.WhentheITstaffmadethedecision,therolloutwasswiftandorganized.In2002,theuniversityspent$1.5milliontoupgradethenetworkinpreparationforIPtelephony.“Literally,onedaywewouldupdatethenetwork,and

thenextdaywewouldhavethephoneontheirdesks.Itwasveryaggressive.”Theuniversitynowhas9,600IPendpointsinoperation.Initially,theuniversitywentfromfourFTEsrunningTDMtosixrunningIPtelephony.Asthelearningcurvetapered,sodidthenumberofFTEsrequiredtorunthesystem.Now,theuniversityonlyneeds2.5tomanageandoperateCiscoUCM.Basedonthecompensationfigures,theuniversityhasreducedtelephonystaffingcostsby$126,750peryear.Inaddition,equipmentmaintenancedroppedfrom$70,000withtheTDMsystem(andrisingconsiderably)to$45,000annuallywithIP.What’smore,thenumberofFTEsrequiredforMACsdropdrasticallybecauseemployeessimplypickeduptheirphonesandmovedwhentheychangedoffices.Intheend,thesavingsandcostavoidancefrommovingfromTDMtohybridIP/TDMtoallIPsavedenoughmoneytopayforthenetworkupgrade,aswellasnewphonesandsomenewapps.

UYear%started%IP%telephony%deployment 2002Percentage%of%employees%on%IP%today 100%Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout No(inhibitorsPrimary%driver%to%IP%rollout Equipment(end7of7lifeReduction%in%FTEs%from%TDM%to%IP 38%Reduction%in%equipment%maintenance 36%Reduction%in%MAC%costs 64%MTTR%reduction 85%

Cost%savings%applied%to:New(apps,(network(upgrade,(new(phones

Cost%savings%sourceReduction(in(staffing,(equipment(maintenance,(MACs

UniversityEmployees:(6,000



ealthcareCompany:AlargehealthcaresystemhasbeenreplacingTDMequipmentwithIPastheequipmentreachesendoflife.ButincertainfacilitiesthathavenotyetupgradedtheLANinfrastructure,theshifttoIPwouldbetoocostprohibitive.Asaresult,theITstaffevaluatedPhybridgeto

enableanupgradetoIPwithouttheneedforaninfrastructureupgrade.AnacutecarehospitalwithinthehealthcaresystemwasabletoupgradetoIPthroughoutthebuildingbecauseofPhybridge.ThehospitaldidnothavePower-Over-Ethernet(POE)switchesorCat5cablingneededforanIPtelephonyenvironment.ButupgradingtheLANinfrastructurewasharderthanitappeared.Inacutecare,infectioncontrolisthebiggestbarriertoanyfacilitychanges.PriortoaLANupgrade,workerswouldhavetosealoffthearea,addressaircontroliftheyhadtopullceilingtiles,andotherrequirementsalloff-hours.“It’saverylaborintensiveprocessbecauseofinfection-preventionstandards,”saysthetelecomlead.WithPhybridge,thestaffdoesnothavetoupgradetheinfrastructuretoenableIPtelephony;itjustinstallsaPoLREswitchinacentralcloset.ThelaborandequipmentcostperdropwithPhybridgeisabout$200,comparedto$1,000withthefullupgrade.Intraditionalofficebuildingsthatdonothavethesameinfection-preventionrequirements,thehealthcarecompanyisrunningnewcableandupgradingtheLANinfrastructure.BecausethehealthcarecompanystillrunsbothTDMandIP,it’snotyetseeingasavingsinstaffingorMACcosts.Theprimarybenefitit’sseeninsofaristheconsolidationofvendorsandtheconsistencyinfeaturesforemployees.ItexpectstocontinuetousePhybridgetoquicklyandlessexpensivelyenableacutecarelocations.

HYear%started%IP%telephony%deployment 2004Percentage%of%employees%on%IP%today 40%Use%Phybridge%to%facilitate%move%to%IP? Yes

Benefits%from%PhybridgeCost,,time,savings,from,using,same,cabling;,deployment,time,savings

Cost%savings%from%Phybridge$200,per,drop,vs.,$1,000,per,drop.,Total,savings,=,$160K,,or,80%,

Primary%inhibitor%to%IP%rolloutLAN,upgrade,costs,specific,to,acute,care,facilities

Primary%driver%to%IP%rolloutCost,savings,,equipment,consolidation

Reduction%in%FTEs%from%TDM%to%IP 0%Reduction%in%equipment%maintenance UnsureReduction%in%MAC%costs 0%MTTR%reduction Improvement,but,haven't,measuredCost%savings%applied%to: General,IT,budgetCost%savings%source Cabling,infrastructure

Healthcare%CompanyEmployees:,100,000



tility:AutilityisnearingcompletionofitsmovefromtwoTDMplatformstoCiscoUnifiedCM.Already,thecompanyhasreducedtheITstaffmembersneededtomanagetelecomby13%(savingtheutility$42,450annually)anditexpectstosaveevenmoreoncealltheTDMisreplacedatallninelocationsby

early2017.“TDMPBXisoldtechnology,soit’snotrelevantanymore.Wecan’tdoalotofstuffwithit.WithCisco,wecandoconferencingandotherfeatures,suchasvideoorJabber.Weseesavingsinactual[costs]andproductivity.Wealsowon’tneedasmany

techsinvolvedattheremotesites.Thereisonepersitenow,andtheywilldropto10%oftheirtimewithanall-IPsolution,”saysthetelecombusinesssolutionsmanager.Onebigreasonforthatisanestimated95%reductioninMTTR.“It’sjustmucheasierwith

Cisco,”hesays,comparingittoexistingTDMsystems.IttakesuptoaweektorepairaprobleminaTDMorhybridworld,oncetheproblemisaccuratelydiagnosed.IntheIPworld,witheverythingcentrallymanaged,ittakesbetweenfiveminutesandtwohours.

UYear%started%IP%telephony%deployment 2010Percentage%of%employees%on%IP%today 70%Use%Phybridge%to%facilitate%move%to%IP? Evaluating

Benefits%from%PhybridgeRecord5calls5over5analog5lines5without5infrastructure5upgrade

Cost%savings%from%Phybridge Unsure

Primary%inhibitor%to%IP%rolloutAbility5to5replace5infrastructure5(in5older5buildings)

Primary%driver%to%IP%rollout Easier5to5manageReduction%in%FTEs%from%TDM%to%IP 13%Reduction%in%equipment%maintenance Decreased;5haven't5measuredReduction%in%MAC%costs UnsureMTTR%reduction 95%Cost%savings%applied%to: General5IT5budget

Cost%savings%sourceReduction5in5staffing,5productivity5enhancements

Employees:55,000Utility



niversity:AlargemetropolitanuniversityisaggressivelymovingtoIPtosavemoneyonCentrexservices.Theservicehasincreasedsteadilytothepointofunaffordabilityfortheuniversity.Costsincreasedby50%to75%,buttheuniversitywasabletonegotiatelowercostsbecauseofalargercontractto

alsouseSIPtrunking.However,theLANinfrastructureisnotupgradedtosupportIP.In2014,theuniversitystartedanetworkrefreshprogramtomovetoallCat5EcablingandCiscoCatalyst3850POEswitches.Oncethatstarted,theITstaffbeganrunningIPtelephonypilots.“WearenowrolloutoutourIPtelephonyserviceontheheelsofthemupgradingtheswitchinginfrastructure,”saysthetelecomanalyst.Byrunninga500-personpilot,theuniversitywasabletoprojectthesavingsitexpectedforthenumberofpeoplemanagingtelecom.Today,sevenpeoplemanageCentrexandrelatedconferencingandauto-attendantservices(fourofthosepeopleworkspecificallyontelecom).OncetheuniversityisallIP,sheexpectsshewillneedonlythreepeopletomanagetelecomandatotaloffiveforalltheservices.Thiswillsavetheorganizationabout$156,000peryear.ShealsoexpectstosaveonMACs(now$60perMAC)butisunsureoftheexactsavingsbecausetherehavenotbeenanyMACssofarwiththepilot.

U

Year%started%IP%telephony%deployment 2015

Percentage%of%employees%on%IP%today6%.(Aggressively(moving(to(100%(by(2017

Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout Ability(to(change(infrastructurePrimary%driver%to%IP%rollout Cost(savingsReduction%in%FTEs%from%TDM%to%IP 29%Reduction%in%equipment%maintenance NAReduction%in%MAC%costs UnsureMTTR%reduction UnsureCost%savings%applied%to: General(IT(budgetCost%savings%source Reduction(in(staffing

Employees:(10,000University



quipmentManufacturer:Thislargeglobalmanufacturerstartedanetworkandtelecomupgradein2005toreplaceagingequipment.Businessunitscouldchoosewhethertoupgradebytakingadvantageofacentralizedfundingprogram.Mostforgedaheadbetween2005and2012,andatthattime,

thecentralizedprogramended.Theremaining10%oftheemployeesnotonIPnowareslowlyupgrading—atthebusinessunit’scost—astheirequipmentreachesendoflife.

NowthatnearlyalltelecomiscentrallymanagedUnifiedCM,theFTEsrequiredtooperatetelecomdroppedconsiderably.Mostofthe400siteshadlocalITstaff,withaportionoftheirtimespentontelecom.Today’sstaffisn’tentirelysurehowmanypeopleweremanagingtelecom

backin2005,butitdefinitelydroppedsubstantially.Asof2011(themostrecentyearforwhichdataisavailable),therewere20FTEsmanagingtelecom;nowthatnumberhasdroppedto13.5.So,atminimum,staffreductionwas33%,foratotalsavingsof$718,250annually.PartofthatreductionistheresultofautomationinprovisioningandMACs—timespentonthatfunctiondroppedby80%.“Wehaveamatrixorganizationthatspansallregionsoftheworld.Therewasahugereductioninpeople,”saysthetelecomsupervisor.Overtime,asthecompanyhaseliminatedTDMandstandardizedonasinglevendorforIPtelephony,theneedforadditionalpeoplewithexpertiseinmultiplesystemswentaway,alsocontributingtothestaffreduction.ThecompanywasabletoreducebyattritionwhenaTDMtelecomexpertretiredorleftthecompany.

EYear%started%IP%telephony%deployment 2005Percentage%of%employees%on%IP%today 90%Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout Cost,managementPrimary%driver%to%IP%rollout End,of,life,of,TDMReduction%in%FTEs%from%TDM%to%IP 33%Reduction%in%equipment%maintenance UnsureReduction%in%MAC%costs 80%MTTR%reduction UnsureCost%savings%applied%to: General,IT,budgetCost%savings%source Reduction,in,staffing,,MACs

Equipment%ManufacturerEmployees:,110,000



niversity:Asthisuniversity’sTDMequipmentapproachedendoflife,theITstaffhadtofigureouthowtofuture-prooftheorganizationwiththelatesttechnologyeventhoughtherewasnobudgetfornetworkupgrades.ThetelecommanagersayshenolongercouldfindsupportonsomeofhisTDM

gear,buthealsodidnotwanttobuynewTDMequipmentwhenIPtelephonyisthefuture.Hebeganevaluatingcostsfornetworkupgrades,buttheywerefartoohighfortheavailablebudget.HisresellerrecommendedhespeakwithPhybridge.TheuniversityendedupusingitsbudgettopurchaseCiscoUnifiedCMandtoslowlystartfundingfullLANupgrades,whilePhybridgeprovidedthesolutionfortheagingLANinfrastructureatacostthatwasthreetimeslowerthanafullLANandcablingupgrade.“Thebiggestbenefitwascontinuingservice.ItallowedustokeephavingphoneswhenTDMwentaway,”hesays.Now,about80%ofthe3,500handsetsrunoverPhybridge.Asfundingbecomesavailable,theuniversityplanstoupgradeallinfrastructuretofullIP,andanynewconstructionwillbefullIP.Sofar,theuniversityhasnotseenareductioninstaffing,MACs,orMTTR.“Westillhaveasubstantialanalogpresencethathasn’tgoneaway,”thetelecommanagersays.EquipmentmaintenancehasdecreasedastheuniversityisabletoremovecostlyTDMgearforwhichmaintenancewasstillavailable.ThebenefitsofarhasbeentheabilitytoreplaceTDMwithoutthecostofafullLANinfrastructureupgrade.

U

Year%started%IP%telephony%deployment 2013Percentage%of%employees%on%IP%today 90%Use%Phybridge%to%facilitate%move%to%IP? YesBenefits%from%Phybridge Cost-savingsCost%savings%from%Phybridge 300%Primary%inhibitor%to%IP%rollout No-user-demandPrimary%driver%to%IP%rollout End-of-life-of-TDMReduction%in%FTEs%from%TDM%to%IP 0%Reduction%in%equipment%maintenance 26%Reduction%in%MAC%costs 0%MTTR%reduction 0%Cost%savings%applied%to: Data-network-upgradesCost%savings%source LAN-upgrades

Other%notable

80%-of-IP-endpoints-run-over-twoGwire-infrastructure-using-Phybridge.-Addressed-endGofGlife-issue.

Employees:-1,000University



lectronicsManufacturer:ConsolidationofmultiplePBXsdrovethisglobalconsumergoodsmanufacturertoshifttoIP.Theoriginalplan,developedin2007,wasderailedbecauseofcompanyfinancialproblems.However,startinglastyear,theITstaffhadnochoicebuttowinbudgetapprovalfortheaging

equipmentthatnolongerhadanymaintenanceandrantheriskofacatastrophicoutage.Themostsignificantcostbenefitisareductioninequipmentmaintenance—basedonwhatithadpreviouslybeenpayingforTDMmaintenance.MovingtoIPwillcutthatcostinhalf.Buttechnically,thecompanyactuallywillseeanincreaseinequipment

maintenancebecauseitwasnotpayingforit,eventhoughtheITdirectorknowsitneededtobedoingso.“Weeitherhavetowaitanothertwoyearstakingontremendousrisk,orspend$2milliontoreplacewhatwehave,”hesaid.Fortunately,hewasabletowinthebudgetfortheproject.BasedonthecontractswithhisManaged

ServiceProviders,heisseeinga20%savingsinMACs,whichcost$50forasoftchangeand$150forahardchangewithTDM.ITstaffing,however,willremainflatwithtwoFTEsmanaging.ThecompanyalsoisevaluatingLANupgrades.“Throughouryearsofdownsizingandconsolidation,wehavemanagedtoupdateafairamountofinfrastructure,”hesays,addingtheorganizationisone-thirdPOE-cablerightnow.“Inotherareas,we’llbedecidingwhethertoreplacetheswitches.”TheymayrelyuponatechnologylikePhybridge’s(throughtheManagedServiceProvider)toenableIPtelephonyinareaswheretheywanttokeepTDM(suchaselevators).ThoughtheITdirectorisnotsurehowmuchhewillsaveinMTTR,heisexpectingsomesavings:“That’soneofthestrengthsofdeployingCisco.Itkeepstelecomandnetworkinfrastructurethesame,”hesays.Beyondthat,otherbenefitsincludetheabilitytosupportcommonalityacrosstheenterprise,tollsavings,andtheabilitytoleverageSIPtrunking.

E

Year%started%IP%telephony%deployment 2007

Percentage%of%employees%on%IP%today7%;&full&deployment&underway&in&2016

Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout Upgrade&costsPrimary%driver%to%IP%rollout Consolidation&of&multiple&PBXsReduction%in%FTEs%from%TDM%to%IP 0%Reduction%in%equipment%maintenance 50%Reduction%in%MAC%costs 20%MTTR%reduction UnsureCost%savings%applied%to: Other&areas&of&UC

Cost%savings%sourceReduction&in&maintenance,&MACs,&toll&charges

Other%nobable Reduced&global&toll&charges&by&45%

Electronics%ManufacturerEmployees:&7,000



onsumerGoodsManufacturer:ThoughendoflifeforTDMequipmentwastheinitialcatalysttoreplaceTDMwithIP,demandforadvancedfeaturesandsite-to-sitecallingareacceleratingthemovetoIPforthislargeconsumergoodsmanufacturer.Goingintotherollout,thenetworkarchitectsayshe

expectedtoeithersavemoneyortobecost-neutral.“RippingoutagoodTDMsystemthatisworkingandmeetingneedsgeneratesalittleROI[ReturnonInvestment],especiallynowthatwehavegonetoSIPtrunking,”hesays,addingthatITdecision-makerscreatedahighhurdleformovingtoIP.Thecompanyfoundsavings,but“it’snotenoughtopayfortheentirenewsystem,LANupgrades,andimplementation.ButwiththeTDMequipmentbeingendoflife,thecompanyhadtoinvestinnewtechnology,”hesays.Theorganizationpreviouslysupportedalltelecomlocallythroughsmallresellersand“MaandPa”telecomcompaniesateachsite.Someoftheequipmentwassoold,theresellersboughtreplacementpartsoneBay.“Whenwehavetoomanyoutages,wegotoIP,”thenetworkarchitectsays.Already,though,theITstaffhasseenbenefitsinthegeographiesithasmovedtoIP.TheinternalITstaffnowmanagesIP;hundredsofsmallcompaniesstillmanageTDM.InternalITisperformingMACs20%lessexpensivelythantheresellers.Sofar,theamountspentonstaffingforIPvs.outsourcedservicesforTDMisaboutthesame,thoughasmoreendpointsmovetoIP,additionalefficienciesofscalewillkickinandresultinlesscostlymanagement.AnotherareaofimprovementisinMTTR.Theorganizationhasseena35%dropintherepairtime,primarilydrivenbydelaysingettingpartsforTDMissues.Otherbenefitsincludetheflexibilitytomovehandsets—andassociatedlicenses—iftheycloseafacility.“Thosearejustsharedsitelicenseswecanmovewhenanotherlocationopens,sotherearenosunkcostswhenwecloseafacility,”thenetworkarchitectsays.

CYear%started%IP%telephony%deployment 2009Percentage%of%employees%on%IP%today 25%Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout No)ROIPrimary%driver%to%IP%rollout End)of)life)of)TDM,)common)featuresReduction%in%FTEs%from%TDM%to%IP 20%Reduction%in%equipment%maintenance 25%Reduction%in%MAC%costs 20%MTTR%reduction 35%Cost%savings%applied%to: Unsure

Cost%savings%sourceReduction)in)staffing,)maintenance,)MACs

Other%notableReplacing)PRI)with)SIP)trunking)saved)up)to)80%)for)50Kphone)sites)

Consumer%Goods%ManufacturingEmployees:)70,000



niversity:With40,000studentsandnearly100buildingsoncampus,upgradingcabling,switches,uninterruptedpowersupplies,andtelecomwasabigtask.“Wewereshortonmoneyandresources,andtherewasalotofwork.Therehavecloseto100buildingsoncampus.Virtuallynoneofthemhad

generators.Thepeopledoingthatworkwerealsothepeopledoingeverythingelse,”saysthetelecommanager.“Wefinishedaheadofschedule.”Thecostbenefitsprimarilycenteredaroundstaffing.TheuniversitymanagesbothIPandtheentirenetworkwiththesamenumberofpeopleitusedtotaketojustmanagetheTDMsystem.Whenisolatingjustthosethatfocusontelecomtoday,thereductionincostsis44%,or$175,500annually.DuringtheperiodthattheuniversityranbothIP

andTDM,thenumberofpeoplerequiredtomanageeverythingincreasedtemporarilybecauseoftheneedfornewexpertiseinIPtelephony.Butoncetherolloutwascomplete,theuniversitywasabletostreamlineitsstaffandreducesomeofthe

redundancythatexistedinpeoplemanagingtelecom.Theuniversityhasn’tseenanysavingsinequipmentmaintenancebecauseitwasnotpayingmuchforTDMmaintenancethroughalong-standingagreementbetweentheuniversityandaservicescompany.ThemainbenefitofthechangetoIPwaspreparingtheuniversityforthefuture.“Itwasfoolishin2005toinvestindyingtechnology.Theequipmentwasendoflife.Wepulledtogetherthemoneyandresourcesandjustputourheadsdownanddidit,”thetelecommanagersays.AnunexpectedadditionalbenefitwasusingCiscoforaudioconferencing,whichhadcostmorethan$100,000peryear.

U

Year%started%IP%telephony%deployment 2005Percentage%of%employees%on%IP%today 100%Use%Phybridge%to%facilitate%move%to%IP? NoBenefits%from%Phybridge NACost%savings%from%Phybridge NAPrimary%inhibitor%to%IP%rollout Cost,-resourcesPrimary%driver%to%IP%rollout End-of-life-of-TDMReduction%in%FTEs%from%TDM%to%IP 44%Reduction%in%equipment%maintenance 0%Reduction%in%MAC%costs 0%MTTR%reduction UnsureCost%savings%applied%to: General-IT-budgetCost%savings%source Reduction-in-staffing

UniversityEmployees:-6,000



etailer:With8,200IPendpointsalreadylive,thisretailerhasmovedfromTDMtoIPatallcorporatebuildingsand25ofits80stores.ThoughthecompanyhasthesamenumberofFTEs(seven)managingIPasitdidTDMsystems,theyaremanaging36%morelocations,asthecompanyisadding

threemorestoreseachyear.Inaddition,thecompanypaysathirdpartytoperformsomemaintenanceforTDM,alineitemitdoesnothaveforIPandonethatwillgoawayoncethecompanyisfullydeployedwithIP.“It’seasiertomanageIPsincethereismoreknowledgefortheIPphonesandconfiguration,”saysthetelecomtechnician.Atthetypicalstore,64%ofitsphonesareonthewallorinanareanotnearanEthernetdrop.Soupgradingthosedeviceswascost-prohibitive.Notonlywastheovertimelaborabout$300perhandset,thecompanyalsohadtobuyanewhandset(averagecost$150),italsoneededtobuyadditionalIPtelephonycapacity.TheretailerwasabletoaddressthoselocationsbyusingPhybridgeswitches,eliminatingtheneedtorewirethestoreswithCat5cable.Movingforward,theorganizationwillcontinueupgradingTDMtoIP—drivenbybothendoflifeoftheequipmentandnewfeaturesenabledbyanIPenvironment.“Ournewphonesaredoingvideo,too.Thefeaturesaredefinitelyadrivingfactor,”hesays.

R

Year%started%IP%telephony%deployment 2009Percentage%of%employees%on%IP%today 60%Use%Phybridge%to%facilitate%move%to%IP? Yes

Benefits%from%PhybridgeNo+need+to+rewire+common+area+phones

Cost%savings%from%Phybridge $300+per+phone+for+wiringPrimary%inhibitor%to%IP%rollout Cost+of+LAN+upgrades,+IP+phonesPrimary%driver%to%IP%rollout Feature+sets,+Equipment+end+of+lifeChange%in%FTEs%from%TDM%to%IP 26%Change%in%equipment%maintenance UnsureChange%in%MAC%costs 50%MTTR%reduction UnsureCost%savings%applied%to: UnsureCost%savings%source Staffing,+LAN+upgrades

Other%notable36%+growth+in+new+stores+with+same+number+of+FTEs+managing+IP

RetailerEmployees:+60,000



ConclusionAlthoughIPtelephonyhasbeenaroundsincethemid-1990s,themajorityofcompaniesremainpartiallyorfullyonTDM.MovingtoafullIPenvironmentsavesmoneythroughstaffing,equipmentmaintenance,andoperationalcosts.Nemerteshasdocumentedthisthroughyearsofresearchcoveringcapital,operational,andimplementationcostsforIPtelephonyandUC.Asorganizationsstreamlinetheirplatformssotheyaremanagingasinglevendor,theiroperatingcostsdrop—insomecases,substantially.What’smore,employeescommunicateusingaconsistentsetoffeaturesanddevices,whichmakestheircollectiveproductivityimprove.Asisevidencedbythispaper,shiftingfrommultipletechnologies,platforms,andprovidersisnotaseasyassnappingone’sfingers.Insomecases,theLANswitchesandcablinghavenotbeenupgradedtosupportIPtelephony.Budgetmaynotbeavailabletoconductthoseupgrades.Or,thebuildingitselfmaymakeitcostprohibitive—ifnotimpossible—topullnewwirestoupgradethecablingandaddressIntermediateDistributionFrame(IDF)closetrequirements.Inthosecases,organizationshavefoundbenefitsfromusingPoLREsolutions,suchasthoseprovidedbyPhybridge.Nemertesrecommendsthefollowingforthoseconsideringamovetoanall-IPenvironment:

• Evaluatetoday’scostswithsignificantattentiontodetailonstaffing,equipmentmaintenance,trainingbudgets,andMTTR.Youlikelywillfindyou’respendingmorethanyouanticipated.

• Makesurecorporateororganizationalexecutivesunderstandtherisktheyplacethecompanyinbyoperatingtelecomgearthatisendoflifeorendofsupport.

• Understandtheemployeeproductivitybenefitsofanall-IPenvironment,particularlyastheyrelatetoconsistencyinfeaturesetsanddevices.

• Conductadetailedcostanalysisthatshowstoday’scostscomparedwiththeanticipatedcostsinanall-IPworld.ThoughcompaniesmaykeepthesamenumberofFTEsduringtheramp-upperiod,theytypicallyreducethatnumberby20%afterthefirstonetotwoyearspost-deployment.

• Don’tforgetmetrics.Measurethe“before”soyoucancompare“after”o Documentsuccesswithrealnumbers,notonlycosts,butalsotimespent,

customersatisfaction,andemployeeproductivity.Doingsowillimproveyourstatureandchancesforgettingbudgetforfutureprojects.

• Castawidenetforsolutions,evaluatingeconomiesofscalebyusingthesameproviderfornetworkandvoicerequirements.WhereLAN,cabling,and/orassociatedinfrastructureupgradesareprohibitive,evaluatePoLREsolutionstoenableafullIPdeployment.



MethodologyNemertesdrawsuponthreeresearchprojectsforthisreport.

• UCTotalCostofOwnership:Nemertesinterviewed26ITprofessionalstogatherdetailedspendingdatafortheirIPtelephonyandUnifiedCommunicationsdeployments.Theseinterviewsestablishedtheparametersandrangesforthesurvey,inwhich238ITleadersprovidedtheirvendor-specificcostdata.Theresearch,conductedfromJanuary2015-March2015,includedbothon-premisesandcloudproviders.Wegathereddataonplatforms,applications,services,andtoolsformanagement,monitoring,andadministration.

• AnnualUCBenchmark:Nemertesinterviewed50ITprofessionalswithresponsibilityforUnifiedCommunicationsandCollaborationtechnologies.Theresearchgatheredqualitativeandquantitativeinformationaboutorganizationalplans,vendoradoption,challenges,anddriversforUCC.NemertesconductedtheresearchinAprilandMay2015.

• BusinessValueAnalysisInterviews:NemertesdevelopedacustomizedsetofhypothesesandquestionstodeterminethefinancialbenefitandbusinessvalueofafullIP(ornear-fullIP)deploymentofCisco’sUCM,sometimespartneredwithPhybridgeproducts.Phybridgeprovidedthenamesoffourcustomerswhoagreedtointerviews,andNemertesreachedouttosixadditionalcompaniesfromitsresearchdatabase.Asenior-levelNemertesanalystconductedtheinterviewsindependently,gatheringdetaileddataoneachcompany’sexperiencewithitsrollout.Nemertesthenanalyzedthedataforeachcompanyandcollectivelyforallorganizations.Wehavekeptthenamesofthecompaniesconfidentialtoprotecttheircompetitiveinformation.

Business Value Analysis - SMP Corp · mixture of TDM and IP, and cloud (Please see Figure 1.)...

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