The ‘new’ VoIP Featured

8:00pm EDT June 25, 2007

In 2003, sales of traditional phone equipment amounted to $2.8 billion. They have dropped precipitously since. In fact, experts predict only $750 million in sales for traditional phone equipment in 2008. One reason for the dramatic drop is that more and more businesses are changing over to VoIP (Voice over Internet Protocol). VoIP technology has improved, costs of VoIP solutions have dropped, and some of the myths and misperceptions about VoIP have been debunked.

The evolution of VoIP technology is leading to increased productivity and cost savings for businesses of all sizes, especially smaller ones, and improving their competitive positions.

Smart Business spoke with Jeff Beller of Skoda, Minotti & Co. to learn more about the trend toward VoIP among businesses.

How do businesses benefit from VoIP systems?

The benefits are both tangible and intangible. Some businesses make the switch for the tangible cost savings. This benefit is dependent largely on call volume, and it can be a major motivating factor for a business that makes many phone calls between multiple office locations. Cost savings also come from what is known as Moves, Adds and Changes (MAC). With a traditional system, unless the business has an in-house telecom staff, there is often a cost associated with moving an extension, adding a new employee to the system or making a programming change. A company could see a cost in the $200 range to have a vendor perform a MAC function. With a VoIP system, clients can perform these tasks themselves, eliminating these MAC charges.

There are intangible benefits as well. With VoIP, an organization can be much more flexible. Phones can be moved around in a plug-and-play fashion. No matter where they are, staff members can be present on the system and can work from home or another location just as if they were in the office. In addition, with presence information, VoIP handles calls intelligently, which enhances your ability to serve your customers. For example, when a customer calls in, a VoIP system can ring to the office phone, directly to a cell phone or to the employee’s remote office location. Finally, VoIP enhances employee productivity with features such as Outlook and CRM integration, easy-to-use conference calling, four digit dialing among multiple office locations and other innovative features like the ability to attach a voicemail to an email or a document.

Has the quality of VoIP improved recently?

It has. There have been many misperceptions about VoIP and its viability as a business product, mostly concerning call quality and network reliability. In the past, poor sound quality and dropped calls were real issues, but because manufacturers and carriers have invested so heavily in VoIP research and development, quality and reliability have improved significantly. Another misperception is that all VoIP calls go over the Internet, when in fact they can go over any data network.

Why is VoIP so well suited for smaller businesses?

Traditionally, small businesses are often early adopters of such technological advances and VoIP is no exception. Manufacturers have addressed this by including product features that make VoIP particularly attractive for smaller enterprises. This includes designing new turnkey packages specifically for small businesses. Because these systems use the Session Initiation Protocol (SIP), installation is simplified and the installation timeframe is shortened. Most importantly, the costs of VoIP have dropped, which makes it more affordable for small business owners. It is important to note, however, that VoIP can be viable for businesses of all sizes.

What factors should influence a business owner’s decision to go with VoIP?

Business owners should consider timing, cost and technology. Timing comes into play as traditional telephone systems need to be replaced as they become outdated or difficult to maintain. Business owners should consider switching to VoIP when their traditional phone systems need to be replaced. From a technology standpoint, companies in the telephone industry are dedicating their R and D almost exclusively to VoIP. This means that if you are to purchase a traditional phone system, it will most likely remain technologically stagnant as your business continues to evolve. The cost factor, which was once a major concern, no longer makes the switch to VoIP unrealistic for a small business.

There are three basic VoIP system types to choose from: hosted, IP-PBX and hybrid. Finding the right one for you depends on several factors. A hybrid system can cost less and be easier to drop into an existing network with no need for re-cabling. For these reasons, hybrid systems are out-selling pure IP-PBX systems three to one.

The change to VoIP does not have to take place all at once. Instead of a complete replacement, a business with multiple locations can introduce VoIP in parallel with existing traditional services on a site-by-site basis. This can minimize any business disruptions and spread out the costs. It can also test the viability of VoIP for a business.

JEFF BELLER is an IT/Telecom Consultant with Skoda, Minotti & Co., a CPA, business and financial advisory firm based in Mayfield Village. Reach him at or (440) 449-6800.