VoIP Adoption

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With all of the benefits VoIP brings to the table—low total cost of ownership (TCO), ease of use, and the ability to streamline operations—adopting the technology would appear to be a slam-dunk decision for any organization. However, once the onslaught of early adopters waned, the addition of newly converted users has risen at a respectable, but not overly significant, pace.

According to Michael Osterman, principal of Osterman Research, a key factor stalling corporate VoIP adoption is the amount of legacy systems still in use and their continued life expectancy. “If you had a six year expected lifespan for your PBX and you’re three years into it, people who could put in a VoIP system are usually going to wait to swap it out until it gets closer to end of life for their existing system.”

Tracy Conrad, president of Nextiva says that although VoIP has been around a long time, like many new technologies it can take a while for mass adoption to take place. “There have definitely been millions of early adopters that have switched to VoIP over time, so there has been huge penetration, but I guess I ask myself why, when you look at the benefits as compared to the traditional analog telephone phone systems, everyone hasn’t switched over.”

Barriers to VoIP Adoption

Conrad theorizes that comfort might be holding some companies back, “When we think of traditional telephone systems, it’s something that businesses haven’t had, at least on the line side, to think much about. It’s always been the telephone and it’s always been the same way. There is some hesitation for businesses of all sizes to make the leap [to VoIP]. I think we are only seeing the tip of the iceberg,”

Complexity is another barrier to adoption, believes Sean Heiney, director of New Product Initiatives for Barracuda Networks, “Of the VoIP vendors today, you’re left with a lot of incumbent guys who have been around for a while charging a lot of money for very complex solutions. If you look at some of the fees that our competitors charge—let’s say you’re looking at a system for fifty users—it can potentially cost $100,000 to $200,000 [USD] depending on features involved.”

Conrad agrees, “I think with standards being put in place, making the change is significantly better than it was years ago and that makes it easier for people to switch. In the past it was more complex and that probably held some people back but as time went on, businesses like ours and others have really worked to make VoIP implementation as plug-and-play as possible. That’s really changed the perception, particularly for small businesses, to help them make that transition.”

A move to VoIP also introduces new challenges, such as who will foot the bill. “What’s interesting if you look at something like VoIP, and this applies to other technologies as well, is if you go to an IT department or a telecom department and say, ‘Here’s a great new VoIP system that will provide end-user functionality and flexibility, and so forth,’ the IT department or telecom department will get the bill for the system, but the benefits accrue to the individual business units. There’s no direct benefit in many ways for them to implement VoIP,” explains Osterman.

There are also considerations that many organizations may be ill prepared to handle, such as the sudden need for additional storage. “One of the leading problems in managing email systems is growth in storage,” says Osterman, “We’ve found this in numerous surveys over the past three years. If you are going to adopt a UC system that forwards voicemail to an inbox—which is one of the main reasons companies switch to VoIP—then all of a sudden IT gets the expense of the VoIP system and the additional expense of storage. I mean if you consider, for example, that a voicemail is approximately 100kb and the average user gets five a day, then you’re looking at needing to add many more gigabytes a day to your storage capacity.”

Catching the Bus

Most experts believe that mass adoption will eventually happen, but it will be many years down the road. Osterman predicts that we will see more VoIP as old legacy systems get retired believing that it’s only a matter of time because of the enormous benefits of VoIP.

“Digital technology was able to replace roughly 90 percent of analog, and VoIP will likely replace roughly 90 percent of analog/digital, so don’t expect the older technologies to disappear entirely,” says Corey Brundage, VP product and marketing for Fonality.

Heiney feels that the next decade will bring about another huge influx of VoIP adopters, in large part because the big providers will figure out a way to offer more affordable VoIP. “I think you’ll see a lot of the providers like AT&T and Sprint start to deliver VoIP as a service and they’ll start to market it more. They’re doing it now, but it’s very expensive for a telephone company to come in and provide a leased line rather than delivering it over existing Internet connection. There’s not a good reason why, in a new office build-out, you’d run legacy phone cable. Today you just run Ethernet and plug your phones into the same switches and infrastructure your computers are on. As people upgrade their infrastructure, they’ll move to VoIP.”

What’s Next?

“VoIP creates a vehicle for invention, consolidation, convergence and cost reduction,” says Brundage. Buyers may not always associate the benefits of VoIP with the technology under the hood, but he feels that VoIP has made many things better and will continue to do so.

Conrad explains that the adoption of VoIP and business communications in general are following the same pattern Nextiva saw as a hosting business—a slow simmer with early adopters leading the charge building up to explosive growth. “There’s going to be a few [VoIP] providers out there and we want to be one of the top ones providing these services,” he comments. “We built our platform from the ground up for small business and quality was our first focus. We’ve recently launched our virtual fax service and Web conferencing and we have several other products we’re going to start tying into our service over the next year or two. We’re excited about it and our customers appreciate it as well. They may have the products and services from other companies, but they want to have it under one roof. Streamlining, simplifying, and usability are key for Nextiva customers.”

Heiney is betting that Barracuda’s newly released CudaTel box will cause a sea change in the industry. “We’re going to continue to make it easier and more cost effective to deploy VoIP. The market as a whole will have a hard time maintaining their price point and competing with us. We’ll see how that works out, but we’re really expecting to flip things upside down and shake things up.”