Economics & Strategy

for Business

Curbing costs is the standard use case for VoIP, resulting in savings of approximately 20% to 30%. Enterprises usually switch to VoIP as a cost-savings measure for two reasons. First is a specific need to cut telephony costs, especially as free or near-free services like Skype become more prevalent in the enterprise. Second would be a broader mandate from management to reduce operational costs, in which case anything under IT's domain would be fair game.

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Moving to VoIP will address these objectives right away, but longer term, the magnitude of savings will diminish. Businesses will realize immediate savings for the service itself, as the monthly line rate will be less than TDM, and many enhanced features incurring additional charges with standard telephony are included free with VoIP. Furthermore, with VoIP, domestic long-distance calls would essentially cost nothing and international calls will certainly be less.

Economically, this adds up to bottom line savings, but that must be contrasted with the overall cost of migration to VoIP. On the plus side, notable cost reductions exist with network convergence, where telephony traffic shifts from the dedicated voice network to the data network. Migration to VoIP also has the potential for hardware savings, as the cost of IP-based phone systems and handsets will be less than continuing with legacy systems.

Furthermore, new network management capabilities would be necessary to prioritize voice traffic and provide appropriate VoIP security protection. Finally, the organization would need VoIP-specific network infrastructure such as media gateways and session border controllers. Overall, lowering costs can be a solid use case for VoIP, but only if the switch is made with these factors in mind.

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