ROI, TCO and Bread

David Byrd : Byrd's Eye View
David Byrd
Chief Marketing Officer for ANPI

ROI, TCO and Bread

With the economy as it is, transitioning existing business customers and prospects to IP communications and SIP Trunking should be easy. However, it is not a no brainer. There is still the questions of whether the existing infrastructure can be leveraged, should the infrastructure be a hybrid, a mix of TDM and IP switching platforms, or should a new IP PBX be purchased? While it is true, the cost of SIP Trunking is cheaper than using POTS or PRIs, an analysis of the cost of doing nothing and having alternatives is important to the decision process. Developing a SIP Trunking return on investment (ROI) is very simple. A reseller or dealer needs to gather one or months of existing phone usage and compare it to the cost of using a SIP Trunking provider. Broadvox has seen three categories of ROI. Savings of around 70% to replace POTS lines with a SIP Trunk and the appropriate level of concurrent call sessions, around 50% to replace PRIs and developed a converged network model with a SIP Trunk, and around 25% to upgrade a network supported by bulk service purchases and well negotiated contracts. Bottom line is that regardless of the situation, the business will see some savings when comparing SIP Trunking to TDM based service.

"Okay, done, sold and let's install tomorrow."

Not quite, here is where the second level of analysis is required. What is the total cost of ownership (TCO)? In order to use SIP Trunks, is new equipment required? The equipment required may be (1) an integrated access device (IAD), (2) media gateway or (3) IP PBX. Selecting the correct path is important for any business making the transition. If an IP PBX is in place, then somebody has been sleeping on the job if the move to SIP Trunking is still pending. If a TDM PBX is in place, then there are several areas to analyze. Current level of depreciation cost of replacement, annual maintenance fees, training, productivity impact, deployment choices and other factors need to be determined. These will require sitting down with the customer's telecom and IT managers to build a thorough TCO analysis. In most cases, it will support one of the three alternatives but be prepared for a fourth alternative, (4) stand pat. Businesses do not run on charts alone, bread is also required. Sometimes it comes down to just having the cash or cash flow to support the purchase.

Don't give up though, there is one more card to play...see you on Friday!



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