VoIP telephony – how to evaluate the real cost of a solution

voip telephony solution


To prepare this article we have used the researches made by Nemertes company. We wanted to learn how to build your own VoIP system and take the best advantage if it. It should be noted immediately that the main advantage of VoIP over classical telephony, in our opinion, is the possibility of using Unified Communication, i.e. Mechanism that combines all possible means of communication in one environment. We will not prove the feasibility of such an approach as there have been said a lot about it before.

Before starting the research, we also want to make a note that the conclusions will be fair for the first year of implementation of the solution. This is due to the fact that most of the problems and, as a result, costs fall precisely on the first year. These will include, for example, such costs as training the staff and covering the “damage” from the errors of this staff.  We also will not consider the subjective moments, such as “buying the most famous brand can lay any rollback” or “after having trained in a brand company it is easier to find the next job.” Evaluation decisions will be conducted regardless of the conjuncture features.

So, the easiest way to compare the cost of the same type of equipment, for example, telephone devices. Here the price dumping is the most visible.

As for operating expenses, the situation is much more complicated here. It is also difficult to immediately understand which licenses and at what stage will be required. The presentation of the product is always conducted in full functionality, and only then, as a rule, after the first purchase, all other details are clarified. An essential factor that strongly affects the final costs will also be non-technical aspects, such as the level of trust with the solution manufacturer and the compatibility of the solution with the existing infrastructure, the availability of operational technical support from the vendor. It is worthwhile to take very seriously these indirect factors, the consideration of which does not seem possible to me within the framework of this article.

Nemertes has made the analysis based on the following companies: Alcatel-Lucent, Avaya, Cisco, Microsoft, NEC, Siemens, and ShoreTel. We will immediately add that there are other very worthy representatives of our market, but their evaluation requires obtaining a full range of prices for equipment and services from them.

Initial data

The following three components are selected as the input data:

Equipment:

Including the telephone station itself, telephones, licenses, servers and everything else that you can buy from a vendor as a real product. The formula used for calculations is (total costs for the solution) / (the number of telephone sets). Of course, a telephone set can have several lines and in this case, its cost will be greater, just as it can be wireless, etc. The calculations take the average between expensive and cheap solutions in the same proportion as their price.

Installation:

Includes the time employees of the company and the services of third-party organizations, if any. The calculation formula is the following [(Employee time) * (Cost per hour) + (Cost of contractors’ services)] / (number of phones).

Operational expenses:

Including staff time, equipment maintenance cost, contractor services, courses, and certification. Used formula [(Total time for maintenance of equipment for the year) * (staff salary) + (cost of service materials + courses and certificates + subcontractors)] / (number of phones).

Obviously, the figures will vary greatly depending on the size of the project. The analysis does not take super small and giant solutions but the averaging of the cost between them have been represented. So for the analysis from 4x to 175 thousand phones were taken.

Main conclusions

The average cost of IP telephony in the first year of use is $ 1,305 per telephone. The average cost of equipment is $ 540, installation $ 61 and operating costs $ 704 per year.

As soon as management sees such figures, at which the costs of operating expenses exceed the cost of equipment, the reaction will not be positive. Of course, we can mistake, and the head of the company may have the “western mentality”, welcoming contributions to employees, but they will unlikely to welcome such a large expenses. NEC has The lowest operating costs and Microsoft has the largest. However, the management sees these costs, as a rule, at the end of the year. And even then this information is not always available in its clear form. However, the reasoning that these expenses are not necessary and can be ignored, turn into a lack of communication, loss of information and other troubles.

Therefore, in our opinion, it will be a mistake not to inform the management about the forthcoming operating expenses. Moreover, I have never seen a leader in my life, who is happy to send his employee to the courses. If such is incorporated in the budget and approved by the management, then the probability of certification is much higher.

Let’s see what is included in these operating expenses. Nemertes Research identifies four components:

  • The time that employees spent on a unit of telephony.
  • Material costs of maintaining the system
  • Subcontractors
  • Trainings

These data were obtained by polling companies who use the IP telephony, since it is obvious that it is possible, on the one hand, not to keep personnel at all, and on the other hand, not to use the services of subcontractors at all. Microsoft is the absolute leader in the cost of operating expenses.

Curiously, out of the total cost of spending, the biggest are the costs for the company’s employees themselves. According to the research, conducting courses for employees at least once in a year reduces this figure by 20% due to advanced training.

If third-party diagnostic and monitoring tools are used, the staff costs themselves can be reduced by half. There is an objective reason for the high cost of Microsoft solutions. Microsoft specialists did not have a specific training on networks and especially voice solutions, while any Cisco specialist for NAT solves network issue very quickly. Also for other companies that come from the TDM sphere, voice problems, such as non-consistency of codecs, are not new.

It should be noted, that the financial costs for the maintenance of the system also include technical support from the vendor and additional service agreements on repairs, and sometimes 7×24 or 5×8 maintenance of the equipment.

Microsoft has the largest expenses for subcontractors, although it should be noted that supporting the solutions not listed in the comparison, like Asterisk and OpenSER, will cost many times more.

Obviously, the total cost of the phone depends heavily on the size of the project. Therefore, the cost of one phone in a project less than 1000 phones will cost an average $ 1,799 per unit, and the project’s cost including more than 1,000 devices can reach $ 723 per unit. This difference is due to a decrease in prices due to the integration of capacities in gateways and servers on the one hand and reduction of maintenance/training expenses per unit of communication, on the other hand.

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