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Users: Voice, data convergence saves money
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March 05, 2004 (Computerworld) -- LAKE BUENA VISTA, Fla. -- While early adopters offered various reasons for the technology decisions behind their converged voice and data network systems at VoiceCon 2004 this week, all said their decisions saved money and increased flexibility.
After staging a debate between representatives from Cisco Systems Inc. and Nortel Networks Ltd. earlier in the week (see story), planners of the VoiceCon 2004 show followed up with presentations from users of either voice-over-IP (VoIP) systems that follow a Cisco approach or systems that rely on a hybrid of older circuit-switched technologies and IP that characterizes the Nortel approach.
While vendors argued about the distinctions, users said they are realizing greater efficiencies just by starting a convergence of voice and data networks, no matter which approach they chose.
Perhaps the most dramatic example of those benefits came from IBM, which is rolling out a VoIP project globally to its 400,000 internal users in 160 countries over the next five years, said Fred Spuleck, director of global voice infrastructure at IBM.
IBM spends "hundreds of millions" of dollars annually on communications and can expect to lower those costs by 25% with the project, Spuleck said. One efficiency will come from lowering the number of current private branch exchange switches globally from 900 to 11 IP-PBXs. IBM is using a combination of gear from Cisco, Siemens Network Systems in Tampa, Fla., and Avaya Inc. in Basking Ridge, N.J.
Part of the driving force behind the move was the realization that the volume of circuit-switched voice calls has already dropped so low that service providers are likely to go no further with the technology, Spuleck said.
In general, adherents of hybrid systems said they hoped to hold on to the value of large investments in large time division multiplexing (circuit-switched) switches, or they felt that a hybrid network would provide a backup in case of a major virus or hack on a data network.
But pure IP supporters said resiliency and backup are easier with those systems than circuit-switched systems and could more easily support video or voice conferencing and new data applications. At IBM, the new network will allow easy creation of an audio conferencing system that will cut IBM's costs in half annually, Spuleck said.
A VoIP project at South Trust Bank in Birmingham, Ala., with 700 offices, will save $1 million annually on conference calling alone, said Stanley Adams, group vice president of network services. That project, using mainly Cisco gear, has saved "several million dollars" annually, and has bolstered disaster recovery capabilities, he said.
One weekend before Christmas last year, an older switch failed in an Atlanta bank facility on a Friday night, knocking out service for 300 executives and major banking operations, he said. Because much of the remaining network relied on VoIP, it took round-the-clock work, but VoIP phones were installed by Monday in time for business. "This VoIP really saved me," Adams said.
A hybrid approach at GMAC Commercial Holding Corp. in Horsham, Pa., relies on some older switches from Nortel but brings IP telephony to 106 global locations, said CIO Narej Patel. In a keynote address, Patel said it was essential to set up the IP telephony atop a network running Multi-protocol Label Switching, provided in his case by Masergy Inc. in Dallas. MPLS can support higher bandwidth needs for videoconferencing and other applications, he said.
The IP telephony improvements at GMAC Commercial Holding cost less than $1 million to install, with annual costs for service now less than $2 million -- with a savings of $120,000 in 2003, he said.
"There is a lot of value in a converged network, and you won't lose your job over it," Patel said.
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