As businesses recognize the benefits of delivering voice services using Internet telephony, they need to understand their options for procuring and deploying voice over Internet protocol (VoIP), including each method's relative strengths and weaknesses.

'IP Telephony technology is not only changing the way in which voice is transported across a network, but also the means by which is it purchased, delivered to, and accessed by end users,' says Rich Costello, an analyst with  Gartner. Companies have three options involving a private branch exchange (PBX), which connect a business' phones internally and also with the public switched telephone network:

  • Purchased IP PBX, which involves buying all the equipment and software and managing the system on its own.
  • Managed IP PBX, where the company purchases the equipment but hires an outside firm to manage it for them.
  • And hosted IP PBX, where the company pays an outside firm to host and manage the system.

More than half of companies will opt for an outside firm to at least manage their VoIP systems, according to Gartner. By 2011, Gartner believes that 40 percent of companies will purchase and manage their own VoIP systems, while 40 percent will purchase their own but hire someone else to manage the system for them.  The remaining 20 percent of companies will hire an outside firm to host -- and manage --their IP telephony services.

Purchasing an IP PBX system

Cost is a key driver in any technology decision. Companies can purchase or lease an IP PBX from a PBX vendor, and choose voice and Internet services from a separate vendor. Procuring the equipment -- including the PBX and IP handsets -- and services -- such as telephony and Internet access -- separately allows the company to shop for the best price, but companies should anticipate ongoing costs, such as PBX maintenance fees and software updates, says Guy Fardone, chief operating officer of Evolve IP, which offers hosted and managed telephony services.

On the negative side, dealing with multiple vendors may complicate support and maintenance. Other issues to consider: a customer-owned and operated system may present a single point of failure. Also, an IP PBX is a swiftly depreciating asset, which may add to the total cost of ownership, Fardone says.

Companies also need to determine if anyone within the organization has the skills to manage such a system. 'IP telephony requires support personnel with a ‘converged skill set' that many organizations lack in-house,' Costello says.

If deciding on a purchased IP PBX installation, Fardone advises companies to make sure their network is prepared and ready, and choose vendors who can train them.

Hiring an outside firm to manage your IP PBX

According to Gartner, 60 percent of companies will outsource management of their systems to an outside firm. 'Many companies are considering outsourcing that skill set from a service provider in the form of managed or hosted services,' says Gartner's Costello.

In a managed IP PBX scenario, a company would lease equipment for a monthly fee. 'In this scenario, the customer pays a monthly fee for an on-stie PBX and handsets from a service provider rather than the standard lease/buy/maintenance option,' Fardone says. Voice and Internet services may or may not be bundled in.

Managed IP PBXes may make more sense for large, single location businesses with hundreds or thousands of employees. However, they are susceptible to the same problems of a standard premises-based (purchased) IP PBX. 'In a power outage, or if the T1 line goes down, not only do you lose your ability to make phone calls, you can't even get voice mail,' Fardone says.

Opting for hosted IP PBX services

While it's the least chosen option -- only 20 percent of businesses will elect a hosted IP PBX system by 2011 -- the market is posed for exponential growth. According to Gartner, communications as a service (hosted IP telephony) will grow from a $250 million a year industry to $2.5 billion by 2011. A big part of that number will be small and mid-sized business, which may not want to spend $50,000 on a new phone system, Fardone says. 'They recognize the benefits and would be more willing to try this in a service provider format.'

Hosted systems enable small and mid-sized businesses to augment their staff with the expertise of the service provider, and get the benefits of the technology and the service provider's expertise without having to buy and physically maintain the infrastructure.

How the options stack up

Fardone lays it out: for a small business with 50 employees to buy its own PBX, the cost would be about $50,000. Internet and local and long distance are an additional $2,000 per month. Add to that the cost of employing staff or hiring a consultant who knows the system whenever they need something changed or improved. 'Companies should look at the total network picture,' Fardone says. 'There are a lot of people they need to pay, not just once, but ongoing.'

With a hosted system, the service provider includes all those services and the physical systems for one price. Companies would have one provider to deal with, and less equipment on site.

In addition, there are uptime benefits. In purchased and managed IP PBX scenarios, if a line goes down, employees can't make calls or even get voice mail. However, with hosted IP telephony, they can. 'It's in the network, not on the premise,' Fardone says.

Advantages to hosted IP services also include predictable monthly hardware and service fees, capital avoidance, limited local hardware and points of failure, and fewer demands on already taxed IT staff.  Disadvantages may include quality of service. Some providers provide dedicated access and some do not. 'Offices with sufficient size can utilize dedicated leased lines to provide voice, data, and PBX services, ensuring end-to-end quality of service,' Fardone says. However, small companies or remote offices must use existing broadband connections, where quality of service can be managed, but not assured.

Each company has unique requirements that they may also need to take into account before deciding how to implement IP telephony, using these points as a guide. Organizations should only consider service providers that can demonstrate a clearly defined product, technology and support road map for IP telephony.