How to Sell: Convergence - Part 3 - Mix and match

Hybrid voice and data systems allow companies to gain the benefits of convergence while avoiding the costs of scrapping legacy technology. They also offer resellers the chance to add value and support, reports Paul Bray.

Converged networks are fine if you don't have any old technology. The basic premise behind converging voice and data in a single network is a sound one.

Demonstrable benefits include call centre integration, remote working support, unified messaging, video conferencing and cost reduction. But 'pure' converged networks, based entirely on IP telephony, require new IP telephony equipment.

Replacement cycles on PBXs, such as office telephone switchboards, are about 10 years. Few businesses are willing to chuck out perfectly good PBX equipment, especially during a recession.

The answer is the hybrid converged system, which provides IP and conventional telephony, sometimes known as time-division multiplexing (TDM) on the same platform.

According to analyst firm Canalys, nearly two-thirds of new telephony lines purchased in EMEA in the first quarter of 2003 were connected to hybrid systems, compared with just three per cent connected to pure IP systems.

"We've heard a lot about pure IP telephony over the past few years but the market continues to pay little attention," explained Sandy Fitzpatrick, senior analyst at Canalys.

"The telecoms industry has looked at the most obvious advantages of IP telephony - reduced call costs and unified messaging - and integrated them as an option or upgrade to its proven PBX offerings.

"Hybrid IP PBXs like these are pitched as providing the best of both worlds: the reliability of the traditional PBX and the investment protection of existing handsets, combined with whatever level of IP integration the customer requires. For most, this is a far more attractive proposition."

The balance between IP telephony and conventional TDM is up to the customer, but Roger Jones, EMEA pre-sales technical director at converged solutions vendor Avaya, outlines a typical scenario.

"A traditional TDM solution, with digital handsets on the desktop and trunking site-to-site and site-to-PSTN [public switched telephone network] will use TDM to transmit voice from point to point, and in many cases for call control signalling," he said.

"In a pure IP solution, desktop telephones, site-to-site trunking and call control would all be IP, although site-to-PSTN would still use TDM.

"A hybrid system will use combinations of IP and TDM in those three areas; for example, a combination of TDM and IP phones on the desktop, IP trunking between sites and TDM to the PSTN. Call control between sites would be IP, while local call control would be a mixture of TDM and IP.

"It's also possible at an IP-connected remote site to use standard digital phones if its local area network has insufficient bandwidth to run IP phones. This is a classic example of a hybrid system."

Best of both worlds
Customers can have the benefits of both worlds and cherry-pick the benefits they want. "They can keep all the features and functions of their PBX/call centre, but extend them across IP to remote sites and mobile workers," explained Jones.

"Their investment in their PBX and all its applications is preserved. They can install IP telephony where it really adds value, and retain all their existing technology where there is no business case to replace it."

Hybrid converged systems can keep costs down by reusing not just existing PBX kit, but existing knowledge and training too. Existing phones and fax machines can also remain in use.

"Pure IP systems require expensive conversion equipment to enable the use of TDM devices such as faxes and analogue telephones," explained Nadahl Shocair, UK chief executive of comms reseller DeTeWe. "The cost of IP telephones is a major drawback for IP-only solutions."

Purchase prices and return on investment (ROI) periods favour converged systems, according to Allan Shriver, marketing manager at voice and datacoms distributor Techland.

"ROI can be as short as a few months and is typically just eight or nine," he said. "We started off one SME with a hybrid converged system using VoIP [voice-over-IP] multi-path switches for about £4,000. He's so pleased with it that he's just bought another switch."

Some vendors argue that the savings from hybrid systems are not so clear-cut. "Today's dual IP/TDM systems can be competitive with pure systems in up-front purchase costs," stated Nigel Jones, business development manager at telecoms vendor Alcatel.

"But although most vendors' IP phones are still more expensive than their digital counterparts, there's generally less hardware in an IP system.

"Firms also need to consider the total cost of ownership associated with both options. Here, pure convergence has the advantage, because moving an IP set from one location to another can be cheaper than conventional phones."

Communications vendor 3Com, a champion of pure IP telephony, claims that purpose-built IP switchboards connected to TDMs are more cost-effective than installing the original PBX manufacturer's IP module.

However, the ability to retain their investment in existing equipment, plus the proven track record of TDM telephony, seems to outweigh such arguments for the majority of buyers, and only greenfield sites or firms planning a complete overhaul of voice telephony seem willing to consider pure IP in preference to a hybrid.

Customers and sectors
There is no such thing as a typical customer for hybrid converged systems. Depending on who you talk to, small businesses, medium-sized firms and corporates all provide opportunities.

Key sectors include the traditional big spenders on voice telephony, such as banking, finance, retail and logistics, especially if they have branch offices that they want to include in their IP networks.

Hybrid systems can start out small. "With many hybrid converged systems, customers can start with a single service, such as voicemail, and expand in the future to add new functionality on the same platform," explained John Wood, commercial manager at hybrid convergence vendor C3.

"The options include interactive voice response, pre-paid telephony, emergency call-out, call centre and virtual call centre, multimedia messaging, interactive chat, call switching and routing, integration with internet services, audio conferencing, SMS and lone-worker management."

A TDM PBX can be upgraded to IP by installing extra cards that convert voice traffic from TDM to IP and back.

Alternatively, a pure IP PBX can be connected in tandem with a TDM PBX that the customer can't or won't upgrade. A new standard, TDM over IP, which is currently being ratified by various bodies, should enhance interoperability.

Ultimately, a hybrid system can be converted to full IP, according to Roger Jones. "Call control is typically the first part to go IP in a medium-to-large system and this is quite straightforward," he said.

"Upgrading from TDM trunks to IP trunks between sites is also a basic upgrade if the organisation has the IP wide area network capability to support it; PSTN connections will remain TDM.

"The final part is to upgrade from analogue or digital handsets to IP phones. If IP soft phones are used, this can be cheap and easy."

Added value to existing customers
From the reseller's point of view, hybrid systems offer a head start, allowing them to offer added value to their existing customers. Grant Notman, UK general manager at comms vendor RAD Data Communications, puts it in a nutshell.

"If, in introducing a new technology, you can demonstrate the value of the old systems in the new technology, its adoption is likely to be simpler and quicker," he said.

"The opportunities arise through visiting your existing customer base and working with them on the upgrade of their data network.

"When this is being planned, you can demonstrate how costs can be saved on transporting voice traffic on the new network, without changing the voice equipment and without obstructing future voice technologies the customer may wish to buy later."

By suggesting an upgrade of the systems they sold in the first place and are still maintaining, resellers can virtually guarantee a continuing role, added Notman. If the customer wants a complete replacement using pure IP, the reseller may lose the account.

More options mean more chance of success. "Dual IP/TDM systems offering the ability to migrate to pure IP will give channels the maximum opportunity," said Jones. "Every situation is different, and having flexibility maximises the reseller's chances of closing a sale."

Margins are better on the voice side than the data side, but both are being squeezed as hybrid systems become mainstream. The more straightforward the sale, the lower the overheads for the reseller.

"We see the hybrid market as more rapidly profitable for data resellers since less consultancy and a minimum of network infrastructure tweaking - if any - are needed," insisted Shriver.

The hybrid market is wide open to both voice and data resellers, although Notman and Shriver believe that data resellers have the edge. "They are likely to know first when the data network is going to be upgraded," explained Notman.

Shriver added: "In our experience, data resellers have come to grips with VoIP much faster, and with more commitment than most voice resellers."

Roger Jones thinks it is the other way round. "The hybrid market is predominantly an extension of the traditional voice marketplace," he said.

"The skills for selling, designing and installing a hybrid PBX require both voice and data experience. But the more complex, high-value voice applications such as call centres will still require the detailed knowledge and understanding of the voice reseller."

Combining skills
What most observers agree on is that the best approach is to combine the skills of both data and voice reseller, and that hybrid systems are a good way for either to move into the other market.

"All channels involved in business telephony need to be looking at a good skill mix of both the voice and data worlds," said Nigel Jones.

"This was one of the problem areas in the early days of IP telephony, but a growing number of channels are gaining skills in both areas. Some channels are 'buddying' with other resellers, complementing each other's skill areas."

Notman recommends diverse training. "It's best to go to a range of training sessions by different vendors to gain a more independent view," he suggested.

Pete Williams, a senior networking consultant at 3Com, doubts that such knowledge comes easy.

"We've been through 'up-skilling' with TDM legacy equipment and found it far less intuitive than pure IP," he warned. "I'm sure it would be the same for telephony resellers the other way around."

But most resellers seem to cope. "Today there are very few companies that don't deliver both voice and data solutions, whatever their history," stated Shocair.

"That, combined with the ever-closer convergence of the technology, removes the boundaries between the sectors."

The outsourcing argument
An alternative to convergence is outsourcing, a preferred option for customers that want to replace capital costs with fixed costs per desk, and to divest day-to-day management functions.

Nigel Jones suggests various possible outsourcing openings for resellers. They could package bandwidth with the solution, passing on some benefits of scale, or offer a service for monitoring the customer's telephony usage to keep costs down.

Management functions such as looking after moves and changes and monitoring fault alarms are easier through management packages that manage IP/TDM platforms. The ability to provide integrated performance and cost reports is essential.

"Some outsourcing solutions will also require the telephony platform to be partitioned, often called multi-tenancy," said Nigel Jones.

"This can be ideal for serviced offices where only one platform is required, but it offers the ability to look like several separate systems from an end-user perspective. A reseller offering such a service can gain benefits of scale and price up services 'per port' accordingly."

The more like a computer system a telephony network becomes, the more it is at risk from security hazards that threaten computer networks, including viruses, hacking and denial of service, as well as telephone security threats such as eavesdropping and toll fraud (hi-jacking the system to make free calls).

Pure IP systems are the most at risk. Hybrid systems are safer simply by virtue of being made up of different operating systems. But resellers must be aware of the issues.

"Customers are increasingly looking at security and resilience when they make purchase decisions," explained Nigel Jones.

"In addition to IP voice audits, channels are seeing the benefits of offering security expert audits packaged with a converged solution.

"Any new converged platform also needs to address existing PBX hacking methods such as toll fraud. It also needs to be secure between TDM circuits (for example, modem dial-in) and the existing IP network; no signalling data path must exist between the two media.

"The solution should also fit in with existing security to ensure that new applications such as web-enabled contact centres aren't an open opportunity for hacking into the system via the internet."

Get it right, however, and users are unlikely to be put off. "We've never lost a sale due to any perceived or real threat to the security of VoIP," said Shriver.

"Security of voice traffic over a data network is as good as the existing security for data traffic on that network."

How to Sell: Convergence - Part 1 - Answering the call

How to Sell: Convergence - Part 2 - Clear and simple

How to Sell: Convergence - Part 4 - Cutting the cord

How to Sell: Convergence - Part 5 - Unified messaging

CONTACTS:

3Com (01442) 438 000
www.3com.co.uk

Alcatel (0870) 903 3600
www.alcatel.com

Avaya (01483) 308 000
www.avaya.co.uk

C3 (01223) 427 700
www.c3ltd.co.uk

Canalys (0118) 945 0173
www.canalys.com

DeTeWe (01442) 345 600
www.detewe.co.uk

RAD (0118) 982 0900
www.rad.com

Techland (01628) 852 000
www.techland.co.uk