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Defining IP Telephony Value Propositions Could Boost AdoptionSeptember 3, 2008 by Agatha Poon, Enterprise Research Senior Analyst, Yankee Group Executive Summary The market for enterprise IP telephony (IPT) could grow exponentially in the next few years. The number of industry participants is escalating and the marketplace is awash with new business models and technologies. With growing service options, enterprises' enthusiasm about IPT deployment abounds. Indeed, enterprises are more proactive in assessing the benefits and risks associated with the deployment of IPT and gauging its effect on existing business process. Their perception of IP telephony value propositions has moved beyond the benefits of cost-effectiveness and improved operational efficiency. Exhibit 1.
This observation is evidenced in the Yankee Group Anywhere Enterprise ? Large: 2007 Asia-Pacific IP Communications Services Survey , which asked surveyed companies with more than 500 employees to indicate their agreements on a list of IPT value propositions. We reviewed enterprises that answered somewhat agree and strongly agree. Of these respondents, more than two-thirds of enterprises realized a wealth of IPT-related benefits other than work efficiency (see Exhibit 1 ). Although enterprises' concerns about IPT management call a halt to full-scale IP implementation, the situation will soon change as enterprises increasingly turn to IP specialists for professional services such as network monitoring and IT security consulting. Together with the growing acceptance of IP Centrex solutions, company-wide IPT deployment will accelerate in the next few years. This will lead to the formation of a collaboration-driven workforce, which Yankee Group considers instrumental to the creation of the Anywhere Enterprise?. Based on the Yankee Group Anywhere Enterprise ? Large: 2007 Asia-Pacific IP Communications Services Survey , we analyze key findings and examine issues that concern enterprises the most as they proceed with their all-IP transformation and examine the implications on the uptake of multiple IP telephony business models. We also discuss the likelihood that enterprises would deploy various unified communications applications in the next 12 to 24 months to complement IPT implementation. Last, we identify enterprise perceptions of a number of emerging services including professional services and open source IP PBX solutions, and assess their business viability in the IP communications arena. Although the IP telephony benefits of lowering opex and improving productivity are indisputable, Asian enterprises have yet to fully realize the value propositions of IP telephony. There is still room for improvement in areas related to IPT manageability and accessibility to telecommuters. IP convergence is slowly but clearly becoming a reality in the corporate world. Enterprise interest in embracing a mix of managed IP PBX and hosted IP solutions is on the rise, and we see them incorporating various unified communications into IP telephony implementations. This is good news for IPT providers. As enterprises continue to proceed with the all-IP transformation for telephony services, the growing availability of IP communications business models and their underlying values will play a key role in shaping the converged IP communications market. In this Yankee Group Report, we examine the implementation of IP telephony and unified communications applications from the end-user perspective. We analyze data from the Yankee Group Anywhere Enterprise ? Large: 2007 Asia-Pacific IP Communications Services Survey , fielded in four major economies ? China, Hong Kong, India and South Korea. The survey was designed to understand the present and future IP communications environment among corporations, key drivers and business challenges, as well as to determine the usage trends for professional services, third-party-owned IP Centrex solutions and disruptive technologies such as open source IP PBX. We interviewed 205 decision-makers/influencers across a wide spectrum of industries in companies that employ 500 or more people. Demographically, the survey represents a broad spectrum of industries with fairly evenly distributed companies ? 37% of the respondents work in companies with 500 to 999 employees, 30% of respondents work in companies with 1,000 to 9,999 employees; the remainder, 33%, work in companies with 10,000 or more employees. The survey targeted executives with primary responsibility over VoIP/IP telephony. Forty-eight percent of respondents are joint decision-makers; 44% of respondents are influencers/contributors; another 8% of surveyed enterprises are sole decision-makers in purchasing IPT solutions. The survey ran concurrently among large enterprises in the United States, while a companion survey of small and medium-sized enterprises was conducted in the United States as well. Because the terms VoIP and IP telephony are interchangeably used in the industry, Yankee Group defines VoIP/IP telephony as the use of business-class voice and multimedia applications provided through new generation IP telephony systems, handsets and software. Although the IP telephony benefits of lowering opex and improving productivity are indisputable, Asian enterprises have yet to fully realize the value propositions of IP telephony. There is still room for improvement in areas related to IPT manageability and accessibility to telecommuters. With that in mind, enterprises are keen to assess various IPT management models. For risk-averse enterprises, in-house management remains the preferred choice. The good news for service providers is that enterprises are increasingly accepting the use of managed IP PBX and IP Centrex solutions. When asked about the management of enterprises' IP communications environments, approximately 40% of enterprises are currently using a service provider to manage their IP telephony equipment. Another 22% of surveyed respondents are turning to or would count on IP Centrex specialists. By country, as much as 58% of Korean companies are currently using/would use a third party to manage their IPT equipment. Chinese enterprises are the strong candidates for the use of IP Centrex solutions because close to 30% of Chinese firms stated that they are existing IP Centrex users/planners, which exceeds the industry average of 22% of surveyed respondents. As enterprises come to terms with the business challenges that prevent them from reaping the benefits of IP telephony and unified communications solutions, end-user training is the most pressing issue for half of the respondents ? although we do identify variations between survey markets. User training is most challenging for companies in Hong Kong (56%) and India (58%). Fifty-two percent of Korean companies have difficulty understanding the link between technology and business process. In the end, all companies must justify the business case for the deployment of any IPT/unified communications applications. This is clearly the biggest challenge for Chinese enterprises ? 40% of surveyed companies were not able to measure the impact of IPT adoption on core businesses. Reviewing various technical concerns, market differences are less substantial. As expected, network security remains a concern for half of the surveyed companies, followed by high costs of upgrading existing infrastructure (44%) and purchasing IP telephony equipment (43%). Some enterprises experience/would expect a spending premium (25% or more) on network equipment and IP telephony equipment. This is because the price of an IP PBX system can vary greatly, depending on features and configurations. Based on anecdotal evidence, a basic IP PBX system typically starts at $20,000.
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