Determining VoWLAN solution ROI

Learn about deploying a VoWLAN system and how to determine implementation ROI. This chapter details the considerations you should take into account when planning a VoWLAN deployment.

Deploying Voice over Wireless LANs
Chapter 1, VoWLAN Applications and Benefits

VoWLAN systems are an extension to wired VoIP systems and an alternative to traditional analog and digital voice communications. VoWLANs offer significant benefits of providing mobility and wirelessly converging voice with data applications. With VoWLANs, hospitals, enterprises, retail stores, warehouses, and home owners can reduce telephony costs and enable mobile applications.

This chapter describes various applications of Voice over Wireless LAN (VoWLAN) systems. Real-world examples and case studies provide you with a solid understanding of how VoWLAN can benefit a company. Details are also given about tangible benefits and expected return on investment (ROI).

Deploying Voice over Wireless LANs
Table of contents:
The role of VoWLAN solutions
Determining VoWLAN solution ROI

Determining VoWLAN solution ROI

Before moving forward with the installation of a VoWLAN system, companies should complete an ROI study that provides the basis for decisions on funding. A worthy ROI must indicate enough benefits before a company will put forth the money to fund the hardware and services necessary to install and support the system. In most cases, a company desires to recoup money spent within one to three years. If the benefits are not well defined or they are not sufficient, deploying the system may not be worth the expense. Not only should the ROI study indicate a positive result, but it should also be clear enough to be understood by a wide variety of decision makers.

This section describes each of the steps necessary for the ROI study and illustrates the main points through a hypothetical case study, which highlights a fictitious company, Acme Furniture. This case study defines a project that a large manufacturing and retail company undertakes to realize the benefits of VoWLAN systems in corporate offices, manufacturing plants, distribution centers, and retail stores. The case study continues throughout the remaining chapters to demonstrate the process of defining requirements, designing the solution, installing and configuring the hardware, and performing operational support.

Initial analysis

The first step of performing an ROI study is to do some initial analysis. At least enough details must be known to define benefits and determine the costs for necessary hardware, software, and services to install and support the system. In the initial stages of the project, especially during the ROI study phase, not all details may be known; however, the details will come into full view as the project progresses with funding.

The following are tasks that a company should complete as part of the initial planning phase:

  1. Identify significant communications delays. Spotting problems that the company is having before justifying a VoWLAN solution is very important. If people within a company have no need to communicate with anyone while away from their desks, probably no need exists for a VoWLAN system. They can just use the existing wired telephone system. People who are often mobile and need to communicate with other employees or people outside the facility, however, will likely benefit from a VoWLAN system. Analyze these types of situations, and look for delays that employees have when responding to important events. For example, a doctor requiring even five minutes to look for an available phone is likely taking too long to respond to a page for a patient needing prompt attention.

  2. Identify primary goals and expected benefits. As with any project, clearly spell out what you expect to gain by deploying a VoWLAN solution. State productivity enhancement goals, such as decreasing customer response time to one minute, and costs that a company would like to eliminate by replacing existing communications mechanisms and using a converged infrastructure for data and voice.

  3. Define preliminary application requirements. Determine just enough requirements to assess the existing network infrastructure and adequately determine costs of the solution. In the ROI study phase, at least identify who will benefit by having VoWLAN handsets and how many you will need. Also, predict the number and frequency of calls that each person will complete on a regular basis. This information helps when determining whether upgrades are necessary for the network to support the calls. Be certain to include present and future requirements.

  4. Assess existing networks. Determine whether the existing wired network infrastructure has the capacity to support predicted VoWLAN traffic. If not, factor in the upgrades as a cost for deploying the VoWLAN system. Certainly, the cost of the solution depends on the presence of an existing wireless LAN. When a wireless LAN is already in place, be sure to test its ability to support voice. More access points may be necessary to achieve the coverage that is necessary for voice traffic, which introduces costs.

  5. Consider changes that may take place in the future. To achieve expected ROI, the VoWLAN system must continue to operate and provide benefits for several years. Company moves, growth, and mergers may introduce costs (or benefits) when moving and expanding the system. If these types of changes are known, take them into account during the life of the system.

Excerpted with permission from Deploying Voice over Wireless LANs, by Jim Geier, Copyright 2007. For more information about this book and other titles, please visit Cisco Press.

Costs

As part of the ROI analysis, a company must define operational and capital costs. This analysis gives a full depiction of what the company will need to pay out to realize the system and resulting benefits.

Operational costs

For operational costs, figure all services necessary to deploy and support the solution. The following defines each of the operational cost elements for deploying a VoWLAN system:

  • Planning - Encompasses the definition of complete requirements that address security concerns, performance needs and project planning.
  • Network assessment - Includes surveying existing wireless LANs and determining the capacity of the local- and wide-area networks (WANs) for supporting voice traffic requirements.
  • Installation - Includes setting up and configuring all components, such as VoWLAN handsets, voice gateways, software that interfaces with the existing PBX, and wireless LAN access points.
  • Testing - Ensures that the installed system operates efficiently and meets all requirements.
  • Training - Provides necessary skills to IT staff that will be supporting the system.
  • Operational support - Needed on a recurring basis for IT personnel to add new users, troubleshoot problems, and respond to user problems.

Some companies will perform only the planning and operational support and outsource the other elements. As a result, the costs for these operational elements generally result from bids by prospective contractors.

Capital costs

Capital costs include hardware and software that make the system work. The following identifies the capital cost elements for deploying a VoWLAN system:

  • VoWLAN handsets - The wireless telephone hardware needed for each user.
  • Voice gateway - The platform that manages wireless VoIP traffic and interfaces with an existing PBX.
  • Wireless access points - The hardware that interfaces the VoWLAN handsets to the network.

Savings

The calculation of savings resulting from a VoWLAN solution includes the combination of quantitative and qualitative benefits. The following sections take a look at each of these types of benefits to see how they can help justify VoWLAN costs.

Quantitative benefits

The quantitative benefits comprise the actual dollar savings resulting from the deployment of a VoWLAN solution. This money is generally cash that a company avoids paying for particular services, but it can also include sales of hardware that the VoWLAN system is replacing. The following are the types of quantitative benefits that you can realize with a VoWLAN solution:

  • Reduced long-distance telephone charges - The routing of intercompany VoIP telephone calls is virtually free; therefore, a VoWLAN system can eliminate the long-distance charges associated with each VoWLAN user.
  • Fewer wired telephone lines - A company can eliminate the need for a wired telephone line for each VoWLAN user, which saves any associated fees. Because VoWLAN users are wireless, there is no need to rewire telephone lines when changes are made to the workforce.
  • Increased productivity - This benefit is somewhat difficult to define in some cases, but it allows employees to complete work faster and better serve customers. This results in higher revenues for the company, which is certainly a benefit.

Quantitative benefits

Qualitative benefits enhance the operation of the company, but they do not result in definable dollar savings. These types of benefits often lean management toward funding the project when quantitative benefits are marginal or not well defined. The following are the types of qualitative benefits that you should consider when performing an ROI study for a VoWLAN solution:

  • Improved safety - This benefit is certainly very important to any company. In some cases, the regular use of VoWLAN phones can provide vital and immediate communications in times of emergency situations.
  • Better image to customers - With the use of VoWLAN phones, customers will see company employees getting things done faster and more efficiently, which makes the customer more inclined to do business with the company.
  • Increased employee morale - Employees equipped with VoWLAN handsets have less frustration because of the elimination of telephone tag and searching for a phone when they need one.

Payback period

With the costs and savings of a VoWLAN deployment in mind, you should calculate the payback period to determine whether the project is worth investing in. The payback period is the amount of time that the system needs to operate to realize enough savings to pay off the initial expenses. Most companies move forward with a payback period of less than three years. The quantitative benefits, however, must exceed the support costs on a yearly basis. For example, a company may find that a VoWLAN system will save $75,000 through lower long-distance telephone charges. If the initial cost for hardware and services amounts to $80,000 and an annual support cost of $15,000 is necessary, the payback period is just over one year. This should prompt most companies to implement the system.

Read the first section: The role of VoWLAN solutions

Read Chapter 1, "VoWLAN Applications and Benefits" from Deploying Voice over Wireless LANs in its entirety.

This was first published in October 2008

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