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Managed and hosted VoIP: muddling through

Zeus Kerravala

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Managed and Centrex and hosted, oh my! For companies looking for an alternative to a premise-based phone system, there are plenty available, and they come in all shapes and sizes. Hosted voice, IP Centrex, managed IP PBXs and network-based voice service are all viable alternatives to the do-it-yourself model. But these terms are often used interchangeably -- incorrectly in most cases -- causing confusion among the buying community as to which product to use in what situation.

For many organizations, the complexity of running VoIP is more than the IT department wants to deal with, so an outsourced solution seems appealing. Sifting through the various offerings can be quite confusing, however, and leaves potential buyers scratching their heads as to exactly what the service is and how it works. A clearer understanding of exactly what's available will help you at least ask the proper questions to distinguish between the services. Of course, this assumes that the people selling the product also fully understand the differences between their offerings, which isn't always the case!

The products
When considering an outsourced service, there are four basic product categories. Hosted IP PBX, managed IP PBXs, network-based services and IP Centrex. The basic premise of all of these services is that a third party manages everything and provides a "service" to the organization -- but they do differ. The main benefit of an outsourced service is that much of the risk is transferred to the service provider, but the customer does lose direct control of the solution.

Managed IP PBX
This is where the traditional IP PBX is on premise. The enterprise could choose to manage the products itself but chooses to outsource the management to a third party. It's important to note that not all managed services are created equal. They range from simple moves, adds and changes up to fully outsourced management of the entire lifecycle of VoIP. Most VoIP services today are managed services and are offered by most telcos and systems integrators, and even by many vendors such as Avaya and NEC Unified Solutions.

The main theme behind a hosted, IP Centrex, and network-based voice service is that the call control is somewhere "in the cloud." All that's needed on the customer premise are IP phones and a router.
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Hosted IP PBX
A hosted IP PBX is no different from any other hosted application, such as email. Instead of the IP PBX being located on the customer premise, it is located in the vendor's hosting center. The IP PBX is exactly the same one that would be purchased and placed on premise, meaning that the company is buying "hosted Cisco" or "hosted Avaya," so it interoperates with the premise-based equipment. Some companies "host" the IP PBX themselves by placing the IP PBX in their own data center, and then every branch office picks up the call control from there. A few companies I've talked to have put the primary IP PBX in their own data center and the backup in a third-party hosting center. The systems integrators and VARs are the primary deliverers of hosted IP PBXs. An interesting option for Avaya customers is Avaya's On-Demand voice service, delivered in partnership with Savvis.

IP Centrex
The term "IP Centrex" is an overused tag used to describe anything where the call control is located in the network instead of the branch. There are many carrier services that carry the Centrex name, but most of them are actually much more than an IP version of a traditional Centrex service. A true IP Centrex service has an IP gateway placed in front of a traditional Class 5 switch, with the service delivered over IP, but the basic service is still a traditional Centrex service. The growth potential of this type of service is limited because many of the advanced unified communications features cannot be delivered this way. Also, in the U.S., Centrex services haven't been overly popular; IP enabling it makes it a little easier to deliver, but the stigma of Centrex still applies to it. As far as I know, there are no major carriers that offer an IP-enabled Centrex service. A few rural ILECs do, but the growth in cloud-based voice services is in a true network-based service, highlighted below.

Network-based voice
A network-based service is similar to a hosted IP PBX but with a couple of differences. First, the infrastructure -- known as a softswitch -- which provides the call control, is located in the telco network, not a hosting center. The softswitch is designed to be a multi-tenant product, meaning that it can house the calling capabilities of multiple customers, whereas a hosted IP PBX is deployed on a per-customer basis. The softswitch has been positioned as the IP equivalent of an old Class 5 switch, but a softswitch is more of an application server that's capable of serving up applications other than just voice. Any service built from a softswitch is capable of delivering many of the unified communications applications as well. One mistake many carriers have made is branding their softswitch-based services as "IP Centrex" services. For example, Verizon's Hosted IP Centrex service is actually a network-based service built on Broadsoft infrastructure and is much more than just a basic Centrex service. AT&T's Voice DNA and Vonage's phone service (consumer) are also examples of this. Organizations considering a cloud-based service should do the due diligence to understand exactly how the service is delivered and the long-term roadmap of the service. The downside to these services is that the infrastructure that provides the service needs to adhere to industry standards, meaning that the features are limited to ones that have made their way through the standards bodies. Most premise-based IP PBXs from vendors such as Cisco and Avaya also adhere to standards, but they add on extra features through proprietary extensions to the standard. In many cases, the standards-based features available should be sufficient for many organizations, but companies considering this type of service should keep this in mind. As time marches on and the standards mature, the gap between proprietary features and standards-based features will close.

Even if you're a predominantly do-it-yourself IT organization,consider a hybrid environment where the hosted services are used for some of the smaller branches and telecommuters.
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The main theme behind a hosted, IP Centrex, and network-based voice service is that the call control is somewhere "in the cloud," and all that's needed on the customer premise are IP phones and a router for the data services. Telecommuter phones and PC-based softphones can also interoperate with these services.

Even though the industry has done a great job creating confusion among all the available VoIP services, I do think they're a good alternative to organizations that want to offload much of the up-front expense of buying the equipment and the ongoing operational costs associated with managing the equipment. If you're considering a service, though, keep a few things in mind.

Understand the architecture behind the service
Many of the services have been branded with names that don't accurately describe them. For example, a name like "Hosted IP Centrex" service doesn't really describe whether it's a true hosted service, Centrex service or network-based service.

Do the due diligence and understand what features are available today and what's on the roadmap
Most of the softswitch-based services are relatively new, so the majority of features are yet to come.

Even if you're a predominantly do-it-yourself IT organization, consider a hybrid environment where the hosted services are used for some of the smaller branches and telecommuters. This will probably scale much more easily for you as you move more locations over to VoIP.

Zeus Kerravala manages Yankee Group's infrastructure research and consulting. His areas of expertise involve working with customers to solve their business issues through the deployment of infrastructure technology solutions, including switching, routing, network management, voice solutions and VPNs.

Before joining Yankee Group, Kerravala was a senior engineer and technical project manager for Greenwich Technology Partners, a leading network infrastructure and engineering consulting firm. Prior to that, he was a vice president of IT for Ferris, Baker Watts, a mid-Atlantic based brokerage firm, acting as both a lead engineer and project manager deploying corporate-wide technical solutions to support the firm's business units. Kerravala's first task at FBW was to roll out a new frame relay infrastructure with connections to branch offices, service providers, vendors and the stock exchange. Kerravala was also an engineer and technical project manager for Alex. Brown & Sons, responsible for the technology related to the equity trading desks.

Kerravala obtained a B.S. degree in physics and mathematics from the University of Victoria (Canada). He is also certified by Citrix and NetScout.


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