Justifying VoIP deployment without cost-analysis

VoIP and UC deployment ROI can be measured using non-financial metrics. Learn more about VoIP ROI in this article from Yankee Group's Zeus Kerravala.

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Zeus Kerravala, vice president for enterprise infrastructure, Yankee Group

Despite the vendor hype, VoIP and unified communications (UC) deployments remain sluggish, as network managers look for ways to justify the cost of the infrastructure and system upgrades. Non-financial return on investment (ROI) metrics can be used as a way to augment the limited financial measurements available to companies to prove that the shift to VoIP does indeed have business value.

I've spoken with hundreds of network managers about their VoIP deployments, and very rarely have I found an organization that can clearly articulate exactly what the ROI for the deployment is. There are some obvious total cost of ownership (TCO) benefits, such as lowered long-distance charges; savings on moves, add-ons and changes; and a reduction in maintenance charges. One can lower cost only so much, however. Eventually, using money savings as the sole purchase justification does become limited.

The flip side of measuring TCO savings is trying to measure the improvement in productivity for the end users of VoIP-enabled systems, which has proven to be very difficult. First of all, you need to be able to understand what the user does and how to turn that into dollars and cents. Then you need to be able to measure the profit in financial terms and figure out the difference. In most cases, the benefits tend to vary greatly from user to user, making this measurement difficult, if not impossible.

I've run into a number of companies lately that have started using non-financial metrics as a way of measuring value. Sure, it's still something of a "soft" benefit, but it's something that can be measured and then perhaps later converted to a financial measure. As an example, the call center space has done this for years. In the call center industry, the key performance indicators (KPI) are such factors as how long each call lasts, how long each customer is in the queue, and how many calls per day an agent takes. A call center manager can tell you exactly what shaving three seconds off a call means. I believe this type of non-financial measurement is key to proving VoIP's value, and I've started to see some use of it already.

Here are some examples:

  • A restaurant chain deployed VoIP to the drive-through stand (this is becoming fairly common now) and used "drive-through wait time" as the KPI for value.
  • A manufacturing organization compared six-sigma metrics as a way of understanding how the quality process has improved because of the collaboration tools.
  • A hospital measured the error rate of correctly diagnosing patients as a way of measuring the value of their converged infrastructure. This also included integration of patient information over the same common IP network. The hospital then used this as a way of reducing insurance costs.
  • A retail brokerage firm used the amount of time it took to respond to a customer as a way of measuring the value of its unified communications deployment.
  • One consulting organization measured the speed at which collaborative groups came to a final decision to measure the value of new collaboration tools.
  • By looking at different KPIs for different user groups, the organizations found it much easier to calculate the value. Also, with some organizations, the KPIs are so crucial (like the error rates of a hospital) that they no longer need to measure the value across the entire organization. If the value received by even a small group of users is high enough, the value to the rest of the organization may be nothing more than a rounding error. This was the case many years ago with CRM systems. The salesforce received so much value from the CRM deployment that the whole company adopted it as a standard. Very few companies back then tried to calculate the value for each user down to the nickel, so why are we trying to do it with VoIP? In my opinion, it's because the post-Y2K economic downturn put us in a mode of cost-cutting and frugality that we never came out of.

    For those of you going through VoIP deployments now, there are a couple of things you can do to help your case. First, try to understand the KPIs for various groups of users. It doesn't have to be all groups of users, but a couple of very high-impact ones. In all likelihood, your company may already be tracking them. Next, find a group of users within that larger group who are tech-savvy enough that you can employ them as beta users to measure the KPIs before and after the deployment. Lastly, and you may need some help from the business units for this, try to understand the process well enough to figure out where VoIP and UC can have the biggest impact. If you can do this, you'll find funding the VoIP/UC investment to be much easier.

    About the author:

    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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