IP telephony costs differ greatly between vendors

One Nemertes Research study found that, as mature as VoIP is, the total cost of ownership for IP telephony varies greatly between vendors.

IP telephony total cost of ownership has improved year over year, according to Nemertes Research's second study of TCO for IPT services from leading vendors. While telephony costs have improved, there is still a stark cost difference that remains among vendors.

Despite IPT being a largely mature technology, vendors are still able to differentiate.

Nemertes conducted the study using a two-party methodology: First we directly interviewed approximately 50 IT leaders responsible for IPT spending within their organizations. Next we surveyed an additional group of screened IT leaders, using the interview data to set reasonable parameters for each category of costs. The end result was data gathered from nearly 190 end-user organizations. What separates this study from others is that our data is derived entirely from what IT practitioners tell us they actually spend, not from list prices or vendor-provided RFP responses.

We calculated IP telephony costs in three areas:

  • Capital: Including all hardware, software and initial licenses required to procure the solution
  • Implementation: Spending on third party, plus internal staff time
  • Operational: Ongoing costs to maintain the implementation including third-party services, maintenance agreements and training

For all vendors across all rollout sizes, we found that the first year, per-endpoint costs came out to a median cost of $935. These per-endpoint costs include everything from hardware costs to licenses to deployment costs. Costs were calculated by adding first-year spending and dividing that number by the number of endpoints deployed. ShoreTel led the way with lowest overall costs at $669 while Microsoft was most expensive at $1,345.

To gain greater insight into costs, we split deployment sizes into above 350 endpoints and 350 endpoints and below. Not surprisingly, median first year costs were significantly higher for smaller implementations: $1,375 versus $626 for larger installs. Here economies of scale often come into play, resulting in lower per-endpoint costs for larger implementations. Larger companies are also more likely to already possess expertise needed for implementation and ongoing support.

Overall, first year TCO dropped by 28% from our 2013 study, driven primarily by lower operational costs as companies gain expertise in IP-based communications and as virtualization reduces system maintenance requirements. Microsoft saw the largest year-over-year drop, of approximately $1,140 per endpoint, thanks to increasing IT familiarity with the Microsoft Lync operating environment.

Going into this year's study, we expected cloud-based telephony deployments to greatly impact our findings, but the reality is that cloud IPT deployments still represent only about 13% of the market. Most companies still deploy on-premises, though we continue to track rising adoption of cloud IPT, especially among small and medium-sized businesses.

Ultimately, the cost data shows that IPT TCO between competing vendors differs greatly. Despite IPT being a largely mature technology, vendors are still able to differentiate by offering:

  • deployment simplicity;
  • administration simplicity;
  • end-to-end integration;
  • bundled performance management; and
  • support for virtualization.

IT buyers should not only compare telephony providers on the basis of cost, but they should benchmark their own operating costs against those of their peers to ensure that they are optimally delivering telephony services to their organization. IT buyers should also continue to keep an eye on cloud-based IPT services and their potential ability to reduce capital and ongoing management costs, though potentially at a higher operational cost.

In my next article, I look at UC costs between different vendors

This was first published in May 2014

Dig deeper on IP Telephony ROI

Pro+

Features

Enjoy the benefits of Pro+ membership, learn more and join.

0 comments

Oldest 

Forgot Password?

No problem! Submit your e-mail address below. We'll send you an email containing your password.

Your password has been sent to:

-ADS BY GOOGLE

SearchMobileComputing

SearchNetworking

SearchTelecom

SearchITChannel

SearchEnterpriseWAN

SearchExchange

Close