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VoIP=ROI, part 2

Tom Pisello and Juan Pablos Pazos
Continued from VoIP=ROI, part 1

Knowledge workers struggling for higher productivity
VoIP has many new features which can help knowledge workers achieve higher productivity, and help companies

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with many sites, telecommuters and mobile workers provide central system features without inordinate costs.

For example, smart dial plans can reduce the numbers required to dial internal extensions. For example, dialing 5 digits versus 10 or 12 to reach a fellow employee at a regional office can save the typical company 2 hours per year per person when all those calls are added up, while the "click-to-dial" feature of a good convergence application suite removes the need to dial the phone altogether. Unified messaging applications can allow users to decide the best way to reach someone (voice, e-mail, instant messenger or video), and presence management avoids busy signals and unwanted voicemail.

A good illustration is Prudential Northwest Properties, a real estate sales company with 750 staff distributed in multiple locations and with many mobile agents. The key deciding factor for transition to VoIP was the possibility of offering users centralized applications (including Find-Me-Follow–Me) and unified messaging. Making real state brokers more accessible to customers and prospects, they achieved productivity gains of more than $1.8 million dollars during the first year.

Another good example: ERP software maker Epicor reported that their Find-Me-Follow–Me system reduced the time employees managed messages by 50 percent, increasing overall employee productivity by about 7 percent as a direct result.

Some of the VoIP and unified messaging features which help improve productivity include:

  1. Dialing - click to dial
  2. remembering key codes or referring to a user manual)
  3. Personal assistant features such as Find-Me-Follow–Me
  4. Send and retrieve FAXes
  5. Send and read / respond to e-mails via phone
  6. Retrieve and process voice mails more efficiently
  7. Manage calendar, task and contacts
  8. Remote capability equal to offices when accessing mailbox / messaging
  9. Access all messages / e-mail from any device
  10. Retrieve voice mail via Internet
  11. Manage phone system on road - call forwarding, messaging, etc.
  12. Video conferencing (including on the fly)
  13. Video multi-casting
  14. Reduce user training via computer-based training

Typical improvements for a 1,000 person company are:

  • 12.5 hours per person per month.
  • 150 hours per person per year.
  • 150,000 hours per year.

This gives at least an 8 percent productivity boost; depending on the type of work, average salary and opportunity cost, this can amount to $7.75 million per year in productivity enhancements.

Call centers
Companies with an internal support desk, or more importantly, a customer contact center, can achieve good ROI metrics with VoIP, especially in deployments where there are:

  1. Customer service issues such as high abandoned rates on calls
  2. Multiple call / agent centers with a difficulty in finding the right person and a high rate of internal transfers
  3. Expensive call-center agents who are spending too much time per call vs. value received
  4. Call centers with up-sell and cross-sell potential
  5. Outbound intensive calling environments
  6. Expensive real-estate and facilities costs

The main contributors to a good ROI are:

  • Simple and fast integration with business applications
  • Cost reductions that come along with virtualization (e.g. remote agents working from home)
  • Efficiencies in the use of agent time
  • Improvements in customer interaction
  • Telecom cost reductions via VoIP and Web interactions

    A good call center application over VoIP will include:

  • Smart handling of incoming and outgoing calls
  • Voice mail
  • Automatic call distribution
  • Computer telephony integration
  • Call recording
  • Automatic call back
  • Supervising and monitoring capabilities
  • The possibility of reassigning resources in real time
  • Intelligent report capabilities

In addition, successful deployment will be evident by a reduction in post-call handling activity, wait time, fewer call transfers and less talk time.

Most of the immediate ROI comes from the integration with existing back office and front office applications. Good solutions will have intelligent middleware with smart graphic capabilities that allow building and modifying call center campaigns, interactive voice response and recognition flows, and customized interaction processes, significantly reducing the time and effort to integrate a call center solution into a business process.

Call recording is an additional feature that saves time and effort in validating transactions, and keeps history that helps reduce misinformation or mishandled problems.

Traditional call centers are key elements of any CRM strategy, but they don't necessary provide the required customer intimacy. In many cases, high abandon rates (more than 15 percent) mean customers or prospect could not reach agents, as in the case of Credit Agricole. The VoIP solution and an integrated call center application helped the company substantially increase the quality of service, allowing new interaction processes like giving the opportunity to leave a voice mail that will be automatically routed to the most appropriate agent following intelligent rules defined by the bank. The Project allowed the bank to reduce the abandon call rate from 15 percent to 5 percent; even better, it captured the caller's information, generating automatic call backs and increasing customer service levels.

Typical improvements for a 250 person call center include:

  • $1-$3 million per year in productivity enhancements by reducing on call times (10-20 percent)
  • $500,000-$1.7 million in reducing call transfers and toll free charges
  • $250,000 in reducing burdened facilities costs via virtualization / consolidation
  • $5 million or more in reduced attrition and additional revenue from improved customer satisfaction

    Multimedia contact centers
    The digital nature of VoIP and the possibilities of fully integrated multimedia communication translates into an increased amount of effective customer interactions, thanks to the more effective use of call center agents and resources. The possibility of using different communications channels including voice, video, messaging, Web, and e-mail during an interaction expands the possibilities and reduces the service and sales cycles.

    This results very easily in improved cross-sell and up-sell rates, higher problem resolution, higher customer satisfaction and re-purchase. From the sales point of view, it translates to higher lead-to-close ratio, increased margins, and more targeted and productive on-site visits. From the marketing perspective, they realize increased response rates, increased number of annual campaigns, higher number of quality leads, and increased average order size.

    Adding multimedia capabilities to traditional call center implementations also allows a move from "usage based" cost bounded traffic to "fixed cost," or almost free, cost interaction.

    IP convergence opportunities: audio/video conferencing, document sharing and presence applications
    Scheduling a conference call among a team of five or more might take days with a legacy system. But with an IP Telephony-based presence management capability, the project manager can quickly see all five members' availability, and with a few mouse clicks, immediately arrange the call.

    Another convergence application makes voicemail viewable on a PC screen, eliminating the need to move through voicemail sequentially. And intra-company conference calls can be arranged and executed as easily as sending a multi-recipient e-mail by leveraging the capability of IP telephony systems.

    Organizations that match one or more of these profiles should consider analyzing in detail the opportunities for improvement, collecting a baseline of the current telecommunication costs and business issues, and then estimating the potential costs, cost savings and benefits. With this business case in hand, the team can assure that the perceived opportunities are real, and that the proposed VoIP can deliver promised ROI.

    Investment required
    It is important when considering a VoIP solution to not underestimate the costs, including planning, acquisition and procurement, setup and installation, management and support, evolution, and retirement.

    There are essentially three options for migrating to VoIP:

    • Traditional purchase or lease – the company purchases the equipment, performs setup and installation, and manages and supports the systems itself. This option has the lowest investment and highest ROI potential, but also the highest risk, as getting the configuration right and assuring performance and service levels are all on the company's shoulders.
    • Managed IP telephony – the company purchases the equipment but relies on the service provider for help in planning, setup and installation, management, and support. This option has a higher investment but greatly reduces the risk. The company can reduce training, save on management and support staff, and realize higher performance and availability.
    • Hosted IP telephony – VoIP is purchased as a monthly service per user, requiring no equipment purchases or installations on-site, except for handsets and soft phones. The service provider provides planning, setup, management and support services. This option typically has the highest investment, but is well structured and easily scaled, and has the lowest risk. The service provider performs technology upgrades, owning risk to maintain and upgrade the systems over time. Also, no additional capital investments should be required to the infrastructure every 3 to 5 years, again transferring risks to the vendor. The only caution is that some vendor offerings are not as current in technology, features and performance as others, potential resulting in differences in benefits.

    Most organizations will choose a traditional VoIP purchase; as a guideline:
    1. VoIP telecommunication hardware and software should be $80 per user for the central system, or with more than 1000 users counts, less than $50 per user
    2. IP phone sets or soft phones can cost $150-$400 per user station, depending on functionality (speakerphones, cordless, videoconferencing)
    3. Quality of service and performance upgrades are at a minimum $5 to 10 per user per month
    4. Additional infrastructure overhaul, one of the toughest costs to estimate, may be required to assure proper quality of service, security and management

    Additional costs can include:
    1. Implementation labor and/or professional services
    2. Additional software applications (contact center, call recording, billing, unified messaging, conferencing, presence, etc.)
    3. On-going support and administration labor
    4. Support and maintenance contracts
    5. Increased support calls and potential user downtime losses on initial deployment
    6. IT training
    7. User training
    8. Write-off, write-down and disposal costs for existing telecommunication assets

    Common VoIP pitfalls
    VoIP projects are not without their risks. These typically include:
    1. Network readiness and upgrade investment
    2. User adoption, where users do not take advantage of the phone, unified messaging and application features expected
    3. IT capability and maturity, where the IT staff does not have the skills needed to effectively manage and support the solution, mitigated by purchasing managed services or a hosted solution
    4. Quality of service, downtime and security, where the solution does not perform as expected or is compromised by security issues.

    Next steps
    When assessing the costs, benefits and risks, it is not uncommon for VoIP projects to have hard cost savings of $300,000 or more for typical medium sized businesses, paybacks of less than 12 months from deployment, and ROI of 200 percent or more, making VoIP migration one of the most compelling IT projects, especially for those companies that most closely match the opportunities described. Industries that tend to match the criteria most include healthcare, education, financials and banking, and state and local governments.

    To move forward, perform the following steps to personalize these results for your own unique opportunity:

    1. Assess current costs and issues
    2. Identify similar opportunities for savings and benefits as examples
    3. Quantify potential benefits
    4. Quantify change costs
    5. Assess risks and build a conservative case

      Assistance is available from IT vendors using their own VoIP models or third party developed models (preferred), or from independent consultants.

      About the authors
      Tom Pisello, Founder, CEO, Alinean, has built his 15-year career with a single-minded vision: helping companies to get more business value from IT investments. Most recently, he's created the first metric and worldwide database that captures the ROI of company-wide IT investments in a single comparative figure, ROIT(TM), giving CIOs and CFOs a competitive tool for evaluating existing and new IT initiatives. Tom is also SearchEnterpriseVoice.com's cost analysis and ROI expert. Ask Tom your question today.

      Juan Pablo Pazos, Founder, CEO, XmarteK, has been a leader in the telecom industry for more than 20 years. During the last two years he developed with Alinean, the IT Value Experts, a pioneering ROI tool that has been used in hundreds of case studies to analyze the opportunities, costs and benefits and risks of VoIP, mobility solutions, security and high speed networking in many enterprise markets. Juan will be joining the SearchEnterpriseVoice.com team of experts soon, answering questions on voice and data convergence. Check our experts page for Juan and send in your questions.


      This was first published in July 2005

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