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Soft benefits when developing a cost model for VoIP

Should I consider the "soft benefits" like increased productivity when developing a cost model for VoIP?

All technology initiatives inherently have both 'hard' and 'soft' benefits, and accurate ROI models account for both to create a credible business case.

First, let us define the difference in the benefit types:

Direct (Hard) Benefits

* First Order Effect: Implementing product directly delivers a benefit
* Results in direct cost avoidance or productivity increase

Indirect (Soft) Benefits

* Higher Order Effect: Implementing product will result in a competitive change to the business, which should result in achieving the stated benefits
* Drives changes in employee or customer behavior
* Typically includes benefits such as customer satisfaction increases, improved selling effectiveness and downtime loss avoidance

The hard and soft benefits for a VoIP business case typically include:

Hard Benefits

• Eliminate or reduce intra-office toll charges
• Avoiding service and support contracts on existing telecommunication system hardware and software, or fee-based services (like Centrex)
• Reduce expansion costs via lower costs for adds, moves and changes; lower user hardware costs
• Reduce the costs of telecommunications management and support via convergence of resources which can support the network and telecomm systems with an integrated set of less staff personnel

Soft Benefits

• Provide productivity benefits for remote and traveling workers who can be empowered with the same integrated capabilities as office workers
• Reduce user training and learning on phone and messaging systems
• Cost-effectively implement unified messaging for improved productivity handling voice messages, e-mail and faxes
• Reduce systems downtime and improve performance
• Empower call centers with advanced automation, productivity and service applications

When considering soft benefits, it is often appropriate to "risk" adjust the benefits because typically the organization will not realize all of the expected benefits when they are soft. These include the fact that not all productivity improvements will result in cost savings or bottom-line benefits to the corporation. Similarly, benefits such as improvements to customer service can result in quantifiable benefits, such as increased transactions or revenue, but are less than guaranteed. When doing a business case, we typically only count a conservative 10 percent of any soft benefit to make it equivalent to hard benefits in their contribution to bottom-line benefits and ROI cash flow analysis.

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