VoIP use among small and midsized businesses (SMBs) is growing, but according to research released today by telecom consulting firm Savatar, VoIP is still a confusing area for many SMB telecom decision makers.
At today's VON conference in Boston, Savatar released the findings of a survey that asked more than 500 SMB telecom decision makers about their VoIP plans and examined how VoIP fits into their business needs.
John Marcario, Savatar's president, said many SMBs examining VoIP find buying the technology a difficult process, but the study found that despite the difficulty, many SMBs are still enthusiastic about VoIP and the possibilities it introduces.
According to the study, of the 560 SMBs surveyed, 17% have deployed VoIP -- an increase of 2% over the first quarter of this year and a 5% increase over the third quarter of 2005. However, companies that have yet to deploy VoIP said that they are confused about what solutions to buy and from whom to buy them. Seventy percent of SMB decision makers are still unclear where to turn for the best VoIP options, the survey found.
One hindrance, Marcario said, is that VoIP providers have not connected with buyers in an effective manner.
"Providers are still not generating demand for VoIP with SMBs," Marcario said. "Providers have a wait-and-see attitude coupled with a quote process that takes more than a month, and that's not helping them capture the market. SMBs need to be educated about the benefits of VoIP; they'll buy from the provider that can help them make the decision on products that are economically advantageous for [their] business."
The silver lining, Marcario added, is that once SMBs do make the leap to VoIP, they are highly satisfied with the results, going so far as recommending it to peers. Once they have deployed VoIP, 69% of respondents said they would highly recommend the technology, while 22% said they would recommend it. SMBs are also interested in buying complementary services like wireless, though services are not always top of mind for SMB decision makers.
The survey found that many SMBs don't know who provides business-class VoIP solutions. When asked "Whom do you think of as a business VoIP provider?" many answered nontraditional telecom companies, cable companies and ISPs. Those three categories showed the most growth from the first quarter to the third quarter of this year. Nine percent of SMBs said wireless companies come to mind as business VoIP providers, and 11% said they could think of "no one" that provides business-class VoIP, edging out traditional telecom companies, which hit only 10%.
SMBs still have no preference for particular VoIP service providers, Marcario said. VARs, or authorized partners of large companies such as Cisco Systems Inc. or Nortel Networks, were cited by 38% of respondents as their preferential service provider. Nontraditional telecos accounted for 19% of purchases.
Throughout the study, SMBs sent a clear message of their VoIP preference and stated that they want lower total cost of ownership (TCO), lower monthly recurring costs (MRC), and better system management from their VoIP systems. Sixty-nine percent said economic factors such as TCO and MRC are the most critical elements of their VoIP decision-making process.
"Buyers know exactly what they care about, and it's not the features that everyone wants to talk about," Marcario said. "Providers need to drive the economic and systems management messages home."
"SMBs really need to understand the concept of TCO in a really straightforward way," Marcario said. "They have to get themselves educated about the economic benefits. I don't think VoIP is for everyone. If I'm a 10-person company with a $40 per month long-distance plan, VoIP has no value proposition."
Savatar's research found that on average, an on-premise IP PBX has a monthly TCO of $50 to $80, while a hosted PBX is between $50 and $60, and a converged voice and data package is between $25 and $30 (but lacks some of the feature set). Marcario also recommends that if an SMB is looking for an on-premise solution, it should look for a vendor that sells it as a managed service.
Elsewhere, the study found that 53% of SMBs that deployed VoIP want to buy wireless from their VoIP provider, and 43% of those who haven't deployed VoIP said they would purchase wireless technologies from providers. SMBs, Marcario said, want to consolidate their telecom spending.
"While the fixed mobile convergence feature set is maturing," Marcario added, "the market is not yet there, and providers aren't yet skilled at selling basic VoIP products. Trying to sell services based on the latest market buzz is like the computer industry trying to sell the latest and greatest processor when the operating system still crashes. Providers should focus on developing the SMB VoIP market first and then up-selling their customers on useful enhancements like wireless."
Overall, Marcario said, SMBs with interest in VoIP must start researching their options and determine what VoIP path is right for them. He added that providers must also recognize that the SMB space is an emerging market for VoIP that they need to embrace.
"In the enterprise, in big business, the game is over," he said. "The enterprise is switching to IP…. The SMB market is significantly less mature than that."