"Can You Hear Me Now?" - New Phone Systems
By Bob Boyles, Principal
Smarter Distribution

As distribution companies move from green screens to GUI systems their supporting networks are due for major over-hauls but this doesn't have to be all bad news. Your technology solution consists of many pieces. We spend most of our time talking about your business software, after all that's the piece that makes the most difference in how your business performs. However, there are other parts of your technology infrastructure that also need occasional attention. One major piece that you should be paying attention to your communications network.

The future is now in the world of telecommunications. Voice Over IP (VOIP) is the rapidly emerging standard for new phone systems. The ability to convert voice tones into digital signals, break them into small packets and route that information over the same networks that support the internet to their destination then re-assemble them into recognizable speech is changing the landscape of telecommunications. In fact, Gartner the research group that track such things predicts that VOIP capable phone systems will constitute 97% of equipment shipments by 2007. As with any major initiative the reason driving the change are potential costs savings

The savings that this technology offers are tremendous. For example, it is not unusual for inter-company phone calls (from branch to branch) to make up 25% of a multi-branch company's total call volume. Imagine being able to route your inter-office calls over the internet and completely by-pass the local and long distance companies.

If you're moving into a new building this technology is ready made to save you some cash! Look at the side of the desk you are sitting at reading this article. There are three wires running to your desk, electric, telephone and computer. As you replace your wiring and convert to a VOIP system the phone and computer will be using the same wire, your wiring costs for a new building just dropped in half.

But the savings don’t stop there. The traditional computer networks required you to purchase a separate leased line for the network communications between branches. Now that both voice and data are data packets you are able to purchase a larger bundle of data switching service rather than purchasing each separate. Since the service provider is handling packets it doesn’t have to dedicate a line to your communications. So they are free to use that space more efficiently so you'll see packet prices that are significantly lower versus leased line costs.

Take all of these price cuts together and it is not unusual to see savings of at least 50% over traditional leased line setups and paybacks that have a time frame of a year or less.

Some of the enhancements to the service are what attracts some customers to this new service. That ability to control the phone system from your desktop is attractive to many technology managers. Someone moves their desk from one end of the building to the other or even across the country. The phone system can now be configured to handle their move in a few key strokes. No more calling the phone company person to come out and punch down new wires in the cable room. Cisco, is one of the major providers of this type of technology and they have over 50,000 employees using this technology.

What really sets this type of new service apart from traditional phone services are the additional features.

No opportunity to save is with some pitfalls. Early adopters of VOIP had to suffer through poor voice quality as the technology of slicing and dicing your spoken words into bits and bytes and then pushing them back together again on the other end took some time to evolve. Today, the VOIP systems offer near or the same quality as traditional phone lines.

Perhaps the biggest problem you're likely to face is that the reliability of your phone service now depends on the reliability of your network. You're used to the computer re-booting every once and a while. The computer goes down for a while you resort to hand written tickets and shipments keep rolling because the phones keep ringing. But now that same system that is handling your phone calls.

One of the biggest unknowns is how the taxman is going to treat VOIP. Today, these services are tax-free since they fall outside the traditional telecommunications tariffs. However, someone once said that "Giving the power to tax to the government is like giving a teenager the keys to the car and a bottle of bourbon to go along with it." The major lose of tax revenue for government entities will undoubtedly cause some change in the tax treatment in the future.

Now that your mouth is watering you're probably wondering "how do I do something like this?" Most surveys indicate that less than 24% of you will call traditional telecoms (big bells and little bells) for VOIP service. Most of you will contact a local VOIP provider. The traditional phone service providers are offering this service but have not been the leaders (wonder why?).

Summary: A successful technology strategy consists of solid up-to-date pieces of application software and speedy, reliable hardware AND a speedy and versatile communications network.

About Bob Boyles and Smarter Distribution:

Bob Boyles is the principal of Smarter Distribution in Coppell, Texas, a strategic coaching business focusing on assisting distributors in using technology. He is also the author of "Succeeding With Distribution Technology" a practical how-to guide for selecting and implementing the right technology. You may reach him at (972) 304-1180, via e-mail at bob@smarterdistribution.com or on the Web at www.smarterdistribution.com

© Copyright 2003, Robert S Boyles Jr. All rights reserved. This article cannot be reprinted or reproduced in whole or in part, without the express written permission of Robert S. Boyles, Jr.