VoIP Adoption Moves into the Mainstream

January, 2008

Over the last several years, enterprises of all sizes have evolved from merely piloting voice over IP (VoIP) technology to enacting full-scale deployments. The deployment of hosted services, IP PBX switches, hybrid systems, and other IP telephony-related technologies is reaching an early majority-adoption phase. This year, Computer Economics research indicates that, for the first time, the majority of businesses will have implemented some form of VoIP technology.

This Research Byte is a summary of our full report, VoIP Usage Ramps, But ROI Sometimes Illusive.

Essentially, our study indicates that VoIP adoption is on a steady, upward course that is likely to persist as companies continue to replace obsolete and aging analog phone systems. The economics of VoIP implementations are mostly positive, although small organizations are having a harder time achieving solid ROI than large organizations are. The total cost of ownership is also, in some cases, exceeding budgetary estimates and proving hard to predict, indicating that there is reason to proceed cautiously with full roll-outs until the economics within a particular organization are fully understood.

The popularity of VoIP has steadily increased over the last few years. Our annual IT Spending, Staffing, and Technology Trends study indicates that VoIP adoption rates have risen at a 12% annualized rate from 2005-2007, as shown in Figure 1. By the first half of 2007, 43% of all companies in the survey reported using VoIP in some capacity. The trend indicates that this year, the percentage of companies adopting some form of the technology will easily surpass the 50% mark. Because of the great expense of replacing installed telephony infrastructure, we do not expect adoption rates to accelerate in classic hockey-stick fashion. Strong, steady, and incremental adoption is likely to continue to be the pattern.

VoIP Fig1 - VoIP Adoption Moves into the Mainstream

The full version of this report examines adoption trends by small, midsize, and large organizations. We also look at return on investment (ROI) and the predictability of total cost of ownership (TCO), and we conclude with a brief summary of the advantages and disadvantages of IP telephony systems. This analysis is based on our annual survey of CIOs and senior IT managers.

Computer Economics Viewpoint
A major factor in VoIP economics is the variety of formats in which VoIP appears. Mass-marketed services from broadband Internet providers are available, often at a flat rate. These services often provide availability to VoIP from a single point of service. In contrast, suppliers such as Skype offer hosted services that allow for placing calls from any computer in any location. As companies exceed more than a few hundred phones, however, hosted services are not likely to be economical or provide the functionality required by large organizations. However, companies will still face a wide range of service providers and technologies, each with their own economics, and careful study and a cautious approach will continue to be advisable.

The full version of this study demonstrates the viability of VoIP in the enterprise, and indicates that close attention to cost management and realizing full returns are required. While knowledge of how to more effectively apply the technology will continue to accumulate, experience indicates that the risks are comparable to many other computer technologies. Most companies will find that VoIP offers attractive economics while enabling better integration of communications capabilities.

This Research Byte is a brief overview of our report on this subject, VoIP Usage Ramps, But ROI Sometimes Illusive. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website at https://avasant.com/report/voip-usage-ramps-but-roi-sometimes-illusive-2008/ (click for pricing).