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Hosted PBX:
A Viable IP PBX Alternative?
July 2005
Agenda
–State of the market
–Hosted PBX vs. IP PBX
–TCO: hosted vs. premises
–Case studies
–Co-existence
–Future trends
2
State of the
Market
3
Hosted Voice: State of the Market
Large players are deployed
–E.g., Verizon, MCI, BellSouth, SBC,
Telstra, Singtel, T-Systems
CLECs expand
–E.g., US LEC, McLeod, XO,
CBeyond, BroadWing 100+ others
Residential distracts enterprise
deployments (temporarily)
–The Vonage effect
Hosted voice follows IP PBX
deployment path
–Trials, branch offices, HQ
Big names deploying
–E.g., US EPA, State of Minn., U
Kentucky, GMAC, Coca Cola, Texas
A&M
4
Which Service Providers? Examples
Incumbent Carriers
Competitive Carriers
Managed SPs / SIs
5
Hosted PBX
6
Hosted PBX Follows Software Trends
30 years of PBX domination
– Centrex fought back with
limited success
– IP PBX same evolutionary
model
IP Telephony changing
market
– From hardware to software
Enterprise software apps
migrating to data center
Is voice just
another data center
application?
– E.g., CRM, ERP, Web hosting,
directory services, email, etc.
7
Hosted PBX: Best of PBX & Centrex
Hosted PBX
Like IP PBX
Like Centrex
IP-based software model
Rich PBX + multimedia functions
Web-based control, MACs
Scale, reliability
Purchase incrementally
Centralized control, mgmt.
Open, standards-based
Best of
both worlds
Consistent Global
Service Delivery
Enterprise
Sites
8
Hosted PBX vs. IP PBX Comparison
Attribute
Hosted PBX
IP PBX
Scale
• Millions of users
• 1-10K users
• Lower numbers of IP phones
Networking
• Centralized mgmt. and MACs
• Uniform dialing plans
• Uniform service set
• Hard-to-manage dialing plans
• Service islands
Total Cost of
Ownership
• Lower cost with outsource
• Higher when total costs factored
in
Openness &
standards
• SIP-based
• Open CPE
• Proprietary
• Closed CPE
Convergence
• LAN AND WAN
• LAN only
Survivability
• Robust, IP + geographic
• Multiple points of failure
Reliability
• 5 9’s for system
• Solaris-based
• 4 9’s for system
• Windows-based?
Technology Risk
• Borne by service provider
• Borne by enterprise
Management
• Centralized system mgmt.
• Mgmt. based on each system
9
Hosted PBX
Economics
10
VoiceCon IP PBX RFP Specifications
System requirements
Primary HQ Site
–Single system image
–Standard business features
–Transparent station/system
feature operation
–Centralized support services
• 1,500 IP line stations
• 100 analog ports
Region 1
• 500 IP line stations
• 50 analog ports
Region 2
• 250 IP line stations
• 50 analog ports
• Attendants, messaging, system
management
–Enhanced 911 support
Messaging
Branch 1
Branch 2
Branch 3
• 200 IP
• 25 analog
• 100 IP
• 10 analog
• 75 IP
• 10 analog
–2750 users, 3000 max
–125 ports, 175 max
End points
Branch 4
• 50 IP
• 5 analog
Sat 1
Sat 2
• 15 IP
• 2 analog
• 10 IP
• 2 analog
–2700 IP sets
–250 analog ports
• Conference phones, fax, backup
lines
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2005 VoiceCon RFP: TCO Comparison
Summary of Solution Costs – Per Month, Per User
Solution
Avaya
Cisco
Avg.- 9 Bids
Hosted
Voice Equipment + Maintenance
Carrier Voice Services
Access
Minutes
CPE (Layer 2/3 Switching)
Phones
$14.48
n/a
$12.68*
$5.00
$2.68
$8.04
$9.44
n/a
$12.68*
$5.00
$2.68
$10.55
$10.70
n/a
$12.68*
$5.00
$2.68
$8.58
n/a
$18.00
$3.70*
$5.00
$2.02
$5.60
Install & Support Staff
$25.13**
$25.63**
$25.88**
$10.66**
$68.01
$65.98
$65.52
$44.98
Total
Hosted 31% less TCO than 9 system average
*Estimated using market pricing inputs
**Uses some estimates, some RFP data
–34% less than Avaya, 32% less than Cisco
Additional benefits
–Carrier grade reliability and survivability
–More flexibility to support change, i.e, adding/removing users, sites
–Less risk: no technology lock-in, stranded assets
TCO only improves with the addition of sites and users
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Hosted PBX TCO Beats Existing PBX
TEQ Consult Group – June 2005
$140,000
Networked PBXs
$120,000
Networked IP PBXs
$100,000
Monthly
Total
Centralized Softswitch
$80,000
$60,000
$40,000
$20,000
$0
5K
10K
15K
25K
Enterprise Stations
“Softswitch solution” offers lower TCO for all size enterprises
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Services/OpEX Costs Overshadow
CapEX
TEQ Consult Group – June 2005
$80
Networked PBXs
$70
Networked IP PBXs
$60
Centralized Softswitch
$50
Monthly
Cost/Use $40
r
$30
$20
$10
$0
CapEx*
OpEx
Telecom Services
*Assumes PBX network infrastructure in place
Softswitch delivers better CapEx, OpEx, and equivalent
Telecom Services versus IP PBX
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Case Studies
15
State of Minnesota
Background
–Large-scale multi-office
deployment, 62K users
–Offices interconnected
by private network
Problems Addressed
–Multi-layer
administration
–Manage call traffic
across public and private
networks
“This will further help the state meet current
and future telephony needs.”
“We will be able to increase the eligibility of
state agencies to take advantage of the
benefits of IP telephony, which will result in
toll savings, circuit consolidation and lower
administration costs."
Keith Payden, State of Minnesota Chief
Information Officer
Key Drivers
–Future-proofing to next
decade
–Open, standard CPE
–Substantial TCO savings
(voicemail)
–Customized interface and
services for different agency
requirements
16
University of Kentucky
Background
–18K students
–Unsatisfied with Cisco Call
Manager deployment
Problems Addressed
–Networking existing
equipment, IP PBXs, hosted
users
–IP PBX scalability
Deployment
–Reloading Cisco phones
with SIP for BroadWorks
–Delivered by Lucent & Alltel
Key Drivers
–Reuse of existing Cisco IP
phones, switches, routers
–Able to meet scalability needs
• E.g., Solaris vs. Windows
–Carrier-grade service offering
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From PBX to Hosted PBX: Before & After
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IP PBX
Interworking
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Hosted and IP PBX: Coexistence
SIP Trunking
– Provide connectivity to IP PBXs
– Save on capex: no need for PRI gateway
Virtual Services for Existing PBXs and IP PBXs
– E.g., Click-to-dial, auto attendant, attendant console,
Enterprise-wide voice mail, ACD/call center, voice VPN
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IP PBX SIP Inter-working
Build a next-gen integrated communication bundle
designed to enhance the deployment of IP (SIP) PBXs.
Current Network
VoIP
IP-PBX
SIPConnect
VoIP
TDM
GW
IP Phones
Customer Premises
sold and managed by
Channel Partner
Legacy TDM
Network
IP-PBX
SIP
IP Phones
Customer Premises
sold and managed by
Channel Partner
Carrier
VoIP
Network
GW
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Enhanced Services for PBX Users
IP Platform
–Start with trunking service
–Add Voice Mail
–Add Unified Messaging
Add Click-to-dial
Add Auto Attendant/IVR
Add Find-Me/Follow-Me
Add Remote/Tele-worker Services
Remote/Tele-worker Service
IVR, Find-me/Follow me
Enhanced
Services
No offering
Auto Attendant
Hosted PBX
Unified Messaging
Basic Service
Connectivity
Voice Mail
Voice Mail
Voice Trunking
Voice Trunking
TDM
IP
22
SIPConnect™ Overview
Partnership
Specification
– Open source: www.sipconnect.info
Availability
– From Cbeyond today
– Additional carriers adding service
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Future
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Hosted PBX vs. IP PBX: Sweet Spots
Number of Employees
10,000+
Campus
Fortune 500
Hosted PBX
Sweet Spot
IP PBX
Sweet
Spot
1000
Hosted PBX
Sweet Spot
Hosted PBX
Sweet Spot
10
SME
1
Retail
10
Number of Sites
100+
25
InfoTech Forecast for Line Shipments
This forecast reflects historical, end-user demand, emerging offers, and
channel capability trends
20,000
17,500
15,000
Hosted IP-PBX
Centrex
12,500
Managed IP PBX
IP-PBX
10,000
7,500
KTS
PBX
5,000
2,500
0
2003
2004
2005
2006
2007
2008
Hosted IP-PBX
61
195
726
1575
2688
3866
Centrex
711
586
487
414
356
310
Managed IP PBX
222
300
467
821
1493
2182
IP-PBX
3631
5386
6097
6690
7342
8243
KTS
4106
4473
4572
4356
3930
3305
PBX
4314
3120
2286
1698
1222
904
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Hosted vs. IP PBX: Avaya “Sell” Report
Hosted: Steal ~15% of IP PBX market in next 4 years
– Reasons:
• Broadband = more hosted competition (vs. Centrex monopoly)
• IP = hosted parity with premises offers
• Avaya poorly positioned for hosted
Source: Janco Partners Inc. November 200427
Future: Mobile Hosted PBX
Same Hosted PBX Application
VoIP Application Server
Extend Existing Services
Managed IP Network
IP Access Network
–Mobile handset looks like IP
phone
–For existing and 3G networks
Wireless Network
–Group mobile subscribers into
an “enterprise”
Support for Dual Mode
Handsets
Enterprise Sites
Mobile Phones
–Use WiFi inside and cellular
outside enterprise
Support Mobile Handsets with
Hosted PBX Enterprise Application
28
Summary
–The Hosted PBX market is moving
into the mainstream
–Large carriers, enterprises are
embracing Hosted PBX globally
–Hosted PBX can have significant
TCO savings vs. an IP PBX
–Hosted PBX has lower TCO vs.
doing nothing
–Future = SIP inter-working, mobile
integration
–Hosted PBX can provide a great
alternative to an IP PBX
29
For More Information
Scott Wharton, VP Marketing
220 Perry Parkway
Gaithersburg, Maryland 20877
USA
+1.301.977.9940
[email protected]
www.broadsoft.com30