Transcript Return on Investment for IP Communications

Return On Investment (ROI)
for IP Communications
Mike Kisch
CNIC Business Manager
Cisco Systems
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© 2002, Cisco Systems, Inc. All rights reserved.
1
Agenda
•General ROI Trends
Changes in the Capital Budgeting Process
Building the Business Case for New Technologies
Feedback from the CIO
5 Simple Steps to ROI
•The ROI for IP Communications
The Benefits of IP Communications
Profile of Customer Engagements
Factors that Drive a Positive/Negative ROI
Overall Findings
Vertical Industry Benchmarks and Case Studies
•Interactive Q&A
CIPTUG Attendees ROI
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General ROI Trends
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Business Trends Driving the
Focus on ROI
•Failures of previous IT investments to produce
expected returns
•Focus on Cost Containment/Reduction
•Greater involvement of business managers in
technology decisions
•IT now accounts for 46% of all capital
expenditures
•Continued struggles of the global economy keep
IT spending tight
•Re-introduction of back to basics methodologies
for capital investments
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Importance of ROI
•80% of IT professionals believe that measuring the value of IT
investments has increased over the past year!*
•86% of IT professionals believe that measuring the value of IT is
important**
•Only 30% have a formal ROI methodology/process***
3%
17%
Increased
Remained the Same
80%
*Source:Information Week Research **Source: CIO Magazine
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Decreased
***Darwin Magazine
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The Changing Use of ROI
Traditional
A structured financial process to “MEASURE”
the relevant costs and benefits in an effort to
determine the financial impact of an investment
Evolving
Organizations are beginning to use
ROI to compare the relative business
contribution of multiple capital
investments in an effort to“MAXIMIZE”
the value of the complete portfolio
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Feedback from the CIO
•Infrastructure investments need to payback in 18-24
months
•Strategic business benefits are still important, but priority
is given to projects that reduce costs
•If business case is built on soft business benefits, CIO will
heavily discount their impact (50-60%)
•Analysis needs to be based upon our internal data, not
industry averages or other companies numbers
•Keep in mind that I’m competing with other business
managers for scarce resources
•Need to identify ways to get more from less, by leveraging
existing technology investments
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5 Simple Steps to an ROI Analysis
1. Clearly understand the value proposition of the solution
and focus on the primary cost/benefit drivers
2. Validate these benefits through 3rd-party sources and
client case studies
3. Break the analysis into manageable pieces, don’t try to
do it all at once (ex. site segmentation)
4. Use a financial model that properly allocates the
costs/benefits over the term of the analysis and applies
fundamental financial principles
5. Run multiple what-if scenarios to determine range of
potential outcomes (sensitivity analysis)
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Obstacles to a Simple and Successful
ROI Analysis
•Inadequate documentation of costs
•Difficulty determining value of tangible/intangible
benefits
•Failure to set the appropriate scope
•Getting buy-in across the organization
•Too much reliance on one financial metric
(TCO/Payback/NPV) and one potential outcome
•Lack of formal ROI process/methodology
•Internal politics
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Cisco’s ROI Methodology
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Cisco’s ROI Methodology
Secondary Data Sources
• Time Motion studies
• Industry Averages
• Meta/Gartner/Giga Research
Customers
• Over 2200 unique analysis
• Customizable inputs
• ROI snapshots facilitate
the data gathering process
• Multiple deployment
scenarios
Cisco Primary Research
Converged Network
Investment
Calculator(CNIC)
• Focus Groups
• Customer Surveys
Analyst Input
• Demos to major analyst firms to get their
buy-in regarding soundness of
methodology
• Incorporated feedback
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Building a Credible Financial Model
•Cisco’s focus is on quantifying the hard benefits of IP
Communications
Models have the ability to calculate and discount the value of soft
business benefits
•All Cisco financial models are designed to be customized
to a customers specific situation
Defaults are used where appropriate, but can be overridden
•Financial models needs to be boardroom credible
Built on a solid financial foundation
Conservative assumptions with a transparent methodology
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\
Cisco Network Investment Calculator
(CNIC)
• Web-based software
application designed to help
customers understand the
specific financial implications
of deploying Cisco solutions
• Available to Cisco
salespeople and specialized
partners
• Includes modules for IPT,
Unified Messaging, CTI, ICM,
ICD, Audio Conferencing,
Storage Networking
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Benefits of IP Communications
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Hard Cost Savings - Equipment
•Reduction in cabling costs for new facilities
•Reduction in infrastructure cost at remote sites
via centralized call processing
•Increased utilization of core networking assets
•Reduction in PBX expansion and upgrade costs
•Consolidation of message store/back-up systems
•Reduction in PBX upgrade/expansion costs
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Hard Cost Savings - Network Administration
•Improved productivity of network support staff
Elimination of certain PBX related tasks
Consolidation of skill sets
Centralized application and network management
•Reduction in the costs of Moves, Adds and
Changes (MAC’s)
•Reduction in remote site management costs
•Reduction in ongoing maintenance costs
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Hard Cost Savings
Integrated Access/Toll Bypass
•Toll-Bypass savings for intra-company traffic
Domestic: Material if call volume is substantial to offset declining
toll rates in neighborhood of 2-5 cents or if organization lacks size
to negotiate prime rates with carriers
International: Still significant with average toll-rates of 12-15cents
•Consolidation of voice and data access
-Reduction in number of dedicated voice lines
-More efficient use of existing bandwidth
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Examples of Business Benefits
•Real Estate Savings
Better utilization of real estate by leveraging extension mobility to
increase worker to workspace ratio from 1to1 to X to 1
Significant savings in high-rent areas like NY, London, etc.
•Platform for New Applications
Unified Messaging – Improved productivity per user by 25-40 minutes per
day
Audio Conferencing – Ability to offload SP provided minutes (8-12
cents/minute) for smaller conference calls to internal service offering
•Ability to standardize infrastructure and extend
corporate capabilities to branch offices
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The ROI for IP Communications
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Summary of Customer Engagements
• 2200+ Customer Analysis to date
• Across all major verticals
•Financial Services – 228 analysis
•Retail – 250 analysis
•Education – 110 analysis
•Government – 140 analysis
• All types of deployment scenarios (greenfield, centrex, centralized call
processing, replacement of new/old PBX, lease/buy)
• A mix of different technologies (IPT, Contact Center, Unified Messaging,
Audio Conferencing, Integrated WAN)
• Different size deployments ranging from a 100 phones to 45,000 phones
• Flash cuts to 5 year migrations
• Global focus including U.S./ Europe/Asia/Latin America
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Key Drivers of Positive ROI
• A compelling event is driving the decision
New facility
End of useful life of PBX/Expiration of lease
Planned upgrade of data infrastructure
• Phased approach to deployment starting with the most
financially viable sites
• Ability to leverage centralized call processing
Deployment has number of remote sites that can leverage
CCP
• Dynamic organization with substantial employee
movement
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Key Drivers of Negative ROI
• In some cases, a significant data network upgrade is
necessary to provide the foundation for reliable voice
• Difficult to justify on hard cost savings alone the
replacement of a relatively new PBX at a single site
• Delays in the deployment of the technology delay the
realization of benefits
• Failure to take advantage of key value producing features
of the technology
• Aggressive pricing from traditional PBX vendors
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Summary of ROI Findings
• Positive Net Present Value 68% of the time
• Average payback of 16-18 months
• Average annual savings per user of $334
• Average # of phones in analysis = 600 phones
• Average hurdle rate of 10-11%
• Primary Areas of Cost Reduction
•Network Administration – 48% of savings
•Equipment – 28% of savings
•Integrated Access/Toll-Bypass – 24% of savings
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Source: Converged Network Investment Calculator 7/0223
Summary of ROI Findings Deployment Scenarios
•Paybacks vary based upon deployment scenario, with green fields
producing the most rapid payback
(Months)
24
18
14
9
6
0
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Green
Field
TDM Centrex
Replacement
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Multi-site
CCP
Older PBX
Replacement
Newer PBX
Replacement
Source: Converged Network Investment Calculator 7/02
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ROI Findings for the
Financial Services
Vertical
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ROI Findings – By Vertical
Payback in Months
(Months)
28
28
18
18
13
14
6
0
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14
6
Retail
Education
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Government
Financial
Services
Healthcare
Source: Converged Network Investment Calculator 8/0226
ROI Benchmarks –
Financial Services (Avg. 421 phones)
Payback/Breakeven Distribution
Immediate
Year 1
Year 2
Year 3
Year 4
Year 5
(N=15)
Net Present Value Distribution
$(100K)
$0K
$500K
$1M
$2M
$5M
(N=15)
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Source: Converged Network Investment Calculator 8/02
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Financial Services Case Study
• Securities firm needed to
replace older PBX that was
nearing end of useful life
• Needed to identify a way to
reduce the costs of a
constantly moving workforce
• Needed to simplify
management of the network
and improve the productivity
of the network support team
• Deployed 1500 Cisco IP Phones
• Deployed conference connection
to offload smaller conference
calls
• Gave the user the ability to move
their phone in an effort to save
MAC charges
• Leveraged extension mobility to
improve utilization of real estate
space
• Payback of 20 Months
• Net Present Value of $1.5M
• Achieved an annual savings of $308/per user
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ROI Findings for the
Retail
Vertical
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ROI Findings – By Vertical
Payback in Months
(Months)
28
28
18
18
13
14
6
0
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14
6
Retail
Education
© 2002, Cisco Systems, Inc. All rights reserved.
Government
Financial
Services
Healthcare
Source: Converged Network Investment Calculator 8/02
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ROI Benchmarks – Retail (Avg. 1255 phones)
Payback/Breakeven Distribution
Immediate
Year 1
Year 2
Year 3
Year 4
Year 5
(N=10)
Net Present Value Distribution
$(100K)
$0K
$500K
$1M
$2M
$5M
(N=10)
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Source: Converged Network Investment Calculator 8/02
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Retail Case Study
• National restaurant chain
• Solution consists of 2500 Cisco
needed to provide a more
IP Phones leveraging centralized
cost effective voice service to
call processing
remote sites
• Updated WAN to facilitate
• Wanted a standard solution
integrated access where
that would lower remote site
available
management costs and
• Able to increase productivity of
provide a consistent level of
network support staff via
service
centralizing call processing
• Wanted to greater leverage
planned data network
upgrade
• Payback of 18 Months
• Net Present Value of $2.7M
• Achieved an annual savings of $361/per user
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ROI Findings for the
Government
Vertical
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ROI Findings – Government Vertical
Payback in Months
(Months)
28
28
18
18
13
14
6
0
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14
6
Retail
Education
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Government
Financial
Services
Healthcare
Source: Converged Network Investment Calculator 8/02
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ROI Benchmarks –
Government (Avg. 3000 phones)
Payback/Breakeven Distribution
Immediate
Year 1
Year 2
Year 3
Year 4
Year 5
(N=10)
Net Present Value Distribution
$(100K)
$0K
$500K
$1M
$2M
$5M
(N=10)
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Source: Converged Network Investment Calculator 8/02
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Government Vertical Case Study
• Medium size east coast
city was evaluating their
future voice strategy
• Had a mix of PBX, key
systems and Centrex
• Centrex contracts were
coming due for renewal
• Decided to deploy IP Telephony
in place of Centrex service to 500
users across several city
facilities as first step towards
converging their network
• Decided to lease instead of
purchase new IP Telephony
equipment
• Annual lease costs for IPT were
less then annual Centrex costs
• Immediate Payback
• Net Present Value of $117K
• Annual savings per user of $335
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ROI Findings for the
Education
Vertical
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ROI Findings – Education
Payback in Months
(Months)
28
28
18
18
13
14
6
0
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14
6
Retail
Education
© 2002, Cisco Systems, Inc. All rights reserved.
Government
Financial
Services
Healthcare
Source: Converged Network Investment Calculator 8/02
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ROI Benchmarks –
Education (Avg. 283 phones)
Payback/Breakeven Distribution
Immediate
Year 1
Year 2
Year 3
Year 4
Year 5
(N=10)
Net Present Value Distribution
$(100K)
$0K
$500K
$1M
$2M
$5M
(N=10)
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Source: Converged Network Investment Calculator 8/02
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Education Vertical Case Study
• Extension campus of large
state university needed to
replace existing end of life
PBX
• Needed to be able to
continue to leverage a
percentage of existing
handsets
• Was faced with an
imminent upgrade cost to
voicemail system and PBX
• Reused 1500 analog phones,
while deploying 700 IP
phones of various models
• Deployed (4) Call Managers
and Unity voicemail
• Upgraded data infrastructure
• Payback of 11 Months
• Net Present Value of $253K
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Final Thoughts
• As the technology matures, so does the
Business Case for IP Communications
• A carefully prepared ROI analysis will assist
you in your efforts to internally sell IP
Communications
• The keys to building the ROI analysis are to
understand the primary value propositions of
IP Communications and to set an appropriate
scope for the analysis
• Cisco has a set of tools and best practices
that can facilitate the ROI analysis process
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Backup Slides
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Cisco’s ROI
for IP Telephony
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IP Telephony at Cisco
IP Telephony
Global Deployment
Brussels, Marcel Thiry
Brussels, (Antares, Pegasus) *
Anchorage, AK
Status: 39,120+ IP Phones
153 Sites in Production
27 to go!
Stockley Park *
London City
Oslo, Göteborg
Chicago, IL
Bloomington, MN
Boise, ID
Carmel, IN
Toronto
Amsterdam *
Paris
Barcelona
Helsinki
Copenhagen
Berlin, Mannheim,
Munich, Stuttgart,
Beijing *
Madrid
New York, NY
Howell, NY
Lisbon
Glen Allen, VA
Gland
RTP, NC
Athens Istanbul
Luxembourg
Jacksonville, FL
Montgomery, AL
San Jose, CA
Co Springs, CO
Tulsa, OK
Rogers, OK
Tokyo (*)
Hong Kong
Dallas Metro
Dallas Sales
Akasaka,
Fukuoka,
Nagoya
Riyadh
New Delhi
Metairie, LA
Baton Rouge, LA
Bangkok
Singapore *
Brisbane
Bryanston
Auckland
Tech Trial *
Production
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Asia Pac
1,725 IP Phones
Americas 6,120 IP Phones
Corporate 20,658 IP Phones
EMEA
3,047 IP Phones
© 2002, Cisco Systems, Inc. All rights reserved.
Adelaide
Melbourne
Perth
Wellington
Sydney (CM 3.0)
(North Sydney, Chatswood)
44
• ROI = 126%
(Relative Scale)
• Payback Month = 10
• NPV (@12 %) = $60 million
IP & Web Foundation
Expanded to Include Voice
2001
2000
(US$)
Net Benefit
Business Benefit of Cisco IP Telephony
Actual ROI Results for Cisco EMEA:
FY2000 - FY2005
$2.6 m
=$340/emp.
2000
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=$1230/emp.
2001
2003
2002
$9.4m
© 2002, Cisco Systems, Inc. All rights reserved.
Deployment of
Converged E-Business
Applications:
$12.4m
=$1625/emp.
2002
2004
2005
$33m
$33m
=$4320/emp.
=$4320/emp.
2003
2004
Year
2005
45
Breaking Down the Benefits:
Large Office Example
The Single Network
Notes:
• Cabling benefit is a one-time benefit and is
only generally applicable during the year of a
building move (Cisco’s “Large Office”
moved in 2001 and thus realised this benefit)
• Costs for Moves, Adds and Changes (MAC’s)
are based on the average cost of an
outsourced PBX MAC, versus that of a Cisco
IPT MAC
$450k
$60k
Total
Recurring
$630k
$120k
(!) = Annual Recurring Benefit
(+) = One-Time Benefit
Cabling
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(+)
$500k
Total
One-Time
$500k
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Breaking Down the Benefits:
Large Office Example
Notes:
• The ROI project team made a judgement call that, even
though the productivity of Cisco employees is undeniably
increased through the use of Cisco’s Unified Messaging
(UM) and Personal Assistant (PA) applications, the benefits
modelling process would be unacceptably vague because
the associated business processes and policies are not yet
defined (e.g. incurring a GSM call to have PA speak e-mail
over the phone)
• This situation will change once the new business
processes surrounding UM and PA are defined.
• Productivity benefits of CTI applications are substantial
because they emulate those of agents at large, CTI-enabled
call centres yet can be implemented at a fraction of the
cost
• Benefits of XML applications are actually small for Cisco
because almost all Cisco employees have laptops and
ubiquitous access to the Web. Organisations that are not
in this same situation will most likely benefit more than
Cisco due to not having to provide a PC to all employees
Employee
Productivity
$24k
$12k
$1k
Total
Recurring
$1.1+ m
$475k
$590k
(!) = Annual Recurring Benefit
(+) = One-Time Benefit
$???k
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Breaking Down the Costs:
Large Office Example
Costs
Total
Opex
$320k
Notes:
• In line with the highly conservative, non-greenfield
approach, the ROI analysis assumes that TDMbased infrastructure (PBX, voice mail system,
multiplexors, etc.) was already in place, before
migration to Cisco IP Telephony
• Hence TDM-based infrastructure capex costs are
$0 – i.e. all capex costs used in the analysis are
representative of Cisco IP Telephony equipment
only
$20 k
$300 k
$1.5 m
Total
Capex
$2.6 m
$0
$1.1 m
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Benefit Differences of the Large,
Medium, Small Offices
• Large Office Results:
Cisco EMEA Headquarters, Bedfont Lakes/London, UK: 1147 Employees
ROI = 130%
Payback Month = 9
NPV = $12.3 m
• Medium Office Results:
Cisco Eschborn/Frankfurt, Germany: 171 Employees
ROI = 120%
Payback Month = 10
NPV = $1.8 m
• Small Office Results:
Cisco Sophia Antipolis, France: 35 Employees
ROI = 111%
Payback Month = 11
NPV = $330 k
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Key Customer Drivers for IP
Communications
• Lower Cost of “Network”
Ownership
– Cost savings are the primary
short-term reason to converge
voice, data and video onto a
single IP network
– This reflects the impact of the
slowing economy on IT
investment
• Enhanced Business
Communications
– Creating new revenue streams
and deploying new applications
that can increase productivity or
enhance customer care are seen
as significant, but longer term
benefits of convergence
Aggregate View on Drivers
60%
40%
20%
0%
1st — 428
2nd — 397
3rd — 344
To drive cost savings (easier infrastructure mgmt.)
To drive revenues
To enable additional application capabilities
Other
Source: The META Group Multi-Client Study 2000/01
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Lower Cost of “Network” Ownership
• Almost 70% of survey
respondents believe they
will realize substantial to
moderate infrastructure
savings when converging
their network
• 50% expect substantial to
moderate administrative
cost savings
Anticipated Cost Savings
50%
40%
30%
20%
10%
0%
• 75% expect to achieve
substantial to moderate
voice/data circuit savings
Substantial
Moderate
Administrative Streamlining
Circuit Costs (T1s, T3s)
Other
Limited
None
Infrastructure
(Cabling, Hardware)
Toll Bypass
Source: The META Group Multi-Client Study 2000/01
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Lower Cost of “Network” Ownership
• Almost 70% of survey
respondents believe they
will realize substantial to
moderate infrastructure
savings when converging
their network
• 50% expect substantial to
moderate administrative
cost savings
Anticipated Cost Savings
50%
40%
30%
20%
10%
0%
• 75% expect to achieve
substantial to moderate
voice/data circuit savings
Substantial
Moderate
Administrative Streamlining
Circuit Costs (T1s, T3s)
Other
Limited
None
Infrastructure
(Cabling, Hardware)
Toll Bypass
Source: The META Group Multi-Client Study 2000/01
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IPT Delivering
Cost Savings Benefits
Majority of customers
expectations are being met or
exceeded!!!
IPT deployment
met or exceeded
cost savings
expectations
Didn't meet
expectations
37%
63%
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IT is Feeling the Heat
Yet, Companies Lack Formal Metrics
% of customers that require ROI Documentation
83%
90
80
70
60
50
40
30
20
Q: Does your company have a formal ROI measurement
system or informal payback scenarios?
N=240
65%
70%
60%
42%
50%
40%
33%
30%
20%
10
0
10%
2000
2002
Source: Darwin Magazine
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0%
Formal Measurement
Informal Measurement
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Strategic Business Benefits
Productivity
Mobility
Business Resilience
-XML apps on the phone
-Enhanced space
utilization via
enablement of hoteling
environment
-Distributed nature of
IP can improve voice
network continuity
-Foundation for end-user
applications
-Conference
Connection
-Personal Assistant
-Unified Messaging
-Phone number
portability
-Device identity
-Faster application
deployment
-Faster set-up of new
facilities
-Mobility applications
-Hoot ‘n’ Holler
-CTI
-Unified
Messaging
-Personal
Assistant
-Softphone
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Hard Cost Savings
Equipment Related
Equipment and
Maintenance
Network
Administration
-Reduction in cabling
costs for new facilities
-Improved
productivity of
network support staff
-Reduction in
infrastructure cost using
centralized call
processing
-Increased productivity
of core networking
assets
-Reduction in the
costs of Moves, Adds
and Changes (MAC’s)
-Reduction in the
cost of outsourced
services
Toll-Bypass
-Toll-Bypass
savings for on-net
traffic
-Consolidation in
voice and data
access
-Elimination of
voice trunks
-Reduction in PBX
expansion and upgrade
costs
-Reduction in annual
maintenance costs
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Real Benefits of Cisco IP Telephony
Hard-dollar cost savings
Single Network
• Maintenance, Cabling, Administration, Support, Power,
Moves/Adds/Changes (MAC’s), Staff
• Voice Business Continuity
• Integral component to an effective voice business continuity plan
• Can be compared against other less effective plans
• Voice message backup/restore
• Real Estate
• Space Utilisation, Reduced Operational Costs, Flexibility
• Reduced Call Costs
•
•
•
•
•
Reduced mobile phone usage
Extension Portability Campus Roaming, Home Office, Other Location
Outbound Call Management
Unified Messaging
Audio Conferencing
• Small Branch Office
•
•
•
•
Centralised Call Processing
Elimination of voice trunks
IP Toll Bypass
No on-site PBX
Reporting, Billing, Cost Management
• Cross-Enterprise telecom reporting
• Cross-Enterprise call cost management
• Predictability of telecom bills
• Reduced PC Costs
• IP phone can replace a web-enabled PC or laptop in certain
environments
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© 2002, Cisco Systems, Inc. All rights reserved.
Productivity
increases that
can be safely
quantified
Employee
Productivity
• End User Applications
• Audio Conferencing
• Unified Messaging
• Personal Assistant
• Web Access
• Computer Telephony
Integration
• IT Operations
• Facilities Mgmt Ops
Benefits that are
very real, but
difficult to
quantify
Cultural
Enhancement
• Customer Satisfaction
• Employee Retention
• Geographic Flexibility
• Competitive Positioning
• Faster Application
Deployment
• Voice Business
Continuity
• Difficult-to-Quantify
Productivity via
Converged Applications
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ROI Case Study
Government Vertical
Customer
# of
Benefiting
Users
Payback
Period
Leading
Technology
Firm
650
6
Large City
Government
23,000
(months)
NPV
(US$ over 5-year
Time Horizon)
$783K
Ongoing Net
Benefit (†)
Capital
Expenditure
(US$/Year)
(US$)
$35OK
$1.4M
• Improved productivity of
support staff by 33%
• Reduced cabling expense
$15M
• Consolidated voice/data
access
• Reduction in annual
upgrade and maintenance
costs
$1.02M
• Multiple employee/location
support, Network Admin
savings
$550K
• Lower infrastructure costs
via single, converged
network
• Lower Annual Maintenance
Costs
$700K
• Reduced costs of MAC’s
• Improvement in
productivity of support
staff
$538/Employee
$24.2M
$7.5M
$326/Employee
Restaurant
Chain
2000
Industrial
Manufacturer
1230
Financial
Services Firm
1500
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21
18
$2.773M
$922K
$461/Employee
0
$748K
$160K
$130/Employee
19
$1.573M
$462K
$308/Employee
© 2002, Cisco Systems, Inc. All rights reserved.
Primary Benefit
Sources
58
Education Vertical in CNIC
• CNIC database contains 110+ Education ROI analysis
–Includes College and Universities, High School and Elementary
School districts, Administrative facilities/School Boards
–Deployments range from 150-900 phones
–US only
–Representation of Campus Administration, County School Districts
and remote classrooms
• Common characteristics across customers
–Multi-site and Larger Central Site environments
–Dynamic operations
•Multiple student/administrator/location support,
–Single vendor environments with longevity, Strong Budget
Consideration-”Cost Conscious”
–Legacy equipment,some Centrex services/out-sourcing
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ROI Snapshot
Financial Services
• CNIC database contains 228 financial services ROI
analysis
–Includes retail brokerage, insurance, banking
–Deployments range from 100-6,000 phones
–Mostly U.S. and European enterprises
• Common characteristics across customers
–Multi-site environments
–Dynamic operations
•Lots of people moving
–Multi-Vendor environments
•As a result of acquisition or because of decentralized control of
networking resources
–Branch offices have lesser network/application capabilities than HQ
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Retail Vertical in CNIC
• CNIC database contains 250+ Retail/Mfg ROI analysis
–Includes Restaurant Chains, New Retail Franchise locations,
Automotive Dealerships/Plants
–Deployments range from 160-3000 phones
–Both U.S and International
–Representation of new store/fast food locations, Manufacturers HQ
and Assembly facilities
• Common characteristics across customers
–-New Branch and campus environments
–Dynamic operations
•Nation-wide or Regional growth patterns for new facilities
–Rapid Deployment, Productivity of Support Staff, Reduced Cabling
–Greenfield and Older PBX conversion sites
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CNIC Vertical Snapshot
Government
• CNIC database contains 140+ Government ROI analysis
–Includes State, Local & Federal Government
–Deployments range from 120-25,000 phones
–Mostly U.S, some International
–Representation of Federal Agencies, State Governments,
Cities/Municipalities/County
• Common characteristics across customers
–Multi-site and Larger Central Site environments
–Dynamic operations
•Consolidation of Real Estate/Office Space and people(“Downsizing of government”)
–Large, Single Vendor environments due RFP/Low Cost purchasing
parameters
–Lots of Legacy equipment and Centrex services
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Areas of Hard Cost Savings By
Deployment Scenario
Areas of Return
Green
Field
TDM Centrex
Replacement
Multi-site
CCP
Older PBX
Replacement
Newer PBX
Replacement
Reduced Infrastructure
Costs
Reduced
Expansion/Upgrade
Reduced Cabling
Costs
Increased Productivity
of Support Staff
Moves, Adds, Changes
Reduction in
Outsourced Costs
Toll-Bypass
Voice Circuit
Consolidation
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63
What the Analysts Are Saying About
CNIC
End-users have told us again and again that identifying the
bottom-line benefit when evaluating new technologies is a
priority given today’s soft economic climate. Effective ROI
tools can serve as a key element to the sales process
because the offer the means for customers to measure the
actual long-term value of new technologies like IP
Communications. Cisco’s Converged Network Investment
Calculator (CNIC) is an elegant response that can play a very
meaningful role in persuading customer to invest in a new
Cisco technology.”
“The most common complaints customers have about ROI
Ken Presti
calculators are that they are too
IDC
Optimistic. Cisco Converged Network Investment Calculator
(CNIC) addresses the potential for overly
Optimistic ROI calculations by letting users enter in their own
assumptions –from productivity gains to wiring drop
Cost estimates. Building useful ROI tools is difficult. They
have to be detailed enough to yield meaningful results that
are tailored
To each customers unique situation, yet simple enough to
make it usable. CNIC is a comprehensive calculator that
considers very detailed
Aspects of the real-world costs of IP Telephony.”
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© 2002, Cisco Systems, Inc. All rights reserved.
Kathryn Korostoff
President
Sage Research
64
Holistic Approach to ROI
A single ROI calculator
for multiple Cisco
solutions
A central support
resource that Cisco sales,
partners, and customers
can depend on for fast
answers
CNIC
User Support
Standardized
approach to
building ROI
models and
engaging with
customers
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E-learning and
instructor led
training on ROI
Training
Best Practices
© 2002, Cisco Systems, Inc. All rights reserved.
65
Key Drivers of Positive ROI –
Retail/Manufacturing Vertical
• Situational/Strategic Drivers
–A compelling event is driving the decision
Ex. new facility, end of useful life of PBX, planned upgrade of data
infrastructure
–Ability to leverage IP Convergence and centralized call processing
Deployments have sites that are new construction/facilities
Allows enterprises to more effectively utilize support staff
Reduces costs to manage remote sites
• Specific Hard Cost Savings
–Reduced infrastructure costs via Centralized Call Processing
–Reduction in Moves, Adds, and Changes (MAC’s)
–-Toll-Bypass cost savings of 15-20%
–Voice/Data access consolidation
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Key Drivers of Positive ROI –
Education Vertical
• Situational/Strategic Drivers
–A compelling event is driving the decision
Ex. new facility, end of useful life of PBX, planned upgrade of data
infrastructure
–Ability to leverage centralized call processing
Deployment has remote sites that can leverage CCP
Reduces costs to manage remote sites, staff & support productivity
improvement
–Creating new revenue generating services (broadband, advanced voice
services)
• Specific Hard Cost Savings
–Reduced infrastructure costs via Centralized Call Processing
–Reduction in Upgrade and Expansion Costs
–Voice/Data access consolidation
–Reduced Out-Sourcing Costs
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Key Drivers of Positive ROI –
Government Vertical
• Situational/Strategic Drivers
–A compelling event is driving the decision
Ex. new facility, end of useful life of PBX, planned upgrade of data
infrastructure
–Ability to leverage centralized call processing
Deployment has lots of remote sites that can leverage CCP
Allows enterprises to more effectively utilize fewer assets
Reduces costs to manage remote sites
• Specific Hard Cost Savings
–Reduced infrastructure costs via Centralized Call Processing
–Reduction in Moves, Adds, and Changes (MAC’s)
–Reduction in annual upgrade/expansion costs
–-Toll-Bypass cost savings of 15-20%
–Voice/Data access consolidation
–Reduced Out-Sourcing Costs (CENTREX)
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Key Drivers of Positive ROI –
Financial Services Vertical
• Situational/Strategic Drivers
–A compelling event is driving the decision
Ex. new facility, end of useful life of PBX, planned upgrade of data
infrastructure
–Ability to leverage centralized call processing
• Specific Hard Cost Savings
–Reduction in equipment costs via Centralized Call Processing
–Reduction in Moves, Adds, and Changes (MAC’s)
–Improvements in the productivity of network support staff
–Reduced remote site management costs
–-Toll-Bypass cost savings of 15-20%
–Voice/Data access consolidation
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69