Presented by:

Vendor Guru TM

5 Tips for Saving Money on Your

Business Phone System
By Clare Kaufman, Ph.D.

Copyright ©2008 HQ Publications ®, LLC. All rights reserved.

Contents

Introduction................................................................................................................................................ 2

VoIP: a Leaner Business phone Solution.................................................................................................... 2

Five Tips for Maximizing Office phone Savings........................................................................................ 2

1. Evaluate Equipment Investment................................................................................................. 2
Converged Analog-VoIP Network................................................................................................... 2
‘Hardware-Lite’ Hosted VoIP.......................................................................................................... 3
2. Maintenance Costs...................................................................................................................... 3
3. Pricing Structure......................................................................................................................... 3
4. Network Integration.................................................................................................................... 3
5. Efficiency Gains.......................................................................................................................... 4

Case Studies in Business Phone Savings.................................................................................................... 4

BlueTrack Inc., VocalocityPBX.................................................................................................................. 4

Pace International, Speakeasy Hosted Voice.............................................................................................. 4

Conclusion.................................................................................................................................................. 5

Sources........................................................................................................................................................ 5

About the Author......................................................................................................................................... 5

Copyright ©2008 HQ Publications ®, LLC. All rights reserved.

Introduction
With recession looming and profit margins under siege, the last thing any company needs is a capital-draining
business phone system. Fortunately today’s VoIP providers offer plenty of cost-trimming features to keep
business phone costs in check. Flat-rate monthly plans, hosted service, as-needed functionality, and efficiency
gains add up to dramatically lower communications overhead. Here’s a look at five ways businesses are taking
advantage of new VoIP technology to save money.

VoIP: a Leaner Business phone Solution

If your business is still on the ‘POTS’ network the potential for cost cutting is vast. A 2007 Nemertes
Research survey of 100 companies found that organizations save between 15% and 40% on wide area
network costs by moving to VoIP. Voice over Internet Protocol telephony has taken over the business
telephony market with the following money-saving features:

•low upfront investment in equipment

•low long distance charges
•savings in office overhead costs through telecommuting
•efficiency gains from integrating voice and data

IP telephony lowers office phone costs by utilizing the company’s existing communications infrastructure—its
high-speed data network. By integrating voice service with the company’s virtual private network, businesses
realize greater efficiency at a lower cost. This win-win proposition has made IP telephony the industry
standard for new installations. As IT research analyst Irwin Lazar observes: “If you’re replacing aging
equipment or going to new facilities, you don’t have much choice: It’ll be IP.”

Five Tips for Maximizing Office phone Savings

Luckily for those who don’t want to make wholesale equipment changes, it doesn’t take a complete phone
system overhaul to realize VoIP’s cost benefits. Here are five ways your business can save money with VoIP
regardless of the state of the current legacy system.

1. Evaluate Equipment Investment

The vaunted flexibility of VoIP technology extends to system hardware as well. Companies may choose to
invest in on-premises VoIP hardware such as an IP PBX, subscribe to an off-premises provider, or build a
hybrid solution that leverages legacy equipment—even traditional phone wiring and PBX equipment.

Converged Analog-VoIP Network

For companies with existing phone hardware, protecting this investment is the first opportunity for business
phone savings. VoIP providers offer solutions specifically designed to repurpose analog systems for VoIP
technology. Inter-Tel’s Axxess converged communications system, for example, is a flexible platform that
acts as an interface between new and old communications technologies. The system extends an analog legacy
system with such post-analog IP functionality as intelligent call routing, wireless support, and data integration.

Copyright ©2008 HQ Publications ®, LLC. All rights reserved. 2

‘Hardware-Lite’ Hosted VoIP
For companies building a phone system from the ground up, hosted service providers offer instant savings by
minimizing hardware costs. Packet8, Vocalocity, and Speakeasy require only basic equipment such as phone
handsets; the service operates over an existing broadband connection and relies on an off-premises PBX for
switchboard and advanced functionality. Packet8 underscores the simplicity of hosted service: “All a user needs
to link to Virtual Office is access to a broadband Internet connection, a Packet8 Virtual Office phone, and a
service plan.”

2. Maintenance Costs
Many businesses realize significant office phone savings by eliminating the costs associated with maintaining
a separate analog voice system. Between switchboard reconfiguration, office rewiring, and equipment
maintenance, a separate voice network can take a significant bite out of the IT budget.

For smaller businesses without a dedicated telecommunications support staff, hosted VoIP offers the most
cost-effective solution. Packet8 advises small business customers to factor in “all these costs—installation,
configuration, and maintenance—and consider the total cost of ownership associated with an on-premises
system versus a hosted solution.” In most cases, small businesses benefit from a hosted service in which
installation “consists of plugging the phones in and having call routing set by the service provider.”

3. Pricing Structure
The variety of pricing plans on the market offers opportunities for further cost savings. The days of ‘all-or-
nothing’ telephony—in which ‘all’ was a costly on-premises PBX—have given way to pay-as-you-go pricing.
Hosted services allow subscribers to pick and choose among menus of advanced features such as follow-me
calling and automated call attendant. Businesses with very specific functionality needs can save money with the
‘a la carte’ pricing of hosted VoIP.

Other favorable pricing plans include free, low-cost, and/or flat-rate long distance. VoIP calls are free within
a company’s virtual private network—even if that network extends to offices worldwide. Most VoIP service
providers offer a flat monthly rate for calls outside the company’s WAN. This is in contrast to traditional public
switched telephone network (PSTN) service which typically charges by the minute.

4. Network Integration
VoIP offers opportunities for network integration at every level. Of course, cost savings are the most dramatic
when a business migrates from two separate communications networks to an integrated voice-data network
utilizing DSL, cable, or T1 connectivity. The Nemertes Research Group estimates that on average, “cabling a
new building to carry both voice and data IP traffic provides 40% savings.” These savings are reflected in the
monthly phone bill. Insight Financial Credit Union, a 150-employee organization, reported: “In the past, one of
our branches paid $1,100 per month for a frame relay data circuit and another $1,100 for voice. Now it’s $750
for voice and data together over high-speed ISDN connections.”

Other integration-based savings include revenue gains from directory and customer data integration. Integrated
voice-data networks provide the infrastructure for customer relationship management (CRM) and customer
telephony integration (CTI) applications, which supplies significant indirect savings in the form of added
customer retention and data mining capability.

Copyright ©2008 HQ Publications ®, LLC. All rights reserved. 3

5. Efficiency Gains
Last but not least are the myriad savings companies realize by streamlining their business operations. Some of
the main efficiency gains include:

•Increased worker productivity. Productivity enhancements range from data integration and management
to ‘anytime, anywhere’ access for mobile workers. The ‘soft’ savings of increased worker efficiency are
arguably worth more than the lower monthly phone bill. Rod Sagarsee, CIO of an intellectual property
law firm, was pleased to see full ROI “from a strict monetary standpoint” after about a year of migrating
to VoIP; but he figures that “if you were to include productivity enhancements, ROI was exceeded from
day one.”

•Optimized business processes. An integrated network compels companies to adopt more efficient
business practices. In aligning with a system’s advanced call center functionality, for example, customer
support personnel establish more efficient protocols for handling all aspects of service calls. IT research
analyst Lazar estimates that for many businesses the real benefit lies in the fact that “converged voice/
data IP networking…integrates with how you run your business.”

Case Studies in Business Phone Savings

BlueTrack Inc., VocalocityPBX
BlueTrack, Inc., a New Jersey-based promotional items manufacturer and distributor, parlayed several smart
IT moves into a stunning 77% reduction in monthly telephone costs. BlueTrack had already trimmed expenses
on equipment and maintenance by switching to VoIP. However, the company’s separate local and toll-free lines
presented an opportunity to streamline the voice system and gain further cost savings.

•800-line. BlueTrack realized its most dramatic cost savings with Vocalocity’s 800-number support.
A worldwide distributor, BlueTrack relies heavily on its customer toll-free number for sales and service;
so heavily, in fact, that it racked up bills of $500 to $700 per month to support the feature.
VocalocityPBX provided the toll-free line at no additional charge, and BlueTrack’s total bill was
only $185 per month.

•Flat Rate. Heavy call volume had driven BlueTrack’s per-minute charges through the roof. Vocalocity’s
flat monthly rate makes more financial sense for the company. In addition to paying less, BlueTrack is
able to plan for expenses and invest those savings elsewhere in the business.

By further integrating the system and switching to a more suitable pricing plan, BlueTrack was able to slash its
phone costs by over $600 per month. CEO Sean Glasser reflects: “Switching to VocalocityPBX was one of the
best business decisions we made in the last 12 months. I only wish we’d switched sooner.”

Pace International, Speakeasy Hosted Voice

Pace International, which develops products to preserve crop quality during shipping, operates in more
than twenty locations worldwide. The challenge of connecting 100 employees scattered across a corporate
headquarters, two plants in Washington and California, 11 warehouses nationwide, and eight international
offices made switching to VoIP “a no-brainer.”

Speakeasy Hosted Voice saved Pace International $65,000 a year, or “at least 25 percent in communication-
related costs,” estimates Jon Wells, Director of IT. The company realized these savings using the following
strategies:

Copyright ©2008 HQ Publications ®, LLC. All rights reserved. 4

 •Flat-rate long distance service. Speakeasy’s long distance plan allows Pace unlimited daily conference
calls between headquarters, plants, and warehouses.

•Maintenance savings. Wells estimates that the company saves 10 to 20 percent of IT time a month by
leaving phone system maintenance to Speakeasy. Aside from easy password and extension changes via
an online dashboard, maintenance is the vendor’s responsibility.

With Speakeasy, Pace managed to secure more advanced features and greater versatility for a much lower cost
than their previous phone system. Wells observes: “We’ll save thousands a year in long distance, and since the
service is hosted, we’ll eliminate all the headaches associated with maintaining phone system hardware in-
house.”

Conclusion
As businesses feel the squeeze of a tough market, many are looking to the voice network to cut overhead costs.
The challenge is to trim the excess costs without compromising the critical communications features that sup-
port the business’ competitive advantage. VoIP technology offers the flexibility and customization to help busi-
nesses develop a lean, low-cost phone solution—one that aligns perfectly with business needs, even as those
needs fluctuate in an uncertain market.

Sources
BlueTrack, Inc., Vocalocity Case Study
“Internet-based Phone Services for Small to Mid-Size Companies,” Packet8
Inter-Tel
Packet8
Speakeasy
Vocalocity
Horwitt, Elisabeth. “VoIP Savings Seen in Productivity and Long-distance Charges,” SearchCIO.com

About the Author

Dr. Clare Kaufman is a freelance writer who covers business and education topics.

Copyright ©2008 HQ Publications ®, LLC. All rights reserved. 5