What's the bottom line value of IP?

It's all very well talking about the benefits of IP at many levels but does the business case stack up? Simon Marshall looks at taking a critical approach in order to get migrations right.

IP telephony may be a money saver but the argument for migrating to a full voice and data IP infrastructure still isn't totally convincing. In fact, putting not just voice but data packets onto a single, unified IP infrastructure is still seen by UK enterprises as a complex technical, cultural and budgetary process. One of the main hold-ups, it seems, is being able to measure the benefits and justify undergoing the process at all.

Full migration has always bugged IT and comms departments and further muddied the waters of the internal justification process. Just when a fairly clear ROI framework emerged for IP telephony from the IP equipment vendors – only part of the full migration process – enterprises began wondering where it would all lead them. IP telephony might be justifiable on its own but why bother with the Full Monty?

"The enterprise mindset has changed and now IP is the de facto most efficient transport protocol for voice and data," says Margaret Hopkins, associate analyst at Analysys. So IP's here to stay but in what capacity?

It's a fact of life that the ROI case so nicely packaged up by the vendors for IP telephony is a lot more complex and variable between different businesses when it comes to a full migration - and that's making it tough for them to offer the same guarantees.

In theory, swapping out old 64k Frame Relay leased lines for new IP connections offers greater bandwidth flexibility at cheaper underlying prices, as well as a host of new services such as IP VPNs, IP storage and videoconferencing. The worrying aspect is that there don't appear to be that many full implementations happening right now.

This could be because the vendors have given full IP migration a bad name as a consequence of their early marketing hype.

"The pressure has been on the vendors over the last two years to be more open about the problems associated with IP," says Paul Devine, Telecoms Programme manager at Frost & Sullivan. "Now Siemens and Cisco, for example, are finally acknowledging that migrating is a step change."

In other words, he adds, they're only just addressing the backlash from investing in the kit to do full migrations and then finding there was little stomach in the market to go through with it.

Although vendors now accept there's no thirst from enterprises for a 'forklift upgrade', they're also guilty of over-selling.

"A number of organisations followed the hype, because at that point the vendors were better sellers than the customers were buyers," says Ed Vonk, chairman of the European VPN users association, and head of Shell's IT Architecture Group.

"But the really funny thing about this whole story is that the savings that come from a full migration are medium-to-long term and these are never decisions that you see enterprises making at a senior level," he adds.

Perhaps the reason it's not happening very quickly, then, is that senior decision-makers, such as the CFOs and CIOs, are concerned only with year-on-year savings.

"These decision makers are not long-term visionaries and this has held the process up," says Vonk.

Whether these decisions involve brownfield or – much easier to justify – greenfield sites, the way they are being made is changing. IT and comms departments are merging, with IT seemingly gaining the upper hand. But final decisions are - with more than a nod in the direction of the current industry downturn - being made by the CFO or CIO. In some cases, specialised central decision making departments have been formed in an attempt to simplify this increasingly upscale justification process.

However, this still leaves them mystified by, on the face of it, a sensible approach by vendors to pitch to the market a productivity argument alongside their traditional ROI justification.

"The productivity gain argument is quite interesting, inasmuch as those responsible for specifying IP equipment don't have the sway to make this argument to the enterprise decision-maker," says Devine.

Analysys' Hopkins agrees. "Productivity gains don't exist if cost savings are not achieved [first]," she adds.

Even so, there are signs that for implementing IP VPNs between sites – a cost benefit - or for remote access – a productivity benefit - vendors are making these benefits much clearer. In turn, steps by service providers to implement more widespread IP capabilities within their own networks may add to the all round confidence factor.

Vonk says Shell has taken a stepped approach to its migration, implementing voice over IP (VoIP) on international trunks and smaller site networks through a series of targeted cost saving studies.

Still, the occasional horror story of a full migration failing to work as expected emerges to keep the market in check, with an expensive change into reverse gear ensuing for the affected company. Quite often, according to Frost & Sullivan, this is because integrating legacy systems on numerous sites is just too complicated to justify the risk.

Strategically, taking measured steps to a migration beginning with, say, VoIP can also be seen as a slippery slope, narrowing later options.

"If they go for VoIP then it's difficult for them to later outsource their voice service," points out Vonk, "because the beauty of the old telephone system is that it's separate and so it's easier to outsource."

He explains that because VoIP can be beneficial as a cost saver, many more service providers are implementing it in their own networks, making it unnecessary for enterprises to do it themselves if they're thinking about outsourcing.

"The whole picture of these decision-making steps is that they should also include an option to go mobile," he adds. "In fact, some enterprises may wonder why they need fixed communications at all but this is another point that is often missing from the decision-making process."

And it's another point for future ROI planning.