Value proposition of IP networks must enhance voice services, show tangible impact

Enterprises large and small must look past the provision of basic voice services before rushing to implement Voice over IP (VoIP) warned speakers at the GTEC Week conference in Ottawa earlier this month. Headline-grabbing as the technology may be, there is no good reason to implement VoIP for its own sake, Terry Matthews, chair of Mitel Networks and March Networks, emphatically stated during his presentation at the event. He added that it makes a "pretty poor business case" to implement VoIP to offer only voice services – in fact, no business case at all. "If there’s no advantage, what the hell are you looking at it for? Unless there is some meaningful, tangible business benefit that gives you a bottom line impact, what the hell are you looking at it for?...What’s your return on investment? Unless there is something substantial, I advise you absolutely not to do it," he said. While IP telephony has grabbed the lion’s share of the headlines in the recent past due to high-profile VoIP launches from a variety of Canadian and non-Canadian telecommunications service providers, other applications running over broadband pipes appear set to produce an equally dramatic impact on the enterprise sector. Matthews cited shrinkage reduction in the retail sector where margins are razor thin – typically in the 1% range and where the bottom line is directly affected by theft or shrinkage (money lost to shoplifting from both customers and employees). Video over broadband tied to point of sale locations can serve as a way to reduce shrinkage, he said. By tying each transaction to the video network, it can be easily verified if an employee is scanning the actual item sought by the customer or a lower priced item located at the point of sale – a common scam, Matthews explained. With each transaction tied to a video clip, purchases can be verified quickly using a computer which would also be tied into the network. "Sales went up because stealing is not going on at the point of sale anymore and there is no (increased) cost of goods…The increase goes straight to the bottom line. The 1%, goes to 2% or 3% net income," he said of the impact using such technology has. Pat Kiely, director of business operations development at Mountain Cable, a small operator in Hamilton, agrees with Matthews that the reason for adopting IP networks has to be more significant than just voice services. He explained the challenge for his company is both to find cost-effective ways to roll out VoIP, but just as importantly to create further value-added services. "If all we can do as cable operators is to replicate what I’ve been able to do for 40 to 50 years without failure, I don’t think we’ve done much," he said. The cable company has to introduce new experiences to consumers such as video to the refrigerator or pushing web pages shared with friends over IP-based phones, among others, Keily added. "If you are looking at IP and voice IP applications and you’re looking at it in the sense of saving money, I think you’re missing the point. I think what you’re looking at in the long run, taking out a distant view, is that voice applications using IP and riding on broadband open up so many opportunities to things differently. The focus isn’t on saving money, the focus is on spending your money so that you get to do what you need to do more rapidly, more intelligently, more effectively," Keily said.

Value proposition of IP networks must enhance voice services, show tangible impact

News | October 28, 2004

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