The Case for Hosted Networking

Giving control to a provider might make sense Is a hosted voice system right for your company? These excerpts from an article in Business Communications Review might help you decide. As argued here by InfoTech, a New Jersey telecom consultancy, hosted has its benefits, but it’s not perfect. In the converged world, it may make more sense to rent rather than buy. This article, based on InfoTech’s provider and enterprise panel research, will examine the key factors involved in the decision. Some companies believe that purchasing a premises system provides more control than a hosted service. This is true, but along with control comes responsibility and cost. The real questions are, "How much control is necessary, and how valuable is it?" This can only be determined by examining the specific elements of control. ImplementationHosted services are less likely to have post-installation problems. Most hosted providers include the station review as part of their service and, therefore, station reviews are conducted by experienced personnel, which may not be the case if companies do it themselves. Between the time the station review is completed and the data entered into the system (two to three weeks) changes take place, and that’s usually where trouble occurs. In hosted solutions, dial tone is unlimited, so there is no penalty for not planning growth, and changes can be made easily. Hosted providers also have application subject matter experts readily available at their centralized sites if there is a problem immediately following cutover. Installing telephony equipment in a hosted environment involves fewer steps: less equipment needs to be shipped to the customer site, new hardware does not need to be burned in, there is no need to assemble racks at the customer site, there is no installing and testing of software, et cetera. The hosted provider mainly needs to manage the station installation and cutover. There is also less need for enterprise participation (such as station reviews, directories and detailed network planning). This means the process is less subject to "customer not ready" issues, and the hosted service provider can set an implementation schedule with a high degree of confidence. Also, hosted solutions can be implemented on a line-by-line basis and can co-exist with the customer premises equipment (CPE) supporting other users. Customers don’t need to cut over completely to the new system at one point in time, as is generally the case with CPE solutions. Hosted services can run side by side with premises systems as needed to handle any issues. This reduces the need for cutover for every user on day one. Cutover can be department by department, which is much more flexible at meeting user schedules. Hosted solutions’ implementation charges are much less than CPE system charges — but customers still need to compare costs on a multi-year total cost of ownership (TCO) basis to see if this is really a savings. Growth Management Managing growth in a hosted environment is easier than with a premises system. There is no need to track line cards and trunk cards and maintain cushion capacity. Nor is there a need to manage gateway scalability and upgrades if capacity is exceeded. Traffic analysis in a hosted environment is performed by the service provider’s operational support systems (OSS), and there is no need to worry about switch and trunk capacity, performance, and configuration. From a financial standpoint, the hosted service’s pay-as-you-go approach provides savings in certain charges and internal resources. Hosted terminal licences are sold on a line-by-line basis (bundled into the per seat charge) rather than in bundles of five or 10, as is the case with some CPE provider terminals. Inventory tracking and management overall is less extensive in a hosted environment. There is no need to track elements at the host site such as cards, servers, gateways, and power supplies. Another important advantage of hosted services is that their costs can decrease if the user population declines. With a premises system there may be opportunities to decrease maintenance costs by reducing active ports, but the opportunity to sell excess equipment is limited, and original purchase expenses might not be fully recovered by the enterprise. MaintenanceWhen critical CPE problems occur that cannot be cleared remotely, CPE customers have to wait for a truck roll and could easily have a total time to repair of four hours or more. (Many maintenance plans’ objective is to arrive on premises within four hours to start the repair process.) The repair on the hosted system with similar trouble may be completed almost immediately because techs are on site at the provider location. Hosted solutions have 24-7 management and monitoring. In order to receive similar support for a CPE system, which may still mean a two- to four-hour wait for a tech to arrive on premises, customers usually have to pay an uplift charge and, in some cases, an additional fee for remote monitoring and management. Less critical issues such as alarms are cleared so quickly by hosted providers that they are often not even noticed and customers do not have to spend time and resources investigating. Another key maintenance benefit of hosted solutions is that the provider is responsible for dealing with network-CPE interface finger-pointing problems, and customers do not need to purchase agency support services to handle these issues. By eliminating some servers and associated uninterruptible power supply (UPS) systems, hosted customers also reduce their need for such maintenance support functions as testing and monitoring backup power systems. Hosted maintenance charges are included in the per-seat charge and are only applied against the actual number of seats in use. Many CPE-provider maintenance contracts are based on available or equipped ports, which means any port that can be connected to either a terminal or a trunk, even if they are not currently in use. Since hosted customers only pay maintenance for ports being used, there is less need to keep track of ports incurring maintenance charges in order to remove unused ports from the inventory. Network Management And AdministrationIn a hosted environment, customers who bundle WAN management services with hosted telephony do not need to proactively manage WAN quality of service (QOS). This reduces the amount of resource, training and test systems needed (e.g., equipping laptops with sniffer cards) in a CPE environment. A major caveat here relates to the rapidity with which a customer needs to change their network to meet changing business requirements; be sure to use a hosted provider with proven ability to meet this challenge. In any network, most configuration problems are due to human error. Allowing hosting providers with well-defined change management processes to handle this function should produce fewer problems than those typical of a CPE environment. Premises systems enable self-supporting customers to move faster on moves, adds and changes for high-priority situations. But hosted service providers do offer SLAs that can be customized to address very high-priority situations. This is one area in which CPE control is an advantage, especially if this type of situation occurs regularly. Mixed IP And TDMHosted services provide immediate centralization of voice applications for all locations and lines deployed at any site, regardless of whether or not a main site is converted to IP. More work is required (e.g., planning, design, installation and ongoing management) to interface a mix of IP and TDM systems in a CPE-based environment than in a hosted environment. In a hosted environment, carriers handle the architectural issues such as interfaces and soft-switch functionality. Customers can deploy IP telephony by work function across multiple locations without having to disrupt other corporate functions (although this would require some additional integration with the TDM environment with regard to dialing plans and voice mail and unified messaging). Hosted services generally offer customers more terminal choices than do CPE solutions. Independent vendors such as BroadSoft Inc., Tekelec and Sylantro Systems Corp. provide multiple IP terminals, giving customers a wider range of choices than offered by individual CPE providers. However, CPE providers such as Avaya Inc. do enable customers to retain existing TDM terminals. SecurityIn a hosted service, voice firewalls are managed by the carrier with carrier-grade security management. Customers do not have to be involved with firewall management for voice communications, avoiding the need to employ expensive technical talent or pay for it on an outsourced basis. Hosted services also provide centrally managed intrusion detection, and customers avoid overhead costs to manage intrusion detection for their maintenance ports. Hosted service customers do not have to manage server security patches and fixes and associated issues of version control, regression testing and compatibility of OS versions with applications. Software patches are becoming a time-consuming management nightmare in the IP telephony environment. In some cases, customers may even refuse to download specific software because of known problems. In other cases there may be issues with version control and updated versions causing problems with working software. As a result, customers may spend some significant time testing patches to make sure they work. Hosted equipment also has very good physical security in a carrier data centre. It is well-guarded and has well-defined security practices. Some CPE environments may have equivalent security, but most do not. Reliability, ContinuityCarrier-grade reliability is provided for hosted services, with element redundancy usually exceeding that of premises solutions (or, at least, customer willingness to purchase the same level of CPE redundancy). Operation centres are hardened and usually better-protected against natural disasters than CPE sites. Hosted service customers also avoid the need to purchase UPS protection for the telephony servers. Business continuity and disaster recovery capabilities are one of the most important benefits of hosted services. Hosted solutions are backed up with the most current configuration. CPE solutions can be backed up, but there is an extra cost in terms of either internal resources (and storage) or external resources (managed service). If a CPE customer were to lose its system due to fire, flood, tornado, et cetera, the firm would have to pay to replace it (or pay for the insurance against such a loss). In a hosted service environment, it is less likely that these events would disrupt service, and even if there were a disaster customers would not be liable for the replacement costs. Single-site businesses with CPE have relatively few options for seamless disaster backup. In a hosted environment an enterprise user can take his IP terminal or soft client home, connect through Windows XP phone system to any broadband connection, log in and have the terminal operate as if the user were at his workplace. This provides the ability to maintain business operations and receive calls during disasters that prevent people from getting to work. Some CPE systems, such as those from Mitel Network Corp., can offer this capability, but most require employees to have softphone capability provided (at an additional cost) to achieve the same functionality. Purchasing LeverageHosted solutions may cause a loss of price leverage that comes from having multiple providers of CPE solutions. Customers usually can leverage equipment vendors and drive down prices of equipment and maintenance by using multiple suppliers. However, InfoTech research shows that customers are increasingly migrating to single-manufacturer solutions, so this leverage may be evaporating anyway. Admittedly, it is less likely that customers would be able to play multiple hosted providers against each other for two reasons. First, in secondary markets it is hard to get multiple providers. Second, utilizing two hosted service provider networks defeats the objective of a centralized architecture and applications environment. Cash FlowHosted solutions smooth out cash flow requirements and free up cash in the first year for other needs, rather than spending it on capital equipment (although premises systems can be leased, which also smoothes out the cash flow). Custom ApplicationsUnquestionably, the ability to develop and integrate customized applications on CPE systems is the greatest advantage CPE solutions have over hosted services, especially as IP telephony matures. In order to run additional applications such as those developed by manufacturer software development partners, hosted solutions have to either extend an API to the premises or run the application on the customer’s site. At this time InfoTech has not seen an API offer from any hosted provider. It is not known how flexible the hosted providers will be in any such offers. Another issue is the manufacturer equipment used by the service provider. Hosted providers using Avaya Inc. or Cisco Systems Inc., for example, for their IP telephony offers would force customers to go to the corresponding set of software-development partners for applications. Counting on hosted providers to run custom applications in the provider’s own data centre can be problematic. The hosted provider would need to approve of the application and the server. This opens the question as to who maintains the server and application. Will hosted providers have the capacity to continue to add hardware and software to support these efforts? InfoTech has seen no evidence that carriers are planning to support vertical applications from outside sources that customers might elect to use. ConclusionHosted services offer savings and reduced complexity in many areas. Companies considering hosted solutions should investigate how each would apply to their situation. While many companies may save money in these areas, this article was not intended to be a full comparison of all costs involved in each scenario, and companies should still go through a full TCO/ROI analysis to compare the true costs of each solution. This article is reprinted by permission of Business Communications Review (www.bcr.com). Advantage: Premises-based SystemsAdvantage: Hosted Systems> Administration> Implementation> Purchasing leverage> Network management> Custom applications> Software upgrades

The Case for Hosted Networking

News | 03/01/2006 5:00 am EST

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