Hosted Voice – Total Cost of Phone System Ownership

Making the decision on whether to purchase a new system, go with a hosted voice solution or keep the old one running is somewhat daunting with all the options available in today’s market place.  The best place to start is to answer a couple simple questions.  Do you have the internal staff to support an onsite hardware based system?  Do you have specialized Customer Relationship Management software or Integrated Voice Response software? Do you have the time to invest in reviewing all the hardware options available and perform a total cost of ownership analysis?  If the answer is yes, then read on.  If not, a Hosted Voice solution may be a better choice for your business.  For more details on EarthLink Businesses offering visit us at hosted voice.  For those readers who want to explore the TCO model for a phone system here are the basics to get you started.

Several factors go into calculating the total cost of ownership, or TCO. Here are the key costs to include in your calculations when considering a move to a new phone system.

Planning your purchase: First, you’ll want to do a survey of your requirements, including how many users you’ll need to support, and what kinds of phones and features they’ll want. If you’re going to support multiple sites, you’ll probably need to do an analysis of your IP network to make sure it will be able to handle the new traffic it will have to carry with the required quality of service.  EarthLink Business provides this consultation as part of our engagement process for Hosted Solutions at no additional charge.

Upgrading infrastructure. If your network analysis indicates the need, you may end up spending considerable money upgrading your infrastructure. Particularly if you’re going to take advantage of the ability to serve several branches or sites from a single centralized IP PBX, you may require more advanced data equipment to carry the voice traffic back to the central location. Such upgrades can run as high as 50 percent to 100 percent of the cost of the telephony system itself.  Other possible preparation needs include providing additional air conditioning, equipment space or racks.

The purchase cost of the IP phone system. Moving to IP telephony opens up all kinds of new opportunities and choices to make. You may provide different users with IP desk phones, or softphones with headsets. With some systems, users with minimal needs may be able to keep using their old phones.  You will also want to evaluate the cost of the software licensing in addition to the hardware as a separate line item as the two can carry different cost components.
Installation and integration. You might buy and install a low-end turnkey IP telephony system yourself. If so, add the cost of staff time for the installation. The other option is to utilize one of the manufacturers certified resellers or VARs.  When going this route keep in mind there are still things that need to be done outside of installing the new system.  For example, integration with your support desk(help desk), linking the system alarms into your monitoring software for automated alerts and your email server for voice to email or other unified communications needs.

Maintenance. Maintenance contracts will be a major ongoing expense to include in your total cost calculations. But the contracts will be more complex than in the days of all-in-one phone systems. To start with, you may end up buying multiple contracts for hardware to cover equipment from different vendors. The annual cost will typically run from 5 percent to 12 percent of the list price of the equipment. Key factors affecting price is whether support is available only during business hours or 24/7 and whether service technicians come to your site to install parts, or you receive them by courier and have to install them yourself.

Utilities charges. Depending on your new system’s requirements, electricity charges for air conditioning and for powering the new system and phones could end up about the same as with your old system. They also could be significantly more, or even less. Either way, they will be part of your TCO.

IT staff. With a new IP telephony system, administration will likely be cheaper and easier. You won’t have to call the reseller you bought the system from every time you want to move, add or change users. But that means you’ll have to assign someone on your staff to at least oversee it. Thus while each operation may take less time, it will still cost money. An easy way to estimate the cost to administer a unified communications system serving a hundred users, figure on allocating one-fourth of an IT staffer’s time. For smaller installations, it does not decrease in a linear fashion because there are still base maintenance items and training that is required to keep your IT person current.
IP bandwidth requirements. One of IP telephony’s greatest benefits is that it allows you to consolidate the telephony functions for numerous sites in one place. That saves considerable hardware and staffing costs. But it also means you need additional IP bandwidth to carry all the voice traffic back to the central location over your corporate IP network. EarthLink Business can help you evaluate the bandwidth needs and provide a private network solution that allows you to maintain security while maximizing your bandwidth with our MPLS solution.

Obsolescence – Like any other piece of equipment, an IP PBX can become outdated. You can upgrade it, but at additional cost. At the end of the day it is much like your last laptop.  After a few years the technology is out of date and harder to support.

So, after going through the list if it seems daunting consider the following about a hosted voice (IP-PBX) solution from EarthLink Business:

No Capital Costs – All IP Phones and equipment can be packaged into a monthly recurring operating expense and allow you to implement.

Predictable Operating Expense – Monthly voice and data charges appear on one bill and include a full array of VoIP features, local and long distance minutes and internet bandwidth per month.

No Management Expenses – The VoIP service provider manages a range of IP service features in the network that are accessible by the customer via a self-service portal via myLink.

Obsolescence, with the EarthLink Businesses hosted voice solution we are constantly looking for ways to add new services and upgrade our platform to keep your business ahead of the technology curve.

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