VoIP comes of age

‘Hello...can you hear me?’ The voice over IP message is communicated loud and clear to the channel as vendors take on PBX

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By  Stuart Wilson Published  February 28, 2005

Tackling resistance|~|Ghoul200.jpg|~|Tarek Ghoul, newly appointed channel manager for Cisco in the region|~|It is here, and it is here to stay. There is no getting away from the fact that voice over IP deployments will continue to accelerate in the Middle East during 2005. With pressure for telco deregulation growing and customers getting to grips with the idea of running voice over a data network, barriers to voice over IP adoption are gradually being eroded, clearing a path for vendors and skilled channel partners alike to push the technology and its wide range of benefits to customers of all sizes. Voice over IP is about so much more than up-front savings on call charges. Incorporating a range of value-added business applications and boosting collaboration is the name of the game as voice over IP promises customers a competitive edge. The vendors are ready and the customers are willing. Forward thinking integrators and resellers would do well to consider the potential of voice over IP solutions as a core part of their offering. The foundations for voice over IP deployment acceleration are being put in place across the Middle East. Vendors are united in the opinion that the hurdles that previously thwarted widespread adoption are now being overcome. “Increasing deregulation and liberalisation in the service provider arena across the region is helping dramatically,” says Campbell Williams, channel marketing manager EMEA at Mitel. “The presence of second network operators and competitive carriers will promote increased competition, increase availability of IP-VPNs and broadband, while also lowering prices.” Traditional resistance to voice over IP has often centred on the almost legendary uptime of PBX networks. Companies selling PBX solutions have claimed that voice is a mission critical application and running such a pivotal corporate function over a data network opened up the possibility for increased downtime. It is a myth that major voice over IP vendors can now dispel with confidence. “We are starting to really see 100% uptime for data networks,” explains Wael Fakharany, regional manager MENA at 3Com. “The reliability is now there. Voice could not have been part of this network when uptime was 99%. Now customers are starting to realise they have a data network with 24x7x365 reliability. Why not use it for voice and video as well; run it off a single cabling infrastructure and employ a single IT manager to take care of both data and voice.” The global trend for voice over IP adoption is mirrored in the Middle East according to Tarek Ghoul, newly appointed channel manager for Cisco in the region. Today, Cisco ships 8,000 IP phones to customers around the world every business day, with the Middle East making a meaningful contribution to this total. “Globally, the percentage of companies using voice over IP in some way grew from just 3% in 2003 to 12% in 2004,” claims Ghoul. “The adoption of voice over IP is clear and we are seeing similar penetration rates in the Middle East. Even if it is not yet a full implementation because of regulations that exist, many companies have already completed partial implementations.” ||**||Gently does it|~|wael200.jpg|~|Wael Fakharany, regional manager MENA at 3Com|~|Pushing customers to invest in a hybrid or partial voice over IP solution is a valuable way for vendors and integrators to overcome any resistance that exists within organisations. “There is still some confusion in the market created by vendors looking to address voice over IP with a forklift solution with regards to infrastructure,” says Roger El-Tawil, channel and marketing manager at Avaya MENA. “This approach is of serious concern to IT managers and decision makers, who would rather have a migration strategy that involves little or no disruption at all.” Put simply, PBX voice networks have been around for a long time. Some customers have invested a great deal in these systems and many PBX vendors and integrators do not want to see their product offerings become obsolete over night (and their lucrative service revenues reduced considerably) thanks to the new kids on the voice block. Negotiating past internal resistance to change needs to play a major role in vendor channel strategies. “We don’t want to act like bulls in a china shop,” declares Ghoul. “For us the key focus is on how we enhance the quality of life and productivity of clients. If we don’t contribute to that we are not doing our job properly.” Within large organisations it is par for the course to see pockets of resistance that continue to hold back productivity levels by embracing outdated business processes and refusing to change. In many cases, an ‘if it ain’t broke, don’t fix it’ mentality needs to be overcome and this is where vendors and resellers need to sharpen their voice over IP total cost of ownership (TCO) and return on investment (ROI) arguments. It is an area where many are already looking to develop innovative purchasing schemes and recruit channel partners with the perfect blend of skills. “It sounds obvious, but the channel most capable of delivering voice over IP solutions is the one with the necessary skills,” comments Williams. “They must understand telephony; they must understand the engineering needs of real-time traffic like voice and video; they must be able to architect LANs and WANs for voice over IP traffic; and they must be able to build a business case for the investment based solely around the particular customer’s situation.” In other words they need a comprehensive set of skills that allows them to understand a client’s pain points and tailor the solution proposal accordingly. To achieve this, vendors have invested, and will continue to invest heavily in skilling up regional channel partners as well as devising innovative purchase schemes. 3Com is pushing innovative pricing models hard as it looks to win some massive voice over IP deals in the Middle East financial services vertical during the course of 2005. Fakharany explains just how it could all fit together: “Imagine you are selling to a bank with 150 branches and a Nortel or Panasonic PBX at each location. A partner can go in, offer to replace the existing system with a voice over IP system for free and charge the client a fee per user per month. We have examined this model and worked through the figures.” The figures certainly appear to add up. Fakharany estimates that a partner offering such a financial model to a 5,000-employee organisation with a distributed office network could recoup its up-front hardware investment in nine to eleven months based on a rental fee of US$19 per month per handset per employee. “Imagine you are the CEO of a national bank and someone says to you I am going to give you the latest SIP-based handsets, you will have zero cost calls and the system will be based on a service level agreement (SLA),” explains Fakharany. “If there is a problem or the system goes down you don’t pay. This is a very compelling proposition for service providers and large channel partners to take to the market.” ||**||Business benefits|~|mitel200.jpg|~|Campbell Williams, channel marketing manager EMEA at Mitel|~|The case for voice over IP deployments extends way beyond call cost savings. El-Tawil explains: “There are many pressing reasons for customers to invest in voice over IP solutions. For IP telephony, the solutions are much more flexible and easily managed than a traditional voice solution. The solutions are also a lot cheaper to maintain, and there are also cost savings that are inherent in having only one network to maintain.” “The productivity and mobility features of IP telephony are also a major plus point — IP telephony is not just about replacing one phone system with another, there are many features of IP telephony that can extend communications beyond current usage and really make a difference in connecting the workforce,” he adds. Many organisations in the Middle East are showing a strong desire to invest in cutting-edge systems across a wide range of verticals including healthcare, education and government. The argument for continued network investment and the compelling reasons for running voice on the data network are becoming harder to ignore. Ghoul at Cisco says: “The network is the business. Without a network, companies do not have a business. Today, enterprises are already running their most critical applications such as ERP and accounting on the network because they see a high level of reliability and availability. I believe that these applications are even more vital than their telephones.” “The admittance is there that these networks are now reliable enough to carry all types of traffic,” continued Ghoul. “We don’t hear questions concerning the reliability of the network any more. That battle has been won in the minds of the IT managers.” While the battle has been won with the IT managers, explaining the comprehensive business benefits that voice over IP can bring is next on the agenda for vendors and channel partners as they aim to accelerate the adoption curve. This means focusing on the business process improvements that voice over IP solutions offer. As well as cheap voice calls, voice over IP systems offer users access to valuable content and collaboration tools. Hundreds of applications have already been developed with many more — including some aimed at specific vertical sectors — under development. ||**||Channel strategy|~|avaya200.jpg|~|Roger El-Tawil, channel and marketing manager at Avaya MENA|~|The nature of voice over IP solutions opens up a wealth of cross selling, up selling and service opportunities for partners with the right skill sets and sales expertise. Vendors are working overtime in the region to ensure that the channel is ready to take advantage of the growing voice over IP opportunity. “Mitel already has well-established channels in all major territories in the region such as Bahrain, Egypt, Iran, Jordan, Libya, Oman, Saudi Arabia, Syria, UAE and Yemen,” says Williams. “We will continue to invest in those relationships to grow our business in the Middle East.” Avaya is in the process of appointing a regional distributor in the Middle East and North Africa as it looks to accelerate the development of a trained channel of business partners capable of taking voice over IP to the market. “Ultimately we are engaging all our resources and employees to play a vital role in the gradual process of overcoming the hurdles facing this technology, by spreading awareness and at the very same time creating leads to drive the business,” comments El-Tawil. Channel education is a top priority for 3Com during 2005 in the Middle East according to Fakharany: “We have selected a few value-added channel partners across the region that are prepared to bet their whole future and existence on selling 3Com voice over IP solutions.” Some of these partners have just returned from an intensive voice over IP education and certification course in the UK as 3Com equips its channel with the requisite skills to deliver voice over IP thrills to customers in the region. This strategic emphasis on voice over IP will be reinforced by the appointment of a voice over IP channel partner manager in the region. Cisco already has an established channel for voice over IP solutions in the region. IP telephony has been part of the vendor’s Value Incentive Programme (VIP), which offers partners extra benefits for focusing on advanced technologies that are important to Cisco’s long-term strategic goals, for some time now. Ghoul explains: “We have been running the VIP scheme for two-and-a-half years now. The margins associated with this scheme are very pleasing for the channel. As well as up front margin they also receive back-end incentives that recognise their contribution to Cisco’s telephony strategy. Resellers can make up to 20% margin on certain telephony products.” In today’s IT channel landscape, 20% margins is pretty exceptional, but it reflects just how important the emerging voice over IP sector is to major networking vendors and how determined they are to lead the pack in terms of channel breadth and customer reach. Selling voice over IP solution means much more than flogging a bunch of handsets and the channel is waking up to the fact that this is a hardware, software and services offering with significant margins and opportunities for long-term customer engagement and even recurring revenue streams. “Margin on voice over IP is typically higher than in standalone voice or data,” says Williams. “This is because the solution is more complicated and typically has more perceived value to the customer. Greater service and support revenues also help improve the potential margins.” ||**||PBX-free Middle East?|~|Cisco_phone200.jpg|~|IP telephones are becoming a common sight at companies of all sizes|~|Vendors present a contrasting picture when asked what size organisation represents the regional sweet spot for voice over IP uptake. The fact that some say large enterprises, others cite the midmarket and some claim that the small and medium business sector is where the real action is leads to one compelling conclusion: voice over IP appeals to customers of all sizes. It is also a technology that cuts across pretty much every vertical using an IT system of some description. The market for voice over IP solutions is poised to embark on an exponential growth curve during the next few years in the Middle East and this has resulted in a highly competitive vendor landscape with Cisco, 3Com, Siemens, Alcatel, Avaya, Nortel, Mitel and a host of other players all fighting for a slice of the action. Competition is also extending down to the reseller and integrator landscape as more channel partners acquire the skills required to push voice over IP. The future is bright and obstacles such as regulatory hurdles, lack of channel skills and customer reluctance to move away from legacy networks are slowly being overcome. The traditional voice and PBX channel needs to work out a strategy now. Clearly, many players in this space do not want to cannibalise their traditional revenue streams, but simultaneously, they need to embrace the irreversible industry trend that will drive adoption of voice over IP technology. Ghoul at Cisco is in no doubt that voice over IP will have a revolutionary impact in the Middle East: “As we move forward, IP telephony is going to become a mainstream part of the Cisco channel offering. We will tilt this technology to make it mainstream and will have more partners pushing IP telephony not only to large enterprises, but also to SMBs.” How pervasive will the deployment of IP telephony systems eventually be in the Middle East? “Our endeavour is to make the Middle East a PBX-free environment,” concludes Ghoul. ||**||

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