VoIP isn't cheaper - so why would you want it?

The business case for adopting voice over IP (VoIP) has evolved. Where once it was all about cutting costs, it's now focused on the greater good the technology can do for a company.

One reason for this is that VoIP isn't always cheaper than traditional enterprise phone services, especially with phone rates falling so dramatically in recent years.

Speaking at the VoIP for Business conference in London this week, Deloitte partner David Tansley said: "If you simply want to reduce costs, in the current volatile market, it's often quicker, simpler and easier to renegotiate with your current supplier" than to move to IP telephony.

Tansley and another speaker at the conference, Ovum research director Peter Hall, revealed that many early adopters of VoIP are not satisfied with the cost savings they experienced.

Organisations often underestimate the costs involved in a switchover, which includes not only specialised software and hardware but often upgrading the corporate network, securing data centres, training users and support staff and reorganising the IT department to include telecoms personnel.

Risks persist. There is the uncertain reliability and security of running voice over an IP network as well as the looming imposition of regulations and immature standards support. But they aren't stopping businesses from embracing VoIP.

By the end of 2005, two-thirds of Fortune 2000 companies had deployed VoIP to some degree, according to Deloitte.

And the UK is at the forefront of the movement, second only to the US in business adoption of VoIP, according to Ovum.

Even voice quality - once considered a major drawback - has been largely overcome, according to Ovum's Hall. He said: "It's very difficult to generalise quality of service for VoIP but nothing inherently says it should be lower quality than [traditional phone service]."

He added: "In the enterprise, if done properly, there shouldn't be quality of service issues."

Still, though VoIP may be business-ready, if it's not free or even cheap, why make the move?

The current thinking is that it provides 'softer' benefits whose financial impact is hard to measure.

These include greater efficiency and productivity through applications such as real-time collaboration or the ability to access an application from any device.

VoIP also benefits home workers and business travellers, makes office moves easier and can provide competitive advantages for businesses such as better customer service through an IP call centre.

Analysts expect more innovative applications to arise for VoIP in the coming years - and for this to make adopting the technology even more tantalising for businesses.

Luke Mellors, IT director at The Dorchester Hotel, said he finds the motivation of cutting costs too limited for deciding whether to switch to VoIP.

He said: "Innovative solutions will always cost you money but what are you left with?

"I want to reduce costs but I also want to see my business - for me, servicing guests - enhanced by the technology."

Whatever the reasons businesses switch, most are expected to roll out IP telephony.

'It's inevitable' was the message from several speakers at the VoIP for Business conference. They agreed 2020 will be the year IP would dominate voice communications, on both fixed and mobile connections.

Mellors sees this as a welcome opportunity. "If VoIP is inevitable, how can you take advantage of it? How can you make it work for you business?" he said.

He's planning a number of new IP-based services for The Dorchester, such as allowing visitors to log onto Skype from their room's phone and integrating the phone, TV and even room temperature systems to create a personalised environment. Each, he believes, will increase visitors' satisfaction and loyalty - and have a real, though sometimes intangible, effect on the bottom line.

However a particular business takes advantage of VoIP, the focus on soft benefits such as productivity as the justification for an IT change signals a new era for CIOs, according to Ovum's Hall.

He said: "CIOs now need to think about staff productivity. They don't have that in their job description - it's probably to run the IT department - but it's becoming an issue for them."