next generation telephony an emerging business communications strategy bob hughes program manager...
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Next Generation Telephony
An Emerging BusinessCommunications Strategy
Bob HughesProgram Manager
IBM CIOSept, 2002
IBM Confidential
Copyright 2002 IBM Company. All rights reserved. 2
The current strategic period will see the emergence of several key technologies with voice particularly well positioned.
"The Bubble""The Bubble"
Adoption Adoption CurveCurve
Business Business ImpactImpact
Time, MaturityTime, Maturity
Innovator's Innovator's CurveCurve
Enterprise Instant Messaging
Wireless Web/WAP
Bluetooth VOIP
Wireless LANs
PDA Phones
TechnologyTrigger
Plateau ofProductivity
Slope ofEnlightenment
Trough ofDisillusionment
Peak of InflatedExpectations
< 2yrs
2-5 yrs
IBM Confidential
Copyright 2002 IBM Company. All rights reserved. 3
The voice environment is about to undergo a transition similar to the transition the data environment experienced a decade ago.
Mainframe Client/Server
CS/TDM IP Telephony1990 --------------- 1995 -------------- 2000 -------------- 2005 --------------- 2010
Proprietary OSes
App-specific UIs
3270 terminal
Open OSes
Standard GUIs
PCs
Hdwr-specific sftwr
Proprietary features
TDM phones
Open software
Standard GUIs
Intelligent endpoints
IBM Confidential
Copyright 2002 IBM Company. All rights reserved. 4
Our basic premise is that we are nearing the end of circuit switch technology’s ability to provide annual cost/performance benefits.
For decades, enterprises have pressured current voice vendors to lower cost and increase functionality using existing technology.
In general, we have been successful. However, the opportunity to achieve continued improvements
within the circuit switched/time division multiplexing technology is becoming increasingly limited.
We must move to a new technology to continue to provide annual benefits.
This new paradigm for voice is voice/data convergence. Finally, we must gain a true understanding of “convergence”, how
voice and applications will be enhanced. We must recognize that voice is NOT just dial tone anymore.
Copyright 2002 IBM Company. All rights reserved. 5
In the WAN, prices have declined and are at or approaching prices below which circuit switching cannot go.
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
1996 1997 1998 1999 2000 2001 2002 2004 2004 2005
Domestic US Trans Europe US to UK Trans AP SW Threshold
CostPer
Minute
On/Off Rate Trends and Projections
Applied ResearchTechnologies
Copyright 2002 IBM Company. All rights reserved. 6
The transition to next generation telephony requires simultaneous development on multiple levels: IP transport, SIP protocol and Applications.
IP Transport (plumbing)
SIP Protocol Base
BusinessCommunicationsApplications
time
Focus
Base Integrate Advanced
IP Transport1. Toll bypass (WAN)
Gateways to TDMGateways to PSTNIVPN or Power9
2. Local (LAN)IP telephonesIP softphones
ApplicationsPresenceFollow-MeMulti-castingInstant MessagingEtc.
SIP ProtocolServers
Call ManagementProxyRedirectionDirectory
ClientsSIP phonesSIP softphonesMS Messenger
External Services
IBM Confidential
Copyright 2002 IBM Company. All rights reserved. 7
A budgetary comparison between TDM and IP for the LAN showed IP preferable under both the local server and server farm based server models.
TDM vs Server Based I P Local Servers
0
200
400
600
800
1000
500 1000 3000
Site Size (in Stations)
Cost
per
Sta
tion TDM
IP
Local vs SDC Based Servers: 500 Stations per Site
0
200
400
600
800
1000
2Sites 6 Sites
Cost
per
Sta
tion TDM Local
TDM SDCIP LocalIP SDC
Copyright 2002 IBM Company. All rights reserved. 8
Industry projections for WAN VoIP shows decreasing cost per minute.
00.010.020.030.040.050.060.070.080.09
Cost perminute
Avg Off Net Carrier Revenue per MinuteIP Voice Minutes
US Retail
Note:This data covers services offeredby carriers, not IP transport overconverged corporate networks
IDC #26354Jan 2002
Copyright 2002 IBM Company. All rights reserved. 9
Industry projections for LAN based VoIP show declining cost per station.
050
100150200250300350400450
20
00
20
01
20
02
20
03
20
04
20
05
20
06
Cost perphone
World Side Cost per IP Phone
US $IDC, April 2002
Rept # 26977
Factors driving cost down:Competition (incl 3rd party)
Natural product life cycle
Factors driving costs up (esp high end)Color touch screenProcessing power
Infrared and wireless connectionPDA docking station
Copyright 2002 IBM Company. All rights reserved. 10
With declining cost per unit for VoIP in both the WAN and LAN, the mix of IP to circuit switched/TDM technology will shift in favor of IP.
Migration from TDM to IP Phones
02468
1019
9510
0619
9719
9819
9920
0020
0120
0220
0320
0420
0520
06
Stat
ions
Shi
pped
(0
00)
Circuit Switched IP Total
World Wide Migration WAN Voice Minutes: Cross Border
0
50000
100000
150000
200000
250000
2001
2002
2003
2004
2005
2006
Min
utes
(M
illio
n)
Circuit Switched I P Total
In-Stat/MDR“LAN Telephony:
A Billion Dollar Market”
IDC Rept #26354Jan 02
Copyright 2002 IBM Company. All rights reserved. 11
We believe the business opportunity for VoIP extends even further to new applications and architectures, in particular, for the LAN
CostPer
Station
Time
Server farm model
Softphone saves $100 per station
Softphone Lite saves $50 per station
SIP enabled Message CenterSaves T1 H/W cost
VXML apps reduce “IVR hell”May automate support functions
Unified Business Communications
Others
Copyright 2002 IBM Company. All rights reserved. 12
These opportunities extend to the WAN, also.
CostPer
Minute
Time
Voice over DSLSaves $.02 - $.05
Voice over Power9 (true convergence)Savings TBD
Local Message RecordingSaves LD cost if called # busy
IP conferencing
Other
Copyright 2002 IBM Company. All rights reserved. 13
New paradigms in voice also promise savings.
CostPer Unit
Time
Self provisioning saves $25 per station
Drop UPS requirement saves $45 per station
Desk top power saves $70 per station
Converged documentation and processesSaves local implementation effort (TBD)
Others
Copyright 2002 IBM Company. All rights reserved. 14
We have a chicken and egg situation: the size of the VoIP benefits are a function of the penetration of our VoIP infrastructure.
Benefit
InfrastructurePenetration
Number Site
s
With
IP PBX
Numbe
r Site
s
On IP W
AN
Self pr
ovisi
onin
g
Softp
hone
Lite
Conve
rged
doc
Local
Msg
Rec
VXML ap
ps
Softph
one
- - -
Copyright 2002 IBM Company. All rights reserved. 15
Voice realities in the industry and at IBM require a new way to look at business cases. We will no longer be able to rely solely on cost savings and must look to productivity and revenue enhancements.
Cost andSavings
ProductivityEnhancement
IncreasedRevenue
BusinessCase+ + =
Business Transformation
The reality of voice business case at IBM:Inventory is aging, often fully depreciated
Therefore, the case for change on solely cost/savings basis is toughThe role of functionality offered by new technology will play major part in business case
Easy to calculateEasy to implementDrive vendors for
lower costs
Difficult to measureDifficult to quantify
Difficult to quantify contributionMeasured at corp level
Copyright 2002 IBM Company. All rights reserved. 16
IBM has a forward thinking voice vision/goals/objectives statement.
IBM Confidential
Transform IBM’s voice infrastructure into one that: Is increasingly cost effective Increases end-user productivity and
satisfaction Showcases IBM products, services and
solutions Accelerates IBM’s business advantage Addresses diverse global requirements
Copyright 2002 IBM Company. All rights reserved. 17
The IBM strategy focuses investments in new technology and looks beyond convergence for benefits
Avoid investing any new $s in TDM technology, where possible.
Look beyond the convergence on IP transport. Voice becomes “just another” IP application. Telephones become “just another” application end-
point. The ultimate payoff is in the integration of the
“voice” application with other applications. The real value in next generation telephony is in
application integration, more than IP transport. Leverage IP telephony to converge along multiple
planes. Data and voice transport. Wired and wireless services. Voice and instant messaging. Voice enablement of existing applications.
IBM Confidential
Copyright 2002 IBM Company. All rights reserved. 18
IBM’s Next Generation Telephony Architecture is a layered architecture; and we anticipate applications that leverage services from multiple layers.
End Points
Transport, SwitchingAnd Routing
Call ControlSignaling
Service
ApplicationInterface
Applications
PhonesSoftphones
Cell PhonesPDA
Softphone LiteVideo
Power9 Ethernet IVPN Wireless GWQoS
SIP Dial Plan GK GW BW Ctl Admission Ctl PSTN/Wireless (Cell and 802.11) Interface
Directory (Incl ENUM)Presence
VXMLText to Speech
Speech RecoRouting Apps
Same TimeCalendar
Unified MessagingSmart Audio Conf
CRMMany Others
AbstractionLayer
DSL
App 1 App NApp 2 App 3
Audio Bridge
En
d to
En
d M
anag
emen
t
Copyright 2002 IBM Company. All rights reserved. 19
IBM’s experience in VoIP business cases is emerging. It is influenced by inventory of spare equipment (LAN) and implementation of new WAN
Premise (I.e. IP PBX): Individual RFPs are highly competitive and often difficult to
characterize Because we have so much TDM equipment in inventory, we do not
have many pure project comparisons of TDM vs. IP Given this, a budgetary study was completed comparing 5 yr TCO
of IP and TDM. IP was less expensive WAN:
Very successful AP WAN project Initially projected savings: up to 20-40% savings, based on site
and final access requirements EMEA RFP did not produce large savings
Current contracts show excellent cost per minute Complexity of EMEA voice network reduced candidate traffic
for IP US Power9 project promising
Copyright 2002 IBM Company. All rights reserved. 20
1-2% of Population on IP phones 25% of AP site-to-site traffic on IP IVPN EMEA WAN RFP in evaluation U.S. WAN (Power9) pilot 2Q/3Q 2002
IBM has successfully deployed Voice/Data convergence in a number of projects.
IBM Confidential
• Calgary Sales & Svc• Cisco AVVID• 450 phones
• Toronto Software Lab• Cisco AVVID• 3,000 phones
• Tel Aviv Country HQ • Cisco AVVID• 850 phones
• Singapore Sales & Svc• Cisco AVVID• 1,000 phones
• AP Inter-site• 18 sites• up to 50% of traffic
• Dubai – New Facility• Cisco AVVID• 200 phones
• India site-to-site• 2 site pilot• 8 sites if successful
In Prod
In Prod
In ProdJune PilotJune Prod
June Prod June Prod
• U.S. Power9 WAN• Cisco gateways• 5 sites
June Pilot
Copyright 2002 IBM Company. All rights reserved. 21
We have excellent communications tools and depend on them daily. Yet they don’t always work together.
On a good day:
My PC worksMy IM works
My applications workMy phone works
My cell phone worksMy PDA works
Everything Works!
But none of them really work together
What if they did?