IP Telephony – next gen heats up

Vast opportunity

Revenues from overall IP-based solutions in Western Europe will be just under $6 billion in 2005. The convergence of voice and data networks presents a vast opportunity for voice and data vendors, service providers, value-added resellers, system integrators, and consultants.

Those vendors who can "IP enable" a legacy PBX system, as well as provide solutions that can take maximum advantage of the IP network, are best positioned to benefit. Enterprises are warming to voice over Internet protocol (VoIP) as the next-generation telephony solution of choice for their business needs. Migration to IP-PBX (Internet protocol - private branch exchange), therefore, is gaining traction among European companies.

IP-PBXs cut long-term operational costs by allowing voice and data traffic to be managed on one network. They also promote the development of value-added IP services and applications as they can support a much richer set of features and capabilities and can inter-operate with data applications for example, CRM software and videoconferencing. IP-PBX is showing signs of success in all sizebands of business, but especially in branch, remote and new office locations in larger enterprises, as well as the SME space.

IP-PBX solutions are the way forward and will impact companies over the next five years. It is now up to vendors and service providers to put together a sound value proposition emphasizing business benefits rather than just technology benefits. This will help drive IP solution uptake. The more cautious European companies want to implement IP gradually and the branch office is seen as a 'safer' option. Once the networks are in place, the enablement of next-generation applications and services provides incremental revenue opportunities for vendors.

In the longer term, IP telephony solutions must be integrated into a managed service offering backed up with a service level agreement to generate additional revenue streams for vendors and partners. Vendors need a large and wide-ranging portfolio of IP solutions to IP-enable any enterprise network. In the short term, developing IP products, which are readily integrated with existing systems, is key to gaining traction in the market. Web-based applications will transform business processes.

Incentivizing partners to sell the benefits of IP telephony from a business perspective as opposed to a technology one will be crucial. Companies want to see case studies proving the return on investment with IP telephony implementation. Reducing costs in the short term is key while reaching profitability is seen as a longer term goal. Vendors must look to tailor IP telephony solutions to large enterprises, as they will lead IP implementations by deploying systems in branch and new office locations.

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