IP Telephony Comes of Age

Once utilized by only the most cutting-edge businesses, IP telephony - where voice conversations are routed over the Internet or through any other IP-based network - is truly growing up.

Also referred to as voice over IP, or VoIP, "IP telephony has gone mainstream," says VoIP analyst Brian Riggs of Current Analysis. "There's no doubt about it." A look at the latest statistics bears out his contention: sales of VoIP are outstripping sales of traditional PBX lines, with the former rising by 10 percent last year and the latter declining at a comparable rate.

 

Retailers are clearly among the big adopters of VoIP. Research released by Aberdeen Group indicates that nearly 80 percent of large retailers, 39 percent of mid-sized retailers and almost 20 percent of small merchants had implemented VoIP by the end of 2006, up from a respective 20 percent, three percent and zero percent at year-end 2004. The evolution of IP telephony products comprises a major driver here. Such vendors as 3Com, Cisco, Nortel, RAD, SpectraLink and Covad have standardized the feature sets of their products. Some players offer hybrid software that enable end-users to gradually phase out legacy PBX systems.

 

The benefits of migrating to VoIP telephony are equally compelling. Admittedly, IP-based and traditional phone systems require a comparable initial financial outlay - with the exception of IP-enabled handsets, that are double the price of older models, at $200 to $300 apiece. However, the cost of maintaining VoIP configurations is lower because they require less maintenance than their legacy-style counterparts. IP telephony also minimizes retailers' long-distance calling charges by enabling calls between stores and corporate headquarters to be executed over a virtual private network (VPN).

 

Productivity enhancements abound as well. With IP-enabled telephones in hand, incoming calls can be forwarded to store managers and associates on the sales floor, and voicemail can be accessed remotely. Some systems let managers with a single mailbox listen to voicemail and E-mail simultaneously, from any location, via text-to-speech technology.

 

For three-unit retailer, Cambria Bicycle Outfitter, migrating to a VoIP system built on Covad's ClearEdge application has lowered monthly expenditures for calls between stores and the warehouse by two-thirds, according to Cambria's president, Steve Fleury. An online dashboard component of the application allows the entire phone system to be managed from any computer, expediting the handling of calls from customers and suppliers.

 

"A lot of our staff also move around from store to store or from stores to our warehouse," Fleury says. "With the system, we can transfer their calls to their cell phones, so they can assist customers even while they are out on the floor without compromising efficiencies."

Some retailers are taking IP telephony one step further, converging voice and data applications on a single network. Goodwill Industries of Toronto, which operates 32 stores, ranks among them. At headquarters, 3Com Baseline Switch 2226-PWR switches power Goodwill Toronto's LANs, as well as its 3Com NBX IP telephony system.

 

At stores, converged IP telephony and data communications occur via a scalable 3 Com NBX V3000 system with either a Baseline Switch 2226-PWR platform or 10/100 OfficeConnect switch linked to an OfficeConnect DSL Router. The OfficeConnect routers support the company's Virtual Private Network (VPN) allowing stores to establish DSL connections to headquarters through virtual tie lines. The routers support the stores' new POS systems, as well.

 

"This secure, converged enterprise-class infrastructure has eliminated $18,500 in fees we would otherwise have spent to cable our headquarters and main community outlet, plus $10,500 per month in line and service (expenditures)," notes Vijay Goutam, Goodwill Industries' vice president of IT. "We're also increasing our productivity and have greater visibility into our stores' performance." With the system in place, each store can automatically execute a nightly batch run of all sales data back to headquarters, where Goodwill Toronto generates sales reports and tracks revenue in a more timely manner. The in-store networks also power new, key-activated cash-register surveillance cameras at every unit. If problems arise, the video feed is transmitted via the Internet to headquarters for analysis.

 

Virgin Entertainment Group also has joined the convergence cavalcade. Its VoIP infrastructure comprises approximately 500 Cisco IP phones used by employees at 17 Virgin Megastores and corporate headquarters. The system also includes Cisco's Application and Content Networking System (ACNS) software, a component of the vendor's Collaborative Communications Solution, and SBC's Multi-Protocol Label Switching (MPLS) network.

 

Virgin utilizes the MPLS network to leverage Cisco's content-caching technology at Virgin Vault kiosks installed in all stores. The kiosks permit customers to access, via the Internet, samples from more than 250,000 CDs, 11,000 DVDs and 7,000 games carried by the retailer. The ACNS software allows store and headquarters employees access to employee directories and advanced voicemail capabilities (such as call-forwarding). Future plans call for using the converged network to broadcast live music events to individual stores, as well as to deliver in-house promotional broadcasts to other North American stores when celebrity artists appear at a particular unit.