White Paper

5 Reasons to Deploy a
Cloud-Based VoIP System
Executive Summary
The cloud has been a dominant technology trend in 2013 and isnt showing any sign of
slowing down in 2014, especially for hosting communications applications such as voice over
internet protocol (VoIP). Until recently, VoIP solutions were primarily premise-based, which
made for easy adoption given their similarities to legacy phone systems. This has proven an
attractive option, especially among SMBs, who tend to prefer the path of least resistance.
While this trend will likely continue for some time, cloud-based VoIP offerings are denitely
gaining favor with SMBs. A key reason is the lack of in-house expertise to properly support
VoIP, but increasingly, businesses are recognizing that hosted offerings bring more exibility,
not just for ease of management, but also in adapting to how employees prefer to work today.
If youre thinking about VoIP as being more than a solution to reduce telephony costs, then
the cloud will hold particular interest. Aside from its inherent strengths as a form of telephony,
cloud-based VoIP brings a range of adaptability that allows your employees to stay connected
wherever or however they may be working. As employees spend less time at their desks, youll
need to nd new ways to ensure they can be accessible and engaged, both to support their
co-workers but also respond to the needs of your customers.
This guide has been prepared to help you understand how hosted VoIP can bring these
capabilities into your business today, and if youre not sure about which deployment model
to follow, youre about to come away with ve strong reasons why the cloud is right for your
business.

About Ziff Davis B2B

Ziff Davis B2B is a leading provider of research to technology buyers and high-quality
leads to IT vendors. As part of the Ziff Davis family, Ziff Davis B2B has access to over
50 million in-market technology buyers every month and supports the companys core
mission of enabling technology buyers to make more informed business decisions.
Contact Ziff Davis B2B
100 California Street, Suite 650
San Francisco, CA 94111
Tel: 415.318.7200 | Fax: 415.318.7219
Email: marty_fettig@ziffdavis.com
www.ziffdavis.com
Copyright 2014 Ziff Davis B2B. All rights reserved.
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Deploying Cloud-Based VoIP 5 Key Reasons
There may have been many factors and considerations behind your decision to adopt VoIP.
Whether this decision was quick or a long time coming, the next decision will be about the
deployment model. In most cases, the choice is between remaining premise-based or adopting
a hosted solution. Each has its merits, and our focus here is on the latter. This section is based
on an extensive review of business drivers among SMBs, and has distilled our research into
ve key reasons for a cloud-based VoIP deployment.
Reason #1 - improved cash ow management
The economics around VoIP are a key reason for adoption, and in some cases, the
only one. However, there is more to consider than having a lower cost base for
telephony, not just in the decision to go with VoIP, but also which deployment model to
choose.
With our target audience being SMBs, we understand the everyday challenges
of staying competitive. Not only is staying competitive difcult, but so is getting
competitive. Some businesses have learned over time what it takes to become
competitive, and are always looking for ways to either maintain or enhance that. On
the other hand, there are also businesses that have lost their competitive edge, and
we would need a dedicated guide just to explore the reasons for that happening.
Regardless, SMBs in particular nd that economic and nancial elements are key
drivers for being competitive. Truly successful businesses nd ways to make this a
sustainable advantage, either by keeping costs down and by extension giving them a
pricing edge, or maintaining strong margins that come from disciplined cost control
measures.
Most businesses arent so fortunate, and are simply happy to take any price
break they can get. This typically happens when the ongoing pressures of market
competition cause declines in sales and/or prots, at which point, decisions become
reactive rather than proactive. Theres nothing wrong by being in this state, which
tends to be common for SMBs. Many businesses simply become accustomed to re
ghting, and while this is no way to run things long term, in a strange way, its part of
the SMB culture.
In extreme situations, this state is akin to survival mode, where any form of advance
planning gives way to the immediate pressures of meeting payroll or paying suppliers.
Where businesses have more of a safety net, this reactive mode is dened more by
the ongoing need to cut costs in the hope that sales will pick up soon.
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Whatever example resonates with you, these scenarios all point to a fundamental
driver that is the lifeblood of almost all SMBs cash ow. When VoIP turns up on
the radar for SMBs, the initial response is usually about saving money on telephony.
During the course of exploring deployment models, this is where the cloud starts
getting attention. Reducing cost may be the big draw, but when decision makers learn
about the hosted option, the impact on cash ow takes the discussion in a different
direction.
Hosted VoIP can take several forms, but a common characteristic will be the monthly
charge format. This is the norm for any type of leasing arrangement, but its very new
for telephony. In the legacy world, telephony was built around a premise-based phone
system, and was really seen as being a product as much as being a service. Being
based on the utility model of pay-as-you-go, cloud-based VoIP is totally a service,
which means that all the associated costs are tied up in a xed monthly payment.
This payment is like a software license, where a cost is charged on a per-subscriber
basis, and rolled up into an overall monthly charge based on the number of end
users tied to the service. The only variable cost factor that could cause this charge to
uctuate would be international long distance calling, but in the vast majority of cases
for SMBs, the amount would be nominal. Many hosted VoIP plans actually included
xed cost options for international calls, so even here, the impact can be covered by
the monthly charge.
Regardless of your calling patterns, the hosted VoIP model will be of interest
not just for IT decision makers but also nancial decision makers, and of course,
top management. The more chaotic your cash ow, the more appealing the xed
cost basis of hosted VoIP will be. Not only is the monthly net cost of these plans
affordable/manageable, but the associated cost certainty means that with telephony,
this is one less thing the business has to worry about when it comes to managing
cash ow.
Reason #2 - moving away from Capex model
This factor is very much related to cash ow, but is distinct enough to warrant its own
analysis. Managing cash ow is often a day-to-day issue, and in that regard, hosted
VoIP provides peace of mind. For that reason, it has been presented rst in this
section; SMBs are often caught up in micro-level issues that demand in-the-moment
attention. Anything that alleviates this ongoing pressure will get on the radar of
decision makers quickly, and savvy hosted VoIP providers understand this.
The key for these providers comes from learning how to position telephony as a
service instead of a product. There is a totally different mentality here, especially for
SMBs with a legacy mindset. So long as a service has perceived utility, businesses
dont mind paying for it, and hosted options make VoIP pretty affordable. Conversely,
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however, since the business doesnt have much invested in telephony with hosted
VoIP, providers are susceptible to other offerings from competitors that are even less
costly.
Given the fact that many such options exist, along with the inevitable downward
pricing trend for VoIP, the buyer SMBs holds all the cards. This puts the onus
on hosted providers to somehow add value and keep their VoIP offering fresh
otherwise their service becomes a commodity, leaving them very little market power.
One way to preserve that market power as well as create it or enhance it, depending
on the situation is for hosted providers to focus on the shift away from Capex to an
Opex model. The more steeped your business has been in legacy telephony, the more
attractive this driver becomes. When premise-based telephony was pretty much the
only option available, the Capex model was just a standard means of doing business.
When it came time to acquire a phone system, the business case was made, and once
the capital budget was in place, the purchase moved ahead. From that point on, from
a nancial perspective, the phone system was managed like any other capitalized
asset, and amortized over time. Once this was off the books, aside from ongoing
maintenance costs, the business more or less had a free ride expense-wise. Given the
long life of legacy phone systems, its not surprising to see businesses keep these in
place as long as possible.
Utilizing a high value asset with hardly any continuing cost is a win-win for the
business, and once accustomed to this, the idea of starting over with another Capex
outlay doesnt hold as much allure as it used to. There are really two factors at play
here. First is the fact that with VoIP, there are many viable options for telephony that
do not require Capex, and chances are this is a new situation for you. If your last
phone system purchase was in the last millennium which will be true for many of
you chances are you would rather not repeat the Capex process unless you really
had to.
Related to that is the second consideration todays economy. Chances are also likely
that the present business climate is tougher for you than when you last purchased a
phone system. Todays SMB environment is hyper-competitive, and getting any form of
capital budget approved is more difcult. This would be especially true for something
like telephony, which has been on a downward pricing curve for years. All signs point
to this trend continuing, and most businesses will see little reason to invest capital
dollars in assets that will only decline in value especially when most of that value is
tied to services instead of hardware.
This prompts the cue for hosted VoIP, which requires little or no Capex. For all the
reasons cited above, this path meets the criteria for being funded out of an Opex
budget. Any opportunity to move away from Capex will likely be welcome, but beyond
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that, hosted VoIP is not really a costly Opex line item, making this an attractive
solution from a nancial perspective.
Reason #3 - limited or diminishing IT resources
While the rst two reasons in this analysis pertain to nancial drivers, other
considerations may be just as important depending on your situation. There will
certainly be scenarios where VoIP economics trump everything, especially for the
cloud, but other, more practical factors have a role to play in choosing the right
deployment model.
As noted earlier, choosing the cloud confers a loss of control, and this could be by
design or perhaps mandated by management. More than any other reason, this factor
is a byproduct of the relationship between IT and executive management. Each will
have their own motivations, and a number of scenarios are possible.
The most clean-cut justication is the case where the business has limited or even
zero IT expertise. This would apply most to micro-SMBs or SOHOs, and given how
VoIP is a major technology departure from TDM, the business case for cloud-based
VoIP is clear. For the business to continue maintaining control with a premise-based
VoIP solution, a skills upgrade would be in order. To justify this, the business would
have to carefully weigh the trade-offs in both time and money to ramp up IT, not to
mention the ongoing investment needed to stay current with such a new technology.
As the speed of business keeps increasing, this can be an easy decision to make,
especially for supporting an application doesnt really have much strategic value. After
all, if you view VoIP as commodity in-the-making, there isnt much upside in acquiring
new expertise, especially if your IT team is juggling many priorities, many of which are
more challenging than VoIP.
Another scenario is one where IT has historically commanded a solid base of
resources, deemed necessary to support capabilities that the business viewed as
having strategic value. In this case, IT is able to manage VoIP, but going forward, there
may be less will to do so. More often than not, IT teams are under increasing pressure
to reduce costs, be more accountable and demonstrate a better ROI to management.
This is especially true with telephony, where the high costs of legacy are now very
difcult to justify with less-costly VoIP options being so readily available.
On top of this, budgets are not growing, and IT is left with a do-more-with-less
mandate. This often comes with an implied message that if this cannot be achieved,
management has viable options to outsource most or almost all of IT. As such, the
willingness to manage VoIP may not be there, especially if IT is ghting for its life,
and there is little upside in risking that on a new technology they have hardly any
familiarity with.
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Whatever case applies to you, it should be clear that managing VoIP in-house will not
always be the best option, especially if IT is under scrutiny by management. Legacy
standards for determining the support needed from IT are getting harder to defend,
and if you view the challenge of keeping up with a constantly evolving technology too
daunting a challenge, then the decision to go hosted will be an easy on to make.
Reason #4 - leverage Web-based innovation
Once you have considered the cloud in terms of its nancial virtues and implications
for IT, there is a broader set of advantages that will not come as easily with premise-
based VoIP. Both go beyond the VoIP service itself, and speak more to the strategic
side of cloud-based communication.
As noted earlier, there is nothing wrong deploying VoIP for VoIPs sake, and in that
case, it really doesnt matter much if you remain on-premise or go with a hosted
offering. If the service alone is all youre really interested in, then the rest of this guide
wont be of much use; unless of course, youre open to new ideas. Our purpose here
is not to tell you what to do rather, these guides serve to update SMBs on the latest
trends in communications technologies, and in turn help drive decisions on what is
best for your business.
On that basis, this factor will have more relevance. If VoIP is still new to you, then
youve probably been using the same telephone service for a long time. Legacy
telephony has endured because it is very well engineered, and until VoIP came along,
nothing was going to displace it. A key reason why TDM has become so entrenched
is its segregated nature. These phone systems have dedicated networks and
operating environments, and while this ensures a highly reliable service, telephony
remains in its own world.
While legacy telephony has not evolved in over 30 years, the communications
world around it has, especially with the advent of VoIP. Today, VoIP works well as a
standalone service much like TDM but is capable of doing so much more. TDM
does one thing extremely well, but things have changed, and we now use a multitude
of modes to communicate. Not only does VoIP provide a comparable experience
to TDM but at a lower cost but it can seamlessly integrate with all these other
modes.
This is probably the most fundamentally different way you need to think when
it comes to VoIP, especially when considering the hosted model. First, you need
to accept that innovation around VoIP and the broader scope of Internet-based
communication will be an ongoing part of the technology landscape. Then you must
embrace this as a good thing, after which youll recognize that VoIP is really just
another application in a data network, and from there, the possibilities really open up.
If you view those possibilities as opportunities to communicate in more powerful ways,
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then VoIP has business value that goes well beyond telephony. To unlock that value,
though, you need to assess which forms of innovation will really help your business.
Some businesses will have enough IT expertise to develop these innovations
internally, but most will not, especially among our readers here. For those businesses,
youre better off evaluating what comes down the road rather than focusing on
creating them.
This could be the best reason of all to choose the hosted path, as most providers
are by nature focused on staying ahead of the curve. After all, if all you offer is plain
vanilla VoIP, you will not stay competitive over time remember, unlike TDM, VoIP is
still evolving and weve only just started to see whats possible. Simply put, the Internet
is far more conducive to innovation than the world of TDM, and if you believe this can
help employees be more productive, then you will want to stay ahead of the curve as
well. Your chances of doing so will be far greater with a hosted VoIP solution than
managing it onsite with little help from those who know the Internet world the best.
Reason #5 - better organizational agility
This factor builds on the previous reason, and speaks to how the cloud can benet
your entire operation. VoIP provides good value on its own, and being hosted allows
the service to be managed with minimal demand on your IT team. These will be
enough for most businesses, but if you take a holistic view of hosted VoIP, there is a
bigger picture to consider.
Whereas a premise-based VoIP solution will likely be telephony-centric, a hosted
version can more easily break away from this model. VoIP is typically associated with
desk phones because that denes its predecessor, TDM. Desk phones still have a
role to play, but hosted VoIP is dened more by the Internet, whereby this is just one
mode of doing telephony. When coming from the cloud, VoIP can as easily be used
on mobile devices, via Web applications, or from soft phone clients on your PC. By
shifting the connectivity channel from hard-wired phone jacks to Ethernet cables or
WiFi hotspots, VoIP can now become used wherever your employees are as opposed
to where the phone jacks are located.
In short, todays workers are more mobile and less tethered to their desks, making
legacy telephony infrastructure less relevant to meeting their communications
needs. To some extent, these needs can be met perfectly well by premise-based
VoIP, but hosted versions are by nature more Web-centric and integrated with other
communications modes. Given the declining role of desk phones, it stands to reason
that your employees will be more productive when given the tools that suite their
needs and changing workow patterns.
Add to this the fact that workplace itself is becoming increasingly decentralized,
and even among SMBs, its getting harder these days to round up an entire team
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to meet in a conference room. Organizational agility has become a top priority for
management, and to enable that, you need a exible communications environment.
VoIP is a core building block here, and when the solution is hosted, you get maximum
coverage to support employees wherever they are. All they need is broadband access,
and whether at home, at a branch ofce or helping customers halfway around the
world, they can be just as responsive as being at their desk. If you see that a key
driver for organizational agility, then you probably need look no further for a reason to
deploy VoIP from the cloud.
Conclusion
By reaching the decision to deploy VoIP, you have taken a big step forward in getting your
business aligned with todays communications technologies. You may have been drawn to VoIP
for the cost savings, but as you explore the merits of a cloud-based solution, hopefully a bigger
picture opportunity has emerged.
Depending on your situation, a case can be made either way for cloud or premise-based VoIP.
Some of this depends on the state of your network and IT resources, but that can easily be
trumped by higher priorities dictated either by IT or executive management. A cloud-based
solution can certainly be justied by virtue of your technical limitations, but even where IT has
the capacity to support VoIP, this can still be the best path overall.
Much of this has to do with the role you view VoIP playing in your business. At face value, the
cost savings may be enough to warrant moving on from TDM, but if you are looking to VoIP to
drive productivity gains and make your business more competitive, the cloud offers a variety of
advantages over a premise-based solution.
This guide has been prepared to support such a scenario, and is one that we believe will
resonate with SMBs. The ve factors analyzed herein should provide sufcient justication for
almost any situation, and if you are leaning in this direction, it is our hope that this guide will
help get you off the fence so you can move forward with VoIP.