VoIP - Key to Convergence
Once upon a time, Voice over Internet protocol was a quirky app that geeks liked because it did something in a new and techie kind of way, even if it did it poorly. The quality was lousy and transmissions were easily lost, but hey, it let people actually talk over the Internet - and it basically was free. VoIP still retains some of the redolence of that stage of its development, demonstrated by the common (mis)conception that there still are quality issues with the technology itself. In fact, VoIP has reached maturity. It is the de facto standard for transport of voice in the telecommunications industry - and its rapidly spreading adoption is a key milestone in the next generation of network technology.
The key to VoIP's impact is that its mission-critical readiness means that there no longer is a need for a multiplicity of networks - every electronic communications channel within an enterprise can run on a single network, on a single communications protocol, with a single suite of hardware and a single support staff, and without the need for external communications providers. This converged voice and data network is nothing less than the next phase in the extension of Internet technology, bringing with it huge efficiencies and a new world of flexibility.
"Converged network and VoIP support the trends of enhanced mobility and flexibility, combined with a level of quality of service that leads to ease of use," observes Steve Sheinheit, CIO of New York-based MetLife ($320 billion in assets). As IP's adaptation for voice becomes increasingly prevalent, it will revolutionize the capability of connecting remotely with one device for multiple purposes. "That adds flexibility, which, in turn, improves cost and productivity," Sheinheit adds.
MetLife began working with VoIP about five years ago when it was upgrading its network. It initially deployed VoIP for toll bypass - bypassing the need for a telecommunications carrier by enabling intra-enterprise calling on the company network. The carrier uses traditional PBX (private branch exchange) telephony as well as VoIP for all of its larger sites, which Sheinheit argues gives the firm both savings and redundancy.
Mobile Workforce
However, Sheinheit sees VoIP's capability for enabling a mobile workforce as having a bigger impact. "This is where the technology is evolving into something we believe we need to provide," he says. "We're looking to have work over different time zones, to access the right people to do the right kinds of jobs whenever those jobs need to be done and wherever those people may be."
Among the ways MetLife is exploring these possibilities is through "hoteling," which dispenses with the need for assigned spaces - and telephone lines - for employees. Employees can simply plug in and route phone and data to their current work stations. "When you come in, you just plug in wherever you sit down and everything moves to that location for you," Sheinheit explains.
In addition to work flexibility, the arrangement allows for reduced real estate costs, says Ken Luna, MetLife's head of voice telecommunications. "Say you had to provide a facility for 250 people, but you arranged a meshed work schedule wherein employees would alternate between work and home hours," Luna explains. "You might thus only need a facility with capacity for 100 people."
MetLife's actions are representative of a movement among larger insurers to implement VoIP and focus investment on network technology upgrades, according to Frederic Veron, managing director, BearingPoint (McLean, Va.). Unlike banks and other financial services companies, insurers have lagged in network investment owing to a justifiable preoccupation with application development, Veron suggests. "Insurers have looked at the network environment more as a commodity that they need to fix when it breaks more than as an opportunity for them to invent new technology that could promote compelling benefits from a business perspective," he says.
As a consequence, many insurers are saddled with multiple networks. "Some organizations make multiple acquisitions every year," Veron relates. "After a few acquisitions, they end up with 'networks of networks' - different technology, different vendors."
By implementing VoIP, rationalizing redundant networks and moving to a converged network, the larger companies to which Veron refers are early responders to growing market pressures. On the one hand, diverse networks will carry increasingly intolerable costs, both in terms of inefficiency and lost opportunity, as market demands call for more network-intensive functionality, such as various types of Web-based outreach to independent distributors and end customers. On the other hand, within a few years, there simply will be no alternative to VoIP - traditional digital PBX will no longer even be sold, according to Veron. "It's a question not of 'whether' but of 'when,'" he contends.
Companies that refresh their networks and move to convergence now will be able to improve the customer experience significantly, leading to greater market penetration, Veron predicts. "The folks that are only beginning today are starting the race late and will find themselves behind," he says.
Getting started won't necessarily be easy, however. Even if insurance company executives have some sense of the larger trend toward convergence, they nevertheless need to justify their technology investments. And even if those executives have ceased to be skeptical about the reliability of VoIP, they still may be skeptical about its likely business benefits.
That skepticism is understandable given the immaturity not of the technology itself, but its adaptation to business applications. "IP telephony vendors have remained telephony specialists and they sell telephony for telephony features, which frankly are somewhat of a commodity today," Veron states. "They've tried to move up the food chain into business applications, but there is still work to be done."
Another source of skepticism is simple ignorance of the nature of telephony as an integrated component of networks and what that can bring to a business. "I see a lot of folks replacing their traditional telephony system with an IP telephony system and just slapping it in without further elaboration," Veron relates. "At the end of the day, what they've replaced their traditional phone with is still just a phone. So other business folks say, 'You're proposing to replace a phone with a phone - why would I do that?'"
In such a case, the implementation of a few choice business apps could make all the difference. Veron argues that business executives are not going to reach the "aha!" moment about VoIP until they've been shown how call centers can be integrated with business applications and virtualized across the enterprise.
Veron asserts that it's IT's job to communicate the advantages of VoIP to the business leadership and advises them to make another argument to encourage adoption: If you buy now, you can buy cheaply. As vendors jockey for positioning in a huge emerging market, they are willing to make significant concessions in order to establish their preeminence, according to Veron. "We've seen vendors giving 50 to 75 percent discounts to make sure they sell their equipment," he claims.
Like MetLife, Cleveland-based Medical Mutual of Ohio ($2 billion in annual revenue) also was an early adopter of VoIP, driven by a mixture of vision and necessity. The carrier anticipated a need for technology-driven improvements in customer satisfaction at a time when it was burdened with an obsolete communications network. The carrier's network hardware was no longer supported by its phone service provider, NEC (Tokyo), and it also was looking to replace its Aspect (San Jose, Calif.) call center solution. It decided to combine the two functions.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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