[*] The business case (against) VoIP

[John Lange]

I have a copy of the slides used in the presentation. If you want to see
it you can download it here:

http://www.open-it.ca/tmp/CIPS_VoIP_Business_Case_2005_v20.ppt

The bulk of my frustrations come from slide 6 "VoIP Total Cost of
Ownership"

In my opinion the numbers in the blue section are way off and here is
why:

Hardware:
$25,000 for hardware and $25,000 to setup and configure? Those are the
kinds of prices you would get from MTS for those services but a reality
check would reveal it is more likely to be $20,000 for both. For
example, an IBM blade centre with two blades is around $10,000 and
another $10,000 for setup would be generous. And by no means do you need
a blade centre, you can go much less expensive using "off the shelf"
Dell servers for around $1000.00. So even 2 of them (for redundancy) is
less than $2500 hardware.

Handsets:
While $300/handset is reasonable for Cisco phones there are MANY other
options including Polycom handsets for more in the $200 range and many
more sub $200 range. Prices in this area keep dropping as more and more
manufacturers get into SIP compatible VoIP phones. This is also a good
thing about VoIP; it give you OPTIONS where Centrex locks you into a
single handset that you have to buy from a single vendor (MTS).

I just called MTS and handsets for the most basic Centrex start at
$312.00.

Voicemail:
$5000 for VoIP voicemail? All features including thousands of minutes of
voicemail are included at no extra charge with VoIP but NOT on Centrex
which has a $0 in that column.

Training:
$3000 Annual for PBX training? The yellow section already counted $5000
for VoIP training! So $7000 for training?! Yikes. I don't know what the
daily rate is for training is but 120 employees can be trained on how to
use a phone in a couple of days max (20 people in 6 one hour sessions).
So $600? And doing it every year? Do people need to be retrained on how
to use a phone every year? Even assuming they do, why is there no
training allowance for Centrex?

Licenses:
$1000 for licenses? This emphasizes why you should NOT use proprietary
solutions. Besides, why is there no value in that column for IP Centrex?
I'm certain the software collaboration bundle that was demo'd and ties
into Centrex was not free.

Admin:
$45,000 for Human Admin? God only knows what this means.

Depreciation:
$17,200 Depreciation. This row is wrong is several ways:

1) First, the FULL hardware/setup and handsets costs were already
counted so you can't now charge depreciation. Thats counting the same
thing twice.

2) The price only works if you assume $300 handsets and $50,000 hardware
and setup which I've already demonstrated is highly inflated. And I
don't believe you depreciate setup charges (I'm not an accountant).

3) $0 depreciation for the Centrex and IP Centrex solutions? Don't the
$312 handsets for those solutions Depreciate? And aren't they insured?
Again there is a $0.

4) Depreciation is written off as expense against taxes so it actually
is a year-over-year savings that you don't get with Centrex.

-- 
John Lange
President OpenIT ltd. www.Open-IT.ca (204) 885 0872
VoIP, Web services, Linux Consulting, Server Co-Location