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Issue of August 2002 
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Diverting voice to cut costs

IDBI Bank decided to divert all voice calls between its offices and branches nationwide through its data network using VoIP technology. By doing so, the company cut communication costs substantially at the same time making use of the unutilized WAN bandwidth. by Soutiman Das Gupta

The Company
IDBI bank started operations in 1995 and is the tenth largest development bank in the world. It has a very strong national presence in areas of corporate and retail banking. It has a large nationwide distribution of zonal offices, branches, and ATMs.

The Need
The bank wanted to cut the costs of telephone and communication bills. It also wanted to make use of unutilized WAN bandwidth.

The Solution
The company deployed VoIP technology in its existing network with minimal hardware and software procurement.

The Benefits
IDBI bank now routes all its long distance calls using VoIP technology. It has saved the company Rs 5 Lakh in just a single month (The month of June). At this rate the bank hopes to achieve fast ROI.

IDBI Bank Ltd., IP Telephony deployment

Click on images for larger view

Like any progressive enterprise, IDBI Bank was looking at ways to cut costs. And the head of every department resolved to put in their utmost to contribute to the initiative. Neeraj B. Bhai, CTO, IDBI Bank devised an effective strategy that successfully addressed cost issues and made use of unutilized bandwidth in its nationwide WAN. He decided to divert voice traffic through the network by using VoIP technology.

By deploying VoIP technology in the existing WAN infrastructure the company was able to save substantial amounts of money. "In the month of June, we saved Rs 5 Lakh. At this rate we expect a very quick ROI," said Neeraj. Deployment work started in September 2001 and the VoIP setup was functional by February 2002.

Cost: Key driver
"In an organization communication costs comprise a rather big chunk of expense. We had to settle steep telephone bills for long distance calls between our branches and offices nationwide. So we had to devise ways to minimize it. We also noticed that the bandwidth in the nationwide WAN was not always fully utilized. This was because the WAN was built beyond current requirements to support redundancy. Since free bandwidth was available, we thought it should be put to use," opines Neeraj.

A sizable investment
Since cost reduction was the biggest reason for deploying VoIP the company had to calculate the equipment and software expenses involved before implementation. "In the beginning, we bought 80 IP Phones which costs Rs 25,000 each. The prices have decreased now, but since we were among the early adopters of the technology in the country, we had to make our initial purchases at those prices. The call manager software and the hardware server cost another Rs 12 Lakh. It seemed like a very large investment in the beginning. But we knew we could recover our investment quickly," said Neeraj.

The equipment
IDBI Bank needed a hardware server that supported QoS features to run Cisco's Call Manager software. The software is a call-processing component which extends enterprise telephony features and functions to an IP Phone. The routers at different locations needed to support QoS.

"Most of our routers are from Cisco and support QoS, which meant that the VoIP solution had to be compatible with Cisco hardware and OSs. We chose Cisco as the vendor to avoid any compatibility issues. Performance and integration were more important," explained Neeraj. The IP Phones are also from Cisco.

Setting it up
Neeraj decided to centralize the call manager application at Mumbai instead of maintaining regional call managers. "Although you can optimize bandwidth in a decentralized environment, management is easier, especially since the number of IP Phones are not too many to begin with. Besides, in this architecture when two locations have to talk, the call is set up in the central location and the data transfer for the rest of the call takes place through the shortest possible link," said Neeraj.

The IP Phones are plug-and-play devices which can connect to any RJ-45 wall socket. They function like a regular TCP/IP host device and communicate automatically with the call manager. The existing routers and switches in the network did not need any cards or modules to be attached.

The bank's in-house IT team has developed a software which keeps track of savings made from using the IP Phones. It collects information from the call manager regarding call duration and compares it with the pulse rates of MTNL and other service providers. This way, the company is able to calculate the returns in real time.

Bandwidth utilization
The zonal offices at New Delhi, Kolkata, Chennai, and Mumbai, and the data center at Mumbai have 2 Mb links. The branch locations usually have 64 K links. Since the data network now has to bear the extra burden of carrying voice, one would expect the network to slow down or develop performance issues at locations that do not have 2 Mb links. Neeraj is confident that such events will not happen.

"We had built the network with capacity for very high traffic right from the beginning. So performance issues will not arise. We typically use 64 K links between our locations and have not installed more than two IP phones at each location. Each IP phone uses 11.2 Kbps bandwidth, so both phones don't use more than 22.4 Kbps. And the call manager gives us reports of call irregularities. If a call data has been retransmitted in a location it will be registered as a poor quality call. If there are too many poor quality calls, it may be a problem with the physical link or the bandwidth. So based on this report we can enhance the bandwidth. However, we haven't felt the need to enhance this bandwidth as yet."

The network is also monitored at each link. If bandwidth utilization crosses 60 percent, excess capacity is added to the link.

QoS features
The IP Phone converts voice into packets of data which behave like any other data packet in the network. An extra QoS bit is added to these packets so that routers and other network devices can distinguish them and give them more priority for transport. This eliminates jitters in the voice. The TCP/IP headers are compressed with a G.729 codec so that the amount of bandwidth used is minimal.

"When the network transmits a voice call the data traffic gets second priority due to the QoS bit, but any change in data access speed is not generally perceptible. This is because the delay is only a few hundred milliseconds. The user will not even realize that a Web page which took 15 seconds to load earlier, now takes half a second more," said Neeraj.

A few locations have legacy Motorola routers which originally didn't support QoS. Software patches were applied to QoS-enable those devices.

Future plans
"Now that the bank personnel have realized the benefits of VoIP, many have started using the IP Phones. And when personnel receive calls from other branches through regular phones they ask the caller, "why don't you use the IP phone," said Neeraj.

The bank certainly wants to take more initiatives along the lines of VoIP. It has plans to purchase 45 new phones soon. A Cisco conference bridge will also be deployed in Mumbai. This will allow six people to talk simultaneously in a conference. And it will allow four simultaneous conferences.

Soutiman Das Gupta can be reached at

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