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Issue of June 2003 
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All for one network

Given the benefits of VoIP and video conferencing, twice the number of companies' plans to invest in convergence this year

Converged networks enable enterprises to transmit data, voice and video over the same network, the end result being cost savings.

That's why companies in almost all verticals are increasing investment in Convergence this year. Overall, investment in Convergence will double this year compared to last year. In the last one year just 8 percent invested in this area, but during 2003-2004, 15 percent plan to invest in Convergence.

Though large companies have been the prime investors in Convergence, small and medium companies are showing increasing interest.


Convergence is a great cost-saver. It allows you to use many services through your existing data network infrastructure.

You can make voice calls (phone calls), transmit video images (conduct video conferences), and transport the usual applications data through your LAN and WAN. It also accounts for optimal utilization of unused bandwidth in your network.

For instance, IDBI Bank uses IP phones for communication between its nationwide offices, and has saved Rs 5 Lakh in a particular month on phone bills. Outgoing call centers use VoIP to call clients in USA and Europe—all at a fraction of the cost required for making calls over PSTN.

Convergence areas

This survey considers the two most popular Convergence applications—VoIP and Video.

With the help of converged networks, companies can make effective use of VoIP technology to make voice calls over the data network. The use of VoIP dramatically reduces communication costs, and enforces the use of aspects like QoS, bandwidth prioritization, and monitoring in a network.

44 percent have already invested in VoIP and 54 percent plan to do so this year. The cost benefit will be easily realized by those who have a high number of users (and a high volume of calls). One-third (32 percent) of the respondents say they have 100+ users for VoIP calls. 37 percent said it's used by 10 - 50 users. And 11 percent said 51 - 100 users make VoIP calls.

Companies can also use Video Conferencing (VC), which is considered the 'next-best thing to being there.' VC is a good way to save time and cost on travel. And it allows interactive sessions, whiteboards, and notes-sharing, all designed to make it seem like a real meeting.

38 percent companies use video conferencing facilities and 41 percent plan to invest in this area this year. Video conferencing is effectively used for one-to-one
communications or for video conferencing between small groups. 47 percent said video conferencing is used between two users, for one-to-one communications. 20 percent say video conferencing is used for 3 - 5 users. And 13 percent said groups of more than 10 use video conferencing.

Low priority

Most enterprises have realized the various benefits presented by convergent networks, and are planning to implement VoIP or video conferencing. However, the budget allocated for convergence isn't showing any exceptional growth.

Since most of the existing networks are IP-based, it doesn't require a massive investment to adapt it for VoIP or video. However, equipment such as routers and gateways will need to be upgraded/replaced to enable the network for voice or video. This will require a modest investment and it's up to top management to consider this. Cost should not be an inhibitor when adapting existing networks, after all one needs QoS.

Research Snapshots
  • 8 percent of the 300 companies that were surveyed already use a converged infrastructure.
  • 44 percent already use VoIP, and 38 percent use video conferencing solutions.
  • Average 52 users in a company with convergence use VoIP. 32 percent companies have enabled more than 100 personnel on VoIP.
  • 15 percent of the companies plan to invest in convergence architectures in 2003-2004.
  • Out of these, 54 percent want to invest in VoIP and 41 percent in VC.
NM Suggests
  • Not to be taken aback by the myths surrounding converged networks and applications like VoIP and Video Conferencing (VC).
  • Companies that have medium and high amounts of intra-office communication should consider VoIP as a measure to cut interoffice communication costs.
  • Video conferencing will be necessary, only if enterprise operations require it. However, it may be necessary to upgrade your networks for better throughput and faster response time.
IDBI Bank cuts cost by using VoIP

IDBI Bank has diverted all voice calls between its offices and branches nationwide through its data network using VoIP technology.

Like any progressive enterprise, IDBI Bank was looking at ways to cut costs. It realized that one efficient way to reduce costs was to utilize existing data networks for carrying voice traffic.

Says Neeraj B. Bhai, CTO, IDBI Bank, "In an organization communication costs comprise a rather big chunk of expense and we had to devise ways to minimize it. It was also noticed that the bandwidth in the nationwide WAN was not being fully utilized. This was mainly because the WAN had been built beyond current requirements to support redundancy. And since there was bandwidth available we decided to put it to further use."

By deploying VoIP technology in the existing WAN infrastructure the company was able to save a substantial amount. Says Neeraj, "Deployment started in September 2001 and the VoIP setup was functional by February 2002. By June 2002, the bank had saved Rs 5 Lakh."

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 enables the bank to calculate the returns in real time.

Utilization of additional bandwidth
The bank's network had been built with capacity for very high traffic since its inception. It typically uses 64K links between the locations and has not installed more than two IP phones at each location. Each IP phone uses 11.2 Kbps bandwidth, so the two phones put together do not use more than 22.4 Kbps. The network is also monitored at each link. If bandwidth utilization crosses 60 percent, excess capacity is added to the link.

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