The age of enterprise convergence
Since IP has emerged as the default format for voice, data
and multimedia, the time has come when enterprises will benefit from convergence,
notes Alok Shende
The headwinds of enterprise convergence have created waves of possibilities
for next-generation Indian enterprises. Key business issues, including competitiveness,
customer satisfaction and employee productivity all have a touch point within
this convergence matrix.
The shift to IP architecture means the adoption of a
standard that the world at large is investing in
Todays enterprise networks carry legacy architecture that ranges from
proprietary standards to architectures that came into vogue during the past
two decades. However, the shift to IP architecture means the adoption of a standard
that the world at large is investing in.
Vendors and service providers have created an entire context of advanced technologies
and open standards around the IP platform that is ushering in economies of scale
and lower prices for end-point devices: either IP telephony or video conferencing
devices for customers.
As voice, data and multimedia agglomerate in IP packets, a cornucopia of possibilities
emerge. IP convergence constitutes a coming together of voice, data and video
traffic on an open IP platform, and hence IP convergence spans networks, transmission,
end-point devices and users.
Technology diffusion cycle
The traditional technology diffusion cycle kick starts when
innovators who need solutions to address complex challenges experiment with
a new technology and start adopting it once the benefits from the said technology
permit them to create a business case for their enterprises. With time, other
constituents come to know of the case studies through word of mouth, and this
creates the next wave of adoption. The short history of adoption of IP convergence
makes for an interesting story.
In contrast to the large enterprises that have traditionally been at the vanguard
of adoption of solutions that have transformative potential, IP convergence
was adopted by smaller enterprises whose need for quality was probably was not
as high. At the same time, IP convergence provided immense cost savings.
For example, one of the early solutions adopted by mid-market enterprises in
the mid-nineties was Fax on Internet. This also gelled with the
evolutionary quality of IP networks since the early generation of IP networks
did not meet the quality standards demanded by large enterprises.
As service providers invested in backend technologies for IP networks such as
high-end carrier class routers, IP compression, and MPLS, the quality of IP
networks has come to a point where IP networks will become the dominant standard
for not only data but voice and video as well.
The market growth for IP telephony in India substantiates the underlying story
for IP convergence. The market for IP telephony has grown from $0.1 million
in 2000 to $54.4 million in 2004, and is further expected to grow at a CAGR
of 25.6 percent to reach $268 million in 2011.
Benefits of convergence
IP convergence holds transformative potential for Indian enterprises primarily
due to three classes of benefits that will accrue to the adopters: reduced communication
costs, reduced total cost of ownership (TCO), and applications as the long-term
Reduced communication costs
As bandwidth prices fall, enterprises will spend less for the shared bandwidth,
which will result in lower voice and video cost per minute. Further, enterprises
will be able to provide remote access to local call numbers. Current regulatory
rules prevent connectivity between closed user groups and the public switch
telephony network, essentially precluding the possibility of inter-company IP
However, enterprises can skim off gains from lower costs for intra-office communication.
Communication costs between employees spread across different offices of the
enterprise can constitute as high as 40 percent of overall communication costs.
For example, a leading public sector bank has deployed 3,000 IP telephony end-points
to rationalise intra-office voice telecom spend, while an IT major has significantly
reduced inter-city travel for its senior managers through video conferencing.
Enterprises today have two different classes of networks to manage: one that
transmits voice and the other that transmits data. IP convergence leads to unification
of voice, video and data networks, and concomitantly brings down the deployment
of resources for maintenance and administration of the network. Centralised
operations and integrated systems management lead to resource optimisation.
Applications, the long-term driver
While a lower cost of communication has an instant appeal for many enterprises,
the real story unfolds when applications are deployed on the IP telephony platform.
Anecdotal evidence suggests that enterprises which have targeted revenue enhancement
through IP convergence have gained higher return on income compared to the communication
cost-saving aspect of IP convergence.
Standards such as Session Initiation Protocol (SIP) have created a baseline
for inter-operability for IP telephony applications, paving the way for enterprise-scale
deployment in a heterogeneous environment that exists in most enterprises.
Another key development in the self-service application has been the VoiceXML
(VXML) platform. A VoiceXML application is basically a Web application with
a voice user interface. Some of the key benefits of developing VoiceXML applications
are that the technology provides Internet access to telephone users, follows
an open standard, provides an XML-based markup language, and leads to speedy
SIP and VXML are leading to the development of applications that manage voice
just like any other application on the desktop, and that can be easily integrated
with any other applications. While there are numerous applications that are
coming up, the ones that have gained significant traction include collaborative
working, an agile workforce, unified messaging and IP contact centres.
Managed Service Providers
The emergence of managed services has created a logical option for many enterprises
that have a genuine interest in gaining the benefits of IP convergence but are
challenged due to issues of initial capital investments or commitment to ongoing
maintenance and support.
Some of the drivers for the emergence of Managed Services Providers (MSPs) in
the coming years are the continuous pressure to reduce capital expenditure and
the increasing need to optimise internal operations and reduce operating costs.
MSPs enable earlier deployment of new applications and services, and leverage
the specialised expertise of the vendor / channel / service provider to manage
There is a compelling need for enterprises today to engage in a proactive analysis
of what the emerging enterprise convergence play has to offer.
But before CIOs propose a business case for convergence to their management
boards, they will need to draw a roadmap to navigate the speed bumps arising
out of legacy architecture as well as incoherent transition maps, and, most
importantly, justify budgets for investments.
Also, since IP telephony is likely to be the base for future application development,
its critical to choose vendors who have a platform that adheres to open
standards, and who provide a clear forward path for technology integration.
The author is Director, Information Communications &
Technology, Frost & Sullivan India.