Feature Story

July 31, 2003

Internet Protocol (IP) is revolutionizing the private branch exchange (PBX). And Cisco Systems now has 2 million proof points. On July 31st Cisco shipped its two millionth IP telephone to SouthTrust Bank, one of America's top-20 bank holding companies. This milestone symbolizes the increasing acceptance of IP telephony as the primary voice solution for businesses. Cisco IP Communications system, which includes Cisco's industry-leading IP PBX, IP phones, unified messaging, and contact center systems, replaces the standard office phone with a highly flexible and powerful multimedia collaboration and management tool. IP Communications has become mainstream as a rapidly increasing number of businesses throughout the world replace their aging traditional circuit-switched PBX systems with IP communications solutions that are more flexible, scalable and easier to manage. Unlike traditional PBX systems, IP Communications networks leverage the same innovations in packet-based communications that made the Internet possible and Cisco IP phones deliver all of the telephony capabilities of traditional digital PBX telephones as well as multimedia capabilities similar to those of desktop computers, handheld PDAs, and Web applications. With Cisco IP Communications, employees can place crystal-clear phone calls, establish video sessions and share data seamlessly over a converged network infrastructure. Such communications capabilities deliver cost savings, productivity increases and competitive business advantages. News@Cisco recently spoke with Don Proctor, vice president and general manager of Cisco's Voice Technology Group (VTG), about IP Communications and the revolutionary advantages it now offers organizations.

Companies have been frustrated in the past by investments in propriety PBX systems, which have trapped them in technology that becomes obsolete. How can IP Communications help companies avoid this problem?

Don Proctor: Companies can avoid the traps of traditional propriety, hardware-based PBX systems by selecting Cisco IP Communications solutions, which are based on an open and flexible software-based architecture that allows businesses to scale seamlessly from single, very small sites with fewer than 100 users to multiple, very large sites with tens of thousands of users. Companies do not have to invest in new infrastructure but, instead, leverage the data network they already have in place for their computing and information systems. Also, since Cisco IP Communications solutions use Internet-based open standards such as XML and JTAPI, customers can take advantage of the wide variety of third party productivity applications currently available. For example, several retail chains use their Cisco IP phones to check for inventory at other locations and automatically dial the appropriate branch, while some hotels use them to provide guests their room service menu selection, and many businesses broadcast emergency messages and instructions to employees' IP phones.

When IP telephony first emerged, companies focused on reducing the total cost of ownership (TCO) of their voice communications systems. Is that still the primary driver for IP Communications?

Don Proctor: The beauty of Cisco IP Communications is that companies can both gain tremendous cost savings over traditional communications infrastructures as well as drive significant increases in employee productivity, leading to a higher Return on Investment (ROI). These days, our business customers save money in a variety of ways. First of all, IP telephony systems eliminate the need for a dual communications infrastructures, since IP communications run over a company's existing data network. While some customers' data networks might need to be updated to assure optimum voice quality, the costs are far less than having to build and manage a separate circuit-based voice network. Our customers report that initial equipment expenses can run 20 percent less than comparable traditional PBX systems, with total cost of ownership (TCO) reductions running 50 percent or greater compared to standard PBX systems.

Cisco IP Communications systems are also very easy to manage. IP phone users report tremendous savings as a result of lower costs associated with moving, adding, or changing employee office locations. Relocating an IP phone is no more difficult than plugging a computer into an Ethernet port. IP phones improve workforce mobility by associating an office extension number with a phone, or phones, rather than with a wire fixed in a wall, as is the case with traditional systems. This means an employee can move an office and keep his or her extension by simply taking the phone to the new office, or logging into another phone. Telecommuters or mobile employees can now have the same extension on multiple phones--in the office, at home, even on a laptop computer. So, when someone calls an office extension, they aren't calling to a specific phone, but, rather, to the person.

But the real benefit comes from employee productivity gains. In a 100 person company might have 5 IT employees; a 10% productivity gain in operations equates to half an extra employee. But if every employee in the company saves 10 minutes a day, or 2%, using Cisco IP phones or applications like unified messaging, the company gets the equivalent of 2 free employees. Recent studies have shown productivity gains of over 5% per employee from Cisco IP communications.

Can you elaborate on the type of productivity and competitive advantages Cisco IP Phones bring to a company?

Don Proctor: Cisco IP Phones are much more than traditional telephones. Cisco IP Phones are intuitive, easy to learn, use and customize. In addition to the business telephony features you expect, Cisco IP phones enable a variety of data and voice/data productivity applications based on standard protocols and interfaces. Customers can purchase packaged applications from Cisco partners and design their own applications. These applications can significantly improve the day to day employee productivity across the organization.

How good is the quality of telephone calls carried over IP networks?

Don Proctor: The short answer is that voice quality over IP networks is no longer an issue for businesses transmitting voice traffic over their corporate intranets. Call anyone at Cisco Systems or any of our more than 8,500 IP Communications customers and find out first-hand. You will never be able to tell you are on an IP-based phone system. Quality, in fact, has been on par-and in many cases better-than circuit-based phone systems for the past few years. For example, technologies like AutoQoS for Cisco switches and routers, announced earlier this year, enable the Cisco network infrastructure to configure automatically to meet the demands of high-quality voice communications.

What precautions should companies take to secure their IP network for voice communications?

Don Proctor: Providing security on the data network should be a top priority for all businesses, regardless of whether they are using the network for voice communications. While Cisco IP Communications networks are inherently no more vulnerable to attack than traditional voice communications networks, but the threats may be different. In general, the security policy a company has put in place to protect the availability, privacy and integrity of its mission-critical data network can also be applied to protecting its IP Communications network. Cisco's SAFE blueprint for network security, based on industry leading practices and technologies, encompasses IP Communications.

Cisco IP communications systems leverage many of the practices available for data to protect voice. For example, many businesses have adopted data center "hot sites" to protect their data infrastructure assets in the event of a disaster. Using Cisco IP Communications, these businesses can leverage their existing data center hot sites to protect their communication capabilities as well. In the event that the primary IP PBX system becomes unavailable, Cisco IP Phones will automatically connect to the backup IP PBX system in the hot site, enabling uninterrupted communications capabilities. With legacy technologies, protecting the voice network requires a much more complex, costly and disruptive strategy that demands precise coordination between the end-users, equipment suppliers and the telephony company.