How to Calculate VoIP ROI

Posted by Natalie DeCario on October 21, 2013 at 11:31 AM
Natalie DeCario

This week's Guest Post is from Michelle Patterson who is excited with the new technologies that are threatening to change the way we stay in touch and communicate, particularly in business. She works with companies that are introducing these technologies to make understanding them easy for regular people.

As with all other types of investments, there is a need to present a calculation of Return of Investment(ROI) to the board prior to investing in VoIP technology. How is the process done? What are the factors that need to be considered? These questions are only some of the questions that each organization has to consider before actually implementing any type of IP Telephony system. After all, this is a big move. Cost related issues should be addressed early on.

Calculating VoIP ROIBefore starting on the actual process, it is very important to understand that in order to achieve a strong ROI upon investing in VoIP despite today’s tough economy, locking down on VoIP ROI is important. Making sure that you have ROI is rather straightforward, and this is possible as long as you are able to cover some points.

Advantages of doing a cost analysis and ROI calculation

  • Telecommunications/IT Cost Savings
  • Increased Support and Administrative Productivity
  • Business Agility and Capability
  • Enhanced productivity and mobility

Whether an organization is focused on deploying VoIP in house or perhaps using a managed service or a hosted solution, it is realistic to consider that there are initial costs that come along with VoIP. In order to further understand the costs involved, which includes VoIP management and implementation; it is highly recommended to do thorough research prior to making any step during the process. In order to be successful upon presenting the calculation to the board, and eventually sell on the business side of the case, all types of costs covered within the process of VoIP deployment, that is, from beginning to end, should be rightfully considered.

VoIP deployment without performing cost and ROI analysis is quite risky. Because several of the advantages of VoIP are soft, the determination of hard-and-fast ROI may, at times, be challenging. After all, there may be hidden costs associated with the implementation of VoIP.

Here are some expenses to consider during the implementation:

  • Network upgrades
  • Hardware upgrades or replacements
  • Labor and services implementation
  • IT training
  • Increase in transport cost
  • Application integration and development
  • VoIP software and central system hardware
  • Managed Services
  • User training
  • Other expenses: support increase, write-downs, potential downtime

Possible risks that need to be considered which might increase cost or jeopardize benefits:

  • IT maturity and capability
  • User training/adoption
  • Upgrade investment and network readiness
  • QoS (Quality of Service) concerns
  • Security issues

Creating a VoIP Business Case

VoIP may turn out to be a costly investment. However, it may also save a significant amount of money, even more compared to TDM-based systems. When attempting to create a business case for VoIP, it is very important to ensure that a working knowledge of VoIP ROI is working.

During the process, it is also important to understand the entire IP Telephony, as well as its' services. This will assist system integrators, Value Added Resellers (VARs) as well as the customers in understanding the advantages and disadvantages of transferring over to a voice data service. This involves the overall examination of call control, connectivity and toll bypass to PSTN. Understanding all these elements will come to surface a better concept of the IP telephony and ROI of VoIP in general.

Aside from doing the calculation on your own, a good suggestion is to work with your service provider in developing an independent analysis. Though each provider may have their own agenda, collaborating with them in personalizing the analysis various assumptions may help in preparing a good presentation to the board.

Tags: Guest Post, VoIP

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