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Heeding the CALL of IP Telephony Providers of advanced communications solutions DIAL INTO specialty retail by Martin Vilaboy Small and specialty brick-and-mortar retail operations haven’t exactly been a primary target for providers of data and communications services. That’s probably no surprise, since most retailers connectivity needs have been fairly modest – T-1 Internet connections or less, a handful of phones, mostly local calling, with some messaging – certainly less than a few other small business verticals, such as small law and medical offices, tech start-ups, financial services and local banks, to name a few. But independent retailers, all of a sudden, have appeared squarely on the radar of providers of advanced and emerging connectivity and communications services. It’s not so much that specialty stores have seen dramatic changes in their voice and data needs, though changes in the way we all communicate are occurring. It’s more that 20 | InsideOutdoor | Spring 2008
many retailers fit the mold of operations that stand to reap the most gains from the capabilities that can and are being wrought by advanced communications. Touting “enterprise-class functionality at small business prices” and overall savings in voices services spending, groups of advanced communications providers have zeroed in on businesses that operate multiple offices or branch locations (each with about five phone lines or less); owners-managers that need to be accessible but rarely can be found at their desks; employees who share desks and phone lines; modest local networking requirements with little or no “telecom equipment” on site; and some customer service functions moving to the Web. Sound familiar? For most purposes, we’re talking here primarily about “IP telephony,” also known as “VoIP,” or “voice over Internet protocol.” It’s important to note that while IP is short for “Internet protocol,” it doesn’t necessarily mean on or utilizing the public “Internet,” nor is it limited to PC-based calling. IP just happens to be the protocol behind the “Internet” we all know and use. In other words, while the much-advertised Vonage telephone service, for example, sends calls over the public Internet, other providers of IP communications have built private IPbased networks that in no way ever touch the public Internet, and therefore are not susceptible to the quality and reliability issues of the public Internet. But by being fully compatible and interoperable with the widely available and easy-to-access public Internet, IP networks allow providers to develop and deliver new and existing communications services much more affordably than ever before, often on a nationwide or global basis. Use of VoIP Products and Service by North American Businesses, 2005 Small Businesses Medium-Sized Businesses Large Businesses 14% 23% 36% Source: Infonetics Research For starters, on IP-based “packet switched” networks, time and distance are less relevant than in the old world of the “circuit switched” telephone networks, so the line between local and local distance calling has been blurred, and as such perminute pricing plans are all but disappearing, much as has happened with cell phone plans. So, if you currently are paying per-minute fees for long distance, and your monthly phone bill is significant, IP telephony services definitely should be a consideration moving forward. At the very least, IP telephony providers tend to offer free or unlimited “on-net” calling, such as the calls between dispersed branch locations. Of course, phones bill are a fairly modest chunk of retailer operating expenses, so even a good percentage of savings may not necessarily be enough to encourage a switch in telephony services. Savings can be driven further, however, by bundling landline voice services with other applications such as Internet access or even mobile services. The upside for subscribers of bundled plans are one point of contact for all services (i.e. one bill to pay) and discounts for buying multiple services from one provider. Source: 8.0% NSGA 7.0% Linear (Footwear) 6.0% How Does Your VoIP Service Compare to Your Old Service (Among 5.0% companies with 100 or fewer employees that have adopted VoIP) 4.0% 100 3.0% 2.0% 801.0% 60 40 20 0 9.0% 0% 68% 12% 8% Linear 8% (Footwear) 28% 20% 16% 8% 8% Source: NSGA Cost 1999 84% 60% 64% 80% 92% 84% Equipment 84% 92% Moves, Adds, Changes 2000 Footwear 8% Linear (Equipment) 24% Management 2001 Call Quality 2002 Reliability 2003 16% 12% 4% 4% 4% 4% 4% 4% Routing 2004 Features Capacity How Does Your VoIP Service Compare to Your Old Service (Among companies with 100 or fewer employees that have adopted VoIP) VoIP Worse About the Same VoIP Better 100 Multi-Location Source: Savatar 80 This “convergence” of services is where IP telephony gets really 60 interesting, beyond just the potential cost savings. To simplify Would you matters, recommend convergence VoIP service is when to 84% 60% voice and messaging 64% services, your business 68% Internet peers? connectivity and 80% all related data 92% services are 40 84% 84% 92% delivered using the same network through one connection to 8% the customer 12% premises, 24% with increasing levels of cross functionality 20 2% between the services. 100 4% 34% 8% 8% 21% 28% 16% 39% < Consider, 20% for example, 16% a link on a Web 12% site 4% 4% 8% that a consumer 8% 4% 4% 4% 4% anywhere 0 on the globe can click, from a computer at their home or on a sales floor, and instantly be connected to a live, human attendant who speaks the caller’s language and can handle orders, frequently asked questions, take a message or forward the call 100 to 4% > VoIP 20% Worse 24% About the Same 52% VoIP Better the phone of the proper recipient, all for a monthly fee that easily can be justified by a small amount of newly generated business. Source: Savatar Taking things one step further is “fixed-mobile convergence,” whereby applications seamlessly travel across 0 20 40 60 80 100 both Cost Moves, Adds, Changes Management Call Quality Reliability Routing Features Would 1 you recommend 2 VoIP service 3 to 4 5 your business peers? Not Recommend Recommend Highly Recommend 2% Source: Savatar 4% 34% 21% 39% 4% 20% 24% 52% Source: Savatar 2005 Capacity 2006 Multi-Location 0 20 40 60 80 100 1 2 3 4 5 Not Recommend Recommend Highly Recommend Employees Employees 100 < Employees 100 > Employees Spring 2008 | InsideOutdoor | 21
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