Unified Communications Case Study: 50 Percent Savings in Midmarket Example

Rob Enderle

In preparation for our MidMarket CIO IT Forum next month, we are collecting case studies on successful projects. This one is on Tridel, a Canadian midmarket builder of condominiums. It reported savings in the 50 percent range for networking and telephone by unifying the systems supplying both services as well as increased customer satisfaction at the same time. While the company's project is still in process, its initial savings are impressive and worth sharing.



While Tridel is small, it also is relatively complex. Each of its 20 active projects is a separate company with its own unique identity under the umbrella of the larger corporate entity.


It had aging Nortel PBXes that had become too expensive to maintain and that required expensive dedicated trunks at each location, leaving little budget for a data connection. That connection was one high-speed DSL link per site, which easily became saturated with data use and couldn't effectively be monitored. As a result, much of the high-bandwidth data use was likely unauthorized as well. This unauthorized use of the Internet led to a proliferation of viruses, excessive downtime and support costs, money that could have been better used elsewhere.


This was an expensive mess that was difficult to manage and less than satisfactory for the each of the working companies.


The Bidders and TCO Analysis


To address the problem, the company decided to merge the data and voice problems into one VoIP/networking RFP and seek bids from Nortel, Cisco, Avaya, Shoretel, along with a OCS (Microsoft Office Communications Server) solution bid.


Each was asked to look at five-year costs for its proposed solution so the company could compare not only initial costs, but also costs over a reasonable period of time. This analysis included energy use. This extended analysis tended to penalize vendors who low-balled initial bids in order to lock in high annual service fees.

The Result


Nortel wasn't competitive, which is interesting given it was largely a Nortel PBX that was being replaced.


Cisco was too complex and expensive to service. While the solution was compelling, it was seen as overkill for this kind of deployment. Implementation costs for Cisco were four times that of the winning bid.


Avaya had a very low initial cost, but the cost of services made it too expensive over the five years. It was generally seen as not competitive.


The OCS bid had an inside track because Tridel isn't just a Microsoft shop, it is heavily invested in Exchange. The solution, however, was not well packaged by Microsoft, and although the solution was one of the most interesting and highly considered, it was felt that it was not quite ready for prime time and there was risk in being an early adopter.


ShoreTel, a midsized U.S.-based vendor, won the bid with a solution that was well-designed for Tridel's needs and the most cost-effective over the five years.


Benefits Achieved


By implementing an IP-based system and aggregating both data and voice calls, the sites could eliminate the expensive trunks and drop in dedicated T1 lines, which dramatically improved network speeds. They could hub the remote resources using MPLS (Multi-Protocol Label Switching) and monitor use, which virtually eliminated unauthorized use of equipment and effectively eliminated the massive virus problems.


They could better direct calls to centralized attendants, assuring that after-hour callers -- who could be investors or buyers -- were handled better. This also eliminated the need for after-hours attendants. The result was an 80 percent reduction in phone line cost and an estimated savings of 50 percent of the historical combined cost for networking and telephony. Against these savings, the cost of the implementation was considered negligible.


The company already is seeing unanticipated additional benefits from the extra bandwidth, such as the ability to collocate or centrally locate servers and to provide for both better redundancy and lower-cost aggregated server and storage solutions. And it believes it has just scratched the surface with the savings and flexibility this solution provides.


Videoconferencing Didn't Take


The company did a trial with videoconferencing, but decided the technology simply wasn't used enough to justify a deployment. The target for this, interestingly enough, wasn't employees, but aging tenants whom the company believed wouldn't want to travel. I think this illustrates two things: First, new technology typically doesn't move well with older audiences, and that to make people use a new technology, both incentives to use it and penalties for bypassing it need to be in place. For tenants, the latter would be nearly impossible to implement.


Wrapping Up: Unified Communications Was a Great Investment


Tridel and CIO Ted Maulucci showcase an intelligent approach to the problem and solution. They didn't just chase VoIP, they chased a solution that best matched the size and type of company and that could save the company money initially while making it more agile and effective strategically. The result was unanticipated benefits, rather than the more typical unanticipated problems after rollout. That result is the very definition of a best practice.

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