There’s a lot happening in office telephony – and for the average small business it’s almost too much. How does a voice over IP (VoIP) network differ from an IP telephony system? What is a hybrid telephony implementation? When is it time to move from a carrier service like Centrex to a key phone system to an IP-enabled service or IP PBX, and how do you go about it?

Once small businesses get their heads around the rate at which telephony is changing, the irony is that modern telephony does a lot to increase the simplicity of business operations.

So what is the difference between IP telephony and a Voice over IP network (pronounced Voyp)? IP telephony enables voice communications to run as data packets over a local area computer network (LAN) that uses the IP protocol – so voice, video and data can all be carried over the one centralised network. The LAN can be wired or wireless, or a combination of both.

When the voice packet moves beyond the LAN to a digital wide area network (WAN) – which it will have to when the business is calling outside of the LAN area – then it is termed to be traveling as ‘Voice over IP’. This is because while the voice stays as a data packet on VoIP, it has to be ‘repackaged’ and addressed differently to IP telephony to ensure it reaches its destination.

You may know that smart IP telephony and VoIP applications are where the telephony world is heading. While there are compelling reasons not to adopt these applications and networks too quickly (more on his later), eventually all businesses will run telephony systems over centralised data networks. Why? Long term, the business productivity and customer service benefits are just too significant to ignore for competitive reasons.

"The advantages come through call flexibility and cost savings," says Dave Mason, marketing manager for telephony specialists Agile New Zealand.

While the word ‘flexible’ has been thrashed by the IT industry over the years, Mason is right: the greatest benefit of IP telephony is undoubtedly the myriad number of ways businesses can manage and access their telephone systems following IP telephony and VoIP implementation.

"They can log on to their phone system from a hotel or from home; they can access an individual telephone account using a number of devices. They can see the telephony status of everyone in the business from wherever they are," says Mason.

As a result, and depending on the type of data network and software being used; call centre agents can work from home, sales managers can see the telephony status of agents across multiple branches; and a pocket PC, tablet or laptop computer can connect and behave like a highly featured desk phone for the mobile worker.

"To the end-user, things really still look the same. But IP allows them to access telephony features from literally any data connection to a corporate WAN that has the appropriate quality of service to support it," says Brian Evans, product manager for Ericsson telephony specialist Zintel.

There are many business possibilities with IP telephony and more are discovered each year. Because voice, data and video traffic converge across the same data network, a voice call can be dialed from a computer screen, voice mail can be read as an on-screen message, and emails can be listened to as voice messages over an IP phone. Voice mails can be printed and an incoming call to an IP telephony system can automatically initiate the launch of a relevant contact management or customer relationship management (CRM) screen to the PC desktop or other IP-enabled device.

But can businesses also save money?

While the widely touted cost savings of IP telephony are arguably less significant than the business productivity gains, they do exist.

"You don’t need as many phone lines, you can reduce carrier call costs and service charges, and you don’t need to pay telephony experts to make administrative changes because IP telephony systems are Windows-based and easy to use," says Mason.

Zintel’s Evans says ROI is typically based around three areas: greater business productivity and flexibility; ease of management and reduction of technology infrastructure; and the leverage of existing and proposed data links to carry voice traffic usually catered for by carrier toll providers.

Paul Douglas, head of enterprise IP voice for Telecom New Zealand, says the key benefits are network simplification, reduced management and support costs; productivity enhancements and more mobility capability.

While the benefits of IP telephony are attractive, preparing a data network to carry voice well is, technically, no walk in the park. One or more IP telephony partners are usually needed because network, data security, IP telephony equipment and application expertise are all important. A data network upgrade may be necessary before IP telephony is possible, and such upgrades cost time and money.

"We regularly assess existing and prospective customers as to whether Ericsson offerings, including IP systems, will have a genuine positive impact on the business. Often we find it does not make business sense to implement IP telephony," says Zintel’s Evans.

SieTec’s business manager Rob Currie agrees, saying only a few small businesses need IP telephony just yet.

"We saw one business with 15 extensions that did without voice mail for 12 years. Now they want voice mail and of course they’re not yet interested in IP," he says.

He says until the time is right for an IP telephony investment, a carrier-managed service like Centrex works well for many small businesses.

"Centrex is a nice application but it’s also an easy incumbent to beat - it only does the basics and doesn’t add a lot of value to the business. At some point growth or change will drive the business to buy an on-premise telephony system and then they get things like caller ID and voicemail for free. From there, they move to screen popping and start to look at integrated email and CTI applications. Eventually, they look at IP telephony and say ‘that makes more sense’," says Currie.

To prepare for the future, many small businesses now buy IP-enabled equipment including phones, routers and switches so they are somewhat ready for an eventual move to IP telephony servers and applications.

"The days of just buying a box and not thinking about the future are gone," says Currie.

A further problem with IP telephony is that traditional, segregated switched circuit telephony systems are more secure. In comparison, voice calls flowing between data networks including wireless networks and even the Internet are at more risk of being intercepted, overheard or compromised.

"When we try to sniff out wireless networks around our office, we easily pick up about 10. Of these, many are home residences with wireless LANs and encrypted data, but two are businesses with the data not encrypted. So it would be possible to capture IP telephony calls and unencrypted emails from the wireless networks of businesses like that. Yet it is quite cost effective to implement sufficient IP telephony security," says Currie.

The main point for businesses to remember is that the security technologies to protect IP telephony networks are available and they work – problems occur when the business doesn’t ensure those technologies are in place, configured properly, and used.

Overall, telephony experts advise small businesses to evaluate IP telephony with care.

"Look at the impact on the whole data environment and realise the lowest risk way to proceed is to use IP only in the areas it is presently required. It will be a long time before we have a purely IP world," says Steve Bower, channel manager for NEC business solutions.

Bower says converged networks and devices are practical for some business environments and not others.

"How ready are users for it; what effect will the human factor have? The hype about VoIP and IP telephony has been around a long time, but not enough telephony vendors slow down and ask the business what it actually does and therefore what it needs," he says.

If IP telephony is on your business agenda and you do have a plan, when and how should you make the move?

Bower says periods of sudden growth or a need to move premises are common catalysts for businesses to adopt IP telephony.

"It’s never because the existing telephone system is not working. The business is normally changing and sales or service operations need streamlining. Screen popping or integration with a CRM package may suddenly become important," he says.

While hybrid telephony implementations (new IP systems implemented alongside traditional telephony systems) are widely recommended, Agile’s Mason says some small businesses do go the whole hog with IP telephony from the outset.

"I would just recommend doing the research first. Run a pilot site, test that everything works and ensure you have been delivered the system you wanted. If there are multiple sites and you need to move from a LAN environment to a WAN, then that WAN readiness is a big thing," he says.

Evans says the most critical part in any IP telephony installation is the load testing of the data network to ensure it can carry voice and data together in a way that is reliable and timely.

"Once tested, a telephony server can be set up and connected to the network, as can end-user devices," he says.

Understandably, telephony specialists play a key role in IP telephony planning.

"Companies need to identify all the areas of their business they would like to improve, whether it’s increased reliance on mobility for their business, working from home, or access to applications anywhere, anytime, anyplace. Once each area is identified, a partner can come in and assess the possibilities," says Telecom’s Douglas.

Currie says small businesses often fall in love with the potential of IP telephony, but balk at the price and so need to do some budget planning.

"Clever applications increase the price of IP telephony solutions but are what clients want. In fact, all the steps needed to implement a quality telephony service across a data network can be very expensive."

He says while toll savings alone won’t pay for such an investment, business productivity benefits like whole-of-company call  visibility will.