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Enterprises committing to VoIP, study indicates

Two-thirds of companies are planning to shift applications across most or all of their business to converged networ...

July 20, 2004  

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Two-thirds of companies are planning to shift applications across most or all of their business to converged networks within the next five years, according to a new global survey.

Implementation has already begun for 55% of firms, although most of these have deployed only in selected parts of the organization thus far.

The survey, conducted by the Economist Intelligence Unit and sponsored by Nortel Networks, explores the topic of network convergence with 103 executives representing over 17 industries around the world.

For the purposes of the survey, convergence is defined as the coming together of voice, data, video and other applications on a single broadband delivery platform –networks based on IP (Internet protocol).

The survey findings, published in a white paper entitled ‘Deploy or delay? Converged networks in the enterprise’, indicate that, among convergence applications, voice over IP (VoIP) will attract the lion’s share of enterprise investment over the next three years.

VoIP’s potential to slash telephone costs is currently a key motivation for executives in pushing network convergence, as is the broader promise of reduced network management costs, the study said.

The majority of executives surveyed (57%) also hope converged networks will enable broader use of applications such as videoconferencing and collaboration software, which enables multimedia dialogue and document sharing between teams.

At the same time, only 13% expect convergence to deliver significant productivity benefits in the medium term.

Concerns remain, however, which continue to hold some companies back from deployment. Paramount among them is the cost of implementation, cited as a significant or very significant concern by 74% of executives. Implementation and IP equipment costs are declining, but so are the costs of traditional services and equipment.

Executives also worry about the security implications of bringing all critical applications together on one network.

“The logic of converged networks is difficult to deny in the long run, but managers need to weigh the costs and benefits carefully, particularly in comparison with the existing technology,” says Daniel Franklin, Editorial Director of the Economist Intelligence Unit.

He adds that converged networks and the applications that run over them are only as effective as the organization and people that use them.

“Management structures and work practices must be adapted to the technology to reap its maximum benefit.”

Convergence, he says, will deliver the greatest efficiencies once all applications are moved to the unified IP network, but the circumstances of many enterprises will dictate a gradual migration over time.

“When planning, you’ve got to design a blueprint for convergence,” says Malcolm Collins, president, Enterprise Networks at Nortel. “It doesn’t need to be ubiquitous. You may only need to give it to 20% of the workforce.”