Voip technology

GRANT SUTHERLAND, BUSINESS SYSTEMS manager at Burger King Restaurants of Canada Inc., describes his company's legacy telephone system in blunt terms: "It wasn't quite a dinosaur, but it was close."

It is hard to compete in any business if your primary communication technology dates back to the telco equivalent of the Paleolithic era. As a result, when Burger King of Canada, a wholly-owned division of Miami-based Burger King Corp., decided it was time to upgrade its telephone system at the end of 2003, it knew it had to make up for lost time.

Enter Voice over Internet Protocol (VoIP), which has popped up on the radar of most enterprises in 2004 thanks to a combination of vendor and media hype. In its most rudimentary form, VoIP can significantly reduce long-distance charges by transmitting telephone calls over the Internet.

Sophisticated versions of this technology can do much more; from integrating voice with e-mail, to connecting voice with data bases and customer-relationship management (CRM) solutions.

Cost reduction of 35 per cent

No one argues about the fact that VoIP is going to be the biggest thing to hit the world of telecom since the introduction of digital cell phones. "Within a decade it's safe to say that not only enterprise networks, but public voice networks will be carried over a single IP platform," says Lawrence Surtees, director of telecom research at IDC Canada.

The question on the minds of most potential adopters, however, is shorter term, and more practical: Is VoIP ready to go today? "Before we went live in July 2004 we did a lot of testing to make sure everything worked properly," says Sutherland noting his company had both technical and security concerns. His conclusion: "VoIP is ready for prime time."

By using VoIP, Burger King of Canada has reduced the cost of processing debit and credit-card transactions at its restaurants by about 35 per cent. It has also sped up processing time, which translates into shorter lines and an ability to drive more business through each restaurant.

"There is no doubt telecommunications is moving toward VoIP," says analyst Ian Angus with Angus TeleManagement Group Inc. "But I have yet to find a case where it makes financial sense to take out an old, functioning telephone system. If, on the other hand, you need to make a change, either because you have run out of capacity or need to consolidate, then IP becomes attractive."

As recently as 12 months ago many companies, including Burger King, were skeptical about VoIP, even if an upgrade had to be made.

Since then, however, the major carriers, including Bell Canada, Telus Corp. and Primus Telecommunications, have been busy rolling out new and improved VoIP products and services. Also, they have worked out many of the bugs that were giving early adopters a headache.

"We now have a large installed base to reference," says Frank Panza, director of marketing for VoIP solutions at Telus in the Toronto. "That has significantly increased the confidence potential customers have in our ability to deliver an effective solution."

He adds that a big component of selling VoIP is customer education.

"Over the last 50 years voice has not evolved much," says Panza. "Some customers want to know if they will still have a dial tone after they switch to VoIP.

Says analyst Brian Sharwood with Toronto-based research firm Seaboard Group, "If enterprises are not at least thinking about VoIP, they are behind the curve."

According to a recent report from Seaboard, "enterprise hearts and minds will be won, despite skepticism, conservatism and capital expenditure constraints, by the new functionality of IP-based systems. Enterprise will be convinced too by the increases in employee effectiveness and contentment such systems will afford. Cost-savings will be a less important factor."

Surtees of IDC Canada has a similar point of view. "Eighteen months ago, there was a lot of skepticism about VoIP. But this is a juggernaut that is going to effect every type of communication."

Erik Heinrich is a Toronto-based freelance writer.