IP Telephony Costs Decline, But Complexity Drives Implementation Higher, Nemertes Research Finds

Nemertes logoFor enterprises in the market for IP telephony, the cost of on-premises IP telephony are declining by 20 percent to 40 percent depending on the size of the rollout, according to Nemertes Research’s annual benchmark survey. The bad news: implementation costs are increasing in line with time spent planning and engineering systems.

Nemertes Research surveyed 189 enterprises to determine cost data for seven key IP Telephony (IPT) and Unified Communications (UC) vendors. The researchers used the data to develop a total cost of ownership (TCO) model, then compared the new TCO to that of the previous year. The study also compared real-life costs for IP telephony endpoints and unified communications systems from Alcatel-Lucent, Avaya, Cisco, Microsoft, Mitel, NEC, and ShoreTel.

The results of Nemertes survey were intriguing: the cost of deploying IP Telephony endpoints declined 28 percent over the past year, driven by lower capital and operational costs due to increasingly fierce competition.

However, the cost to deploy unified communications features have skyrocketed by 83 percent — Prospectus1reflecting the growing time and effort enterprises are spending on planning and engineering their systems. IP telephony deployments have become increasingly complex as IP leaders today must consider integration with SIP trunking, mobile enablement and unified communications (UC) and collaboration apps.

To mitigate the added complexity of IP telephony deployments, enterprises are spending more money on internal resources and external consulting. That has driven the median cost per endpoint from $61 in 2013 to $108 in 2014.

It is not surprising that more IT leaders are looking to the cloud: 29 percent of the survey respondents already were using cloud IP telephony; another 28 percent were evaluating the technology. Only a scant 16 percent had no plans for cloud IP telephony. Monthly licenses for cloud UCC range from $11 to $30; per-vendor costs vary based on the number of applications included, Nemertes explained.

The survey revealed a couple of big surprises: enterprises are not spending less on internal staffing when they move to the cloud. On average, companies are paying $224 per end unit to operate on-premises UCC deployments — however, they are still spending $252 per end unit to manage their cloud deployments.

Based on Nemertes’ interviews with IT leaders, the analysts expect that figure to decline in the coming few years as deployments stabilize and relationship management solidifies. For now, however, organizations are devoting the same (or sometimes more) staff members to operate cloud UCC and cover vendor management, training, support, and strategic planning.

Although 57 percent of respondents said they had a strategic UC provider, few actually use a single vendor, Nemertes found. A common scenario includes use of Microsoft Lync for instant messaging (IM), presence, and internal Web conferencing, and Cisco for video conferencing and WebEx for external Web conferencing.

For more information on the survey, visit https://www.nemertes.com.