To illustrate the difference, she sketched scenarios for two companies -- a small firm with about 80 users and little VoIP expertise, versus a large enterprise with 5,000 users, substantial networking expertise, and the budget for capital investments. For the smaller firm, a hosted option would cost about $480 per user per year and makes the most sense. The larger firm would have to spend about $813 per user during the first year for an on-premise implementation, but that option would still make more sense because the company ought to be able to drive down the annual cost to about $309 per user in subsequent years.
The smaller firm, lacking economies of scale, would tend to spend more in total over 5 years with an on-premise solution -- about $440,000 versus $360,000 for the hosted solution. For the large enterprise, the situation is just the opposite, with the on-premise solution weighing in at about $11.3 million over 5 years, compared with $13.6 million for a hosted solution, according to Nemertes Research.
These comparisons will probably change with the evolution of hosted and cloud communications products, Gareiss said. Even today, the right decision will vary depending on the networking competency within a given organization and the pricing it can negotiate with service providers, she said.
Her estimate was also based on average pricing for on-premise equipment. Nemertes pegs the first-year cost of a VoIP implementation at $1,413 per end point. That includes $537 in capital costs, $135 for implementation, and $741 for operations. Smaller companies tend to pay more -- for example $667 per person for an organization buying fewer than 500 units, versus $342 for an organization purchasing more than 5,000 units.
Ed Flavin, CIO of the oil exploration company Modec, and Jaime Libow, an engineering director at Travelers, joined Gareiss in a follow-up session to discuss their experience to date. Both have deployed Microsoft's Office Communications Server and are evaluating moves to Microsoft's newer Lync UC platform. Libow said OCS is fully deployed to 3,400 users and is allowing Travelers to manage internal voice calls without dependence on the public phone network.
Both also described support for mobile phones as a major element of their plans. "Our cellular bill annually is $1 million plus," Flavin says. "That's because they don't have us drill for oil in glamorous places," and roaming fees in remote areas can be steep. So he wants the ability to let engineers working on an oil platform route calls over Wi-Fi to an enterprise network that can relay them as toll-free VoIP calls.
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