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Voice over IP is simply an engineering term for the act of packetising voice and sending it over a network that can carry IP packets. The underpinning network could be based upon Ethernet, Frame Relay, ATM, ISDN, MPLS, XDSL, wireless, satellite, etc. - the only requirement that VoIP makes upon that network is that it has the required bandwidth and Quality/Class of Service to ensure that the voice quality is suitable for business telephony.

VoIP can still occur even if the telephony is still TDM-based, using a traditional telephone system. In this instance, the phone call starts on a normal PBX on Site A but, rather than being routed across a conventional circuit switched network connection, the call is sent to some form of gateway where it is packetised (i.e. converted from TDM to IP) and sent across the LAN/WAN to another gateway (or IP-PBX) where it is converted back into TDM (if necessary) and sent to the TDM-PBX (if applicable) at Site B.

IP Telephony differs from simple VoIP because here the call control resides in IP, as do the end-user telephones. VoIP is a necessary pre-requisite for IPT - VoIP can exist without IPT, but IPT cannot exist without VoIP.

Reducing ongoing monthly/quarterly telephone service charges is the biggest single area of cost saving through VoIP adoption, and the most common utilisation of VoIP within installed customers. Customers with multiple sites often have one of two (or a combination of both) site-to-site network scenarios:

• A VPN for voice and a separate VPN for data, these are often made up of expensive leased lines
• A VPN for data but no voice networking – all telephone calls between sites will involve a PSTN call and associated call charges.

[All private network links shall be referred to as VPNs for the purposes of this document, regardless of the nature of the networks]

Through VoIP, using some form of IP Trunk Gateway, significant cost savings can be made by the enterprise. In the former example, the requirement for two VPNs is eliminated as all site-to-site voice traffic is now sent over either the existing data network or a replacement single network. In the latter example, the PSTN call charges are removed, with the VPN being used to connect these sites for all voice and data services.

Additional cost savings can be made through Least Cost Routing and Automatic Route Selection once IP Trunk Gateways (or IP-PBXs) are in place at all office locations. Telephone calls made in nationally or internationally distributed enterprises will select the least expensive location from which to “break out” in order to maximise available tariff rates, i.e. local-rate calls instead of national-rate calls.

Historically, small offices were often "corporate orphans" - their larger office counterparts had large PBXs and high levels of voice networking between them, but this solution was cost prohibitive for the smaller offices due to the high costs of corporate PBXs and leased lines.

This meant that although smaller offices had the same data resources as larger sites (albeit via slow data connections), they had different small PBXs or key systems for voice and no voice networking. This meant that there were different telephones, different or no voicemail and different functionality for the end-users, with several different hardware and management platforms for the enterprise to support.

In the IP world, small offices can have either a full IP-PBX just like larger offices since IP-PBXs are more scalable downwards or very small offices can have IP telephones that are extensions remotely served by an IP-PBX in a larger office. This means that users in remote locations now have exactly the same desktop resources as their colleagues in head office type locations; they have the same voice messaging resources, they can work in the same functional groups, and they are in the same management environment. And, as described above, the requirement to pay call charges for every site-to-site call is eliminated.

These elements combine to provide three major benefits to the organisation - cost reduction through lower phone bills and a reduction in the number and types of hardware platforms they must support; a single management environment and identical functionality for all users regardless of location, allowing them to work as if they were in the same building as their colleagues.

In the past, home offices with full network connectivity and a remote PBX extension were rare. Though it was feasible, it was an expensive and hardware based solution - therefore, it was only used for employees who had a large "£ amount" associated with their time or function. Now, thanks to the explosion of broadband and ADSL to the home, IPT can be extended to the home location seamlessly, for little more than the cost of an IP phone.

The first two benefits combined result in total or near total transparency of functionality across the network. This enables new usage models such as hotdesking (discussed later), whilst allowing users to communicate and collaborate better than may have been possible in the TDM world. For example, manager/secretary working across the network; a call could be parked on one system and picked up on another system miles away; or three users in three remote offices could be in the same hunt group as a fourth colleague in head office. In essence, IP means that all users in all locations have the telephony devices and functionality wherever they are on the network, and wherever they move around the network, but with the ability to work as though they are all co-located in one virtual location.

In the TDM-PBX world, there was a significant cost and maintenance overhead associated with the hardware needed for telephony. Hundreds or thousands of users required dozens of line cards and some form of cabinetry to house them, and each site required large amounts of hardware. This was not only expensive from a hardware acquisition and cost of ownership perspective, it was also expensive from a space perspective - the real-estate costs (and associated air conditioning, back-up power, etc.) were considerable.

In the IP-PBX world, platforms the size of a CD player housed in 19" racks can provide full IPT service to hundreds, and indeed thousands, of users. IP phone connectivity is via LAN switches, requiring no incremental hardware. They take up much less space (the existing LAN/WAN hardware racks usually have sufficient capacity); they require less cooling and power; scalability up and down is merely a matter of software licenses, not hardware cost; there are fewer points of failure due to the reduction in complexity; and troubleshooting is faster so problems can be resolved more readily.

The area of Moves, Adds and Changes (MAC) can be one in which enterprises spend large amounts of time and money on a weekly basis as the organisation evolves - new users arrive, old users leave, people move around the business, desk layouts change, and changes are made to user configurations. IP can deliver significant improvements to the efficiency of this process, particularly with moves. With IP telephony the user's telephone can simply be unplugged from its old location and plugged in at its new location. The IP phone requests a new IP address from the DHCP server and normal service is restored - the IP phone will automatically be connected onto the voice VLAN based on its MAC address bringing with it the user's extension number, name and any other programming associated with that MAC address. Therefore, the cost of user moves drops to virtually zero.

Furthermore there is no productivity loss for the end-user as there is no delay in restoring telephony service following an office move. The whole process is much cleaner and more elegant both from a user and system administration perspective.

One theme running through all six of the previous IPT benefits is ease of management. Now there is only one wide area network to manage; all offices have the same telephony applications and devices, from a single management interface and program; there is a reduction in the requirement to manage PBX hardware and no need to manage a separate voice infrastructure within the building; when planning - both contingency planning and future proofing - there is simply one LAN, one LAN port and one cabling point per user for voice and data services, thus simplifying the process considerably; and MAC work is made simpler either by elimination of manual programming, or simplifying that programming through browser tools and wizards that can be accessed from anywhere, reducing the need for costly site visits.

In traditional PBX installations, the addition of applications such as voicemail, unified messaging and contact centres has a considerable investment in hardware. Cards and cabinets for the PBX were needed and a dedicated turnkey server (customers could often not source their own) as PBX interface cards, voice cards, fax cards, DSP (Digital Signal Processor) cards and the like were needed. This resulted in a "blocking" environment, because the number of ports or channels between PBX and application was limited. Scalability upwards required a significant hardware upgrade. Only after this hardware investment and integration was completed could the application itself - the software - be bought and rolled out.

The entry-level cost could be extremely high for hardware alone, meaning that even simple supplementary voice-related applications such as contact centre management and reporting were only to be found in the domain of larger enterprises with large numbers of users. Smaller businesses or large enterprises with only a small number of users needing the application were left in the cold, due to the cost-prohibitive nature of the application.

With IP based telephone systems, the cost and complexity of applications integration is greatly reduced. For some IP telephony systems, functionality such as basic voicemail, auto attendant and Automated Call Distribution (ACD) now reside on-board the IP-PBX platform. This means that, rather than buy an off-board server, the enterprise merely needs a user license for each user, so the applications are now fully software based. More value-adding functionality such as large-scale centralised voicemail, integrated messaging, unified messaging, speech recognition, email & web chat contact centre integration, and contact centre management platforms still require an off-board Windows server. However, this is an off-the-shelf server that customers can provide themselves - all they need to source from the vendor is the software and corresponding user licenses. There is no need for any large upfront hardware investment or any incremental hardware required for expansion. This has the effect of reducing the entry-level cost of the application, meaning that smaller enterprises can also benefit.

It is important to note that, at this stage, we are not talking about any usage models or applications that are not currently available on traditional phone systems - those will be discussed below. These applications are the same - e.g. unified messaging, speech recognition auto attendant, multimedia contact centres, etc - the only change is the nature of the interface to the phone system. It evolves from a TDM, hard-wired, physical connection to an IP virtual connection. The application is still the same; it is merely cheaper to source, less expensive to integrate, more elegant to manage, and easier to scale upwards and downwards. For this reason, IP-PBXs are often deployed solely as "application gateways" - if hardware is required to integrate via DPNSS or Q.SIG to an existing PBX, the hardware used can be an IP-PBX that has a whole raft of incremental functionality for a similar price point to a mere application gateway that will do nothing else. In this example, the IP-PBX starts life as an application gateway but can later be used for, say, IP trunking, IP telephony to user desktops and eventually can fully replace the traditional TDM PBX .

The area of new functionality is arguably the most important area of all when one examines the benefits of IP telephony. With the exception of Small Office / Home Office integration, it is the only area where IPT delivers tangible benefits to end-users (the rest of IPT's benefits are in cost reduction and management efficiency).

Some IPT benefits are thanks to the inherent mobility and flexibility of IP - these include the ability to hotdesk, whereby hotdesk users can logon at any available hotdesk IP phones on the network, regardless of location. All their telephone calls, voicemail messages, call forwarding, class of service, personal programmable keys, etc, come with them to their new location. Also, because IPT can operate over any network infrastructure with the bandwidth and QoS necessary for voice, it becomes easy to use wireless technologies with a variety of edge device - wireless telephones, PDAs, or PCs with wireless LAN cards can all be used for voice.

Other new desktop functionality is achieved because the IP phones are now in the data realm. This means that the IP phone can be used as a data access device - customised content can be delivered to IP phone screens, microbrowsers within sets can look at Internet/Intranet content, and Software Developer Kits exist so that the phone can be programmed to, say, access information such as room bookings. Furthermore, the IP phone can be used as a conduit to the data network. An example of this would be PDA integration, where the IP phone becomes the cradle onto the network; users dock their PDA on the phone and synchronise with application servers - the PDA becomes the client interface for telephony, the PDA can be used to dial direct from contacts, emails can be read, Pocket Explorer can be used to surf the web, databases can be accessed, and such like.

The third and final area of new desktop functionality is realisable thanks to voice and telephony being in the IP arena. Telephony becomes another application on the network, and voice a real-time data stream. This means that it is far easier to add new media types into person-to-person or person-to-people interactions and communications sessions. This starts with new desktop functionality - softphones and desktop control applications that can interface with the likes of Outlook, Notes, and the like in order to provide screen-pop type applications. From there, new media streams can be layered in - video can be controlled using telephony call control, IP phones, and IP desktop tools; real-time data sharing and collaboration can be facilitated as well - now we can have total transparency between voice, video and information.