Jul 30 2008

Squeeze Out Every Dime

Once an agency rolls out a VoIP system, how can it keep ROI on speed dial?

Sometimes more is more — more savings, that is, in the case of Voice over IP use by the Walter Reed Health Care System.

Arthur “Charlie” Doutt, contract site manager for Network Support Services for Walter Reed, says he cost-justifies VoIP on the basis of reducing recurring costs.

The more users the health-care organization moves to VoIP each year without having to add network resources, the better the return on investment, says Doutt.

Given the size of most federal operations, the struggle to keep telecommunications costs in check surprises no one in the IT or communications shops. But, as agencies adopt VoIP to lessen telecom expenses, like Doutt, they also want to find ways to maximize ROI.

VoIP has an immediate bottom-line appeal: Rather than replacing one communications paradigm for another, it maintains the familiar telephone service but uses a less expensive transport medium. What that means for many agencies is that they can often offset the initial capital investment, training and other expenses involved in a VoIP implementation project. But how do they get ROI over the long haul?

Agencies have found a number of ways to boost their VoIP ROI. These include increasing the number of users who share the network infrastructure, allowing users to handle many of their moves themselves, finding new functions enabled by VoIP that can improve worker efficiency and implementing new VoIP projects after a network has been updated for other reasons or installing it in a new site.

Scale Up Users

One example of the add-more, pay-less approach is the Army’s Walter Reed Health Care System, which has 6,000 staff members and runs 10 major medical facilities in Washington, D.C., and throughout the North Atlantic region. A VoIP pioneer, the health-care system — which treats more than 150,000 service members, their families and retirees — began using IP telephony in 2001.

Although the Army won’t reveal the health-care system’s pre-VoIP telecomm expenses, Doutt describes them as “very high.” The Army saw VoIP as a way to reduce expenses for Walter Reed overall without affecting the quality of its health-care services, he says.

1,000 users: The breakpoint at which the Walter Reed Health Care System
sees a cost increase when adding new users to its VoIP network

Walter Reed kicked off the move to VoIP with a proof-of-concept project that involved installing 150 telephones. That initial deployment proved VoIP could work as well as the traditional public branch exchange system in use and that, if nothing else, it could save money by eliminating recurring monthly phone fees, Doutt says.

At the time of the pilot, the Walter Reed network was not sufficiently robust to handle a major technology shift to a telecommunications service dependent on the Army organization’s wide area network. But all that changed in 2003, when Walter Reed installed a Gigabit Ethernet backbone. From that point on — with the exception of a short halt while obtaining the Joint Interoperability Test Command’s VoIP certification — the Army health-care organization kept converting its users to VoIP. Currently, it has deployed 1,600 VoIP phones. To reduce costs directly attributable to VoIP, Walter Reed deploys VoIP when phones reach the end of their life and must be replaced.

The primary ROI comes from the reduced recurring costs. Instead of paying about $14 a month per user to Verizon, Walter Reed now pays a single monthly charge for the primary rate interface (PRI) line. To increase ROI further, only about 30 percent of users have direct-dial numbers, which costs less than $2 a month per subscriber. The rest have extensions that outside callers get to through the main Walter Reed phone number.

Photo: Cameron Davidson
To cut down its deployment
costs, the Army's Walter Reed Health Care System deploys VoIP when phones reach the end of their life
and must be replaced, says Arthur "Charlie" Doutt.

DIY and Expand Functions

TIP 1: Price It Out

Before his organization implements VoIP in a department, Walter Reed’s Arthur “Charlie” Doutt completes a cost analysis and determines the project’s overall ROI from the move.

At the Education Department, Deputy CIO and Chief Technology Officer Brian Burns says the primary and most measurable savings have come as a result of reducing charges for Integrated Services Digital Network lines and toll calls. But he says eliminating service calls by telecom providers to handle moves, adds and changes in service also benefits ROI from VoIP.

“Previously when someone moved, we’d spend move time waiting for the telecom specialist to make the local changes,” he says. “With VoIP, we can centralize the moves.”

The department started its transition to VoIP at its Washington headquarters and is now rolling it out across the country. The goal of the project is to provide equal or better service at a lower cost.

Piggyback on Compatible Upgrades

All things being equal, the more users on the system, the better the ROI. But you can pump up the return if you can get some infrastructure upgrades for free.

TIP 2: Control the Pace

Having good ROI looks impressive on a spreadsheet, but “if we move too quickly, we don’t have time to teach people how to use the phones,” says Arthur “Charlie” Doutt of Walter Reed. “There’s no column on the ROI spreadsheet for satisfied, well-trained users. But we don’t just want good numbers. We also want to make sure people are able to take full advantage

of the VoIP functionality.”

Take the case of NASA headquarters. The agency, which currently has 2,000 VoIP users, was able to save money by piggy­backing on a network upgrade that was already planned. “Since the network guys were upgrading switches and routers out of their money, we didn’t have to pay anything for the core infrastructure,” says Danny Gear, NASA telecommunications manager.

NASA began its VoIP project three years ago when the 10-story headquarters grew cramped for space and the agency decided it would move about 200 people to a new building. Because the staff in the new building would need networking and telecommunications equipment anyway, there was little cost attributable to going with VoIP versus a traditional PBX. On the other side of the ledger, NASA was able to save the approximately $14-a-month fee per subscriber.

Gear expects the agency will realize greater savings as more NASA sites move to VoIP and calls from site to site route across the WAN using free five-digit internal calling. Soon, Dryden Flight Research Center in Edwards, Calif., will begin VoIP service and share WAN direct dial with staff members at headquarters. Then, within a year, Johnson Space Center in Houston will implement VoIP.

Plus, Gear notes, time will be on the government’s side. ROI will improve as the prices for VoIP equipment continue to drop. “Each time we go shopping for new equipment, our sticker shock is less of a shock.”