by Brian McConnell

While the rest of the computing industry has hyped the explosive growth of the internet to death, an important technological shift has quietly taken place whose implications for the telephony industry will be as important as the emergence of the personal computer in the early 1980s. The shift I am referring to is the shift away from expensive, proprietary servers, to modular, low cost servers that customers can install and maintain themselves. 1998 has seen the introduction of TCP/IP and ATM-based telephone networks, some which use PC telephony servers, some which fully merge voice and data into the same network. The result for buyers is a vast array of products and platforms to choose from. This article will help you select the platform appropriate for your company.

While the idea of having customers install and maintain their own telephone system is still heresy in some circles, several vendors have come onto the market in the past six months with telephony servers that give traditional PBX systems a serious run for their money by making the technology easy to work with. Just as the Apple Macintosh™ revolutionized the personal computer industry by setting new standards for ease of use, these systems are similarly poised to do the same for the telephone equipment industry.

Available Platforms

Today, you can choose from many different types of telephony platforms. Some are traditional PBX-like systems. Some are PC-based systems. Some are LAN-based systems. And some blur the line between all of these.

Traditional PBX/Key Systems While the PBX's days are numbered, it is certainly not dead. PBXs have a proven track record for providing reliable telephone service, digital telephone handsets, and can handle a large number of users. If you have several hundred users in a single facility and need a telephone system, you'll certainly want to look at PBXs. Large PBX vendors such as Lucent Technologies and Nortel are working on technologies that will enable these systems to support voice over IP, computer telephone integration, etc. These vendors will be able to successfully reinvent themselves as telephony vendors for mixed voice/data networks. Mid-sized PBX vendors with less R&D resources face a difficult challenge.

PC Integrated PBXs PC integrated PBXs are ideal for mid-sized companies that need a PBX telephone system, but want a more user friendly management interface. One of the major problems with PBX equipment is ease of use. Most PBX vendors have not designed their systems to be managed by end users, and require all management tasks to be done by trained support personnel. PC integrated PBXs provide administrators with a simple graphical user interface that makes it easy to add users, change system parameters, and so forth. This eliminates the need for extensive consulting support for these systems, and therefore lowers the cost of ownership.

PC-Based Telephony Servers PC-based telephony servers are ideal for small and mid-sized companies that want a smart telephone system that delivers enhanced services such as voice mail, follow me call forwarding, computer telephony integration, and so forth. Although some MS-DOS based systems have been on the market since the early 1990s, interest in PC-based telephony servers really took off in 1996 with the introduction of Windows NT and Unix-based systems. The basic system architecture involves PC-based expansion cards for the trunk lines and stations which is controlled by a software application. The benefits of these systems are many: improved ease of use, extensive features, and software upgradability to name a few.

LAN (IP or ATM) Telephone Networks LAN-based telephone systems are relatively new to the marketplace, although the idea behind them is not new. Several systems have come onto the market in 1998 which use either voice over IP (VoIP) or asynchronous transfer mode (ATM) technology to deliver voice calls over a company's data network. These systems eliminate the need to operate separate voice and data networks, and in some cases, are also much easier to administer. Most of these systems also include a "gateway" to connect to the circuit-switched PSTN.

Hybrid Packet/Circuit-Switched Telephone Systems Pure LAN-based systems are interesting, but most companies do not want to migrate to an entirely LAN-based solution. Hybrid systems blur the line by using conventional circuit switching technology for some users, and packet switched (i.e., Ethernet, voice over IP) technology for other users. The ability to select different delivery technologies for different users provides companies with great flexibility. These systems can also be used to construct a distributed telephone network which is highly fault tolerant. (More on fault tolerance later in this article.)

Virtual Telephone Systems (Intelligent Network Services) Lastly, virtual telephone systems replace customer premise equipment with intelligent services that reside inside the public telephone network. These services are a great choice for small companies that want to project a big company appearance, and for geographically distributed companies with multiple sites, mobile workers, or telecommuters. The beauty of these services is this: the only customer premise equipment required is a telephone, and the "customer premise" could be any place on planet Earth that has direct dial telephone service.

Choosing a Platform

Type of System	Definition	Benefits	Weaknesses	Ideal Uses
Centrex Service	Centrex is a brand name for a set of services offered by local telephone companies on business telephone lines. Centrex allows you to use the local telephone company, in effect, as your telephone system. Each employee is given a private phone line. With Centrex, you can transfer calls to other users (and outside numbers), set up 3 way calls, and forward your telephone line to another location.	No equipment to buy except telephones Low monthly cost for small businesses Local telephone company provides support and service	No automated attendant Limited ability to manage calls No computer telephone integration No intelligent call management services Expensive for larger workgroups	Small businesses (up to 10 or 20 users) with light to moderate telephone use, and no need for enhanced services besides voice mail. Good for companies that have fairly simple telecommunications needs.
PBX or Key System	A conventional PBX or Key Telephone System is like a telephone company central office in miniature. All of your phones are wired to a box in your equipment room. This box provides dial tone to the telephones and may also provide enhanced services such as voice mail, auto-attendant, etc.	Ability to handle many users on a single system (several hundred to several thousand) Support for digital feature phones Designed for reliability	Enhanced services (i.e., voice mail, ACD, CTI) require third-party add-ons which are expensive and difficult to configure Limited selection of telephones, digital telephones are also expensive Upgrade path is often limited (if you outgrow a system, you may need to buy a new system) Most administrative tasks require outside contractors	Mid-sized and large businesses with several dozen to several thousand users to support. These systems provide more functionality than Centrex, but less than PC telephony servers and LAN-based systems. This is a good choice if you need to provide fairly basic telecom services to a large number of users.
PC Integrated PBX	A PC integrated PBX is essentially the same thing as a conventional PBX, except that the system can be connected to a computer via a serial cable or local area network. The telephone system is programmed via a friendly graphical user interface (GUI). This reduces the cost of installing and maintaining the system substantially.	All of the benefits of a conventional PBX, plus... Windows or Java graphical user interface for system administration, this reduces the need for outside contractors Some enhanced services, such as voice mail, are built in	Additional enhanced services (i.e., ACD, CTI) require third-party hardware add-ons Not as scalable as conventional PBXs (most systems max out at 100 users) No support for IP telephony (yet)	Mid-sized businesses (up to around 100 users) that want a PBX they can manage in house. These systems do not provide as much functionality as a PC telephony server, but come close. The downside is that the system is proprietary and difficult to expand except using the vendor's own products.
PC-Based Telephony Server	A PC-based telephony server is a Windows NT or Unix workstation, outfitted with expansion cards that enable it to function as a telephone/voice mail system.	Nearly all of the features of a conventional PBX, plus.... Graphical user interface for system administration Advanced services such as automated call queueing, follow me call forwarding, computer telephony integration, speech recognition, and more Easy system upgrades, many new features can be delivered as software upgrades Familiar software and hardware troubleshooting procedures since the system is just a PC server	No support for digital telephones (most systems) Limited support for high density digital telephone lines such as T1 and ISDN Primary Rate Dependent on the server's operating system to function	Small and mid-sized businesses (up to 100 users per site) that want a user friendly, upgradable telephone system with lots of features. They are especially useful for businesses that have mobile workers, telecommuters, or those that want to automate the handling of inbound telephone calls.
LAN Telephone System	A LAN-based telephone system uses voice over IP (VoIP) or asynchronous transfer mode (ATM) to deliver voice calls to users using the local area network. These systems eliminate the need to operate separate voice and data networks.	Completely merged voice/data network, your telephone is an Ethernet or ATM device Simplified administration (telephony can now be managed like any other network service) Great for geographically distributed environments (TCP/IP doesn't care where devices are physically located)	Incomplete feature set—most systems provide basic telephony services, but are lacking in enhanced services and administration tools Limited support for legacy telephone equipment such as analog telephones In spite of this, these systems are quite promising	LAN-based telephone systems are useful for small and large companies that want to create an integrated voice/data network. While these systems are fairly new, they show great promise for redefining corporation communications by turning voice into just another data network service. These systems are also useful for companies that have remote sites connected to headquarters via a wide area network.
Hybrid Circuit/Packet-Switched System	Hybrid systems use voice over IP (VoIP) to route calls between switches, and use conventional analog telephony to deliver calls from switches to individual users. These systems are typically packaged to look like network appliances like hubs or routers, and are also very easy to install and manage.	Best of both worlds, packet-switched (TCP/IP) between switches, circuit-switched (plain old telephone service) to end users Very easy to install and manage, most systems are packaged as turnkey network appliances. Little or no setup Distributed architecture—simplifies wiring, great for campus or distributed environments, fault tolerance (users can be spread across many switches)	Still relatively new—most systems do not yet have a complete feature set compared to PC telephony servers and traditional PBXs No support for digital (feature) telephones In spite of this, these systems are quite promising and will displace the PBX in small and mid-sized offices	Hybrid systems offer the best of both the packet-switched and circuit-switched worlds. They still work with ordinary analog telephone handsets, so users do not have to buy special telephones. However, they use a company's intranet to transport calls between switches. Their distributed architecture makes them highly fault tolerant, and also simplifies wiring in distributed environments.
Virtual Telephone System	A virtual telephone system is a service which resides inside the public telephone network. These services eliminate the need for customer premise equipment (except for telephones), and are therefore quite appealing to small businesses and to geographically distributed businesses.	No-brainer installation, in fact there is no installation because there is no equipment to buy or install Minimal up front cost since there is no equipment to buy Completely distributed (virtual) office, your users can take their calls anywhere Features are added continuously, vendors often add features to their services. You don't have to do anything on your end to benefit from these upgrades You can cancel service at any time, no long-term commitment	Per-minute rates add up for large workgroups, and for high traffic environments Other than that, there are no major disadvantages	Virtual telephone systems are actually services which reside inside the public telephone network. They provide nearly all of the features of an expensive PBX or telephony server, without requiring the user to buy any hardware. They are great for small businesses, companies with mobile workers, and for companies with multiple offices. Usage charges can add up though, so this offering is best for smaller companies with light to moderate phone usage.

Table 1 - Comparision of Different Telephony Platforms  

Highlighted Applications and Telephony Platforms

Application	What Is It?	What Type of System Is Best?
Automated Call Queuing/ACD	Automated Call Queueing, or Automated Call Distribution, allows you to automatically distribute incoming calls to a workgroup of people (i.e., sales staff), and to queue calls (put them on hold) if everyone in the group is busy. This is an extremely useful feature for companies that receive many incoming calls for a group of people. For example, if all of your sales people are busy, the system can tell callers to hold the line for the first available customer service agent.	PC-based telephony servers currently offer the best ACD services, unless you are willing to spend tens of thousands of dollars on a high end PBX/ACD. Three systems which offer especially good ACD service are: AltiGen AltiServ, NexPath NTS, and Interactive Intelligence.
Busy Lamp Field	A busy lamp field tells your users who is on the phone, so you can see at a glance if someone else in the office is busy or available to take a call.	Busy Lamp Field (BLF) is available on most key telephone systems, PBXs, and telephony servers. Network services such as Centrex and virtual telephone systems do not typically provide a busy lamp field. PC and LAN-based systems typically deliver BLF using software that talks to the phone system across your local area network.
Computer Telephony Integration	Computer Telephony Integration or CTI allows your computer to coordinate with your telephone system. For example, you can use CTI to trigger an onscreen display when your phone rings. Your computer will use caller ID information to look the caller up in your contact manager, and if it recognizes the number, will display the customer's information automatically.	Computer Telephony Integration is a basic service in PC telephony servers, LAN-based phone systems, and in hybrid systems. It is typically an option for PBX and key telephone systems.
Digital Telephone Lines (T1, ISDN, E1)	Digital telephone lines are useful for mid-sized and large companies that handle many calls at a time. These special telephone lines deliver between 23 and 30 conversations on a single cable, and therefore simplify wiring. They also deliver additional information about callers, and also offer slightly improved sound quality over standard analog lines.	PBXs and PC integrated PBXs currently have an advantage here, although some PC-based and LAN-based systems also support digital telephone lines. PC telephony servers, as a general rule, have been slow to support this technology.
Internet (IP) Telephony	Internet or IP telephony enables you to route calls either over the conventional telephone network, or over a TCP/IP network (this could be your own private network or the public internet).	Anyone with 1/2 of a brain is actively working on adding IP telephony support to their systems. High end PBXs will support IP telephony by the end of the year. PC-based and LAN-based systems are already equipped for IP telephony, and will also support this technology soon if not already. LAN-based and hybrid systems already support IP telephony in some form.
Telecommuting/Remote Workers and Sites	Telecommuting is becoming increasingly popular in today's workplace, and business travel is still a fact of life. Some phone systems make it possible for remote workers to assume a local appearance on the phone system, so they always appear to be in the office, when in fact they are somewhere else.	PC-based telephony servers win this category hands down. They provide extensive call forwarding and messaging options such as follow me roaming (where the system will attempt to locate the user at a list of numbers), unified messaging (where the system forwards voice mail to a users email inbox), and numerous other features.

Table 2 - Highlighted Applications and Telephony Platforms  

Representative Vendors by Platform Type

Platform Category	Comments	Vendors/Web Sites
Centrex or Plexar Service	Centrex or Plexar service is ordered through your local telephone company or competitive local exchange carrier (CLEC). Visit our Centrex resource page for more information about Centrex service and products which complement it.	HelloDirect.com Centrex Resources
Key Telephone Systems	Key telephone systems are best used in small offices (32 or fewer users) which do not require complex services such as computer telephone integration.	InteliData IPS Nitsuko Panasonic many others... (see our directory of industry links)
PBX Telephone Systems	PBX telephone systems are offered by a wide range of companies from industry giants like Lucent Technologies to smaller companies like Comdial.	Comdial Lucent Technologies Mitel Nortel many others ... (see our directory of industry links)
PC Integrated PBXs	PC integrated PBXs represent a relatively new category of system. Following is a list of representative vendors in the mid-sized market (up to 100 users).	Comdial InteliData Plexus
PC Telephony Servers	PC-based telephony servers, available since the early 1990s, are a good choice for small and mid-sized businesses looking for an affordable, feature rich system with lots of call forwarding and messaging options.	AltiGen AltiServ (Windows NT) Artisoft TeleVantage (Windows NT) Com2001 NTX (Windows NT) Dash Office Phone System (now Picazo) (MS-DOS) Mitel MediaPath (Windows NT) NexPath NTS (Java Telephony) PcPBX (MSDOS)
LAN-Based Telephone Networks	LAN-based telephone networks, introduced in early 1998, are the best example to date of the convergence of voice and data networks. These "one wire to the desktop" solutions will be appealing to companies with a heavy data focus.	NBX Corporation (IP/Ethernet) Selsius (IP/Ethernet) Sphere (ATM)
Hybrid LAN/Circuit-Switched Systems	Hybrid systems deliver the best of the traditional telephony and data networking worlds. They use conventional telephony technology to connect phones to the system, and they use IP telephony to transport calls between switches. Some systems also provide integrated internet access via ISDN or T1 data lines. These are great solutions for companies that want an integrated, turnkey telecom solution.	Praxon Shoreline Teleworks Touchwave WebSwitch
Virtual Telephone Systems	Virtual telephone systems eliminate the need to buy on site equipment (except for one or more telephones). These services enable even very small businesses to project a professional image, and to benefit from enhanced services like voice mail, fax mail, follow me call roaming, and more.	Advanced Queuing Systems

 

Choosing a Vendor

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What About Price?

Factor #1 – What Is the Gross Cost per User per Month

Most companies use their telecom system for at least two years before upgrading or replacing the system. To estimate the per-user/per-month cost of your system, take the total cost of the system, divide this by the number of users, and then divide that number by 20. So, for example, a system that averages $500 per user really costs $25 per user per month.

Factor #2 – Local Toll Savings

A PBX or Key System will reduce the number of outside telephone lines you need compared to a Centrex system. So, for example, if you currently have 10 employees, each with a private line, and switch to a system which allows your 10 employees to share 4 outside lines, you no longer need 6 phone lines. Business telephone lines cost approximately $20 to $30 per month, not including usage, so in this example, you would save approximately $120 to $180 per month, or about $1500 to $2,000 per year.

Factor #3 – Long Distance Toll Savings

Systems that support voice over IP (internet telephony) can also reduce long distance charges, particularly for calls placed between offices outfitted with similar equipment. For example, let's suppose you have two offices that are connected to a wide area network or virtual private network. You place an average of 40 hours worth of interoffice phone calls per month. Each office is outfitted with a Touchwave WebSwitch ($6,500 ea). Using a per-minute rate of 10 cents to estimate toll charges, you save approximately $240 per month, or nearly $3,000 per year, on interoffice toll charges by routing interoffice calls over your WAN. Over two years, this savings alone reduces the real cost of your systems from $13,000 to roughly half that amount.

Factor #4 – Increased Productivity

Many of these systems provide services such as automated call queueing, remote call forwarding, and message management which enable your employees to work more effectively. These benefits are difficult to quantify and cannot be easily formulated. However, if the addition of an ACD for your sales people enables them to handle 20% more calls with the same staff, it stands to reason that this will have a direct impact on your business performance.

Factor #5 – Reduced Staff Requirements

When used wisely, auto-attendant and automated call queueing services will eliminate the need for a full-time receptionist, allowing you to give this person other duties besides answering the phone all day. Most systems do not entirely eliminate the need for a receptionist, but do dramatically reduce the volume of calls handled by an operator. This means your office staff can spend more time on other matters besides saying "How may I direct your call?" For most businesses, this equates to $20,000 per year worth of "found money." An employee who was once tied up answering the phones all day can now be given other duties, which means you can do more work with the same staff.

Here is a simple formula for estimating the real cost (or benefit) of a system.

Step	Description	Comments	Example
1.	Start with total system price		$20,000 for two 8 line x 16 extension PC telephony servers, each to be installed at different offices
2.	Estimate monthly local telephone savings	Estimate how many fewer phone lines you will need per month, multiply this number by $30.	$480 per month, 32 users now share 16 lines, for a net savings of 16 outside phone lines used at both offices
3.	Multiply monthly telephone savings by 20 months	We assume that you use the system for 20 months. This is a conservative estimate. You will probably use it longer.	(-) $9,600 in local phone charges
4.	Estimate monthly long distance savings	If you are using IP telephony to transport calls between offices, estimate the number of hours of interoffice calls per month. Multiply this number by $6 per hour.	20 hours per month of interoffice calls @ $6/hour equals $120 per month in toll savings
5.	Multiply monthly long distance savings by 20 months		(-) $2,400 in long distance savings
6.	Productivity improvements	This is difficult to estimate. A call queueing system, for example, allows the same number of sales people to handle more calls, and therefore to close more sales. We will not factor this into this example.	n/a
7.	Staff reductions	The use of an automated attendant and call queueing system reduces your receptionists telephone related workload by 50%, thus freeing this employee to perform other tasks.	Assume $2,000 per month salary x 50% = $1,000 per month effective savings
8.	Multiply monthly staff savings by 20 months		(-) $20,000 in effective savings
9.	Combine costs and savings to estimate real cost (or benefit) of the system		$12,000 net benefit as a result of using the system. The system actually pays for itself when all of these factors are combined.
10.	Divide this number by 20 months	This will give you an estimate of the monthly cost or profit associated with the system.	$600 per month in effective savings/profit

Even if you just take the total price of a system, and divide this by the number of users, and then divide that number by 20 months, you will typically be paying less than $50 per user per month. You spend 2 to 4 times as much on health insurance per employee, so in the context of other operating expenses, this is not a big number.

When you consider the benefits of using a more sophisticated system (i.e., toll savings, improved productivity, workload reduction), the system will more than likely break even or even generate some profit.

So, a decent telecommunications solution will not only make your company sound better, it will also have a direct impact on your bottom line.