Can VoIP Save Your Business Money?

By Dan Ballard, in , posted: 20-Jul-2009 10:46

VoIP stands for "Voice over Internet Protocol" traditionally when you pick up the phone to make a phone call, that call travels through the copper phone lines to the exchange and is routed to the phone that you dialed. VoIP enables you do make that same phone call however instead of going through the copper phone lines, the call is sent over your broadband connection.  A consumer grade example of this that many people are familiar with is Skype.

With VoIP  the monthly phone line cost is much cheaper than copper lines and the calls to different destinations are cheaper and in most cases local business calls are free and if the call is placed to someone with the same VoIP provider the call is also free.  Which is certainly an advantage if your business makes lots of inter office calls.  However these cost savings have to weighed up with the potential risks!

Risks With VoIP
Because VoIP calls travel over your internet connection if your internet connection goes down for whatever reason, so too do your VoIP lines.  This is a major risk for businesses as customers put up with a delay in email if your internet is down, however if they can't call you they quickly get very frustrated and this can lead to lost business.  These risks can be mitigated in several ways;

- Have high quality hardware to lessen the likelihood of a hardware failure

- Have a high quality internet connection

- You can keep one or two traditional copper lines and have them setup as backup

- In the event of a broadband failure your VoIP lines can automatically forward to a mobile phone number
Another factor that businesses have to take into account when changing over to VoIP is the experience of the provider, let me explain.  With the recent advent of number portability and numerous wholesale VoIP providers in the market, the barriers to entry for a small company or even a one man band to become a VoIP Telco provider are surprisingly low.  The result is every little IT company rushing to supply VoIP to their customers without proper testing, training or a viable billing systems.  So the way to avoid getting tangled up with such IT cowboys is to request a referral from your provider so you can ask another company how their VoIP experience has been and ask to see an example of the VoIP phone bill before accepting any proposals for a VoIP migration.

Because failure of broadband is a relatively rare event and even though these risks exist many businesses believe that the cost savings (anywhere from 20%-50% off telecommunication costs) and the additional functionality are well worth changing over to an IP based phone system.

Dan Ballard

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Comment by Eric Shaw, on 20-Jul-2009 18:14

I have use VOIP service for over 5 years on and off for our business. The first two providers had down times that resulted in loss revenue to our business. Can you imagine a full day without phone service for your business? This happened with XO communications and Pac Bell VOIP Service. Two reputable companies that I felt should not of had these problems. After switching back to analog our business continued to grown and once again switched back to VOIP after experiencing a huge growth in our business and hoped that the technology would of become more stable. But unfortunately the problems are far worse then previously experienced. From outages to problems with other VOIP companies unable to communicate with our VOIP service. Most recently I experienced problems with Tmobile communicating with our service that lasted for over 4 months this year. We also experienced problems when customers that used Comcast service would not hear ringing when they would call even though we would hear the phone ring and customers talking on the other end. These continued problems tell me that VOIP has a long way to go before it can become a reliable and stable service. Companies that provide VOIP have a responsibility to their customers that means they need to work together to work out any problems with their service instead of telling their customers its not their problem. Until then I recommend staying far away from VOIP especially for your business.

Author's note by cyberhub, on 20-Jul-2009 21:35

Eric, it sounds like you have had a bad experience with VoIP, I see you are refering to companies in the US.  In New Zealand we do not have these companies that you had trouble with. 

That being said businesses still should do their due diligence when choosing a VoIP provider.

Comment by Kimberly, on 21-Jul-2009 05:05

Eric, you should look into RingCentral (edit link removed). We have been using them for about a year and they have been great. We did research beforehand and they had the best bang for the buck. They've really saved us alot of time and money.

Good luck!

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Dan Ballard
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