Is VoIP Worth It?
The reasons can be as much qualitative as quantitative,
but once you add them all up, school districts are finding
the answer is yes.
JIM SCHUL SAYS EXPERIENCE
has taught him one key to optimizing the
return on investment (ROI) for a newly
installed voice over IP system: Turn off your
old phone line!
"I don't know if I should say this, but phone
companies will keep billing you until you tell
them to turn it off-- and sometimes even after
that," says Schul, the CIO of the Harris County
Department of Education in Houston, which
recently finalized its switch from landlines to
VoIP. "You have to put requests in writing, 30
to 60 days in advance."
It may seem trifling, but making sure that
the local phone company doesn't bill you for
your old landlines is one step toward ensuring
that your move to a web-based telephone system
will show a positive return on investment.
School districts have by and large had
great results implementing VoIP, which has
become the conduit for delivering expanded
functionality, achieving greater internal control,
and gaining freedom from onerous
monthly phone bills. But demonstrating a
financial return on what is a substantial
investment can be an elusive effort.
The goal of calculating return on investment
with VoIP-- or any new technology
initiative, for that matter-- is to derive either a
simple number that identifies the value of the
investment, or a ratio that compares the value
of the results you expect to receive from the
deployment to the amount you would have to
spend to buy the system and maintain it.
To get a reliable calculation, you have to
take several numbers into account. According
to Jeff Hicks, software architect for
NetQoS and author of Taking Charge of
Your VoIP Project (Cisco
Press, 2004), to get
a sense of pre-VoIP
costs you need to
know what your district
is being charged
for each traditional telephone
line it uses, typical
long-distance charges, as
well as the expense of running
dual networks-- one dedicated to
voice communications and the other
to data communications-- including staff
and maintenance costs.
On the VoIP side, costs include
the purchase of equipment, including IP phones, specialized network equipment
such as call servers, and backup power sources in the event
of a power outage. Then there are charges for the many applications
that will run on VoIP to perform chores such as automated
attendance and unified communications. And there may still be
the cost of those lingering traditional phone lines that need to
remain in place, dedicated to maintaining 911 and alarm access.
Plus, says Hicks, you have to ensure that your network
infrastructure can support the additional bandwidth required
to sustain voice traffic. Hicks' company sells products that
examine the impact of running new services on the network.
He also points to Cisco Systems' IOS IP service level agreement,
part of the company's IOS operating system, which
allows network administrators to run VoIP tests between
routers and between routers and switches to gauge whether
the network can sustain additional usage.
Three Ways to Spell ROI
THERE ARE SEVERAL METHODS of computing ROI, and
one isn't necessarily better than another. It all depends on
how your higher-ups like to see their numbers. Here are
three commonly used formulas, all working off the same
hypothetical figures: Benefits total $250,000, while project
costs come to $175,000.
- Benefits - Costs = $75,000 ROI
- Benefits/Costs = 140% ROI
- (Benefits - Costs)/Costs = 43% ROI
Once you've documented and compared the expenses for
both your old phone service and the VoIP system, it's time to
reckon the value of making the switch. There are potential
savings in two obvious areas: eliminating or reducing monthly
carrier expenses and consolidating networks, with the latter's
requisite reduction in staffing, maintenance, and
Even after you've pulled together all the numbers, tallying
a comprehensive ROI for a VoIP system still isn't easy. First,
there are many ways to calculate ROI, and one isn't any better
than the next; it all depends on how your administrators
prefer to see the numbers presented. In one formula, you take
the benefits and subtract the costs and you have your simply
answer. In another, you divide the benefits by cost. In a third
approach, you subtract costs from benefits and divide that
difference by those initial costs (see "Three Ways to Spell
The second complication is that, beyond hard and direct
cost savings, you need to be able to quantify all the benefits
VoIP delivers to your school. And that's not so simple to do.
Measuring the Benefits
"I'll be honest with you: ROI and how you quantify it-- you
can slant it any way you want to," says Vani Naidoo, education
solutions marketing manager for VoIP vendor Mitel.
That said, Naidoo believes there are ways to reliably
calculate the cost savings VoIP offers while ferreting out and
measuring the technology's qualitative benefits.
For example, she points out, if a district has an office support
person dedicating a portion of each day to handling incoming
and outgoing calls, a VoIP system can include an automated
speech attendant to direct calls. There are also the advantages
brought by the mere availability of more phones. Few schools
or districts can afford to deploy landline phones or voicemail
accounts to every classroom, while VoIP service allows for a
1-to-1 installation. So when a parent calls to reach a teacher,
instead of staff handling the call, it can be routed directly to the
teacher's class or voicemail box. Naidoo says the value of that
freed-up time can be calculated by multiplying staff salaries by
the percentage of time that can now be redirected to other work.
VoIP's qualitative benefits are apparent in Florida's
Monroe County School District, where the implementation
of a Mitel 3300 system "has opened up doors to really great
communication," says Ken St. James, director of instructional
technology. He calls the district, which covers a 110-mile
stretch from Key Largo to Key West, "geographically
challenged." That has made communication challenging too.
With a phone now in every classroom, VoIP service has
improved dialogue between parents and teachers, as well as
among staff, and even between the superintendent and teachers.
"A teacher will call the superintendent directly and get right
to his office," St. James says.
Likewise, the new phone system has been used to notify
teachers in emergencies, such as a bomb scare at one school that
prompted a lockdown, and a stranger on campus at another. The
phones include digital readouts. If school administrators want to
put a message out, they ring the classrooms and enter a special
code: Code 3. "Teachers know what a Code 3 is," St. James says,
"so it doesn't alert the students."
Because the 14 sites in the district are so far apart, staff and
teachers are beginning to hold training sessions through Mitel's
Your Assistant, a collaboration application. Now participants
can sit in front of their computers and talk with each other over
the phone while viewing demos, receiving training, or getting
remote support. "We're probably going to be doing more with
Your Assistant this year, just because of travel expenditures and
cost of gas to go up and down the Keys," says St. James.
When the topic of ROI is brought up, St. James dithers a bit:
"Our superintendent has asked us the same question: 'Can you
tell me a dollar amount?'" He can document the savings of
$50,000 to $60,000 a year produced by eliminating the costly
maintenance contract the district had in place to cover its
12-year-old phone system. But trying to defend some of the
more substantial benefits of the new service that can't be
captured statistically eludes him: "Enhanced communication
has been a real thing, but how do you put a value on that?"
Harris County's Schul says he knew that a convergence of the
voice and data networks would result in savings. "If I don't
have to maintain two switches-- if I don't have to maintain
knowledge of two switches-- that saves us money," he says.
Better customer service was also a consideration, Schul
adds. "We weren't getting the customer service that we thought
was adequate. We had multiple delays-- days long-- in getting
phones repaired or fixed. And we were looking for a better
solution for our customers." The county's internal IT department
was little help. It simply documented whatever came in
through its help desk and forwarded those requests to the local
Schul says that because a large number of the district's locations
were connected with fiber optics, his team knew Harris
County had the bandwidth available to deploy VoIP. To begin
the process, the IT department did an analysis of the existing
phone system to discover all recurring costs, as well as support
and maintenance expenses. Plus, the department
researched turnaround time on the additions, changes, and
deletions it was having done by a third-party vendor. The
outlay, says Schul, "seemed to be prohibitive."
From that, the county procurement staff issued a request for
proposals, to which four vendors responded. After getting demos
from each company, the county started negotiations. "There
were two main factors that helped us make a decision," Schul
recalls. "The first was, of course, the cost. We looked for a quality
solution at the best price. Then we looked at ease of use."
FCC Ponders VoIP E-Rate Eligibility
EVEN IF IT TAKES an outside consulting firm to sort out a district's
E-Rate options, few dispute the value of pursuing E-Rate dollars to
fund new telecommunications and internet initiatives. But the Federal
Communications Commission, which manages those
dollars-- to the tune of about $2.25 billion every year-- is seeking
comments on potential changes to its Eligible Services List (see
Among the topics under consideration in this "notice of potential
rule making," or NPRM, is interconnected VoIP services: voice over IP
that connects the caller to the traditional phone network. The FCC is
evaluating whether interconnected VoIP service requests should be
processed as a Priority 1 service (such as all telecommunications
and internet services), and, if so, whether such requests should be
certified under Children's Internet Protection Act requirements.
Scott Weston, executive director of communications for Funds for
Learning, a consulting firm that helps
maneuver schools and vendors through E-Rate paperwork and
compliance, believes that at least part of the motivation driving
the FCC to consider the issue is to get ahead of the curve and
"future-proof" its rules about VoIP.
"Schools are looking at their bottom lines and saying, 'I can get X
number of phone lines for this much money,' or 'I can save some
money if I go this VoIP route,'"Weston says. "And maybe that's why the
FCC may want to solidify its stance on interconnected VoIP. Maybe it's
seeing that more schools are migrating that way. For some, it's more
cost-effective than traditional phone service. The FCC wants to get out
in front and lay out the groundwork so that at some point in the future
it doesn't have to pull the rug out from under schools and say, 'We're
going to take away your funding.'"
The result of any proposed changes,
Weston says, will draw attention to the
FCC's funding of VoIP projects. As yet,
Funds for Learning hasn't publicly stated
its position regarding the NPRM. But
Weston says, "I think the FCC is really
saying, 'We're concluding those initial
determinations are still accurate.' It's
really an announcement out to
the world saying, 'Hey, interconnected
Two of the vendor candidates were closely priced, but one
had a VoIP system that appeared to be simpler to use. "That
was going to reduce our total cost of ownership, because now
we had a system we could support easily, train our end users
on easily, and train our support people on easily."
The system-- ShoreTel equipment installed by Total
Technologies-- covers 29 locations and 990 phones. The first
group of 500 phones was deployed in the district in December
2006. A second phase followed in September 2007, when 280
units were installed. The final 210 went in this past September.
As the deployment progressed and the county was able to
turn off the old system, Schul says, "we realized an even faster
return on investment." According to Schul, the district initially
projected a 24-month rate of return on its VoIP deployment,
but is now on track to achieve that in 20 months.
The county chose to lease its system over a period of three
years rather than buy it outright. "Like everyone, we have to
fight budgets," Schul says. "We didn't have the capital on
hand to pay for the entire system, so we looked at different
lease options." He says leasing adds a little bit of interest to
the cost, but that it is the most cost-effective way to get the
functionality the county needed.
According to district calculations, after three years the traditional
phone service would have cost about $1.16 million. An
outright purchase of a VoIP system would have cost $591,000;
the lease costs $598,000. Those are just the hard numbers, but
they tell enough of the story, Schul says. "Converging networks, saving dollars on network switches--
because now you're utilizing
your existing infrastructure-- have
advantages in the long haul."
More for the Money
Implementing VoIP doesn't always mean a district will pay
less each month for its telecommunication services. What it
does mean is that the schools will receive more for their
money, which is the essence of measuring a positive return.
Before factoring in the funds it receives from the federal
E-Rate program, which provides discounts to eligible districts
for telecommunications services, Marana Unified School
District, northwest of Tucson, AZ, is spending about
$295,000 annually for its ShoreTel VoIP system, which it
deployed last year on its new wireless network, as opposed to
$330,000 a year for the previous Qwest Centrex system (see
"At a Glance"). Although a $35,000 savings doesn't
sound like much, it's considerable when you take into account
that the number of phones available in the district has nearly
doubled from 700 to about 1,300.
The district doesn't own or maintain the equipment. That's
handled by Trillion. "We really didn't have anybody who was
an expert in VoIP," Marana's technology resources manager,
Tom Payne, explains. "We still have the ability to manage and
monitor a good portion of it."
The result: Service has vastly improved. The local phone
company could take up to four weeks to respond to requests for
changes to the phone service. Now, says Payne, he can make
changes quickly right at the management console on his computer--
the same console viewed by the technicians at Trillion.
"Because we manage that, there is no cost per month," he says.
New phones can be installed within a day a work order is
received. "Teachers are just amazed by that. They love that they
don't have to wait or keep calling to find out what's going on."
Staff who travel among the 18 schools in the district-- such
as counselors-- can reassign their phones on the fly when they
arrive at a different campus. "They punch a code into the
phone, and it transfers that account to that phone," Payne says.
"That's a temporary assignment. When they unassign it, it
goes back to the home account. It gives them the ability to
receive calls without giving out
multiple phone numbers, and to
get voicemail no matter where
VoIP is still a relatively young tool, and many schools and
districts are just beginning to realize its biggest advantages. So
for the time being, ROI may remain hard to pin down. But that
doesn't mean the technology isn't making an impact.
Monroe County in Florida will shortly be deploying
Microsoft Office Communicator 2007,
which its Mitel phones integrate with
through Active Directory. Once that software
is installed, users will have a "presence"
that can be viewed from Outlook,
SharePoint, and Office Communicator.
That will enable them to right-click on
other users in the directory, select the
type of communication to initiate with
them, and talk via audio, video, or instant
messaging by computer or phone.
"Some of the features we've gotten out
of the system are light-years away from
what we used to have," says Miguel Gonzales,
network analyst for the district. "The most exciting thing
about a VoIP system is that it opens the door for unified communications.
It gets your foot in the door."
If you would like more information on VoIP, visit
our website at www.thejournal.com. In the
Browse by Topic menu, click on Telecom.
Dian Schaffhauser covers education technology for T.H.E.
Journal and its sister publication, Campus Technology.
This article originally appeared in the 11/01/2008 issue of THE Journal.