The ROI of VoIP

Everybody says VoIP saves big bucks. But does it?
Author:
Publish date:
Social count:
0

By now you’ve probably heard the buzz about Voice over Internet Protocol (VoIP). Advocates say it saves money on long distance calls by sending them over the Internet, improves communication by eliminating the Private Branch Exchange (PBX), and offers a host of neat features such as call forwarding, e-mail accessible voicemail, and more.

When it comes to measuring the dollars-and-cents impact of this technology, however, K–12 districts frequently find themselves in a bind.

Such was the case last year when officials at Tift County Public Schools in Tift, Georgia, set out to invest in a new telecommunications system. Harris Tucker, technology services director, had read volumes of material about VoIP but needed to prove to a new superintendent that an investment in the new technology actually would save big bucks.

“Besides being the newest telephone technology, [we knew] VoIP would provide the eventual placement of putting a phone in every room without having to pull new cabling to the rooms,” he says. “We just had to justify it.”

The Believer

For Tucker and Tift, the math was simple. Tift was paying approximately $4,700 per month for local phone service, or $56,400 per year. Of that, only $900 was eligible for E-rate discounts, a paltry number considering the school could have received a discount of up to 80 percent.

Determined to save dollars, Tucker put out a request for proposal for a VoIP system comprised of 257 phones, two phone switches, and two primary rate interfaces (PRIs). Mitel, a VoIP vendor in Ottawa, Ontario, beat out three other vendors with a $134,000 bid. Next, Tift entered into a Local Service Agreement with BellSouth Communications to provide local service for the two PRIs. The service bill dropped to $2,600 per month—a savings of $25,200 per year.

Because all of these new service charges are eligible for E-rate reimbursement, this July the school can apply an 80 percent discount to the telecommunication charges. The results will reduce the monthly charge to $520, or $6,240 per year, a savings of $50,160 overall.

From this figure, it was easy for Tucker to prove the value of his investment. Because Tucker spent $134,000 on the Mitel system and will save $50,160 per year on service, he calculates that the district will break even on the system in roughly 2.5 years.

The Naysayer

With figures like this, it’s hard to believe that anybody would decry the cost-effectiveness of VoIP. Still, Margaret Klee, CIO at the Los Angeles Unified School District, considers herself a skeptic.

Klee’s thinking is straightforward. After considerable research, she says she couldn’t find a call manager for less than $300,000 or $400,000. When she considers that the district currently pays less than two cents per minute on toll charges and factors in the district’s 84 percent E-rate district, Klee says it’s not worth the cost of equipment and maintenance to deploy VoIP.

Another reason Klee hasn’t warmed up to VoIP is how vulnerable it would leave her network. She cites the system’s single point of failure as a major problem—if the network goes down, the entire school district would lose voice communications. For this reason, Klee says she’d never completely abandon traditional lines, meaning that VoIP always would be an increased charge rather than a means to save money.

“Traditional phone systems are very reliable,” she says. “The biggest area where there is potential savings for us is the areas of the district where calls would incur toll charges for calling place to place and by routing the calls over the data network—we could avoid those charges.”

That said, Klee is quick to add that Los Angeles Unified has invested in VoIP at a handful of remote sites to achieve the savings she mentions. On the whole, however, she says the district does not plan “significant deployment,” and therefore does not see the need to conduct a cost-benefit study down the road.

Matt Villano is contributing editor of School CIO.

Featured

Related

The ROI of VoIP

Everybody says VoIP saves big bucks. But does it? Advocates of Voice over Internet Protocol (VoIP) say it saves money on long distance calls by sending them over the Internet, improves communication by eliminating the Private Branch Exchange (PBX), and offers a host of neat features such as call forwarding, e-mail

Hold the Phone

These days, not even Paris Hilton is getting as much exposure as Voice over Internet Protocol. VoIP, which has existed since the mid-'90s but has only recently taken the IT world by storm, lets users make and receive phone calls over the Internet. Already embraced by the consumer market — there are more than

Down to Business

Taking cues from the corporate world can mean money saved and efficiency gained. Across the country, public and private school districts alike are hiring CIOs and IT managers with volumes of experience in the business world. The thinking behind this trend is simple: Hire someone from the private sector and he or she

Remote Control

It's no secret that the combination of young people and computers can equal aimless Web surfing. In the classroom, teachers incorporating computers into their lessons need to make sure students are using technology in productive ways. To do this, many schools have turned to classroom management systems. Does your

A La Carts

You want wireless mobility? Have a COW. Computers on wheels, or COWs, combine the wireless technology of today with the audio/visual carts of yesteryear for an entirely new spin on mobility. Increasingly used by districts with laptop computing initiatives, COWs are among the hottest high-tech sellers in schools today,

Avacaster In The Virtual Classroom

Once upon a time-say, a few years ago-a lot of people believed that Webcasting was the Next Big Thing. We were going to watch television-like, serial entertainment right on the Web. A lot of seasoned film and television people jumped their respective ships for start up companies that would provide original programming