Convergence

Slow adoption

Small businesses are taking it slow when it comes to deploying technologies such as VoIP and video conferencing. By Mohd Shariff PA

Gone are the days when small businesses used to rely on manual methods and avoided modern technology in their business. Small businesses have made investments into technology such as VoIP, Video conferencing and Video over IP.

During the past year, issues such as, Quality of Service (QoS), voice latency and reliability plagued convergence technology. However, there has been significant improvement since then. For a large enterprise, VoIP is the cheapest mechanism for long distance communication. Similarly a small business with multiple offices or remote offices within the country can use VoIP in a closed user group (CUG) and save recurring cost in long distance calls. According to the survey 29 percent of the 34 respondents who have adopted convergence technologies have deployed VoIP. Web conferencing proved to be a more popular application with a bit over half the respondents who have deployed convergence technologies using it. When we spoke to different small business they were of the opinion that most of the convergence technology such as Web conference, VoIP, video conference and video over IP are not necessary for them as their operations are still small. L. M. Kaushal, deputy director, Arbro Pharmaceuticals Ltd based out of New Delhi says, “These converged technologies such as VoIP, Video conferencing are so advanced that we don’t find it relevant to our business given the scale of our operations. Additionally we do not have that kind of the budget as well.”

However remote workers, telecommuters, and travelling executives appreciate VoIP’s remote usage capabilities. Whether they’re at home or in an airport, off-site workers can use virtual extensions to connect to the office phone system from any remote location with broadband Internet access. Remote and travelling workers can also use an IP-enabled phone, or soft phone (special software installed on a laptop or PC to allow it to function as a telephone) to place and receive calls as if they were working at their office desk.

Convergence reduces cost, increases collaboration

A video conference (also known as a video teleconference) is a set of interactive telecommunication technologies, which allow two or more locations to interact via two-way video and audio transmissions simultaneously. It has also been called visual collaboration and is a type of groupware. It differs from a videophone in that it is designed to serve a conference rather than individuals.

A small section of small businesses are using Web conferencing for collaboration with their customers or OEMs. For example Pakona is using a Web-conferencing solution for collaboration with its customers. Jinesh Shah, IT-head, Pakona Engineers Pvt Ltd says, “Web-conferencing helps us stay in touch with our customers and we collaborate on many areas. They can point to where they want us to make a change from the convenience of their own office.” Other small businesses are using Web conferencing to conduct live meetings—marketing reviews or presentations over the Internet. In the early years of the Internet, the terms Web conferencing and computer conferencing were often used to refer to group discussions conducted within a message board (via posted text messages) therefore not live, but the term has evolved to refer specifically to live, synchronous meetings, while the posted message variety of discussion is called a forum, message board, or bulletin board.

“Web conferencing offers a more efficient, flexible and dynamic approach to meetings, while retaining some of the aspects of face-to-face interactions,” says Prem Kumar, deputy manager, Kajaria Ceramics Ltd.

Voice over Internet Protocol, also known as VoIP involves the routing of voice conversations over the Internet or through any other IP-based network. Companies providing VoIP services are commonly referred to as providers, and protocols which are used to carry voice signals over the IP network are commonly referred to as VoIP protocols.

VoIP business models

Business-class VoIP comes primarily in two flavours—premises-based and outsourced. Like a traditional PBX or key system, a premises-based IP phone system resides at the client’s site. In this setup, clients are usually responsible for purchasing, installing and maintaining all necessary equipment and negotiating local, long distance, conferencing and Internet service contracts from multiple service providers.

In contrast, with an outsourced model the client has no physical hardware on-site other than the handsets on each desk and a managed router. A single vendor provides service via a shared-tenant, hosted PBX over private IP connections, which are usually T1 or DSL lines. Outsourced providers typically offer all-inclusive services for a flat monthly fee, providing the dial-tone, local, long-distance and international service, conferencing, maintenance and support and Internet access.

Video over IP is a term that describes a method of transmitting video, audio and data signals as data packets over an IP network. We did not find any small business using it commercially.

Part of corporate strategy

For most companies, technology adoption is a part of corporate strategy in order to streamline business process. Observe a small business and you will see that organisations are adopting an organised mode of functioning. This holds true regardless of the industry vertical. Be it banking, retail, travel, FMCG or ITES, all these segments are upgrading their IT infrastructure in general and LAN technology in particular as they expand. Overall, the trend is positive. It can easily be predicted that the convergence market has a promising future in India. Customers continue to see IT as an important asset and the importance of networking has been acknowledged.

Though convergence technology has not been deployed widely, many segments are looking for investment into this. 15 percent of the 197 respondents intend to invest in VoIP in the coming year. 13 percent intend to invest in video conferencing and 12 percent in Web conferencing. Video over IP has eight percent planning to invest in it.

In terms of industry verticals manufacturing/engineering and auto & auto components are the leaders in planned adoption. 22 percent of manufacturing respondents intend to invest in both VoIP and Video Conferencing.

Mansur Ahmed, senior process associate, Cross Domain Solutions Pvt Ltd, Bangalore says, “Technologies such as Web conferencing, VoIP, video conference and Video over IP give us a competitive advantage over the competition. Additionally today’s business is recognised by the speed of responding to customers by bringing products faster to market and these helps us close the gaps. Though at the moment these technologies have not been deployed, but as the time passes companies will adopt these technologies.” Normally small business waits for a right time to adopt technology. Unlike large companies, which will deploy technology in advance, a small business will deploy only when it realises the need for that particular technology. If we look at Web conferencing, initially there was not much interest. However, as travelling increased, small businesses thought of using this technology. Analysts feel that small businesses are growing rapidly; this segment has adopted and identified IT infrastructure as a core enabler of its business growth. This leads to a growth opportunity of LAN applications that have changed drastically over the past two years. However, this growth is because of advanced applications such as VoIP and IP phones, video conferencing and other applications that will drive demand for high performance LANs.

Many small business owners equate VoIP with cost savings, largely because of widespread advertising campaigns touting consumer VoIP offerings. However, cheaper calls are only a small part of the story for the business market, which demands quite different phone system capabilities. For the business market, the upfront equipment investment and ongoing technical resources required to successfully install and manage an IP-based phone system can be substantial, depending upon the nature of the deployment. Fully understanding the impact of VoIP beyond monthly long-distance savings requires a comprehensive assessment of the benefits, costs and choices associated with this technology. Besides the upfront investment, many small businesses are reluctant to deploy VoIP phone systems because they have limited internal technical resources and expertise, and lack access to the extensive IT staff employed by larger enterprises. In addition, small businesses often cannot risk the reliability and quality issues that plague consumer VoIP phone service delivered over the public Internet.

The growth enabler

The convergence network sector is driven by wireless and Internet communications. About 42 percent of the investments were in expansion-stage companies, and some of these companies appear to be doing quite well, though their annual turnover is around Rs 50 crores. One trend that affects these sectors is digital media convergence; think about how video content shifts from the TV model to the on-demand model, and to mobile devices like iPods and wireless devices there’s a lot of investment opportunity to build infrastructure for that.

Advances in technology have become a driving force. The acceptance of data centres, adaptation of networks, enhanced security, growth of wireless and mobile communications in an enterprise, ability of LAN to support Unified Communications and most of all the need to maintain Quality of Service have collectively driven the LAN market to new heights. Key drivers fuelling VoIP growth in India will be availability of inexpensive devices, applications that exploit the integrated voice, data and video network and out of the box carrier grade voice quality.

Small businesses that are geographically spread will have to invest in VoIP to enable their employees to interact with each other in a cost-effective and easy manner. The VoIP number in most cases is simpler than the regular phone, for instance a person is reachable on his extension for his colleagues across the world. Companies are demanding that remote access solutions support VoIP.

When we talk about small business, though technology adoption is strategic one but the investment pattern is tight, particularly when they plan to invest on convergence. Most of them believe that the cost of this technology is coming down, which has led organisations to start thinking about it. Many small businesses believe that audio, video and Web conferencing will push the need for VoIP. Special computer conferencing programs will be available to enhance co-operative writing projects. By using workstations, all participants can see the document simultaneously and make changes. Video conferencing can be used for training both staff and clientèle. Many sites will have workstations that put audio, video and computer conferencing on every staff member’s desk.

If VoIP adoption is low it is because most Internet phone services don’t offer communications packages designed for small businesses. Now that’s changing, with a variety of tiered services that can fit nearly any business model. There are two basic types of VoIP service. The first is designed to replace your existing landline phone with VoIP. Traditional phone companies offer such services, and VoIP pioneers.

The second type of VoIP service is the free or nearly free services, such as Yahoo! Messenger with Voice, GoogleTalk, and Skype. These software applications let you place calls from a PC or connected handset to other users of the same service at no charge. Most of these also let you call regular phone numbers for a couple of cents a minute. This technology is there in almost all the small business that we have surveyed. Still many people believe that VoIP isn’t a perfect solution. The issue of service has yet to be satisfactorily resolved, calls are sometimes dropped, audio quality is occasionally inferior, and when the power goes out, so does the phone service.