Tom JasnyTom JasnyVice PresidentVice PresidentVocalData, Inc.VocalData, Inc.

Capabilities, Convenience, and Cost-Savings Drivers for Hosted PBX Services

OutlineOutline

• Terminology• History• Current Analysis• Change Factors

– Market– Technology

• Overview of Hosted• Features• Benefits (vs. PBX & Centrex)• Market Segments• Value Prop for Enterprise• Business Case/TCO• Conclusions

TerminologyTerminology

• Centrex

• PBX/IP PBX

• IP Centrex / Hosted PBX / Virtual PBX

• Managed PBX

• PBX Trunking / IP Integrated Access

DarkAges

DarkAges

History of PBX vs. CentrexHistory of PBX vs. Centrex

19XX 1960 1970 1980 1990 2000…

PBXs

Centrex Service

Digital PBX

"Advanced" Centrex

IP PBX

Hosted IP Telephony

Situation Today –• PBX dominates enterprise• Centrex serves very

large/small businesses• IP PBX well established• Hosted IP ~ 80,000 lines

What's going on?What's going on?

• Enterprises and service providersalike are eschewing CapExand trimming OpEx

• Pressure to outsource specializedfunctions

• Ethernet LAN/WAN infrastructureubiquitous

• Complex technology becomingredundant

• PBXs/Class 5 nearing end of life cycle• VoIP technology in it's 4th generation• Business cases and TCO looking good for nexgen

providers

0

1,500

3,000

4,500

6,000

Ho

sted

PB

X L

ines

2001 2002 2003 2004 2005 2006 2007

CASA

AFME

Asia-Pac

Europe

NA

The Hosted PBX MarketThe Hosted PBX Market

Source: Probe Research

0100020003000400050006000700080009000

Hos

ted

PB

X li

nes

(000

s)

IP Centrex = 48% of all Centrex lines by 2008

Centrex line decreasing at 4-5% / year, Centrex revenue decreasing at 8.5%

Nexgen revenues growing at 190% CAGR from 2001-2008

Service Provider Virtual PBX Line Forecast (global) Service Provider Virtual PBX Line Forecast

Regional Breakdown

Source: Frost & Sullivan

Source: Probe Research

• Complete array of PBX-like business features– Includes features such as DID, Speed Dial, Transfer, Do Not Disturb,

Hold, Mute, Redial, Call Forward, 3-way Conferencing, Call Waiting Caller ID (Name & Number), blah, blah, blah …

• Applications and advanced features– Conferencing and Desktop Collaboration– Unified Messaging (v-mail/e-mail/IM)– Web Portals/Web Services– Remote Services/Mobility– Self-Service Management - Enterprise Administration– Auto-attendant - Call Center - IVR– VPN – Enterprise Networking– Firewall Traversal

• Communicates with customer-facing endpoints: IADs, LAN/WAN access gateways, IP phones, PDAs and mobile phones

• Communicates with PSTN-facing gateways and softswitches

What are Hosted PBX Services?What are Hosted PBX Services?

Core FeaturesCore Features

IP CENTREX FEATURESAbbreviated 2-digit Dialing

Call Waiting/Manager ID

Permanent Per Line Block

Anonymous Call Rejection

Caller ID Priority Call

Billing Codes Caller ID Block Redial

Call Forward All Calls Conference Remote Call Forward to DID

Call Forward Busy Do Not Disturb Speed Dial

Call Forward No Answer Forward to Voice Mail Transfer, Blind & Guided

Call Return Group Pickup Urgent Call

Call Trace Hold Virtual Ring

Call Waiting Park

CLASS 5 FEATURES976/900 Block Call Waiting Priority Call

Abbreviated 2-digit Dialing

Call Waiting/Manager ID Redial

Anonymous Call Rejection

Caller ID Speed Dial

Call Forward All Calls Caller ID Block Urgent Call

Call Forward Busy Forward to Voice Mail Virtual Ring

Call Trace Hold

Call Return Permanent Per Line Block

HOSTED PBX FEATURESAbbreviated 2-digit Dialing

Call Waiting/Manager ID

Permanent Per Line Block

Anonymous Call Rejection

Caller ID Priority Call

Billing Codes Caller ID Block Redial

Call Forward All Calls Conference Remote Call Forward to DID

Call Forward Busy Do Not Disturb Speed Dial

Call Forward No Answer

Forward to Voice Mail Transfer, Blind & Guided

Call Return Group Pickup Urgent Call

Call Trace Hold Virtual Ring

Call Waiting Park

End-User Web PortalsEnd-User Web Portals

Web Portal Directories

Web Portal Integrated Voice Mail

• Access phone features, call management• Unified call directory, visible voice mail and teleconferencing

Unified Messaging/IM IntegrationUnified Messaging/IM Integration

Presence/IM/Voice Integration

• Unique integration of IM/phone presence• Call management based on IM status (and vice versa)• Ability to launch voice conversation, e-mail, file transfer – from IM

Mobility SolutionsMobility Solutions

Mobility - PDA & WAP Interfaces

• Call disposition via PDA

• Mobile call management, directory access, voice mail management, etc.

Service BrandingService Branding

• Brandable by Service Provider

• Control over graphics, coloring, features

• Can be sub-branded by Agents

• Alternatively, a custom web portal can be created using SOAP, CORBA and VOISS API with full functionality

Improved ProductivityImproved Productivity

• Professional,efficient call handling capability for front desk personnel– GUI interface– Ability to direct and process incoming calls – Current phone status & caller-on-hold status– Point-and-click call routing– Point-and-click employee directory

• Personal productivity through converged features– Unified messaging; IM/EM/VM/Presence– Web portal for phone management

• Call disposition• Directory• Conferencing• Visible voice mail• Call log• Click to call

Value Proposition for the EnterpriseValue Proposition for the Enterprise

Small business segment value– currently served by Centrex

• Expanded feature set• Self-Service Management• Part of lower-cost, bundled offering• Competitive providers

Medium business segment value– currently served by PBX/KTS

• New personal productivity services• Self-Service Management• Part of lower-cost, bundled offering• No CapEx; No Maintenance; Lower OpEx

Large business segment value– currently served by Centrex

• No CapEx; No Maintenance; Lower OpEx• Single network technology• Self-Service Management• Outsourcing opportunity

Business Segments

Benefits of Hosted PBX ServicesBenefits of Hosted PBX Services

VS. PBX VS. Centrex

Avoid capital outlay and need for in-house expertise

“Look Big”; full-feature set/phones, DID, multiple line appearances, …

Reduce administration of moves, adds & changes

Avoid moves, adds, changes charge from LEC ($100/empl./yr)

Reduce costs by consolidating voice & data; single wiring infrastructure

Reduce costs by consolidating voice & data

Reduce maintenance costs(23% - Yankee)

Reduce cost of interoffice calls by 97% !!! (IW) & average by 23% (Y)

Platform for enhanced services– unified messaging, voice mail,

conferencing

Platform for enhanced services– unified messaging, voice mail,

conferencing

Easier Installations for EnterpriseEasier Installations for Enterprise

• With hosted PBX solutions– Complete the installation

in days– Complete the cut-over in

hours!– Plug in phones

To install voice solution for a 50-person business

• With traditional PBXs– Complete the installation

in weeks– Complete the cut-over in

days (reserve the weekend!)

Ongoing Costs of MACsOngoing Costs of MACs

• Savings on moves, adds, and changes present an even more compelling benefit– Typical employee moves desk an average of 1x a

year; typical cost ranges from $75 to $135 per change

– For a 500 person medium-sized business, eliminating this cost through self-registration results in $50,000 annual savings!

Enterprise Value PropositionEnterprise Value Proposition

• Small business example shows 23% monthly savings with hosted IP PBX service

• Key savings is in reduced line charges—with packetized voice, don’t need extra lines for overflow, hunt groups

• Voicemail and conferencing are included in basic line charges for hosted IP PBX services

Source: IP Centrex Services, Yankee, 12/2000

$ p

er

mon

th

DataVoicemailVoice lines

$1,682

$1,300

Centrex “Virtual” IP PBX

Monthly Charges for 25 Users

Comparing the AlternativesComparing the Alternatives

• InfoTech study 10/2001 reviewedtotal cost of ownership for 3 solutions:– Traditional PBX (IP-enabled)– IP PBX– Hosted PBX Services

• New installations, 3-year view– 100 and 400 person installations– 10%, 20% teleworker, respectively– 20 users added in Year 3

• Costs addressed:– First costs: System, phones, gateways, installation, additional LAN

costs, administrator & user training, soft phones, DSL modems, remote modules, local facilities

– Ongoing costs: IP Centrex line charges, facilities charges (local trunks, PRI, ISDN, DSL/cable), hardware maintenance, space, HVAC, power, backup, insurance, staffing

– Business disruption costs

Total Cost of Ownership (TCO) ResultsTotal Cost of Ownership (TCO) Results

0

50

100

150

200

250

Dolla

rs S

pent

(0

00's

)

I P-Enabled

237283 105724 126399

IP PBX 219229 85220 109434

Hosted 135001 60192 82480

Year 1 Year 2 Year 3

• IP-enabled PBX shows highest cost– Assumes purchase of new PBX

• IP PBX cheaper admin and trunk charges offset higher system costs

• Hosted has no upfront system costs, lower maintenance costs, no space reqs

• Year 3 cost up due to adds• TCO (3 years)

– IP Enabled: $591,513– IP PBX: $413,883– Hosted:$277,673

Source: Infotech. Revision 10/2001

100-person Enterprise

0

200

400

600

800

Dolla

rs S

pent

(000

's)

I P-Enabled

729232 240496 272351

IP PBX 754016 252880 275234

Hosted 427425 201816 220252

Year 1 Year 2 Year 3

• Similar assumptions with larger installation

• Higher % of users are teleworkers; 20% geographically dispersed

• TCO (3 years)– IP Enabled: $1,242,079– IP PBX: $1,282,130– Hosted:$849,493

Source: Infotech, revision 10/2001

Total Cost of Ownership (TCO) ResultsTotal Cost of Ownership (TCO) Results

400-person Enterprise

The Verdict is In!The Verdict is In!

• PBXs dominate the enterprise marketplace today; Centrex provides service at the margins and is declining

• IP Telephony technology has matured, creating alternatives to traditional solutions

• Enterprise customers are deploying IP telephony solutions now– IP PBXs are have proven in both the market and the technology– Dozens of enterprises are deploying hosted solutions globally

• IP-based solutions for voice provide significant benefits to the enterprise

– Reduced connectivity charges– Enhanced applications– Reduced administration & Productivity improvements– No capital expense

• Hosted PBX solutions present a compelling business case due to the dramatically reduced total cost of ownership, reduced network management costs and cheaper bundled offerings

About VocalData, Inc.About VocalData, Inc.

• Who we are: – A VoIP market pioneer founded in

1998 with approx. 75 employees in Richardson, TX

• What we do:– Develop and market "VOISS", a suite

of voice applications and services, delivering a rich set of line-side and enhanced features in a IP network

– Sell to service providers and system integrators, who provide hosted PBX or IP Centrex services to business and residential customers

• Our investors:– Austin Ventures, Trinity Ventures, SAIC

Ventures, JP Morgan, Seed Capital and others

Tom Jasny, Vice President, Sales & Service

tjasny@vocaldata.com