Business VoIP Migration: Evolution or Revolution

Should businesses take an evolutionary approach to VoIP? Or should they bite the bullet and completely replace their existing TDM systems?

Sunnyvale, CA-based privately held ShoreTel, which has been selling IP-PBX systems for business for a decade, says ’replace.’

ShoreTel VP of Marketing, Steve Timmerman, is blunt.

“The evolutionary approach is good for Avaya. It isn’t good for customers,” he says. “Nobody is investing in TDM anymore — it’s a dead end. The choice for customers is whether you want to go through the death by 1,000 cuts or make the leap once.”

A hybrid environment is complex to manage — Timmerman calls it a “nightmare” — and doesn’t scale. More important, a pure IP environment sets the stage for more efficient business operations and new customer services. “Cost savings isn’t the driver,” Timmerman explains. “The real benefit of pure IP is applying it to the business.”

ShoreTel has been in business for 10 years and was founded as an IP PBX company when few people were thinking about IP telephony besides VoIP pundit Jeff Pulver. Even as recently as 2002, the company hired an engineer from a traditional PBX company that pooh-poohed the idea of IP-PBX.

“He had proposed a voice over Ethernet system and they didn’t believe you could do that,” recalls ShoreTel founder Ed Basart.

Although it’s not as well known as competitor Cisco, ShoreTel has achieved rapid and steady growth — 366 percent over the past five years, according to Timmerman, and has been profitable for the past two. The company’s customers include the City of Oakland, CA and the staffing company, Robert Half International.

Infonetics, Infotech, and Deloitte & Touche rank ShoreTel as one of the fastest growing IP-PBX companies and it was named one of the Silicon Valley Fast 50 by the Silicon Valley/San Jose Business Journal.

Timmerman acknowledges that lack of visibility is one of the company’s principal challenges. “We’re in only three of ten deals,” he says. “We’re competing with giants and we beat them on a regular basis.”

He ticks off the ways that ShoreTel’s PBX outpaces the competition.

The first is system architecture. ShoreTel’s PBX is designed more as an appliance rather than a system.

“We have a distributed switch-based architecture — there is no disk or hard drive,” Timmerman explains. “It runs on an embedded operating system – VxWorks.” With server intensive architectures, the design used by many PBX systems, the disk drive is the most likely point of failure. Without these “moving parts,” ShoreTel’s architecture delivers higher reliability, contends Timmerman.

Another benefit of this architecture is scalability. “You can scale from a few users to thousands with a single architecture,” Timmerman explains. “You just add an additional switch to the rack.”

In a comparison of system cost and complexity for Avaya, Cisco, Nortel and ShoreTel by the New York research firm Nemertes, ShoreTel took the first place for set-up ease: an average of 69 minutes. (Avaya was second at 77 minutes, Nortel next at 186 minutes and Cisco took last place with 250 minutes per user).

The second way that ShoreTel shines is ease of configuration, installation and management, according to Timmerman. “We have a one page price book — three switches, two gateways, five phones. You mix and match.”

And customers don’t have to worry about obsolescence. “The 1998 switch is still l supported by the current software,” he says.

ShoreTel comes with a Web browser-based system management application. “Other vendors still have a CLI [command line interface] to manage,” Timmerman explains. “That’s a nightmare. Other vendors have multiple interfaces. ShoreTel has a single image of all your offices. You can manage the entire systems with one view.”

The third competitive feature that Timmerman points to is the company’s ergonomic phones. “Our phones have a unique design. They have a concave surface — they’re easy to look at. Speakers and microphones are high quality.”

ShoreTel also provides a desktop personal call manager GUI. “We have people who never touch the phone,” Timmerman reports. The call manager also interfaces with Microsoft Outlook.

The company also has wireless integration in the pipeline. “We’re working on putting applications on a cell phone that make it look like a phone on the company IP-PBX,” says Timmerman.

But what does all this functionality cost? Here, too, ShoreTel gives competitors a run for their money. Capital, start-up and maintenance costs are a third to half those of other competitors, according to another Nemertes study.

At the same time, ShoreTel gets high marks from customers, receiving a number one ranking for customer service from the Nemertes survey.

“You don’t compete with giants unless you have a better system,” Timmerman observes.