1. Hosted by Value, Risks and Rewards of VOIP Zeus Kerravala Vice President, Enterprise Infrastructure The Yankee Group zeus@yankeegroup.com

2. Hosted by the Yankee Group  The Premiere Global Telecom, Technology, Wireless, Media and Internet Commerce Market Research and Consulting Firm bridging the old and new economies  30 years as strategic adviser to many of the world’s largest network service providers, equipment suppliers and enterprise e-businesses  More than 100 Technology Analysts with a Special Focus on Enterprise and Carrier Networks, Internet Commerce and Infrastructure, Wireless Technology & Services Zeus Kerravala Vice President Oversees Yankee Group’s Enterprise Infrastructure services Focus on enterprise hardware and software infrastructure, Internet data center infrastructure, carrier edge

3. Hosted by the Yankee Group Core Practices Extend Worldwide Europe Latin America Asia Pacific Customer Focus Investment Banking and VCs Buy-side Investors Vertical Markets

4. Hosted by Enterprise Challenges Improve user productivity through the use of technology. Competitive advantage vs. necessary evil Increase revenues while lowering cost. Mobilization of the workforce The need to unify all communications platforms. Conversable technologies Align IT with business process

5. Hosted by The New CIO Mandate Now Time Tactical Strategic Business Value Importance of Technology to the Enterprise Past CIO Metrics: Bandwidth, CPU, Memory, Database/System Availability Future CIO Metrics: Productivity, Revenue, Cost, Profitability, Process

6. Hosted by State of VoIP Adoption Results 2002 – 10% penetration of line shipments 2003 – Forecasting 25% for 2003 1 Million IP Phones sold in 2001 2 Million IP Phones sold in 2002 Projecting 3 Million in 2003 Projecting $10 million in soft phone for 2003

7. Hosted by Telephony Line Shipments 0 2 4 6 8 10 12 14 16 18 20022003200420052006 Total Phone System IP Telephony (Millions)

8. Hosted by Adoption Results for VoIP 2002 adoption was 10% Respectable, but held back due to: Legacy vendors have been slow to develop IP Telephony solutions Reliable VoIP has been difficult to manufacture End-users have not been properly educated on what exactly is available, and what the true costs of owning a phone system are Indirect channel either from voice world or data world have not quickly adapted to new environment

9. Hosted by 1.No Interest 2.Not deployed, but interest 3.Deployed in trials 4.Departmentally deployed 5.Fully deployed across the company What is the status of VoIP in your organization? Hosted by

10. Value Risk IP Telephony Value and Risk Gain a competitive advantage Lower TCO than running separate systems Improve efficiency of end users Will increase user productivity by unifying collaborative apps It’s about voice OR data Competitive disadvantage if performance is erratic Increase TCO if pre-work and analysis is not done Will lead to inefficiency if not deployed correctly End-users will not use new applications if the experience is not consistent It’s about voice AND data

11. Hosted by The Changing Value Proposition What we have been saying: VoIP, Convergence, Multicast, Layer2, Layer3, QoS, Switching, TDM, PSTN, etc. Value Proposition: TCO savings, IT improvement, etc What we should be saying: It’s about managing and using information and communications better Value proposition: Driving business value through productivity improvements

12. Hosted by Tomorrows Requirements: Extending the Enterprise Partner Employee E-Mail IP Voice TDM Voice Web Information Call Center Faxes Voice Mail Mobile Phone Messaging IVR Using and Managing Information

13. Hosted by The New Value Proposition Lower TCO Improved IT Process Streamline BP Competitive Advantage Increasing ROI

14. Hosted by IP Telephony Benefits TCO Savings: Less cabling, equipment, savings on toll costs, network savings Improved IT Process: Reduced MACDs, ease of configurations, streamline staff Streamlined BP: Unified messaging, collaboration, travel benefits Competitive Advantage: Presence software, speech req, IPT apps

15. Hosted by 1.Greater than 125% the cost of TDM 2.101% to 125% the cost of TDM 3.The same as TDM 4.75% to 99% the cost of TDM 5.Less than 75% the cost of TDM Audience Response: What savings/premium do you expect VoIP to yield? Hosted by

16. Networking TrendsIPT Impact Networking Trends will Drive IP Telephony Adoption Networks will be packet optimize Web services continue to drive app. integration Network and computing platforms will be simplified through standards Voice platforms will be adapted to packetized networks The phone and PC become key voice/data integration points Third-party software vendors will develop vertically oriented “deadly” applications Telephony will be come an application on the data network

17. Hosted by Phone-Based Integration Source: Cisco Systems

18. Hosted by PC-Based Integration Integrated Video Presence Application Integration Source: Mitel

19. Hosted by What This Does to the Business Talking Collaborating Delayed Real Time Delayed Media Restrictive Media Adaptive Reactive Proactive

20. Hosted by Pervasive Communications

21. Hosted by IT Investment ROI ROI from decreasing IT cost ROI from increasing employee productivity Productivity Impact of IP Telephony

22. Hosted by Convergence Risks Voice and video are real-time applications extremely sensitive to delay, jitter and packet loss Businesses demand five-nines availability for voice Need PSTN-like call quality New features and functionality do NOT compensate for poor call quality Large networks require network audits and upgrades QoS must be implemented Best practice on the LAN Mandatory for WAN Inaccurate TCO and ROI calculations

23. Hosted by 1.Cisco 2.Avaya 3.3Com 4.Nortel 5.Other Who Is Your Preferred VoIP Vendor? Hosted by

24. Recommendations IP Telephony will happen – be ready Perform a network assessment  LAN, WAN, servers, cabling, management, power Choose a test bed for deployment  Assess what you learn from the test bed Review sample business cases, calculate TCO and ROI Success depends on planning and having an effective management infrastructure  “Measure twice, cut once” (and proactively manage the quality of the cutting)

25. Hosted by Thank You! Zeus Kerravala Vice President Enterprise Infrastructure The Yankee Group 617-956-5000 phone zkerravala@yankeegroup.com http://www.yankeegroup.com