Term Paper on "Voice Over IP"

Term Paper 10 pages (3916 words) Sources: 4 Style: APA

[EXCERPT] . . . .

Voice Over Internet Protocol Report

The Impact of Voice over Internet Protocol on Enterprise Communications

Voice over Internet Protocol (VoIP)'s market adoption and growth are being driven both from a cost reduction standpoint in addition to the agility this technology provides for companies looking to serve their customers through Internet-based service and support strategies. The mid-tier and low-end of both manufacturing and services industries however are leading adoption of VoIP technology, driven by the need to stay more focused on key customer relationships. The high end of manufacturing and services industries including financial services focuses on technologies that deliver enhanced data analytics, and the low end of the market is increasingly focusing on having a single view of their customers, strengthening relationships with them in the process. VoIPs' early adopters are more concerned with being able to stay connected with customers while significantly cutting the cost of calls and alleviating price premiums paid to traditional telephone service companies. These early adopters also have business models that are global in focus which further underscores the economic advantages of switching to VoIP as their communications technology.

The motivation the majority of companies have in adopting VoIP as a long-term replacement for Public Switch Telephone Network (PSTN) service include cutting the costs of internal and external communications, accomplishing lower bandwidth expenses, enabling 360 degree views of customers by using both data and voice-based applications that enhance business processes that are customer-facing, optimizing existing infrastructure resources including a heavy reliance on Service-Oriented Architectures (SOA) and Web Services, and most critical to it organizations, the simplifying of management of distributed architectures leading to a lower overall cost of operations. Taken together all these factors are driving the largest corporations globally to evaluate VoIP at the Chief Information Officer (CIO) level primarily as a cost reduction strategy. Yet the early adopters in mid-size and small manufacturing and services companies are relying on VoIP as the foundation for their multi-channels strategies, often linking their Internet sites and Call Centers to drive up customer satisfaction, strengthen their 360 degree view of their customers, implement more effective cross-selling and up-selling strategies online, balancing customer value and call center load in the process. This last point is accomplished when VoIP is used as the foundation for creating a synchronized online and call center strategy, where customers can seamlessly transition from one channel of communicating with the company to the other. The concept of Click-to-Callback is based on giving customers the option of either using website-based VoIP communication tools vs. calling in and speaking with a call center representative. An example of this in the services industries is the project completed by SouthTrust Bank, a small financial services company headquartered in Birmingham, AL. SouthTrust has successfully implemented this strategy while accomplishing a $5M reduction annually in telecommunications expenses, yet this savings only became known after the bank looked at how to use VoIP to pursue having a 360 degree view of the customer in addition to implementing disaster recovery over multiple locations. With traditional telephone services providers dragging their feet on VoIP service, SouthTrust Bank began piloting VoIP in the 2000-2001 timeframe and quickly realized it could be the foundation of their customer-facing strategies. There are literally tens of hundreds of smaller manufacturing and services companies that are in varying degrees moving to make their operations more efficient and cost effective, finding out that the level of customer responsiveness, customer satisfaction, cross-sell, up-sell and customer retention growth strategies are all possible when VoIP-based solutions are in place that unify all customer sales and service channels.

Both large and small companies on average spend over 30% of their total telecom services alone on voice services, with 66% willing to migrate to VoIP, according to Forrester Research and their adoption analysis of U.S. Enterprise-Class VoIP Services in Q1, 2007. (Forrester Wave 2007). Yet from the research completed by Gartner specifically in the financial services industry, there are only pilots occurring today in larger financial services institutions as there are many concerns regarding how secure VoIP is as the platform for completing financial transactions.

The context of the problem at the high end of manufacturing and services companies is resolving the paradox of how to attain the major cost savings without comprising the level of service possible on mature telephone technologies that can manage existing call volumes just fine. As the it departments of these larger companies are highly risk-averse and look for cost reduction first, and will only partially invest in customer-driven responsiveness measures, the piloting phase of VoIP in the larger manufacturing and services companies will most likely continue. The mid-size and smaller manufacturing and services companies however are quickly realizing that the many channels their customers interact with them through have even greater revenue growth potential than the cost reductions possible through replacing PSTN-based lines and systems.

In conjunction with VoIP pilots, the largest manufacturing and services companies are also evaluating how Web Services, specifically in the areas of transactions with financial intermediaries, and both commercial and consumer customers.

Web Services is the next generation application layer that will be used in conjunction with VoIP. The application richness of Web Services built upon VoIP as a platform shows considerable potential for smaller manufacturing and services companies who want to connect with, sell to, service and learn from their customers how to deliver greater value over time. In essence the combination of Web Services and VoIP for smaller- and mid-size manufacturing and services companies firms working with these technologies has the potential to completely re-order how selling and service are managed in this industry.

The Fundamentals of VOIP

VoIP is the transmission of voice and data digitally across the Internet. This is accomplished by coding, compressing messages and then placing them into packets for quicker communication across the Internet. After the voice data are transmitted to the destination through the network, in order to be received at the receiving end, it will be re-assembled using the process outlined below.

Step 1: Voice to digital data transformation

The first step in the process is the translation of voice data, which is by nature analog, into digital data. The voice data is translated into an IP packet for ease of communication across the Internet. Digitizing is accomplished through a variety of coding schemes. The current voice coding standard is mainly ITU-T G.711. The source and destination must use the same coding algorithm, so that the digitalized bit stream can be converted to understandable analog voice data. Digitizing can be done by the PSTN provider (telephone company), Internet Service Provider (ISP), or PC on the desk or the IP telephone set.

Step 2: Digital data to IP transformation

After the voice data is digitized into bit stream, the next step is compressing and coding the voice packet into specific frame, this is done by using algorithms to ensure accuracy and security.. The network processor will add control header and payload in the voice packet, and send the voice packet to the destination through Internet. Different from circuit switching network, IP network doesn't have dedicated link between transmitter and receiver, the control header provides network navigation information for the packet, the payload includes voice data, timestamp, and other additional information. Also, the re-assembly can be done by the telephone company, Internet Service Provider (ISP), or by the PC on the desk or the IP telephone set.

Step 3: Transmission

In this session, the entire network will receives the IP packet from the sender and transmits it to the destination within a specific time, the time can be different values in a specific range, it reflects the "noise" or interference in the network transmission process. Each node in the network checks the address information in the IP data, and uses this information to send the data to the next node. During the transmission, packets can be lost, damaged, or have errors. In the ordinary data transmission, the lost/damaged data can be retransmitted, but since VoIP is real time application, therefore a complicated error detection or correction method is needed.

Step 4: IP packet to digital data transformation

The destination VoIP equipment starts to process the IP packet after receiving it. A buffer is used to accommodate many voice IP packets. A company can through the use of VoIP tools change the size of the buffer; small buffer generates small latency, but can not adjust big jitter. Address information and other control information will be removed, only the original data can be reserved, the reserved original data will be sent to the decoder, and the decoder will decode and decompress the voice data into new voice data.

Step 5: Digital voice to analog voice transformation

The media player driver sampling the voice data and send it to the sound card, the sound card play. Figure 1 shows a simplified diagram of this process.

Figure 1: A simplified model of how VoIP works

Source: LWC Research (2006)

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