Back to Air Transport IT Review - Issue 1, May 2010

Driving costs out of your voice infrastructure

Thanks in large part to the increased migration to IP, there is a new model for voice services. And it has proven potential to enable radical rethinking and significant cost saving opportunities.

The old paradigm saw voice as dial tone, a commodity, a cost to the business, and an isolated technology. Now we can use voice as an application, a business enabler to be commercialized, and a value-add to the network.

But even though migration to IP can deliver significant savings and productivity improvements, quantifying these benefits is key to understanding Return on Investment (ROI). This need to understand the ROI is behind the growing practice of Voice Cost Optimization.

Voice Cost Optimization (VCO)

Voice costs typically represent a significant part of the overall spend on IT and communications across the air transport sector. Airlines, in particular, have highly distributed voice operations with local contracts managed by local budget holders. They like the apparent sense of security that local providers may offer.

However, relying on local providers can also lead to non-standard techniques and functionality, no control of costs, complex support processes, and heavy management overhead. It can be difficult to maintain an accurate picture of what solutions are actually in place across the organization, how they interact with other processes, and what investment is needed to keep them working as expected.

Devil in the detail

Voice Cost Optimization transforms an organization's communications infrastructure and processes by allowing an airline to gain a complete picture of the Total Cost of Ownership (TCO) associated with their voice services.

It identifies previously unknown costs and associated hidden risks - particularly from legacy equipment support - while suggesting changes to improve service resilience and increase functionality.

The Voice Cost Optimization study also goes beyond pure cost analysis. It also provides a view on the existing infrastructure and an inventory of contractual engagements from the customer.

The assessment process includes five key elements:

Scoping
Preparation and planning
Information gathering
Assessment
Recommendations

All of these elements are obvious. But, of course, the devil is in the detail. For example, different groups within an organization have different user profiles. These profiles must be understood, and a truly holistic picture of voice requirements must be constructed before the correct solution for an airline's business can be identified.

Employees who travel frequently, for instance, will require mobile connections, while office workers simply need a standard, but utterly reliable service. Ground workers, on the other hand, must have a strong communications network from the tarmac.

Contact centres should also be considered. They are a key point of interaction with passengers and are increasingly used by airlines to provide an opportunity for increasing revenues. VCO analysis can identify contact centre cost reductions through infrastructure improvements, as well as explore the potential for auxiliary revenue generation.

Out of the dark

With complete global visibility of the cost base, it becomes easier to address specifics such as administrative expenditures. It also makes it easier to reveal economies of scale that can only be realized though supplier consolidation.

While cost reduction and management is a critical factor in the Voice Cost Optimization process, perhaps of equal importance is the issue of network resilience. Once again, it's down to visibility and control.

As voice services are standardized and the number of suppliers is reduced from dozens to one, for example, more opportunities to leverage new technologies present themselves. an airline's existing MPLS (Multiprotocol Label Switching) network can be utilized to allow Voice over IP (VoIP) adoption, for instance. By routing as many calls as possible over the IP network in this way, efficiency is enhanced and further cost reductions can be achieved.

Extra scope for improvement

Voice Cost Optimization brings other advantages too:

Service levels can benefit. Homogeneity and consistency of service levels across multiple sites can deliver greater reliability, resilience, and security of communications.
Resilience is enhanced through tighter contract control over a smaller number of vendors. The risk of costly and disruptive disputes can be substantially reduced, while day-to-day handling of maintenance can be streamlined.
Functionality is increased by ensuring all offices and outstations have access to the same processes. Out-of-date and inefficient processes are eliminated.
New services and opportunities can be exploited across a network that is homogenous, including adopting functionality that may not be possible for a network that is reliant on multiple vendors. Extra clout is also available if the whole organization is dealing with one vendor.
Mobile integration becomes easier to facilitate within a single network. For example, Wi-Fi networks can be exploited for greater cost-efficiency and reach.

And there's one final key advantage of Voice Cost Optimization: it is the ability to use homogeneity to plan a long-term roadmap for IT and communication services. By basing this roadmap around industry best practice, airlines can ensure they meet the complete needs of the organization, today and into the future.

Revealing hidden costs

Within the air transport industry, voice costs are a hidden liability. However, Voice Cost Optimization can reveal previously hidden costs and can reduce the complexity of multiple contracts, saving organizations money and providing executives with the visibility they need to gain greater control of capital expenditures.

The experience of SAS

SAS is one of many SITA customers benefiting from a radical rethink of their voice infrastructure, thanks to VCO.
Under an agreement that provides services to 800 users in 40 locations across 23 countries, SITA reduced SAS's voice service contracts from more than 100 to just one. In the process, US$ 3.6 million was saved.

The scale of the problem - unveiling the costs

The scale of the potential for problems facing organizations with a highly distributed voice organization can be seen from this sample PBX landscape.
Out of 50 PBXs, some 15 are of an unknown type. The rest are spread across a range of manufacturers, with recent capital expenditure still made across multiple brands.
Voice Cost Optimization unveils and clarifies the issues and costs.