Many people are looking for ways to estimate the financial potential if they move to SIP-based network architectures. As we are building many of these SIP business cases these days, I thought about sharing some of the key basics we use. I hope this might help you create your business case.
We follow a very simple principle. First, you need to understand where you are today. Your network “as-is”. Your network present state. The objective of this first step is to determine your voice network capacity, measured in TDM-trunks equivalents. Second, to estimate your future network state, you will apply an SIP concentration 1: N factor to estimate your new network capacity needs. Your SIP network architecture requirements. Third, by knowing your current costs and understanding what your future cost will be, you will estimate the financials of your business case. And if you know the equipment upgrade investment necessary to support your future network architecture, a compelling SIP economic model for it.
Your Network Present State
Create a list of all the types of voices services you have in your network today. Typically, these are PRIs, Phone Lines, T-1 Voice for Inbound (800) or Outbound services, etc. Group them enterprise-wide and separate access components from their station or phone numbers. Below is an example case so you can see what you need:
There is two kind of voice services these days. Those that have built in concentration 1: N, like PRIs, and those who are related directly 1:1 to the user, like a Phone Line or Centrex-type of services.
For services with concentration, you need to multiply the numbers T-1 (1.5Mbps) equivalent access associated with such services times 138x. This factor can be a number between 115 to 230, we use 138 for a well-engineered network.
For services with 1:1 relationship, you just multiply the number of telephone numbers or stations associated to each one of them times 1x.
Using the example case above, here is how the calculations look:
In this case example, the current network capacity in TDM-Trunk equivalents is 2,978 trunks.
To finalize your network present state step, just add up the cost associated to each of your services. Something like this:
Your Future Network State
In this step, you will calculate the equivalent SIP-based architecture capacity and the costs associated with your future network state.
To determine your future network capacity needs, divide the number of voice TDM-Trunks equivalent you calculated, as per step above, by an SIP concentration factor of 6 (this can be a factor between 5 to 20, we typically use 6 in our cases). This calculation will give you the minim number of concurrent SIP trunks needed to support your current network traffic into your future network architecture.
On top of that, you will need to calculate new access bandwidth needed for your future SIP architecture. Typically, an SIP architecture is centralized so your SIP-PSTN connectivity will happen in one (or two or more for redundancy and resilience purposes) central points in your network. The bandwidth needed at that location(s) will be the number of SIP concurrent trunk you calculated above times 0.032x (Mbps).
Using the previous example for these calculations, it will look something like this:
Now, the cost for your future network. The concurrent SIP trunk costs will be the number of concurrent SIP trunk you need and multiply the rate you got from your service provider. Based on our database, we typically benchmark at $15.00 per concurrent SIP trunk. Check with your service providers if you need something that’s specific to you.
Now, you need to add fresh bandwidth costs for the access portion of this service we just calculated. Assuming you already have IP access at all your locations, and enough bandwidth available on your current data network*to reach your central hub in your architecture, then the new bandwidth for your future architecture will be the required bandwidth times the rate you get from your service provider. These are the Ethernet access costs. Based on our database, we benchmark this cost at $1,000 per 10Mbps.
Using the same example above, the financials will look something like this:
Note*: If you do not have QoS IP network accessing all locations in your network where SIP traffic will be routed from, you will need to add those data IP point access costs into your case.
Your SIP Business Case
Now that we have your current network capacity estimated and your current network annualized costs, and, your future network requirements and costs calculated, all you need to do is to combine your calculations to complete your SIP business case. Following the example, here is a graph showing the comparison of current vs. future network state in yearly costs and the savings achieved through the SIP-based future architecture:
So, in this case, there are about $320,000 in savings per year if you move to an SIP-based network architecture.
Naturally, to achieve this future SIP-based architecture you will need certain infrastructure refreshment. Session Border Controllers (SBCs, if not provided by the service provider), IP Phones, PoE (power over Ethernet) Switches, etc. Following the same example case above, if we assumed an investment needed of $1.0 million to upgrades your equipment infrastructure and services and a 5 year period, then your future network architecture economic model will look something like this:
In the case in example the $1.0 million in investment generates $1.6 million hard dollars savings, you will break even the project at around year 3, with $0.6 million in net savings, within the first 5 years period. The whole upgrade is self-funded, and this customer case I used as way of example got as well all the additional operational benefits of the new technology. Awesome!