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A Cisco Telephony Architecture Evolution

Chapter Description

This chapter introduces the concept of ROI, and provides the background and reasoning behind Cisco's decision to migrate to an all-IP network.

IP Telephony replaces standard public switched telephone (PSTN) networks (PBX), using the Internet to send audio between two or more users in real time and allowing users to communicate via an IP telephone. Replacing conventional circuit-switched technology with a more cost-effective and efficient packet-based architecture, the Cisco Architecture for Voice, Video and Integrated Data (AVVID) transmits data, voice, and video over a single network infrastructure.

With 23 Expansion Port Network (EPN) PBXs coming up for renewal throughout the various Cisco facilities, the organization needed to make the decision whether to renew the leases or to migrate its phone system to IP Telephony. After conducting a return on investment (ROI) analysis and determining that it would be much more cost effective to migrate, Cisco began to put the team together to develop the processes that would ensure a smooth transition.

The Cisco AVVID network infrastructure is the foundation that is essential for rapid and seamless deployment of emerging technologies such as IP Telephony and other new and evolving Internet business solutions across the enterprise. Built on the Cisco AVVID network infrastructure, the AVVID IP Telephony solution brings the promise of high-quality IP voice and fully integrated communications to fruition by allowing data, voice, and video to be transmitted over a single network infrastructure.

Cisco has always been its own "first best customer," integrating its own technologies typically at least 18 months ahead of market requirements as well as using that opportunity to test and build new feature requirements.

Operational Benefits of Cisco IP Telephony

From a user's standpoint, Cisco looked to IP Telephony to increase personal and workgroup productivity, improve its ability to respond to customers, and reduce operational costs. Because the IP phone registers itself whenever it is moved, users can take their phones with them, creating a virtual office by plugging into spare data wall jacks and receiving calls regardless of their current location. They can access and self-manage their own set of phone services while maintaining one phone number. Also, because IP Telephony uses the same standards as data communications, both PCs and phones can access voice mail, check e-mail, view video broadcasts, and enable other IP Telephony applications on the same shared network.

For network managers, the process of managing a converged voice and data network becomes a much simpler task. Centralized voice services provide the ability to extend the functionality of the corporate IP voice, video, and data solutions to remote office locations without having to invest heavily in additional infrastructure and software for the remote offices. This gives the central office (CO) a greater degree of control over what is added to the network and ensures greater systems integration and security.

In addition, the cost of relocating a phone or changing phone numbers when an employee moves—a significant expense that can cost up to U.S. $90 per phone—is eliminated. Also, because IP Telephony is a software application, enhancing its capabilities in a production environment is a matter of upgrading software on the server platform, thereby avoiding expensive hardware upgrade costs.

Table 1-1 demonstrates the cost reduction and operational savings generated by the streamlined process of managing and facilitating IP telephone adds, moves, and changes.

Table 1-1 P Telephony Impact on Adds, Moves, and Changes: San Jose Campus IT/Telecom Savings: Fiscal Year 2002 (August Through June)





Project moves




Individual moves




Adds (new hires/configurations)












WPR** Savings




Reduction of contracted services to support MACs





Fiscal Year 2001

Fiscal Year 2002


Type of Service

Average $/Move

Average $/Move


Disconnect/reconnect systems support




(Approximately 91 percent of expense reduced)




Other Benefits

Move process time shortened

Zero downtime of phones

Higher client satisfaction

Integration of resources



*Cost variance between IP and non-IP MACs

** WPR = WorkPlace Resources

Cisco calculated efficiencies in both resource and cost savings based on the following time- division multiplexing (TDM) market assumptions:

  • From 250 to 10,000 phones at one site per month

  • PBX maintenance—U.S. $3.50 to U.S. $2.50 per port with 33 percent ports, not phones

  • Move/add/change activity—U.S. $90 per move/add/change (110 percent of phones at Cisco move each year)

  • Voice mail support—U.S. $2.20 to U.S. $0.90 cents per phone

  • Software upgrade support—U.S. $0.44 cents per phone

  • PSTN support and coordination—U.S. $0.50 cents per phone

  • LAN/WAN support—U.S. $5.00 to U.S. $0.25 cents per phone

Factoring in the preceding assumptions, the IP Telephony Remote Network Management (RNM), the service that monitors the IP Telephony network remotely, was identified as further reducing ongoing total cost of ownership due to IP Telephony eliminating support overhead and combining LAN/WAN, PSTN, and PBX support, as shown in Table 1-2.

Table 1-2 Impact on Total Cost of Ownership

PBX Support Comparison

Traditional TDM PBX Support

IP Telephony-RNM Telephony

PBX maintenance

Upgrade support

PBX management


PSTN management

LAN management

Remote site management

Infrastructure changes

Maintenance fees

Sold separately

Dispatch or labor

Dispatch or labor

Not included

Not included

Not included

Not included

Cisco SMARTnet

Cisco SAS






Priced separately

Ongoing support is made much easier with the migration to IP Telephony, and relative costs are reduced significantly. Figure 1-1 provides a view of the expected ongoing support costs for PBX versus IP Telephony.

Figure 01Figure 1-1 Ongoing Support Costs for PBX and IP Telephony

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