Frost & Sullivan

Frost & Sullivan: Accelerating Adoption to Hosted IP Telephony




The emerging convergence of voice and data has introduced profound changes in the enterprise telephony landscape. Two dynamic and evolving system designs are making inroads on traditional phone systems by fully satisfying small enterprise, medium enterprise, and branch office communications requirements: the IP-PBX and, alternatively, hosted IPT (IP telephony) systems.

IP PBXs and hosted IPT systems represent the evolution of the traditional TDM PBX and Centrex architectures that were prevalent until the end of the previous decade. Therefore enterprises willing to migrate away from circuit-switched PBX systems will have to consider a migration from their existing solution to either one of the two next-generation alternatives.

Typically, the decision to migrate depends on a set of circumstances that is particular to each business. Therefore, it is an event-driven phenomenon that is typically triggered by the folloiwng occurrences:

  • Completion of the depreciation cycle of older TDM-based PBXs
  • Expiration of existing TDM Centrex contracts
  • Office moves and/or consolidation
  • Greenfield opportunities
  • Gradual enhancements / replacements of newer PBX due to other factors (more mobile workforce, higher voice traffic volumes, etc.)
  • “Special situations” such as government stimulus programs or special one-time offers made by vendors to help migrate their installed bases toward IP

Another trigger will be the replacement cycle. The Y2K replacement activity disrupted the age distribution of the installed base. Consequently, a large number of TDM PBX systems were replaced before their “due date” (i.e., before being completely written off from an accounting perspective or before becoming obsolete from a CIO point of view). A considerable number of decision makers opted for that choice because it made more sense to buy new rather than pay an expensive upgrade fee to make their systems Y2K complaint. From 2006 onward, the bulk of the PBX systems that were new or updated in anticipation of Y2K are becoming due for an upgrade or replacement, and this has been an additional catalyst for the replacement opportunity.

On a broader scale, a paradigm shift is taking place with the emergence of the packet-based solutions, and the viability of converged voice and data networks. An IP PBX or a hosted IPT solution, do not merely represent new communications systems, but also key enablers of new business, and a cost saver that improves business processes. CIOs and CTOs will realize that VoIP is more than just transporting voice IP packets over a LAN. The key relies on integrating those voice packets with second-generation IP enterprise applications, which will enhance employee productivity and hence become a competitive advantage. In seeking out a new solution, enterprise decision makers typically need to have the following set of objectives in mind…

To find out what the objectives are and to continue to read this white paper, click the download pdf button.

About Frost & Sullivan

Based in Palo Alto, California, Frost & Sullivan is a global leader in strategic growth consulting. This white paper is part of Frost & Sullivan’s ongoing strategic research into the Information Technology industries. Frost & Sullivan regularly publishes strategic analyses of the major markets for products that emcompass storage, management, and security of data. Frost & Sullivan also provides custom growth consulting to a variety of national and international companies.

About Citel

Citel enables SMBs, large enterprises, and service providers to realize the cost and productivity benefits of IP telephony while at the same time leveraging their existing PBX infrastructure investment. Businesses with single or distributed locations and PBX vendors can now deploy next-generation IP applications and services at their own pace, with little business disruption. Service providers can deploy hosted IP telephony services quickly, without having to “rip and replace” existing enterprise PBX handsets and LAN cabling. Citel is a privately-held company with corporate headquarters in Amherst, New York, and offices in Concord, Ontario and Loughborough, England. For more information, visit