VoIP: ROI in seven months for car dealership

Replacing ageing phone systems with Voice over IP private automatic branch exchanges (PABXs) has become common even for small companies, with cost savings often a major goal. For Western Australian car dealership chain DVG Automotive Group, however, the ability to move phone calls over the data network was just the beginning of a project that's on track to pay for itself in as little as seven months.

Representing brands including Nissan, Mitsubishi, Hyundai, Chrysler, Jeep, Dodge and Peugeot, DVG employs more than 250 people at five retail locations throughout the greater Perth area. Its headquarters are located in Morley.

In such a heavily sales-based business, phones are being used almost constantly at DVG, both to field enquiries from customers and to make sales-related calls to prospects and suppliers. To ensure customer service was up to scratch, for more than three years DVG had paid thousands of dollars monthly to have 16 handsets monitored using a third-party service that records calls for later review.

Although it worked well, the previous solution was expensive, costing more than AU$5,000 a month to provide recording capabilities for the handsets, according to IT manager Ben McIntyre. "You could almost use the cost of that phone call recording system to justify the cost of a new system," he says.

DVG had been investigating the opportunities posed by VoIP on and off for nearly two years. However, coupled with the ongoing costs and lack of features in DVG's existing Commander PABX -- a 20-year-old monster running over equally old cabling -- by last year it had become clear that a move to VoIP, and potentially a more expansive customer relationship management (CRM) application, was in order.

Keeping it in first
Consideration of options for the replacement system initially centred on Cisco Systems, which offered a broad VoIP capability that suited many of the company's requirements. However, adding call recording functionality to a Cisco environment would have required thousands of dollars' worth of additional equipment as well as ongoing management costs.

DVG considered similar offerings from NEC and Samsung, but soon found its preferred solution in Avaya's IP Office 406, a PABX targeted at small- and medium-sized businesses that combines legacy handset and VoIP support. More importantly for DVG, the IP Office solution incorporated call recording capabilities, via Avaya's VoiceMail Pro and IP Office ContactStore add-ons, at minimal additional charge.

This solution promised a return on investment (ROI) within months based only on savings from that feature alone.

With this knowledge, DVG has pursued a "slowly, slowly" approach to its VoIP migration -- so slowly that, in the initial phases of the rollout, it has retained its existing phones and faxes. Rather, the majority of its effort has been focused on issues such as ensuring sufficient bandwidth is available so that call quality isn't compromised.

"At lot of the costs in IP are in the switching, plus the redundancy of making sure the system is resilient and stays up," says McIntyre. Use of virtual LANs (VLANs) has allowed DVG to segregate voice and data traffic, helping keep performance predictable. Reinforced by an ongoing relationship with Telstra -- which supplies DVG with its symmetric Business DSL communications links -- McIntyre says this process has been less onerous than many might expect.

"There are a few steps to ensuring that IP packets are getting from end to end in the right amount of time, and the calls have the right quality on them," he explains. "If you've got a good service level agreement with your data network provider, they should be able to take care of it and make sure you've got all the right settings. As long as you're calculating the right amount of sessions going over your link, you should be alright."

The right model
Eight months after the project began, DVG has VoIP up and running on around 95 handsets in its Melville and Wanneroo sites, and is in the process of bringing up another 80 handsets in its main Morley City location, which will be upgraded during planned renovations in the second quarter. The company's other two sites, in Maddington and Midland, will also be upgraded to the VoIP system during planned renovations down the track.

Just based on cost savings for the call recording functionality, the project is expected to pay for itself within the first 12 months -- not counting savings from calls, infrastructure management and the many other costs of PABX management. DVG handles hundreds of calls every day, with around 250 recorded calls per month consuming around 100MB of disk space (salespeople can turn off the feature if the customer requests it).

The total cost for VoIP and cabling is around AU$40,000 per site, excluding its Morley headquarters -- approximately AU$65,000 will be spent.

With the call recording savings already secured, DVG is also investigating ways of making better use of the IP Office system's other features. For example, automated voice response menus will allow the dealership to divert many incoming calls from reception straight to the relevant department.

A mooted system for indexing each car during service would allow customers to dial into the phone system, punch in their ID number and be automatically informed whether their car is ready for pickup. "We've got a few ideas for these," says McIntyre.

Wireless LANs -- which allow phone calls to be taken from wireless VoIP phones and PDAs anywhere on the various sites -- are still yet to be deployed, but tests in Wanneroo and Morley City have proved promising. The 802.1x authentication standard is used to ensure that users on the network are all authorised and their network access duly restricted. "Based on what their group policy says, we can tell users what part of the network they're allowed to access," McIntyre says.

Even with the old handsets and faxes still in place, the significant benefits the IP Office rollout has delivered are proving more than enough to justify DVG's involvement. In the long term, McIntyre envisions a growing role for VoIP-capable phones, which have proven extremely user-friendly in limited tests. "The handsets are just easier to use," he says.