Making The VoIP Call

Two years ago, Barry Goldstein found himself at the foot of a path he could not refuse to take. It was time for Goldstein, the president and CEO of CT Networks, a Hauppauge, N.Y., solution provider, to move into the VoIP market.

The 23-year-old company had its roots in traditional telephony, but Goldstein began to see that the road CT Networks was traveling was coming to an end. "We come from the legacy PBX world: It's a dead model. It's gone. It's history," Goldstein said. "I started to see opportunities falling away to hosted service providers. That was my first clue that this game was going to be about bandwidth."

That's when Goldstein made the decision to invest in the VoIP and data integration expertise his company would need to take the new path toward IP communications. That's also when a new set of decisions presented themselves: Once a solution provider like CT Networks decides to move toward VoIP, it sees quickly that the path actually diverges into three, with an array of potential vendor partners representing each one.

An IP-PBX can be a dedicated piece of equipment from vendors such as Avaya or Cisco Systems. Solution providers can also integrate their own system using software such as the Asterisk open-source IP-PBX platform. Or they can take the hosted approach, offering services from companies such as 8x8, Covad Communications Group or M5 Networks.

Each path has its own benefits and detriments, which means solution providers need to choose based on their business models, the level of investment they wish to make and the types of customers they want to go after. Goldstein took a blended approach: He built an IP telephony practice on partnerships with Cisco, Inter-Tel and NEC and added newer players in the hosted VoIP space such as Covad and M5 to target smaller customers.

The journey, while necessary, wasn't easy. "It's been incredibly painful for us," Goldstein said. "To become authorized by Cisco to get IP telephony reseller status—we're Premier-certified in IP communications—you have to have many Microsoft engineers, many Cisco engineers, many sales experts, parts experts and IP voice experts."

The investment in new salaries alone in the first year of CT Networks' transformation totaled $400,000 to $500,000, part of a year-one investment Goldstein puts at close to $1 million. It's a move that seems to be paying off. CT Networks' IP communications practice has reached about $20 million in product and services sales. "We're just beginning to reap the benefits now," he said. "It's just starting now that we are winning the big deals."

Like CT Networks, D&D Consulting, a 15-year-old networking and security integrator in Albany, N.Y., also saw the move toward VoIP as a matter of survival. "To stay competitive in the networking space, you have to get into VoIP. Otherwise, you're going to go out of business," said Chris Labatt-Simon, president and CEO of D&D. "The choice was either do it or get left behind in networking, which is a major piece of our business."

It took three months of soul-searching to determine what path and what vendors were best for D&D, a process that included looking at the solution provider's current capabilities to determine what holes needed to be filled and whether potential vendor partners would be able to fill them, Labatt-Simon said.

D&D's path to VoIP now lies with a single partner—Avaya—largely because of its service and support capabilities, Labatt-Simon said. The company expects to begin selling IP communications solutions within the next few months.

What solution providers like Goldstein and Labatt-Simon illustrate is the importance of up-front research and planning. The investment in both money and personnel can be substantial, profits are not likely to come immediately and the right vendor partner can help make or break a difficult transition.

Next: Keeping It In-House