Sensitivity Analysis Of Hosted vs. Premises IP-Telephony TCO/ROI

Dolsky, Ken; Williams, Warren
December 2005
Business Communications Review;Dec2005, Vol. 35 Issue 12, p40
Trade Publication
The article compares hosted and premises IP-telephony by using the total cost of ownership (TCO)/return on investment (ROI) analysis. The TCO/ROI tool compares the financial effects of different premises systems and hosted services offers and determines the areas of greatest impact on ROI and cash flow. The breakout of the four cost categories for the purchased system costs over 5 years show that human resources cost accounted for 41.4% followed by access and toll costs and equipment and installation costs. The ROI tool assumes that managers in a CPE system environment will incur corresponding resource costs in evaluating planning and managing software application upgrades. To determine the sensitivity of the ROI to the resource requirements, both the initial and ongoing planning resources for the premises- based system were decreased by 50 percent. As a result the ROl of the hosted service was reduced by 54 percent. The findings reveal that the cost factor of toll bundling has the largest effect on hosted service ROI.


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