Skype slips into business

Two years ago, Mark Ehr and a few co-workers began using Skype to communicate between Proxima Technology’s Denver headquarters and its offices in Sydney, Australia, and Windsor, England. “I’d spent hours talking to Sydney,” says Ehr, director of product marketing at the 70-person software company. Luxembourg-based Skype’s peer-to-peer voice-over-IP software routes calls over the public Internet, offers good voice quality and supports conference calls — and it’s free, he says.

Soon, top executives began using Skype for internal calls. “That set the tone for the rest of the company,” Ehr says, and today Skype is the primary means of making intracompany calls at Proxima. Skype has also allowed Proxima to put off a planned migration to an internal VOIP telephony system.

Driven by convenience and potential cost savings, Skype and other consumer-focused public peer-to-peer calling networks have been quietly gaining ground in businesses, to the delight of some and the chagrin of others. While such public calling networks can cut costs, administrators must also sort through the management, compliance and security implications.

That needs to happen fast. As with public instant messaging services, peer-to-peer VOIP has taken root with consumers, who are increasingly using the programs at work. “Services like Skype are indeed coming into enterprises, brought in by users much in the same way IM services were brought in years ago,” says Irwin Lazar, an analyst at Burton Group. Currently, some 30 percent of Skype clients use the service for business calls, says Will Stofega, an analyst at IDC.

Skype and programs such as Microsoft Live Messenger and Yahoo Messenger With Voice combine instant messaging and file-transfer capabilities with voice- and videoconferencing capabilities, integrating those into a single, proprietary soft client on the desktop. Contact lists are built by sharing user IDs in the same fashion as instant messaging “buddy lists”. Most programs can only call users that have the same client, although a few, such as Gizmo, are more open.

Users particularly like the ability to see whether a person is online before initiating a call, says Lazar. “Voice mail is cumbersome and annoying. It’s a lot nicer if you can avoid voice mail by sharing presence information,” he says.

Skype, which claims more than 100 million registered users, established an early lead in public VOIP calling. It has traditionally offered the best voice quality, although it faces increasing competition. Skype was also the first to offer value-added services to connect VOIP callers to the public switched telephone network (SkypeOut) and to allow users to buy a local telephone number that PSTN users can call to reach a Skype soft phone (SkypeIn). “Skype is successful because it just works. … It is easy to use and seamlessly traverses network address translation [devices] and firewalls,” says Jeff Pulver, chairman and founder of Pulvermedia, which offers the competing Free World Dialup.

The advantages of peer-to-peer VOIP go beyond just cost savings, says Stofega. “From a consumer perspective, it’s a price game, but from a business perspective, it’s evolved into an application, a tool that can help business processes.”

For example, Peter Dout, IT specialist at US Robotics Corp, says employees use Skype to communicate from home with overseas offices in different time zones. “You don’t have to be in the office to take that Skype call,” he says. The company, which also sells Skype-compatible headsets, has formally embraced peer-to-peer calling and even includes a Skype client in its basic desktop system image.

But US Robotics’ use goes beyond interoffice calling. Customers can click on a button on its Web site and connect to its call center via Skype. Dout created a single Skype ID for support calls and uses SkypeOut to forward incoming calls from that ID to a regular PSTN number in the call center. Routing calls to the call center through the PSTN allows Skype calls to be logged and recorded just like any other incoming call. “The infrastructure I have set up for this call center all gets used. It’s the same as a regular land-line call,” says Dout. The configuration also enables US Robotics to manage just one Skype ID for all incoming Skype calls.

For Mary Galbavy, director of customer operations at US Robotics, the key benefit has been cost savings. In the US, incoming calls through SkypeOut cost US$0.017 per minute versus $0.05 via the 800-number support line. The big savings, however, are realized in its European call centers. In Italy, for example, incoming calls over the PSTN cost $0.46 per minute versus $.023 with SkypeOut. Since users also pay a charge when calling in, they have an incentive to use Skype, and 26 percent of all callers in Italy do so. “We cut our telephone costs by a minimum of 20 percent,” says Galbavy. Worldwide, “at least 5 percent” of US Robotics’ customers are using Skype, and customer use has been growing at an annual rate of 175 percent, she says.

Proxima’s employees also use peer-to-peer calling to avoid toll charges when traveling. Users make calls via their laptops rather than incurring long- distance or mobile roaming charges, especially during trips abroad, says Ehr.

Proxima’s CEO recently purchased a dual-mode PDA phone so he could use Skype’s Pocket PC client over Wi-Fi — and uncovered a potential problem with peer-to-peer calling. The PDA lacks the power required to make Skype calls. “If you are the originator [of a call], your machine is doing all of the processing,” Ehr says, and conference calls increase the workload even more.

Skype and similar programs also lack centralized management capabilities, such as the ability to review and retain call detail records, and they may represent security risks, says Lazar. “For companies subject to Sarbanes-Oxley or HIPAA, that has been the showstopper,” he says. For other organizations, however, the choice is less clear.

Marvin Wheeler, chief operations officer at Terremark Worldwide, a collocation services provider in Miami, says he sees remote users increasingly calling in over services such as Google Talk or Skype. “For spot use, it’s great,” he says.

Peer-to-peer voice services are still consumer- focused and offer few features to support business needs. Most lack a well-designed, central directory, so each user must maintain his own list of user IDs. Skype users must set up a prepaid account to cover per-minute SkypeOut charges or monthly fees for a SkypeIn number. Skype does allow administrators to set up a common pool that specified employee accounts can draw against, but invoicing and detailed call billing aren’t available, and individual user IDs must be configured and administered individually. “I need an account. I want to be invoiced,” Ehr says.

Wheeler is wary about the security implications of peer-to-peer calling. “For consumers, [the networks] are great. On a business level, you have to watch them. There’s also a business risk involved,” he says.

With Skype, for example, calls are encrypted, but the encryption scheme has not been subject to open, public review. Skype, which uses multiple ports to get through firewalls, is particularly difficult to block. It also offers an application programming interface (API) that developers can use to create presence-aware applications that can traverse the Skype network. Since Skype supports file transfers, it’s possible that “Skypecasts” could transfer copyrighted content into or out of the enterprise, says Lazar.

However, security concerns may be overblown. “If the flaws were easy to exploit, someone would have figured out how to do it by now,” Lazar says.

Michael Jackson, director of operations at Skype, says the latest client disallows access to the API by default and allows the file transfer feature to be disabled.

Eventually, integrated clients within businesses will become common, says Lazar. For example, products like Avaya’s Converged Communication Server and Microsoft’s Office Communications Server 2007, slated for release next year, offer a similar experience to services like Skype for internal calling. However, such products typically won’t work with public peer-to-peer systems such as Skype.

With the gradual adoption of a unified client for internal use, users will benefit from using presence awareness with VOIP calling. As was the case with IM systems, however, administrators could face the prospect of having two integrated communications clients on user desktops — a private one for internal use and a public one for free, peer-to-peer calling outside of the company. Eventually, clients for internal use may offer some degree of federation with public peering services such as Skype, Lazar predicts. But in the interim, peer-to-peer VOIP services are likely to continue gaining ground, particularly in organizations that haven’t yet moved to IP telephony and in small and midsize businesses where the auditing and controls are less strict.

The benefits are just too compelling for users to ignore, says Stofega. “It’s a cheap, simple application that gets the job done.”

This story, "Skype slips into business" was originally published by PCWorld.

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