After decades of being locked into the limitations of time division multiplexing (TDM) the humble private branch exchange (PBX) is morphing from telephony basics into an IP-based, enterprise communications gateway. The future of the PBX is as a converging point for every kind of device from desktop to wireless and mobile, and rather than the box in the IT cabinet calling the shots, it's about independent software that automates processes and allows applications to talk to each other. As the business case for integrated ondemand services becomes clearer and the cost of hardware and applications plummets, vendors and businesses are being forced to think beyond quick fixes. While much of the market is still focused on hybrid or makeshift solutions, with cloud computing taking some of the pressure off, full IP PBX is increasingly being viewed as “a strategic enabler of revenue growth and cost savings”. According to the February 2010 Global Industry Analysts (GIA) market report, IP PBX sales worldwide are expected to reach $US9.05 billion by 2015, driven by the need for “greater operational flexibility, reduced telephony transport costs, and enhanced ability to acclimatise organisational trends”. They say there's no gain without pain, and that's been evidenced by the fact that a number of those championing the IP PBX wave only five years ago are no longer with us, either because they were pushing proprietary technology, got the cost model wrong, or the market wasn't ready. For example, GDC Communications and Cogent, both huge players in the local PBX market, are gone, and telecomms giant Nortel took a dive last year, and was acquired by Avaya. Ericsson opted to partner with LG rather than have a direct presence and a number of smaller players, who imagined they might make a killing in the transition to IP, also ended up in the trade media obituary notices. Software sets the scene Vendors who have leveraged their switch and router-based hardware to get into telephony, and traditional PBX developers who have converged data streams and smart software into the mix, continue to evolve. Every other month there's an announcement of new or revised strategies, directions and partnerships, or the latest customer premises equipment (CPE), software or cloud-based services. And while there's inevitability about the march to full IP integration, capacity constraints in both internal and external networks are limiting market growth. While many smart enterprises are migrating to digital IP phones and softphones, the reality is the plain old analogue telephone still dominates most desktops. And hybrid approaches, enabling old and new solutions to coexist, still dominate the local market, despite being an interim measure. While the GIA report says IP-enabling existing TDM infrastructure with IP station ports is prevalent, it warns there's a limited timeframe before changes in data communications force businesses to a full IP, IP-Centrex or cloudbased PBX solution. At the hardware heart of a modern PBX system you'll typically find a dedicated computer-based host, 19-inch rack-mounted telephony servers or small router-sized internal IP Enterprise Communications Systems (IPECS) deployed at key points on the network. Essentially these servers or gateways integrate and manage telephony, data and video across modern structured cabling systems, connecting desktops and devices regardless of whether the user is in the building or a mobile or wireless link on the other side of the world. Ideally the modern PBX will enable quality of service (QoS) for sensitive or mission-critical applications such as video, and provide cost savings with low-cost to no-cost voice over IP (VoIP).  Managing requirements is smart software, either loaded on the system, the desktop, the device or accessed from the cloud, that pulls together and distributes applications and data streams to where they're needed. It may be the caller's cellphone or landline number that triggers such actions, dragging information from customer records and management (CRM) systems to populate pop-up screens. This kind of activity, commonplace in call centres and customer support operations, is enabled by caller line identification (CLI) and increasingly by SIP (session initiation protocol) or a combination of both. However, the catch-cry of IP everywhere is still not a reality in the local PBX market. While most modern systems have VoIP capability, there are few pure IP PBXs in use; and VoIP, positioned as the great toll call cost saver, has been slow to gain ground. By various estimates only 14-18% of businesses are using the technology, perhaps one of the lowest uptakes in the world. Consequently seamless IP integration on the corporate structured cabling network, a goal long championed by Alcatel, Siemens, LG, Ericsson, Cisco and others, has had a much slower evolutionary path than first envisaged. Today the main suppliers of PBX technology include Avaya, LG-Ericsson, Alcatel, ShoreTel, Panasonic and Samsung. At the top end there's Cisco, mainly through its relationship with Telecom Gen-i, and Microsoft with its Office Communications Systems (OCS) software. Then there's a raft of companies like Atlas Gentech in the ‘up to 100 employees' segment who specialise in integration, bringing hardware, software, infrastructure and connectivity together with carrier partners into customised packages. Compelling case for video The business case for videoconferencing and workgroup collaboration as part of the PBX mix is now compelling as an alternative to long-distance sales or business meetings. However, it's still mainly high-end users who've been able to make regular and reliable use of this. Industry veteran Peter Gordon, national manager with Atlas Genteck, says the slow evolution of our infrastructure is inhibiting the uptake of IP-based solutions and impacting potential growth across the entire industry. Ancient switching technology and the lack of fibre in the Telecom network are major constraining factors. “The public switch network infrastructure is one of the most antiquated in the world because it's still largely copper. The only other country in the world still using the NEC NEAX exchanges is Zimbabwe,” he says. “Video communications requires a minimum of 256kbit/sec each way just to talk; with 20 people on a video conference it can't be done unless you have a dedicated network or leased line, and that's still very expensive,” says Gordon. Greg Malone, dealer manager with Samsung distributor GTL Networks, agrees ‘presence' and being able to see who you are talking to are growing in importance as the cost of moving people around the country for sales calls increases (“Video is huge now”). Traditionally he says multi-site presence across an entire network, where you can have internal chat, videoconferencing, whiteboards and screen sharing, has only been available at the corporate end of the enterprise market and costs “big dollars”. That's changing with the release of products like Samsung's OfficeServ Communicator for as little as $200 per seat. The dedicated end-to-end enterprise system can trigger applications and automate decisions about when and where to call a person and whether to escalate from a chat session to voice or video call. While the Samsung solution is proprietary, Malone doesn't see that as a problem. “It's a positive thing, in that we have all the tools and know it all works together within a managed and controlled workplace environment.” The system keeps records of all chats and emails, as this can contain important business records and discussions, and protects the company from misuse of the tools. While the big players tend to want to run the game themselves with proprietary applications and customer premises equipment, there is an increasing pull to openness. SIP it slowly Just as the advent of IP (Internet protocol) transformed the computer industry by separating applications from PC operating systems, SIP (session initiation protocol) is making telephony applications independent from PBX hardware. The growing acceptance of SIP, along with cloud computing or software as a service, has opened the way for new enterprise voice and IT vendors, broadband-hosted VoIP and specialised software providers to enter the market with offerings more suited for small to medium businesses. Locally, for example, World Exchange and IT Telenet offer a range of virtual PBX services over their own ISP-style infrastructure, connecting client offices and networks nationally or internationally at a much lower cost than many of their rivals. In the PBX environment SIP can assist with network awareness or telepresence, where phone calls follow an individual, triggering the data or applications that can best equip the sales, service or support agent. Avaya New Zealand manager Hamish McNee says the SIP architecture breaks everything apart, rather than having to configure software inside a PBX box to work with each new handset or application. “You simply build an application and as long as both parties confirm to the Open SIP standard, you get plug and play. You create an enterprise-based cloud where everything works together without having to have proprietary or customised interfaces, ”he says. Since acquiring Nortel after its fall from grace, Avaya has devised a roadmap to protect customer investment in contact centre, data network switching and the PBX space. This is based around Avaya's Aura architecture, which is open enough to allow “a Cisco PBX in Wellington to work with a Nortel system in Auckland and an Avaya in Christchurch”. While SIP can help drive costs down, Avaya sees unified communications (UC) as the key to productivity, which also helps to reframe the PBX in the ‘multi-modal communications category'. Over time, McNee says the PBX will become purely a mechanism for controlling phones, but even then it's really the applications that'll be doing the work. “My desktop softphone brings together instant messaging, email and my web cam as elements of unified communications.” This may expand to include hot desking, follow-me communications, desktop management and other solutions pulled together by integrator partners including Gen-i, Agile or HP. While the major carriers have been slow to embrace SIP, he says it's coming and will help trigger a real breakthrough in communication enabled business processes (CEBP) where “a communications instance is triggered by an application”. For example, an emergency alarm might trigger a call to a specific individual, or the application might contact a specific group of people and conference them together under other circumstances. “That's where the real value is,” says McNee. In other words, the future of the PBX and its related technologies and software is about automating processes and allowing applications to talk to each other. Weighing up the options So how do you know when to make the shift into the next level of integrated telephony or all the way with a full IP PBX? Selwyn Rimmer, Gen-i's head of Integrated Communications Services, says businesses should align the desired benefits with longterm and short-term business goals. This may include ways to increase productivity, expand a customer base, deliver better service and achieve more effective internal and external business communications. He says it's vital that PBX systems are able to respond to continual changes and provide the integrated capabilities necessary to enhance performance and growth. “Any new services should seamlessly integrate with existing ICT infrastructures and core applications such as customer relationship management, business intelligence and enterprise content management.” And Rimmer says it shouldn't have to be a choice between cloud computing and a PBX, as a mix and match may be best for some clients. “Those with more complex multi-site environments can maximise their existing investment by leveraging the cloud to achieve scalability, flexibility and cost effectiveness.” As the industry matures, telephony clients will want more than just CPE and dedicated services from their providers. They'll want a clear technology roadmap, integration skills and the best possible advice on improving processes and streamlining connectivity with business partners, customers and the mobile workforce. The way forward in these uncertain times, says Cisco engineer and Internetwork expert Alan Register, is “collaboration-enabled business transformation”, essentially a partnership between vendor and customer to achieve the best possible outcomes. He says modern businesses want reliability, high availability and a platform that allows collaboration between multiple devices: cellular, desk phone or soft phone, and ‘virtualises' contact centre agents and remote or home workers. Video telephony and end-user presence are an essential part of that mix. Depending on how open existing platforms are, a staged migration might be best and involve a mix of cloud services and on-premise investment. Register says Cisco and a number of other vendors have solutions that enable customers to leverage existing intranets and the reach and scalability of cloud offerings. One of the first challenges, however, may be to evaluate and invest in improving infrastructure, to enable the use of richer media including high-definition video and audio, and faster response times for desktop sharing. Register says that's where a multiprovider strategy can pay off, providing greater flexibility when integrating different technologies. However, clients should ensure this involves open standards and mature solutions that will reduce rather than increase complexity and cost. Infrastructure obstacles Although corporate backbone network speeds have become quicker, most businesses still depend on the main carriers for expensive decades old leased lines or primary rate ISDN (30 x 64kbit/sec channels) to connect PBXs, private office networks and call centres. However, modern PBX systems need to transfer large amounts of data and images, which will inevitably push the limitations of copper. While xDSL has improved considerably in the past five years, it's still a domestic rather than a corporate solution. Peter Gordon of Atlas Genteck says everything is going IP, and New Zealand will remain stuck in the dark ages until there's a much wider rollout of fibre. “This is an obstacle to people opening up business relationships with or investing in New Zealand at a time when the modern PBX enables road warriors to connect back to their office seamlessly and have access to all the usual applications no matter where they are in the world.” The great hope to kick the PBX industry and businesses into next generation technology is the $1.5 billion fibre-to-the-premises network being deployed the government and its partners. Greg Malone, from GTL Networks, says there's been a lot of hype about teleworkers, telecommuters and people working from home, but it's been fairly ad hoc so far. “There'll be a massive shift and an explosion in the uptake of new technology when the fibre is in place, but for the moment we're still working around it.” No half measures Although the market has been focused on hybrid PBX solutions to keep squeezing every last drop of usefulness from legacy telephony equipment, the pressure to migrate to full IPbased systems is on. The next evolutionary step promises smart applications that talk to each other and connect seamlessly across a range of devices, customising services based on location and need. Mobility will be paramount, with internal and external wireless capability and mobile phone applications linking directly back into the corporate network through a secure virtual private network (VPN), giving employees much more flexibility. Users will work more interactively, with business tools borrowing much from the chat, texting, social networking and video streams that have become so much part of the daily lives of consumers. And while IP phones, power over Ethernet and video phones all look enticing, the focus is back on the desktop or mobile device, with the physical phone fading from sight in some cases, as USB handsfree devices, headsets and softphone applications prevail. As the external infrastructure slowly shifts to light speed, New Zealand businesses have a window of opportunity to get their internal networks ready so they can take full advantage of the transformative role that next-generation PBXs can have on their corporate culture. The death knell has already sounded for traditional circuit-switched TDM systems. In a couple of years it just won't make economic sense for manufacturers to keep producing both old and new technology. The alternative to planning and investing in an upgrade path is to be locked out of future innovation by dinosaur technology, and confronted with disruptive and far more expensive forklift upgrades when your old gear is no longer supported.