Why TCO when considering Unified Communications is Paramount

© 2009 ShoreTel, Inc. All rights reserved worldwide. 04/12/2023

Beat ComplexityThe Importance of TCO

Tom PerryDirector of Marketing EMEA

Lenovo User

Change:- ShoreTel champion partner conference to

© 2010 ShoreTel, Inc. All rights reserved worldwide. 22

FoundedIn 1996-Superior technology designed from a clean sheet of paper

Company Overview

HeadquartersSunnyvale, California with offices in the UK, Germany, Spain, Australia, Singapore and Hong Kong

GrowthMore than 14,000 customers globally – serving over a million end users

850 partners to date, growing at roughly 10% year over year

Financial StrengthOver $100M in cash, no debt


14,000+ Customers - All Industries in EMEA

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© 2009 ShoreTel, Inc. All rights reserved worldwide.

Home OfficeMobile HotelAirport Wifi

What is unified communications?

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UnifiedMessaging

Mobility

BusinessProcesses

Conferencing

Office AppsIntegration

Web Collaboration

Voice

PresenceAnd IM

Video

© 2010 ShoreTel, Inc. All rights reserved worldwide. 04/12/202304/12/2023

What do clients need?

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Lowest Total Cost of Ownership

Easy to Use and Easy to Manage

Scalability Reliability and Availability


ShoreTel Products

ShoreWare®

ApplicationsShorePhoneTM

IP TelephonesShoreGear®

Voice Switches


One brilliantly simple solution for the way you work

7

Business Communication Solution

Unified

CommunicationsIP Phone System Contact Center




Unified


Unifying rich communication capabilities into a modular

design that scales and integrates with ease




Unified




Integrating voice, video, and data across any device to

streamline collaboration and enhance productivity




Unified




Integrating voice, video, data across any device to

streamline collaboration and enhance productivity

Combining flexible yet sophisticated multimedia

contact center capabilities to empower agents anywhere


IP Phone System


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Business Communication SolutionAll-in-One

Contact CenterUnified

Communications


Brilliant Simplicity - Results In Lower TCO

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EASY TODEPLOY

EASY TO

LEARN

EASY TOUSE

EASY TOMANAGE

EASY TOSCALE


What is the Key Driver for People Making Purchase Decisions?


Companies That Have Beaten Complexity

• Complexity targeted as a major new area for cost reduction

• Numerous documented cases of companies able to reduce costs by 15% to 30% by aggressively attacking complexity

– Proctor & Gamble – $4B savings

– Motorola’s ‘War on Complexity’ – $2.6B / 2 years

– Kraft – $400M annual savings

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It’s not just about savings: it’s also about the gains

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Greatcustomer experience

Impactfulcommunication

Dynamiccollaboration

Productiveworkforce

Lowpurchase cost

Lowdeployment cost

Lowoperating cost

Lowgrowth cost

ShoreTelLowest TCO


Total Cost of Ownership (TCO)

• Capital costs (hardware & software)• Implementation and training• System management / MACs• Network and long distance charges

Return on Investment (ROI)• End user productivity

– Presence services (3.9 hrs / week / employee)

– Remote employees (4.0 hrs / week / employee)

– Mobile employees (4.3 hrs / week / mobile emp.)

– Unified Messaging (3.6 hrs / week / employee)

• Organizational Productivity– Increased call volumes

– Increased customer satisfaction

– Increased CC agent effectiveness

– Business process integration (e.g., CRM)

Focus on revenue impact regardless of vendorProve overall technology business case

(e.g., IPT vs. TDM)

Focus on reduction of tangible costsEnable correct choice between vendors

(Including TDM)

Source: Sage Research

ROI v. TCO

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The Reality: Up-front Costs Represent 26% of TCO

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11.1%

13.7%

1.6%

6.3%

27.6%3.6%

30.5%

5.7%

IPT Capital Cost

Network Upgrade

Implementation & Tng

Support Services

System Management, MACs

Electricity Consumption

Network Costs

Long Distance Charges

TCO Components


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Capital Expenditures

Defining Total Cost of Ownership

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OperationalStart-Up Costs

OngoingNetwork Costs

Energy Costs

UC System Costs


Defining Total Cost of OwnershipMeasuring the Total Financial Impact of a Unified Communications System

C. UC system costs1) Support services

(maintenance and upgrades)

2) Moves, Adds & Changes (MAC)

3) System management

4) Recurring training

5) Cost of system downtime

D. Electricity consumption

E. Ongoing network costs1) WAN cost

2) Voice Trunk Cost(Analog, Tie Line, E1/T1, SIP trunks)

3) Long distance charges

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A. Capital costs1) Telephony system

2) Hardware replacement

3) Network upgrade

B. Operational start-up costs

1) Implementation

2) Training

Up-front Costs Ongoing / Annual Recurring Costs


Why is total cost of ownership important?

• Financial guide to inform decision-making process

• Technology insight into product functionality and future needs

• Overview of increased efficiencies

• Comparison of system management complexity across UC vendors

• Objective measure of the total business impact of UC

• Effectively comparison between leasing and purchasing a UC system

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TCO provides an important metric for evaluating the risks, costs and benefits of UC solutions.

TCO serves as:

r i s k s


Beat Complexity

The TCO Tool

Lenovo User



History PedigreeProfile

Founded in 2001

Headquartered in Orlando, FL

30+ full-time professionals

ex-Gartner business value / ROI experts

IT content experts from top IT vendors including IBM, HP, Sun, SAS, Oracle, Siemens, CSC

Original pioneers (1994) of B2B Value Selling Tools

Sold first TCO/ROI software company to Gartner in 1998

1st scalable business value platform – XcelLive™

Over 75 customers and 650 ROI/TCO models across an array of IT and B2B disciplines

Endorsed as best practice by many leading vendors including Microsoft, HP, IBM, EMC, NetApp, Siemens Healthcare.

Partnerships with IDC, Morningstar and ZDE

Alinean: Value-Based Sales and Marketing Tools

OUR FOCUS: Aligning B2B solution providers with frugal buyers via interactive, value-based tools

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TCO Detail Worksheet

• Configured for customer’s exact circumstances• User able to update / override assumptions or

results (all categories)• Simultaneous / parallel calculation for TDM and

IPT alternatives

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TCO Tool – Structure

Customer Configuration• # phones (IP phones,

analogue phones & extension)• Vertical industry• # sites• International (sites, currencies)• Trunk requirements

Product List Calculations• ShoreTel switch & phone

configurator• Cisco & Mitel configurator• Nortel / Avaya Price regression• Server and equivalent phone

mix for leading IPT competitors

Financial Results

• TCO calculations (pre- & post-tax)• Graphical output (TCO, cash flow)• Financial ratio analysis

(payback period, IRR, ROI, NPV)• Energy consumption results

(kWh, $)

Third Party Cost Data• Network upgrade costs• Upfront operational costs• Ongoing telephony

system costs• Ongoing network costs• Energy consumption


ShoreTel TCO Tool – WHY?

Maximizes cash flow and long-term shareholder value

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Provides an objective measure of the total business impactof the UC purchase decision

Captures the organizational impact of UC product and system management complexity

Improves financial planning and accountability

Improves organizational decision making, efficiency

and alignment

Offers powerful insight, regardless of

deployment size


Total Cost of Ownership Tool


https://roianalyst.alinean.com/shoretel/sales

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A Quick Look…

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A Quick Look…

30


Source Data: Ferris Research, Inc., Wainhouse Research, Nemertes Research, Alinean Research, The Tolly Group

A close look at TCO with ShoreTel

TCO comparison ofmajor UC system vendors

(pre-tax)

10-year analysis based on standard large enterprise configuration:

1,500 users across 3 sites

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0

5

10

15

20

25

30

$M

31

AvayaMitel CiscoMicrosoftShoreTel

Implementation and training

Capital cost for network upgrade

Capital cost for telephony system

TDM

$14.76$14.02

$19.79$19.80

$6.86

$26.65

Long distance charges

Network costs

Electricity consumption

System management, MACs, downtime

Support services


Rapid ROI drives business value

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Financial ratio comparison by vendor

Payback Period(# Months) 25 Months 32 Months 41 Months 50 Months 74 Months

Return on Investment (ROI) (%) 48.8% 37.9% 30.1% 24.9% 18.0%

Internal Rate of Return (IRR) (%) 91.6% 57.3% 37.5% 25.9% 10.5%

Net Present Value(NPV) ($M) $5.075M $4.272M $3.404M $2.887M $1.413M

UC FINANCIALS RATIO MITEL AVAYA NORTEL CISCO TDM

ShoreTel TCO Reduction Advantage (Post-tax) 11.82% 21.68% 26.51% 37.58% 46.63%


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1

3

ShoreTel TCO summary

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A TCO analysis as part of the evaluation process offers important technological and financial insight

The ShoreTel TCO Tool draws on third-party data for

a full competitive analysis

ShoreTel offers industry leading TCO, lower than Mitel, Avaya, Nortel, Cisco and existing TDM with:• Low purchase costs• Low deployment costs• Low operating costs• Low growth costs

ShoreTel offers

superior gains

with brilliantly

simple solutions


COMPETITORS

HARDWARE + Switch-based – Server-based (disk drives)

Where is Low TCO Driven from?

34

SOFTWARE + Distributed – Centralized

MANAGEMENT + Single, intuitive Web-based interface – Disparate systems

END-USER FUNCTIONALITY + Seamless and consistent across locations – Inconsistent features

across locations

REDUNDANCY + N+1 – 2N, duplicate systems

SCALABILITY + Modular – Forklift upgrades

SERVER DEPENDENCY + Low – High

EASE OF USE + Brilliantly simple – Unintuitive and complex

TOTAL COST OF OWNERSHIP + Low – High


Key Drivers of TCO VarianceBrilliantly Simple Has a Unique Architecture

• ShoreTel Architecture

– Embedded switch-based call control

– Distributed software architecture

– Managed as a single image

• … Drives 4 Key Benefits

– Unmatched reliability and availability

– Easiest to install, maintain and use

– Most scalable solution

– Lowest TCO


Beat ComplexityTCO Guarantee

STAND 523 at IP Expo

Lenovo User


Why TCO when considering Unified Communications is Paramount

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