Sunday Business Post – Dubai Special – Aug 19 2007
There are plenty of investment opportunities in the United Arab Emirates as the country continues its strong building boom, writes Dermot Corrigan.
About 25 per cent of all the world’s cranes are today perched over building sites in the United Arab Emirates (UAE), so it is no surprise, they say, that the crane is the national bird of the UAE.
Among these are the cranes helping to construct the six buildings of more than 100 storeys and about 700 (seven hundred) buildings over 40 storeys, which are under construction in Dubai
The total investment in announced construction projects has been estimated at 338 billion dirhams (€67 billion).
This all adds up to a lot of real estate, especially considering that the official population of Dubai is approximately 1.5 million.
According to Mike Bridge, presenter of a weekly property show on UAE Radio 2 and director of the Dubai Shows property exhibition, potential investors should not worry, as Dubai’s ruler, his highness Sheikh Mohammed Maktoum Bin Rashid Al Maktoum, has a serious and considered plan.
“The government has got a 15 year plan,” said Bridge. “The general consensus was that there might be a property bubble, and when is it going to burst? But now there is a consensus, I think, that it is not going to burst, or if it does that it will not be as soon as we thought. People here are still buying, and turning around profits very quickly.”
“A friend of mine bought a two bedroom duplex penthouse apartment there for 3.5m dirhams (approx €690,000) last month, this property is due to be handed over in the next six to nine months and she expects to be able to sell it for a profit of about 50 per cent.”
The reason why the bubble does not appear to be bursting any time soon is that over 800 work permits are currently being issued each day in Dubai. This adds up to approximately 300,000 new arrivals in the city every year, which is fuelling a demand for somewhere to live and work.
“The problem here is that we are still playing catch-up,” said Bridge. “There is not enough property to meet the number of people who are coming into the UAE. It is very hard for me, working and living in Dubai, to find a property to rent.”
Bridge said premium office space was also scarce. 50 of Fortune 500 companies now have operations in Dubai. Halliburton, the major US construction firm, is moving its global headquarters to the city.
The property sector in Dubai is closely controlled by the government. The three biggest developers – Nakheel, Emaar and Dubai Properties – are all owned by Sheikh Mohammed. Foreign investors have only been allowed to buy property in certain areas of the city since 2003.
Bridge said that the introduction of escrow law last month was a further protection for foreign investors, especially those buying off the plans.
“This is good news for international investors because their money is protected,” he said.
He said Irish investors considering the Dubai property market should take their time and do their research.
“The majority of Irish investors come over and buy property from the developers themselves,” he said. “The first step would be to start the search on the Internet to get a feel for prices. I think then they should literally jump on an Aer Lingus or an Etihad flight and come and see for themselves what is on the books.”
Irish property company Larionovo has an office in Dubai and Andrew Brett, its chief executive, said that there were currently opportunities for Irish investors in both commercial and residential property in Dubai.
“Commercial property is quite hard to get hold of in Dubai,” said Brett. “It tends to move very quickly. Irish buyers of commercial property in Dubai tend to be people who have been on the ground and have put in quite a bit of time there.”
“Residential property at the moment is quite open, there are an awful lot of people getting involved in buying in Dubai. The rental returns over the last couple of years have been very good.”
Brett said that Irish investors tended to be surprised by the high standard of Dubai residential properties.
“Properties tend to be larger than in Europe, the finish tends to be very good, most would have a concierge service and valet parking,” he said. “Many buildings would also have roof top swimming pools and gymnasiums.”
Brett said that an average Dubai two-bedroom apartment cost about €225,000 and that it was increasingly possible for Irish investors to get local finance.
“This time last year there were only about 12 lenders operating here and now there is over 40.”
Nor is government interference a problem for Irish investors, said Brett.
“The government have been trying to put a rental cap in place as the rental market has gone up over 40 per cent in the last couple of years,” said Brett. “It will still be pretty generous, 10 to 12 per cent rental returns will still be quite common in Dubai.”
Brett said that people looking at Dubai for short-term kills were missing the point.
“I think you have to look beyond 2008 or 2009 and see what is happening,” said Brett. “Anyone looking at Dubai as a short-term market is being short sighted, we see Dubai as a very good long term investment.”
Island of Ireland insert
One of the most striking development projects underway in Dubai is ‘The World’, a cluster of 300 man-made islands, located four kilometres offshore and shaped to form a map of the world.
The ‘Ireland’ island is five acres in size and is being developed by Clare company Larionovo as a single five-star holiday resort.
“The whole island will run as a hotel,” said Larionovo CEO Andrew Brett. “There is a mixture of villas, townhouses, one-bed, two-bed and three-bed apartments, which will all be rented out by the operator of the hotel.”
The island will also be home to a mix of boutiques, restaurants, recreation and spa facilities and a central marina.
Larionovo is selling the properties and Brett said all the villas and townhouses, the most expensive of which cost €2.8 million, have been snapped up. Apartments, starting at €715,000, are still available.
“By purchasing a unit you become a founding member of the hotel,” he said. “You get two weeks free usage a year and it is rented out for you the rest of the year. 60 per cent of the commercial activities on the island are also returned to clients.”
According to Brett the look of the resort will be recognisably Irish, even if the climate will not.
“Greenery will be a very important part of the look, and we will have underground irrigation system for that,” he said. “The courtyard area is Georgian, with brickwork and slate roofs. We did not want to create a theme park, we wanted a modern interpretation of Ireland.”
Brett said this project showed the audacity of modern Dubai.
“When we first started people thought it was pie in the sky, but when you actually see it on the ground you see this is a very well thought out, serious project,” he said.
Sunday Business Post – Dubai Special – Aug 19 2007
Dubai now generates three times more income from tourism than it does from oil. This ratio is set to increase dramatically in the coming years, due to a raft of multibillion euro projects.
These include the world’s biggest airport – Dubai World Central International, Dubailand – a Disneyland-style tourist city which will include the eight wonders of the world rebuilt to scale, the ‘Palm’ man-made islands packed with five star hotels and amenities, and the Dubai Mall, which will be the world’s largest retail experience.
These projects will complement the facilities already in place in Dubai including the iconic seven-star, yacht-shaped Burj Al Arab hotel, the Wild Wadi Water Park, the Dubai Creek Golf and Yacht Club and the Mall of the Emirates, which houses a huge indoor ski slope, despite being only 25 degrees north of the equator.
“There has been massive investment in infrastructure and in entertainment and leisure facilities,” said Baerbel Kirchner, director of the UK and Ireland office of the Dubai Department of Tourism and Commerce Marketing (DTCM).
Kirchner said that Dubai offered a wide range of holiday experiences.
“You have a very diverse product offering, ranging from desert, beach, retail, golf, horse-racing, wellness and spa experience. The restaurants offer an international range of top quality cuisine. We also have guaranteed year round sunshine.”
Guy Crawford, chief executive of Jumeirah Group, the largest hotel and tourism business in Dubai, said that Dubai’s hotels were among the best in the world.
“Burj al Arab has won best hotel in the world,” Crawford said. “Jumeirah Emirates Towers has won best business hotel in the Middle East. The Jumeirah Beach Hotel has won best resort hotel in the world.”
“We look to have an individual experience tailored for each of our individual customers. There is an underwater seafood restaurant that caters for a unique once in a lifetime experience. Or you can go to the noodle house that we have in the souk (commercial quarter) and eat for a few euro.”
Crawford said Dubai attracted a wide range of holidaymakers, primarily from Europe, Russia and the Middle East, including 33,000 Irish guests to Jumeirah hotels in 2006.
Ireland is now linked by daily flights to the United Arab Emirates (UAE). Aer Lingus has flights direct from Dublin to Dubai since March 2006, while El Etihad opened a new service from Dublin to Abu Dhabi in July. The Irish link with Jumeirah Group is particularly strong, as the company’s executive chairman is Irishman Gerald Lawless.
“Gerald has been with the company since its inception,” said Crawford. “Initially the link between Dubai and Ireland would have been very much with horse-racing, but with the direct flights our Irish business has grown.”
Kirchner said Dubai was not a budget backpacker destination.
“What you find in Dubai is very good value,” said Kirchner. “The level of service and facilities is incredibly high and I don’t think anywhere else in the world can compare in terms of value. Dubai is a global leader in quality, style and luxury.”
Dubai is now very much an international destination, rather than a regional Gulf city, according to Kirchner.
“We are at the crossroads between East and West, which gives us a diversity of influences,” she said.
While the UAE is among the most liberal of the Gulf countries, Kirchner advised Irish visitors to respect its cultural and religious heritage.
“When travelling to any destination it is important to be culturally aware, for instance one should dress sensibly. However alcohol is offered in all hotels and licenced restaurants.”
Sunday Business Post – Dubai Special – Aug 19 2007
“It is the quality of life,” said David McGee, a 50-year-old Irishman who has lived in Dubai for the last two and a half years. “There is a whole range of things that give you an enjoyment about where you are living and working.”
“You have the beach, a vast range of restaurants, great hotels, every morning our newspaper gets delivered to the door for 10 cents, water gets delivered, your laundry gets collected and dropped back, you go to a hotel and you have valet parking.”
McGee, who works in financial services, writes a weekly blog (www.homethoughtsfromdubai.com), chronicling his life in Dubai and commenting on general business and property matters. McGee said that the majority of the approximately 6,000 Irish now living in the United Arab Emirates were probably attracted by the considerable career opportunities available.
“I think most people that are here, notwithstanding the quality of life, see the potential to make good money through working for companies at a senior level or establishing or creating your own company,” McGee said.
Dubai, one of the seven emirates that make up the UAE, is among the fastest growing cities in the world. In 1975 its population was less than 150,000. It is now approximately 1.5m and should hit 6m within the next 20 years.
Parts of the city currently resemble a huge building site, and a phenomenal amount of investment is pouring in. The tallest building in the world – Burj Dubai – is under construction. The largest airport in the world is planned, and the biggest man made port in the world is already open.
“I consider it exciting,” said McGee. “It is a reflection of the enormity of the aspiration of the government and the leadership of Sheikh Mohammed. It is very much a reflection of a can-do society. It does not have the bureaucracy of other cities or countries. A person, or a couple of people around that person, make a decision and things get done.”
McGee pointed out that a substantial number of the inner circle around His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, are Irish.
These include Gerald Lawless, executive chairman of the Jumeirah Group, and Colm McLaughlin, managing director of Dubai Duty Free. Dermot Mannion, now chief executive of Aer Lingus, was previously a director of Emirates Group, the UAE flag carrier.
McGee said that Dubai was not quite perfect, citing the traffic, tremendous heat during the summer and some more baffling government decisions as negative factors of living there. Anyone expecting a low cost of living was in for a surprise, he said.
“The cost of living is not much cheaper than other cities such as Paris or Melbourne or London,” he said. “Supermarket prices are comparable with Ireland. Accommodation can be quite expensive, but the average size of a villa or apartment here is probably double or treble what it is in Dublin.”
McGee said that Dubai society was also much more liberal than neighbours such as Saudi Arabia or Kuwait. He described it as an international city, which just happens to be located near the south-eastern tip of the Arabian peninsula.
“If people did not know they had got off a plane in Dubai, and you brought them around to any of the hotels on the shoreline or any of the better restaurants, they would not know they were in the Middle East. You could be anywhere in the world.”
Just 22 per cent of the population of the UAE are Emirati nationals. McGee said that most of his colleagues and friends in Dubai were expats from around the world, and that the Irish community was not particularly tight-knit.
“There are about four or five venues that will do the All Ireland hurling or football and the rugby internationals. You would probably meet more Irish at those events than you would in business circles as we tend to be dispersed.”
Sunday Business Post – Dubai Special – Aug 19 2007
Tax-free zones and other enterprising initiatives make Dubai an attractive place for business.
Dubai’s location, between east and west, and its open and pro-business economy, ensures its place as an increasingly popular Middle Eastern base for Irish businesses.
More than 30 Irish companies operating across different sectors have operations in the United Arab Emirates (UAE), and Enterprise Ireland has a permanent office in Dubai. CR2, a banking software firm with headquarters in Dublin, has 22 permanent staff in its Dubai office.
Two of the firm’s four executive directors, chief executive Martin Dolan and director of sales and marketing Kieran Kilcullen, are based in Dubai full time.
“We acquired a British company called Interlink in 2000,” said Kilcullen. “They had a large population of banks in the Middle East that were now customers of ours so it made sense to have a base here.” On a recent Enterprise Ireland trade mission to the region, CR2 announced a deal to provide software and services to the Bank of Sharjah in the UAE.
AdaptiveMobile, another Dublin firm which makes security solutions for mobile phones, set up a sales operation in Dubai in 2005.
“There were three aspects behind picking Dubai,” said Graeme Baker, AdaptiveMobile’s general manager for the Middle East. “One is that it is a very good hub, central to the region. It is also important that customers see that you are committing to the region. Then from a tax perspective locating here is very efficient.” Tax is an important consideration for companies operating in Dubai.
Although there are some stringent regulations regarding foreign ownership of businesses in the United Arab Emirates, companies operating in designated so-called ‘free-zones’ in Dubai pay no direct taxes on corporate profits and staff pay no direct personal income taxes.
There is also 100 per cent repatriation of capital and profit within the ‘free-zones’. Businesses that wish to set up in a ‘free-zone’ pay a registration fee and are then granted a set number of work and residency permits, and also provided with office space.
“We have a wholly owned subsidiary of AdaptiveMobile registered in the UAE. It depends on the type of registration you do. If you have a lot of people on the ground you might take an office in the free-zone and get so many desks and so many visas,” Baker said.
“A lot of people here are in Dubai Internet City or Dubai Media City and the average for a small company to register can be about $50,000. With the type of office that we are running, we went for one of the outer zones and our set up was much less,” he said.
While CR@ is not based in a free-zone, Kilcullen said that the firm had a local sponsor. “As a representative office of CR2 UK, our British subsidiary, there is no corporate tax on the business that we do in the Middle East,” he said. “So it is still a tax efficient base.”
Kilcullen said that Dubai’s location was ideal for CR2. “We have customers in 77 countries and Dubai is the logical base for us,” he said. “We ourselves tend to host our annual user conference in Dubai, as it is a very useful location for customers based in Russia, Central Asia, Eastern Europe, Africa as well as the Middle East to get visas for and to fly to.”
Kilcullen said that CR2, who have about ten Indian, seven Irish and a few British and South African staff working in Dubai, had no problem persuading people to relocate to the UAE.
“When I first came to Dubai ten years ago it was impossible for foreigners to put down roots here or buy property,” he said. “These days Dubai is much more like an international base like Dublin or London or Paris. We no longer feel the need to offer people big packages to re-locate to Dubai, we find people coming to us asking to be based here.”
The company has no difficulties securing work permits for anyone it wants to employ, according to Kilcullen.
“It is very easy for us to bring employees into Dubai from any part of the world. There are no restrictions on the kind of staff that we can employ, which is obviously very important for us.”
Baker, who gave a presentation to other interested Irish companies during an official visit to the UAE by Taoiseach Bertie Ahern earlier this year, said that Irish businesspeople had to get used to different ways of doing business in the region.
“One of the things we highlighted was that the rules of Europe really do not apply here,” said Baker. “In any business it is always relationships that are important but here it is even more so. In some environments you can be very successful by using a local partner, whose introduction can carry a lot of weight. This is not a place where things happen quickly. You tend to go back for another meeting and another meeting. By European standards you might think that you are wasting your time here, this is the fourth meeting and nothing has happened yet, but it is all part of the process. Ultimately they will say yes.”
Kilcullen said that CR2 had run into no major problems doing business in Dubai.
“There is probably a little bit more bureaucracy than Ireland, but it all works quite smoothly and efficiently and does not impact on the running of the business,” he said.
“There is a big drive towards e-government. We have generally found it to be a very pro-business environment.”
He said that many of CR2’s potential customers were actually setting up operations in Dubai themselves, which was a bonus.
“More and more international businesses are basing their assets there, or increasing their presence there. We have some large corporate customers who have strong regional centres in Dubai, such as Standard Chartered Bank and Barclays.”
AdaptiveMobile recently raised $14 million in funding, which included investment from Noor Financial Investment Company, a Kuwaiti investment firm.
The firm uses its Dubai operation to service customers in markets ranging from South Africa, through Saudi and Kuwait, to Bangladesh and Indonesia. Lorcan Burke, co-founder and chief executive of AdaptiveMobile said that Middle Eastern customers were prepared to pay a premium to secure the best products.
“If they are buying they want to buy the best technology,” said Burke. “They do not buy second rate stuff. They can afford the best, but they do not spend money in a ridiculous manner. They are hard negotiators, but they will pay good money.”
Barker said that he had experienced no cultural or social problems either living or doing business in the UAE, which is among the more liberal of the Muslim states in the region.
“You have to respect the fact that they have pride in their country and pride in their religion,” said Barker. “As long as you show them respect you are fine.”
The Irish businesses operating in Dubai cover a broad range for sectors, from AIB in financial services to OpenMind Networks, Valista and Cellusys in telecoms and Clearstream Technologies, Crannog and Medentech in healthcare. Mercury Engineering, McNally Design, Zutec, ICDS Recruitment, and Sturdy Products are active in the construction sector.
CR2’s Kilcullen said: “My advice to people would be to look at the type and volume of resource that you want to base here,” he said. “Dubai is not the cheapest location internationally to base resources.”
He said that Dubai was neither a low cost nor a low wage economy. “We have put core resources in Dubai and satellite locations in Bangalore (in India) and Amman (in Jordan) where manpower costs and the costs of living are not so high.”
Sunday Business Post – Recruitment – Aug 5 2007
Recruitment company Beeswax Europe claims that multilingual jobs are still in plentiful supply in Ireland, despite recent redundancies, writes Dermot Corrigan…
Ireland is now the number one location for multilingual jobs in Europe, despite the potential loss of up to 900 jobs at Xerox’s customer support call centre in Dublin, according to the director of BeesWax Europe.
Reports last week claimed that the jobs, which had been transferred to IBM as part of an outsourcing agreement between the two IT giants, could be lost over a two-year period under a plan to relocate customer care operations to overseas locations, including Bulgaria, India, the Phillipines and Scotland.
Despite this, Gerry Rockingham said that multilingual jobs of the kind on offer at Xerox’s Blanchardstown, Co. Dublin, facility are still plentiful in Ireland. This is not a particular boon to Irish people who speak more than one language, however as the majority of multilingual positions are going to overseas candidates who come to Ireland to work.
“Usually companies will be able to find a ‘native tongue’ fluent person here in Ireland,” said Rockingham. “Irish society has changed hugely and pretty much 80 per cent of all the vacancies we have are for native tongue language speakers.”
In general, Rockingham said Irish language graduates had weaker multilingual skills than graduates in other European countries.
“You do get graduates from Limerick or Dublin City University who spend a year abroad as part of their degree, which is fantastic, but many people will not have studied French in as much depth as a French person has studied English,” said Rockingham.
A multilingual recruitment company, BeesWax recruits solely for multilingual roles in four areas: contact centres, shared services, IT support and sales. The firm sources candidates from all over Europe, placing them primarily with organisations operating in Ireland.
“It can be hard to find these people,” he said. “A lot of the companies that are hiring need someone to work in a trilingual customer service role, or do German technical support or do accounts payable in Dutch. We are basically specialists in where and how to find these people.”
BeesWax employs ten recruitment specialists, all of whom are from other European countries and speak a minimum of two languages fluently. They liaise with partners abroad to source available candidates.
“We have a network of about 45 advertising agencies across Europe who we work with to advertise our vacancies and try and attract candidates for us through a range of methods including major European job boards, specialist publications, industry portals and offline advertisements,” said Rockingham. “A big thing for us has been the growth of the internet. Nearly all advertising for junior to mid-level roles has gone online.
Rockingham established Beeswax in early 2005. It had a turnover of about €1m last year.
“At the moment 75 per cent of our business would be in Ireland. 10 per cent in the UK,” he said. “The other 15 per cent is in mainland European countries.”
Rockingham said multilingual jobseekers in Ireland, particularly recent graduates, were more likely to be placed in niche jobs with smaller firms.
“For the Irish graduate with language experience there is a huge increase in the number of Small to Medium Enterprises (SME) companies that are exporting around Europe,” he said. “A lot of SMEs are hiring people with languages because successful companies are not just Irish any more they are European. Small IT companies can be selling to France, Germany, Eastern Europe, Japan. The opportunities for Irish people, in a sales capacity or in a higher value job, are with companies that are exporting.”
There were also some opportunities for multilingual Irish in international facing call centres, said Rockingham.
“An Irish person with French may work in a centre, say, managing the French speakers,” he said.
According to Rockingham, speaking another language can have a positive impact on the salary a candidate can attract.
“If it is a small company that requires many languages you will get quite a large language premium, because you might be the only person supporting customers in three or four languages and in those circumstances you could do very well,” he said. “You could be talking €3,000 or €4,000 more.”
“However, in a large (call centre) environment with a hundred people supporting German, they will not necessarily split the calls and interrupt the workflow processes, so speaking three languages is not really an advantage.”
Rockingham said that many Irish recent graduates, who were armed with language skills, were going abroad and taking advantage of their native English language.
“The opportunities for Irish people are in other countries where people want English speakers.”
Sunday Business Post – Computers in Business Magazine – July 2007
Convergence is no longer simply about cheap phone calls, it has evolved to become a central hub for many SMEs and larger businesses, writes Dermot Corrigan…
Converged communications networks, such as voice over internet protocol (VoIP) telephony, have the potential to help Irish SMEs utilise their communications networks to improve the way they do business.
The ability to make phone calls is no longer the main reason why businesses choose to invest in new communications networks, said Donal Berry, business development manager with Datapac’s communications solutions group.
“I do not think that people invest in voice over IP technology so that they can get dial tone on their phone the same as traditional telephony,” he said. “The investment is for business drivers.”
Converged information and communications technology (ICT) systems can radically shake up a small business’ internal and external communications, according to Matthew Burke, head of solutions, design and consultancy with Damovo.
“Convergence is primarily viewed as the integration of voice, data and video across a single IP network,” said Burke. “In convergence, the data network becomes the backbone for all communications within a business.”
Put simply, this means that instead of having a traditional telephony system with routers, switches and individual lines, one application runs on your office network and manages all your internal and external communication (including voice calls, emails, data transfers and audio and video traffic) over an internet connection.
“Traditionally your computers ran on your data network and your voice was on a separate telephony network,” said Berry. “On a truly converged network you have your CRM, ERP, Microsoft applications, switches, routers and voice all on the one.”
Niall Feely, director of business market with Eircom, said that SMEs often found the progression to converged systems from traditional telephony systems easier than larger organisations did.
“We find now that it is easier, cheaper and faster for smaller companies to adopt new technologies and new ways of working,” said Feely.
James Finglas, sales director of MJ Flood Technology said that Voice over IP (VoIP) was the most common stepping off point for convergence in Irish SMEs, who were maybe not fully aware of the potential and practicalities of convergence.
“Skype really raised the profile of Voice over IP and has raised the platform for companies like ourselves to be able to educate SMEs around the different technologies involved in convergence,” said Finglas.
Burke said that the idea of convergence was being taken on board in all sizes of business in Ireland.
“With more and more articles appearing in the national press, small business owners are learning about the practical benefits of converged applications and services,” he said. “Features and benefits of convergence that were once only known to the IT department are now widely known at boardroom level.”
Apart from VoIP, some of the features and benefits that come under the convergence umbrella are multimedia conferencing, video broadcast, unified messaging, presence features, instant messaging and contact centre technologies.
Feely said that most small business owners were typically not as concerned with exciting new technologies, and more worried about how they could use convergence to build their business.
“People are much more interested in what it can do for them, rather than the technology itself,” he said. “You would rarely get a customer who says look I want to buy some of this convergence stuff or I want voice over IP. They are much more interested in figuring out how to adopt email to sell more to their customers, or how can we become more productive or get my employees set up to work from home.”
Vincent McFadden, head of convergent solutions with BT Ireland, said that given the pace of development in the convergence space, it is important that SMEs identify the individual requirements and advantages that apply to their business.
“The key challenge is for the SMEs to understand the benefits to their business from deploying converged technologies,” he said. “Some of the benefits are tangible and the business case is easy to define and justify, however, as we move beyond the integration of voice and data and to more advanced converged technologies the benefits are less tangible, as they are more around productivity and efficiency gains.”
What can convergence do?
Converged networks can use voice over IP functionality to carry all their telephony needs on the one system.
“You get one number from your communications vendor,” said McFadden. “This number is virtualised, so it doesn’t belong to any single device. Your real devices (home office phone, mobile phone, office desk phone, and personal home phone) are all configured behind that virtualised number. During normal office hours calls will ring at all numbers except your personal home phone. The call can be answered at any device, transferred to any other of your devices during the call. So I ring you at 7.30 in the morning. You answer at home. It’s a long call, and you need to get to the office. Transfer the call to your mobile. Continue till you get to the office then transfer to your office IP phone.”
The latest converged networks are including FMC (fixed mobile convergence) functionality, which can integrate mobile and fixed line networks, McFadden said.
“Fixed mobile convergence solutions make it easier for employees to collaborate and respond rapidly to customers in a multi-vendor, standards based environment. The SME wants to control mobile costs, improve communication, leverage fixed and IP investments, hook PBX (Private Branch eXchange) and mobile phones together, cut duplication of devices, billing analysis and management and make employees more productive.”
A major benefit of all this is that call costs drop considerably, and can disappear altogether. However, Finglas said that concentrating solely on cheaper phone calls was to miss the real advantage of converged networks.
“Everybody focuses in on the call costs, and these solutions may or may not provide a return there, it is dependent on the type of business and the activities that they are involved in,” he said. “Where you really start to derive benefits is around productivity.”
CTI (Computer Telephony Integration), which is typically used to drive efficiencies in call centres, is far less expensive and easier to implement using a voice over IP system, according to Berry.
“You can have a centralised operator anywhere on your data network so you can route calls far easier than you would have traditionally,” he said. “At the moment, the customer will call and say this is so and so from whatever company and I would like to order this much of this product. There are steps involved in that, you have to guess which customer is calling, then get all the customer details up on the screen and then get the order form up on the screen and start inputting the data.”
“With CTI the incoming customer call is identified by the number they are calling from and the call is popped to the agent that handles that account and all the relevant order forms will automatically pop up onto the screen. You are taking three or four steps out of handling a call.”
Berry said that convergence was also enabling people to access the office network and applications from wherever they happened to be.
“Teleworking is a major driver for voice over IP, your network can just expand out to wherever you have a broadband or VPN (virtual private network) connection,” he said.
UC (unified communications) was another attractive driver for converged systems, said McFadden.
“This goes beyond the integration of voice and data and into a world where communications infrastructure integrates and converges with IT,” he said.
A unified communications solution can include voice, e-mail, fax, instant messaging, video and web conferencing, file sharing and applications sharing, and means that two colleagues can work together on projects regardless of their physical location.
“UC enables users to collaborate and conference though a choice of communications medium, and to hold virtual meetings regardless of the location of the participants,” said McFadden.
According to Feely, the emergence of intelligent converged networks means that SMEs can change the way they deploy and use key business applications. Instead of purchasing a software product and installing it on their server or each machine in the office, companies can now access applications online using flexible solutions hosted and delivered on the Internet.
“You are not bothering with buying servers and hardware and software licenses and going through implementation projects, you are just paying a fee per month, per user,” he said. “Also you can then expand it or drop it as you want.”
Feely said that this flexibility was especially useful to smaller businesses that may not have the IT infrastructure or resources to deploy complex applications required as their business expands.
“You do not necessarily have to invest in new hardware,” said Feeley. “If you look at a hosted solution, all you really need is a PC that can run an Internet browser and access reasonably rich Internet content. Previously if you wanted a new application often it meant upgrading your memory and replacing your PCs.”
Burke said that online video was another exciting tool brought to the table by convergence.
“New services such as IPTV (Internet Protocol Television) and video on demand will offer businesses new and interesting opportunities to interact with their customers,” he said.
Implementing a converged communications network in an SME requires careful planning, said Burke.
“The migration strategy to convergence and IP is crucial for an SME,” he said. “A successful migration takes forethought so it proceeds smoothly, at a pace appropriate to their needs, and with minimal risk.”
According to Feely the first step in convergence implementation for small businesses is to put in a good quality high-speed broadband connection.
“The main backbone for a lot of SMEs would just be a broadband connection,” said Feeley. “You get up to 6MB download speed now so capacity-wise that is massive for the vast majority of SMEs. Once you have that in place, you can do it in a piecemeal approach, you do not have to necessarily go for a big bang, throw everything out and start again.”
Finglas said that until recently Irish broadband connections were not sufficiently resilient to carry IP telephony, which meant that SMEs were forced to either go for an expensive solution or continue using traditional telephony. This has now changed, however.
“The two things that were blocking that were the lack of quality of service on the line so the entry level was a full MPLS (multi-protocol label switching) solution,” said Finglas. “The second thing was a service level agreement. Both of those are now being launched, which will open up the market and drive greater adoption from SMEs.”
McFadden said that convergence solution providers and vendors were now beginning to actively target the SME space.
“The major convergence service providers and vendors are beginning to aggressively target the SME market with relatively cheap, so called plug and play products,” he said. “Products which combine the disparate functional technologies such as PBX, router, switch, firewall, voicemail, conferencing, wireless et cetera will start to appear and competition will drive price to a point where it becomes competitive to SMEs.”
McFadden said that larger SMEs might look beyond standard broadband offerings and consider implementing their own virtual private networks (VPN) as their connection point to the Internet.
“The VPN may be an internet based solution, possibly based on DSL (digital subscriber line) connectivity, which is much cheaper than leased lines, or a private solution using MPLS technology,” he said.
Finglas said that many traditional PBX telephony systems that SMEs may be using already have the potential for IP telephony built in.
“You can have a hybrid solution where the PBXs are part of the new solution,” he said. “That can be done with most PBX systems put in over the last couple of years, so it is not a question of throwing out all the old hardware.”
Feely said that competition in the Irish communications market meant that the cost of converged solutions had fallen considerably.
“People will spend a lot more now on desks and chairs than they will on communications technology,” said Feely. “The change has been quite dramatic in recent years. You can get business quality broadband for €40 per employee per month.”
McFadden estimated that the total cost of putting in a sophisticated future proofed converged network for a 20 user SME was approximately €7,400. This included a power over ethernet switch (€2,200), a router (€1,000), 20 IP handsets (€3,200) and sundry installation costs (€1,000).
Converged solutions then lead to significant cost savings for businesses, with free or low cost telephone calls the most obvious. McFadden said that there were also savings typically made in the areas of infrastructure support and maintenance.
Berry said that adding and changing users was much more straightforward and less expensive with IP telephony systems.
“There is a lot of money spent on moves, add and changes in traditional voice systems,” he said.
Scalability is very much a feature of converged communications networks.
“If you put in a VoIP solution it is similar to a server, if it has expansion slots as the company is growing you add another card and you add a number of station licences,” he said. “The solutions are scalable by design, without having to refresh the hardware before you reach quite a high level.”
The use of mobile devices within converged solutions will increase greatly over the next few years, said Finglas, who predicted that companies will soon be implementing their own mini-mobile networks across their sites.
“A lot of companies are looking at a GSM gateway that is specific to the LAN or the company,” he said. “When you come into a radius of your site it will actually pick up your own GSM gateway, rather than O2 or Vodafone, and then you can actually make calls onto your IP network, onto an MPLS and out to the main office. The technology is there and we know it works. One of the barriers to this is the regulator, as far as we are aware a decision has to be made at that level.”
McFadden said that the communications market itself would see convergence in the coming years, with infrastructure and applications vendors working together to provide solutions.
“Convergence will drive the continuing trend towards interoperability and integration between the network vendors and software vendors,” he said. “Virtualisation of resources in the data centre, server and network, will drive corporate IT resource centralisation. Widespread build out of quality of service enabled wide area network infrastructure such as MPLS and SDSL (symmetric digital subscriber line) will be a key enabler to the provision of converged applications across organizations and will enable a more rapid adoption of the home worker concept.”
Feely said the idea of using service providers to provide a converged IT function for SMEs was in the pipeline.
“You are starting to see the emergence of things like software as a service, hosted applications, and bundles that include your broadband, web-hosting, security, back-up storage and maybe some applications,” he said. “This is increasingly the way things are going.”