Microsoft Teams — Building the financial business case.
Whether you’re budgeting for next year, trying to figure out if you can cost-justify Microsoft (vs. your current phone system) or starting your research about Microsoft Phone System, you will need to figure out how much the voice transformation project is going to cost. As we all know, senior management requires a concrete business case with hard numbers before signing off. When we work with clients to build the financial business case for Microsoft Phone System, the discussion immediately focuses on licensing and calling plans. It’s important to factor in the hard and soft costs of your current phone system (and other services that can be replaced by Microsoft Teams). In this post we are going to cover all of the above. We’ll also provide a tool to help with your budgeting activities (spoiler alert: the financial tool is available here).
Here are the steps to build a budgetary cost estimate for Microsoft Phone System:
#1 — Select a base Office 365 license
There are 3 licenses that can be voice-enabled. E1, E3 and E5. Functionality increases as you move up from E1 to E3 to E5. Licenses can be mixed and matched across your organization too. So the first decision is which capabilities/functionality is required per user group. The answer will dictate which base license(s) required.
Office 365 Licensing Table (summarized)
#2 — Microsoft Phone System Add-On
The Microsoft Phone System add-on is the foundation for Microsoft Cloud Voice. The phone system add-on is required in order to add a calling plan to a user account. The add-on in addition to the base Office 365 license.
- The phone system add-on is included in the E5 license (at no additional charge).
- The phone system add-on is an additional charge with E1 or E3 ($8USD/$9.70CAD per user per month).
#3 — Audio Conferencing Add-On
A big advantage of Microsoft Modern Workplace (including Phone System) is the ability to consolidate/eliminate 3rd party online meeting services (e.g. audio conferencing, WebEx, GoTo, Zoom etc) and replace them with Microsoft Teams. End users that currently have a host account for multi-party online meetings with dial-in numbers will require the audio conferencing add-on. Users that host VoIP-only meetings will not require this add-on (because that capability is included in the base Office 365 E1, E3, E5 licenses). If you haven’t used Teams for meetings yet, you’re missing out. The video experience is awesome and joining meetings is a breeze (even if you don’t have the client installed (thanks to WebRTC).
- The PSTN audio conferencing add-on is included in the E5 license (at no additional charge).
- The PSTN audio conferencing add-on is an additional charge with E1 or E3 ($4USD/$4.86CAD per user per month).
More information on Audio Conferencing is available here.
#4 — Calling Plans
There are 2 options for Calling Plans with Microsoft Phone System:
1) Microsoft Calling Plans
There are 3 different calling plans available out-of-the-box:
- Small domestic plan: 120 domestic minutes per user per month. ($6USD/$7.30CAD)
- Medium domestic plan: 3,000 domestic minutes per user per month. ($12USD/$14.59CAD)
- Large domestic & international plan: 3,000 domestic minutes and/or 600 international minutes per user per month (whichever comes first). ($24USD/$29.18CAD)
For more specific information on calling plans, see this article.
These plans can be mixed and matched (e.g. 500 users x 120 minute plan & 50 users x 3,000 minute plan = 210,000 total minutes per month). Toll-free minutes and any additional usage above the plans purchased are covered via Consumption Credits (paid by credit card assigned to client’s Office 365 tenant). In our experience, Microsoft Calling Plans are competitively priced when deployed correctly.
2) Direct Routing (BYOT)
Microsoft provides an option for organizations that want to bring their own trunk (BYOT) to Microsoft Phone System. This option is ideal for organizations that have existing SIP services in place today with competitive rates, on-staff expertise and an interest in continuing to dedicate resources to actively manage & control their telephony environment. BYOT requires certified SBCs to be deployed on the customer network OR via a service provider that delivers Direct Routing as a Service (e.g. Arkadin). For more information about Direct Routing; see the latest Microsoft TechNet article here.
#5 — Managed Services
For organizations that are looking to focus internal resources on their core business and get out of the business of managing their phone system, there are managed services providers that provide end-to-end managed services for Microsoft Phone System (e.g. Arkadin). Managed services for Microsoft Phone System provide organizations with end-to-end solutions for consulting, planning, deployment and ongoing support so IT teams can focus on their core business and outsource cloud voice to the experts. Common requests we’re helping clients with: planning, end user change management, site migration, devices/device management and end user help desk for voice services (and the rest of the Office 365 suite). For budgeting purposes, managed services can range from $2 — $10 per user per month (depending on the level and scope of white-glove service required).
The next step in the budgeting exercise is to figure out what you’re paying for your current phone system. The two most common scenarios for existing phone systems are:
- An existing cloud hosted phone system
Cloud hosted phone systems are typically easier to calculate existing costs then on-premise phone systems. There should be an invoice showing your monthly charges for these services. The complexity is in the details because not every cloud phone system is built the same. Here are the different costs to collect to get the full picture of what your current phone system costs today:
Hosted PBX:
- Monthly recurring costs (hosting)
- SIP/Voice Circuits & Usage charges (if purchased via a separate source then hosted PBX)
- Annual software maintenance charges (if applicable)
- End of term upgrade costs (if applicable)
Conferencing services:
- monthly charges for audio conferencing service
- monthly charges for web conferencing service
- monthly charges for video conferencing service
2. An existing on-premise phone system
On-premise phone systems are more difficult to calculate existing costs then cloud phone systems. In order to get a complete view of current costs, it’s important to look at the following:
Phone System:
- hosting facilities (rack space, compute, power, cooling, etc)
- # of people (or % of their time) it takes to maintain/patch/monitor current phone system (that could be refocused on other projects with a cloud phone system)
- effort to provide end user support/helpdesk services
- Licensing & Annual Maintenance costs
- Upgrade costs (at the end of each contract)
- SIP/Voice Circuits & Usage charges (if purchased via a separate source then hosted PBX)
Conferencing services:
- monthly charges for audio conferencing service
- monthly charges for web conferencing service
- monthly charges for video conferencing service
Now it’s time to input your numbers and compare the results. Arkadin has built a handy budgetary planning tool to help in this process (available here; at bottom of page). It’s important to point out this exercise is specifically focused on hard costs. There are soft costs that are not as easy to quantify and equally important in the process (e.g. business continuity risk, impact of poor/unavailable service etc).
Quick Recap:
Step 1: pick your base Office 365 license
Step 2: add the phone system license
Step 3: add the audio conferencing license (for those that need PSTN dial-in)
Step 4: add your calling plans (Microsoft or bring your own)
Step 5: find a partner to guide through the transformation
Hope this post helped to clear up how to budget for Microsoft Phone System. If you would like to talk through your specific situation in more detail, the Arkadin team is standing by and happy to discuss.
