Over the past five years the cloud has transformed how businesses organise and use many of their strategic systems.

Most obviously, traditional desktop applications have been transferred to counterparts in the cloud, as they offer lower costs, easier maintenance, 24/7 accessibility and perpetual upgrades. Now business telecoms looks set to go through a radical transformation of its own into cloud services.

Many enterprises already use teleconferencing through systems such as Skype, and since its acquisition of the service Microsoft has announced that it will integrate the systems into many of its forthcoming products. For system administrators, this should lay the ground for a seamless integration of Skype with any Windows platforms in use.

Elsewhere, the video conferencing market is expanding as new low cost systems become available. TelePresence installations based on Cisco's platform offer high end telecoms and video combined, and more businesses are embracing the potential of tablet PCs with systems like Polycom's RealPresence Mobile video conferencing.

This use of unified communications is a trend that will continue and touch all types of businesses in the near future.

Slashing costs

Businesses are initially focusing on how their enterprises can enhance their existing telecoms with cloud based services. The traditional approach has been to lever more efficiency out of existing networks such as ISDN, but with the arrival of the cloud the principles of SaaS (software as a service) are now being applied to telecoms. The practical upshot is that costs can be reduced by about 50% of traditional ISDN services.

The key to cloud based telecoms is SIP (session initiation protocol) trunking. It is a text based signalling protocol that establishes internet protocol network sessions at the application layer, and replaces ISDN with a standard and cheaper connection to the internet.

In addition, using SIP trunking can reduce call costs to the PSTN (public switched telephone network), making it highly attractive to businesses that have already moved other services to the cloud.

To take advantage of the technology, IT managers will need to perform an audit of their company's existing hardware. Anything installed within the last 12 months is likely to be compatible with SIP trunking, but older hardware may need to be replaced.

Flexibility appeal

SIP trunking has all of the telecoms services most existing systems currently offer, including call forwarding, diverting and conferencing. But it's the flexibility it offers that is the major draw for business users.

With traditional telecoms systems, a phone number had to be associated with a physical phone line, but with SIP trunking this is no longer the case. Users can move around an organisation and still connect to its telecoms network, and geographically remote workers can connect to the cloud where the call is routed to the desired destination.

For businesses that are rationalising their operations SIP based telephony offers clear advantages, including the ability to operate a comprehensive telecoms platform with nothing more than a connection to the internet and the promise of cost savings. But a move to these systems can be a highly useful tactical decision, especially for businesses that have embraced the cloud in other areas of their operations.

The dynamic nature of SIP based telephony makes it possible to adopt the 'on demand' principles that have made other cloud based services so attractive: a company no longer needs to sign long service contracts for ISDN lines that may lie idle for a large proportion of the time.

For IT managers the initial deployment of SIP based services will mean using a dedicated connection to the internet. The SIP trunk will replace the existing PBX, which will typically be either basic or primary rate (30 channel) ISDN.

Voice and data are typically separate at this point, but as their respective channels move to the cloud it is possible to make further savings through convergence, managing the available bandwidth accordingly.

In addition, the scalability of SIP based systems is clearly demonstrable for IT managers who have to justify the move to their chief financial officers.

Piecemeal approach

Despite these benefits, businesses are generally taking a cautious approach to SIP, partly because ISDN is a well understood component of their infrastructure. Some companies are taking a piecemeal approach to migration with an eye on a wholesale move to SIP based telecoms in the future.

A McKinsey report on the future roles of telcos in ICT markets concludes: "Large enterprise adoption of cloud is more segmented with a range of adoption cases. For example, 'divisional IT' is the adoption strategy for large enterprises to free IT department management bandwidth. Smaller divisions or departments are provided with a standard, externally managed cloud offering, and the IT department only manages the portfolio of SaaS applications made available."

Many businesses will now look at their existing cost centres and see that traditional ISDN telecoms platforms are relatively expensive and inflexible. This is likely to prompt those that have moved some of their office systems to the cloud to make the evaluation of SIP based telecoms a priority, and to develop changeover plans to minimise disruption.

Companies that have been using VoIP will already have experience of the telecoms benefits they can obtain from the cloud. Now others can move away from the PBX and ISDN platforms that have dominated their telecoms services for decades.

SIP is a natural progression that looks set to become the new standard for business telecoms.