VoIP Cuts Telecom Costs for California Insurance Department

Pilot VoIP project tests feasibility for deployment at other California state agencies.

by / June 8, 2008
Insuring Good Communications Photo by Gerry McIntyre

When California Gov. Arnold Schwarzenegger released the 2005 California Performance Review report, which recommended a state agency study the feasibility of voice over Internet protocol (VoIP) phone systems for state agencies, CIO Roy Simpson of the California Department of Insurance (CDI), took notice.

The CDI sorely needed to replace the private branch exchange (PBX) phone system the agency installed in 1989, and Simpson wanted a technology update that would enhance productivity, streamline communications and provide better access for constituents.

"We looked at the governor's report and said, 'Let's be that pilot, and let's provide information back to the Governor's Office and other interested parties through a work group, and share that information,'" Simpson said.
Simpson was prepared for a pilot program since 2004, when the CDI hired Delegata, a consulting firm, to perform a VoIP network-readiness assessment and evaluate the modernization needs of the CDI's call centers in Los Angeles and Sacramento.

Under Simpson's leadership, the CDI was selected as the test agency and implemented its Telecommunications Infrastructure Replacement Project (TIRP). The project upgraded the CDI's network infrastructure and replaced its existing telecommunications systems with a VoIP phone system. The CDI regulates the largest insurance market in the United States, and the agency's telephone system supports more than 1,300 users across 14 offices statewide.


Bring on the Vendors
"We did a lot of brainstorming before we were able to create the plans," Simpson said. "Each proposed solution carries its own unique level of implementation and support rigor based on complexity."

Simpson's team researched what features the CDI needed in a phone system. They interviewed office workers, mobile workers and call center staff to find out what they needed and wanted. "We partnered with the people who would actually use the technology in the end and found out what worked best for them," Simpson said.

The key challenge for the $3.1 million project was dealing with vendors who were unfamiliar with the detail the project plans required to decrease risk and ensure success, Simpson explained. The TIRP team underestimated the amount of staff time required for the project.

Simpson is a firm believer in collaboration as a tool for success. Cooperation during the project management process can help predict the potential problems or dangers, as well as successfully plan, organize and control activities, he said.

During the VoIP implementation, CDI project managers held weekly project management meetings with the project vendors: NetProtex, AT&T, independent verification and validation vendor Delegata, Sabot Technologies, Cisco, and integration vendor Nexus IS. Simpson also established guidelines for team members' interpersonal communication.

CDI project managers established an implementation methodology: system configurations; testing and acceptance test plans covering functional and system test cases; maintenance plans for system support during and after the deployment; and training plans for user and administrative training. They used a Web-based portal to share documents and track and resolve issues during development. Monthly IT governance meetings were held with executive staff to discuss project status, issues and change requests.

In September 2007, the CDI deployed the VoIP-based telephone system statewide, which included a desktop IP station and IP soft phones for three main locations and 11 satellite locations across the state. Many technologies were used for TIRP, including Cisco networking equipment, AT&T wide area network dedicated servers, Cisco software applications and several third-party applications.

The success of the CDI pilot helped California with a cost analysis that determines if and when VoIP technology would be an effective solution for other state agencies. The CDI now markets the TIRP through the state's IP Telephony Work Group to share expertise and lessons learned, and provide system demonstrations to other state agencies.

The CDI's VoIP system supports conferencing, auto attendant, paging, automatic failover and support for analog phones and fax machines. It also supports the CDI's call centers in Los Angeles and Sacramento with automatic call distribution and interactive voice response (IVR).

The IP phones provide CDI workers with mobile extensions, allowing them to use their phone in multiple locations. The system improves security and interoperability through its failure protection when, in the case of a network failure, calls are automatically diverted to an alternate public switched telephone network. The new system also has unified messaging capability that integrates e-mail, voicemail and faxes onto desktop computers for retrieval through a phone or computer interface. A self-service IVR application - with speech recognition for navigation and input - integrates with the department's Oracle database.

The CDI call center provides on-site support to California residents during a disaster. The mobile extension feature was particularly effective during last year's Southern California wildfires, when CDI workers teleworked from home or a local disaster site.

The new system has increased staff productivity and improved service levels to insurance customers and agents, Simpson said. The cost savings in long-distance calling for the CDI is estimated at $80,000 annually. The CDI also saves $111,000 in lease payments it previously paid for the Los Angeles call center system.

Problem Solver
For Simpson, the key to effectively governing an IT project of this size and scope was collaboration - whether it's working closely with vendors to iron out difficulties, communicating about problems or issues, establishing effective working guidelines or working with state agencies to share experience and knowledge. During implementation, a dispute arose with one of the project's vendors over a fixed-price contract. The vendor requested additional money for tax purposes, but Simpson negotiated to avoid a potential implementation delay.

"I said, 'You already have an invoice for payment - why don't we consider the taxes in dispute and continue working?'" Simpson said. "We probably avoided a large legal issue over the contract terms, and they continued to work. I like sitting down at the table to negotiate. It's really about the customer; what they get is paramount."

Simpson believes all organizations should empower staff to take risks, make and meet commitments, inspire trust, focus on the customer and effectively engage teams and individuals.

"The buzzword for success in government is collaboration," Simpson said, "and that anything we do is transparent and open to public review. The real basis of power doesn't come from being the only one with information. It's being able to share it and extend its use to empower others."

Chandler Harris Contributing Writer