"It makes a lot of sense to lower costs," Mason says. "If a credit union is making a decision to upgrade their phone system, it's really almost the only choice they should be going with at this point.

"An example is a branch manager calling his peer at another branch. It doesn't necessarily mean that call will go over the Internet. But it does mean it will go over the same communication and data lines the credit union already has in place connecting its branches. That does save costs."

However, cost isn't the only attraction. Call centers that handle a lot of member support see benefits. Data can be integrated more easily to boost member service.

VoIP is maturing, Mason continues, and most initial problems have been remedied. But it is new, and as with any emerging technology there can still be problems.

One bright factor is in case of a disaster, such as Hurricane Katrina, recovery can actually be easier. For example, the MCUL has a main branch just outside Detroit and another office in Lansing. If the main branch VoIP were to go down for whatever reason, the Lansing office would retain the ability to handle in-bound and out-bound calls.

In addition, "It only took about a day to bring up our Lansing office, and we didn't have to buy two complete phone systems," Masons notes. "We used a smaller, less expensive piece of technology for that additional branch."

However, systems management of VoIP is more demanding than a conventional phone system. It's highly sophisticated, so there are additional aspects requiring attention.

Mason also cites a couple security issues. VoIP typically runs on some sort of Microsoft platform. That means problems such as viruses and worms can also invade voice solutions. But it's probably not an issue if VoIP doesn't actually run across the Internet.

"You should plan how your branches are going to communicate and interact with members," Mason says. "As CEOs and boards consider VoIP, they need to look at it from a strategic level. If a credit union has a strategy of building more branches, VoIP may be a good option. It may not be the right decision for all credit unions. There may be too much infrastructure in place already.

"But I would say if the current phone system is more than five or seven years old, it's a good time to start looking at upgrading. Do your research. There are a number of players out there. You need to determine which is the best fit for your credit union, and how VoIP is going to interact with the rest of the credit union network. It's not something you should get into just because it's the latest and greatest." Stable, But Not Disaster-Proof

Gail Koehler, senior vice president/technology at Purdue Employees Federal Credit Union, sees VoIP catching on and growing. Many credit unions who have not made the move have at least considered it.

Koehler adds VoIP has been very reliable, and the PEFCU network has been up 99.9% of the time. Even so, after a major disaster or other failure, backup systems need to be in place–which would be true even without the latest technology.

Bill Arnold, PEFCU assistant vice president/technology, emphasizes the P in VoIP. Protocol, he notes, defines the standards for putting communications on a network. "We were on dedicated data lines out to each of our branches," Arnold says. "There were also voice networks. So those were two networks we had to run independently. Now VoIP means being able to run voice traffic over the data network. We had the capacity, so it meant gaining more efficiency." The more necessary something becomes, Arnold notes, the more reliable it tends to become because people invest the money needed to keep it up and running. For example, there are fewer dropped cell phone calls today because more people are using cell phones and the carriers have placed more antennas and created smaller cells.

"There have never been a lot of viruses targeted at phone systems," he says. "But viruses like networks. They like to spread over them and share themselves with others."

On a positive note, with VoIP the same protection such as firewalls offered on a data network can be provided for voice communication.

Koehler and Arnold emphasize IT decisions shouldn't be made in a vacuum. Start with the requirements of the various people who will be using VoIP, then determine what technology is actually needed.

Mountain America Credit Union in Salt Lake City introduced VoIP about two and a half years ago. The previous phone system was probably at least 12 years old, and a move to a new corporate office presented an opportunity to upgrade.

Ray Carsey, MACU vice president/technology, explains the credit union had been using toll by-pass by employing voice-over-data connections for about seven years. Then IP was added to telephones.

"Credit unions shouldn't buy VoIP if they just want to use it as they have in the past with PBX systems," Carsey advises. "There are a lot of things you can do with IP phone systems that you can't do with traditional systems. One of the main benefits is we use one cable to go to the phone, then from the phone to the PC. That certainly simplifies wiring.

"Another thing we've done in the past year and a half is start using little video cameras. They're tied to our phones so we can handle videoconferencing between our branch locations and our corporate office."

Each branch typically has a camera in the branch manager's office and one with a large monitor in an administrative room. There are 80 cameras at the 44 branches and some 170 in the corporate office. The idea is to save branch staff trips to the corporate office for training or other events.

Yes, video connections could be provided without VoIP, Carsey says, but it would be a lot more difficult. There's no need for an IT person to hover. Dial the extension and you're good to go.

In addition to being used at the call center, VoIP is also in place at the homes of 10 or 15 call center employees who work from home. MACU is trying to make the call center a universal contact center handling e-mail as well as voice.

Greater New Orleans Federal Credit Union is an example of a credit union looking to move into VoIP as it replaces a 12-year-old phone system. The shortcomings of the current system are apparent, for example, at the call center. The credit union can't track all the information it needs, such as how long a member was on hold.

GNOFCU happens to serve Bell South employees, so when talking about upgrading, Bell South indicated VoIP would be a good solution.

Having seen Hurricane Katrina firsthand, one of the things GNOFCU President/CEO Ricardo Miron likes about the idea is VoIP's flexibility in disaster recovery.

"In a disaster recovery mode, all a person has to do is hand-carry his phone, plug it into a laptop, and as long you have an Internet connection you can make phone calls as if you were in your office," Miron says.

"Providing all of the settings and configurations are done properly, your extension number, your voicemail, all reside in your laptop."

If employees were displaced all over the country, as they were after Katrina, as long as they carried their phone with them and plugged it into their laptop, they'd be in business. The credit union also wanted the new system to have a lot of redundancy, making it easy to quickly connect to the backup site in Jacksonville, Fla. "If this building–our main building–blew up, I wanted our other locations to be able to connect to our disaster site in Florida. The way we did it for Katrina, we actually hand carried our data on a hard drive. What if the person carrying the data had not been able to get a flight to Jacksonville? Then what would happen," Miron wondered. Cost was indeed another factor. The credit union would save money by not needing separate voice and data lines. However, the credit union did back off from some features. For example, GNOFCU discovered a VoIP connection to Jacksonville would cost $4,500 a month.

"Even when you figure in eliminating some of the lines we have today, it [VoIP] is very expensive," Miron says.

But certain costs are dropping. He notes a few years ago a T1 data line cost $1,500 to $2,000 a month. Today it's $600 to $700. However, "That's getting to be old technology," he notes.

At this point post-Katrina, only two of the four GNOFCU branches are operating. The plan is to have them all connected by VoIP.

"We still don't understand it all," Miron admits. "Every time we talk to the Bell South people they come up with a new twist. Make sure you look at the cost structure and what you want to do. It could get very expensive."