VOIP Passes Nissan Road Test

By Stan Gibson  |  Posted 2005-01-24

VOIP Passes Nissan Road Test

You know voice over IP has reached the mainstream when a company that describes itself as conservative builds VOIP migration into its data and voice communications road map.

"The idea was never if it should happen, but when it should happen," said Steve Lydston, IS manager for Networks and Security for Nissan North America Inc., based in Gardena, Calif. With an eye toward saving money and improving corporate collaboration, Lydston studied VOIP for several years. When he judged the time to be right, Lydston embarked on a plan that would span several years, gradually bringing VOIP into all company offices and factories.

"We take a very conservative view of things. We dont want to put the company at risk of serious outages," said Lydston. "We purchased technology to allow us to IP-enable all of our locations, but so we would not have to jump into everything at once." The move to VOIP started almost three years ago, said Lydston, and it will go on for three to four years.

Nissans culture may be conservative, but with the company close to bankruptcy in 1999, dramatic changes were needed. In the face of industry watchers predictions that Nissan would be acquired, Chairman and CEO Carlos Ghosn launched the Nissan Revival Plan and its sequel, Nissan 180, which is in the final year of its three-year life span. The number 180 is derived from the goals of the plan: to sell 1 million more units globally this year than in 2001, to achieve an 8 percent operating profit margin and to reduce debt to zero.

The implementation of VOIP, and the money savings it is expected to generate, is one component in the massive global initiative. But dollar savings arent the only reason for the move to VOIP. Enabling closer collaboration across far-flung worldwide operations is another. Videoconferencing between design and manufacturing engineers is a key goal.

VOIP is entering a new era of mainstream adoption. Click here to read more.

Nissan is not alone in its "not if, but when" approach to VOIP. For example, Visteon Corp., the automobile parts consortium, which counts Nissan as a customer, is in the middle of a massive VOIP rollout as well. Visteon has already deployed 6,000 IP handsets and will connect another 6,000 this year, according to Mike Loo, director of global IT strategy and infrastructure for Visteon, based in Van Buren Township, Mich. With the help of IBM Global Services, Visteon is deploying mainly Cisco Systems Inc. and some Avaya Inc. equipment, Loo said. He is counting on 30 percent monthly savings compared with previous telecommunications expenses, which were for mainly antiquated Centrex services. Like Nissan, Visteon plans to enable engineers to collaborate via videoconferencing. Eventually, Loo said, he plans to enable videoconferencing between Visteon and its customers, including Nissan.

As part of a worldwide company with French partner and controlling shareholder Renault in the Renault-Nissan Alliance, Nissan makes its own purchasing decisions but coordinates them with the global organizations of Nissan and Renault, both of which are moving to VOIP, Lydston said. Exercising its prerogative of choice, Nissan inked a sole-source deal in September 2002 with Siemens AG for VOIP equipment, including the entire line of OptiPoint handsets, ranging from entry-level to high-end models for executives and conferencing-capable phones for meeting rooms.

Lydstons drive to implement VOIP is on two main tracks: one for existing facilities, the other for new buildings. The first to be all-VOIP are smaller, new locations because significant savings—in one case, 12 percent of the cost of the building—have been possible by running only one Category 5 cable to each cubicle or office, instead of running phone wires as well.

However, the savings from VOIP calls for long-distance are not so dramatic that they would warrant a rip-and-replace approach to existing phones. Instead, Lydston said he will replace existing phones as they become outdated or stop working.

Next Page: VOIP fits into collaboration strategy.

VOIP fits collaboration strategy

Additional savings will come from scrapping as many fax machines as possible. "We really dont need fax machines anymore. Theres another element of ROI [return on investment]—we can get rid of them," said Lydston. As analog lines are converted to digital, he intends to convert to AVT Corp.s CallXpress RightFax PC or server-based fax system. New printers are allowing Nissan of North America to scan and transmit as well.

Cutting costs alone would only get Nissan perhaps 90 degrees around on its 180-degree turn. The VOIP deployment is part of a companywide effort to improve collaboration across all design and manufacturing facilities in North America through integrated data, voice and videoconferencing.

The promise of low-cost videoconferencing is particularly attractive, Lydston said, stating that engineers designing automotive components will be able to readily communicate with the manufacturing plants assembling them. The communications gear will carry not only data about the parts but also diagrams of them and videoconferences between the companys design center in Farmington Hills, Mich., and its manufacturing engineers at assembly plants. Also in the loop is the companys hot weather test track facility in Stanfield, Ariz., and Nissan Motors Acceptance Corp. headquarters in Torrance, Calif.

Nissans U.S. automobile manufacturing plants are in Canton, Miss., and Smyrna, Tenn. A power-train plant is located in Decherd, Tenn., 70 miles from Smyrna. In the 3.5 million-square-foot Canton plant, some 400,000 vehicles, including the Altima sedan, Titan pickup, Armada SUV, Infiniti QX56 and Quest minivan, are produced annually. Currently with a mix of IP and analog phones, Canton now has several hundred IP phones.

The 5.2 million-square-foot Smyrna facility produces 550,000 vehicles per year, including the Altima, Maxima, Frontier pickup, Xterra SUV and Pathfinder SUV. The plant installed 250 IP phones in September. Both the Canton and Smyrna plants are using the Siemens HiPath 4500 PBX. "We wanted the redundancy of the HiPath 4500," said Lydston.

"We try to use IP telephony where its the most beneficial—for example, in manufacturing plants that have miles of cable. Rather than pull lots of copper cable, we will pull fiber and give everyone an IP phone," said Lydston.

Nissan has two assembly plants in Mexico, in Aguascalientes and Civac. In addition, Mexican operations are based in one Mexico City office, and a training center is in another Mexico City facility. The Aguascalientes plant makes the Sentra for the U.S. market and a variety of other vehicles for Central and South America. The Civac plant makes a variety of vehicles for Central and South American markets. Nissan has converted systems at all its Mexican locations to 4300 or 4500 and has deployed 250 IP phones in Mexico City, with approximately 125 IP phones in Aguascalientes and Cuernavaca. Using Siemens proprietary CorNet IP communications software, Siemens plans to link all its facilities in the United States and Mexico.

"These guys are always on the phone and talking to each other, sharing systems globally. They have machines that talk to each other. People go back and forth all the time between the U.S. and Mexico," said Lydston.

In North America some 15,000 users are served by IP-capable PBXes, although only 1,200 to 1,500 are using IP handsets. Eventually that number will reach 12,000, Lydston said.

Implementing VOIP will also help improve communications for executives using laptop computers, who will use Siemens OptiClient PC VOIP software. "People fly around the world in corporate aircraft. They land in all kinds of places, like Dubai and Guam. We used to have large pay-phone bills. Now, they can call for free anywhere in the world, using a laptop and a soft phone," said Lydston. "Weve got 1,000 to 2,000 laptop users, and were just beginning that rollout," he said.

Lydston said that so far, audio quality has not been a problem. He cited the companys private IP network, which is supplied by AT&T Corp., as a principal reason. That network benefits from the use of MPLS (Multiprotocol Label Switching) technology, which reads and prioritizes packets according to their content, ensuring quick transit for voice packets. QOS (quality of service) capabilities enabled by MPLS will be particularly advantageous to Nissan when the company begins to implement videoconferencing and collaboration capabilities, Lydston said.

Nissan has outsourced management of its IT operations to IBM Global Services, which was instrumental in establishing a timeline for the transition to VOIP. "The IBM folks run our IT, including voice/data networks. They are our operations people. We have a core IT team of senior managers and architects. We are responsible for what we buy, and IBM is responsible for running it. We get reports from IBM all the time. Its a collaborative effort," said Lydston.

The IBM team uses Siemens HiPath manager at the Canton plant to ensure that bandwidth is available for the applications that need it. Currently, those network administrators manage only U.S. links. When CorNet is fully implemented, they will also manage the Mexican part of the network. Eventually, Nissans European operations network could be taken under Cantons management wing, said Lydston.

Nissan uses Microsoft Corp.s Live Communications Server and plans to broaden deployments. Nissan should benefit from an agreement between Microsoft and Siemens earlier this month under which the two vendors agreed to ensure interoperability between Live Communications Server and Siemens HiPath switches.

"Collaboration is big and getting bigger. Videoconferencing is in trial all over the globe," Lydston said. In Nissans road map for the future, its not a question of if but of when.

Nissan Does a 180
Project 180, now in its third year, is intended to improve Nissans corporate performance and to place the company among the auto industrys leaders
  • Sell 3.6 million vehicles this year—1 million more than in 2001
  • Achieve 8 percent profitability
  • Reduce debt to zero
  • Sold 3.3 million vehicles last year
  • 11.1% operating profit in FY 03
  • No net automobile debt

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