Cisco Systems, the leader in data networking, used traditional PBX equipment from Lucent, the leading voice company. When the company moved into IP-based voice telephony, Lucent became a serious competitor, so it had to move quickly to implement its own technology.

The company started replacing the PBXs in its smaller branch offices in early 1999. Of its 40,000 employees in 110 locations worldwide, 29,000 are now using IP phones, including 18,000 employees at its corporate facilities in San Jose.

"We are really betting our business on this technology, so we were able to minimise the business risk by slowly migrating over time and scaling up gradually," says Marthin Debeer, vice president and general manager of Cisco. "We were the first in the world to do this and we wanted to learn lessons for our customers."

The PBX equipment is replaced by software that runs on a standard network server, typically a single 1,000MHz processor with 1 gigabyte (GB) of memory and a 10GB hard disk. Each server supports 2,500 users and is deployed in clusters of up to five.

Cisco is currently qualifying more powerful servers that can support 10,000 employees each. Users communicate using a telephone handset that uses internet protocol (IP) and is attached to the local area network.

"In the data world, people grow networks without a lot of forethought," warns Mr Debeer.

"To carry voice you have to make sure that your network is correctly designed and configured. In most cases it does not require any hardware upgrades, you just turn on some features in your switches and routers or make a few configuration changes."

It is also important to change the way the network is operated. In a data network, if a network manager reboots a router in the middle of the day, users might not be able to download e-mail for a minute or two, which is acceptable.

However, when voice is running on the same network current calls will drop and no new calls can be made for two minutes, which is serious. Procedures must schedule downtime and perform upgrades so that they do not affect voice calls.

On the positive side, simplification of its networks means that Cisco is recovering its investment in only 18 months. With the current slowdown in the US economy, reducing operational cost is at the top of its list of priorities and the company has accelerated its internal deployment because of the cost savings it is realising.

Cisco employees are also benefiting from increased productivity.

"We have brought the business telephone into the internet age," says Mr Debeer. "As well as making regular voice calls, the telephone now becomes like a thin internet client that can access content and information."

For example, users can hit a "directories" button and spell somebody's name. The handset finds their extension and dials them. The "personal assistant" application has fully integrated speech recognition and can route incoming calls using rules that are based on the person calling or the employee's schedule.

There is fully integrated calendaring support, so that Mr Debeer can log into any telephone in a Cisco office anywhere in the world, select calendaring and access Microsoft Exchange server. He can see where his next meeting is, what the agenda is and who will attend.

Users can access company news and in San Jose alone there are 30,000 hits a day from employees checking the Cisco stock price.

"We get it from our telephones because it is so convenient and easy to use," says Mr Debeer. "You don't have to use a personal computer to access critical business information."

Extension mobility allows travelling employees to log into any IP phone to receive calls and access their services. If you call Mr Debeer on his number in California, he could actually receive it in London. Alternatively, it might ring on the IP phone in his study at home.

Cisco employees also use software telephones on their laptop computers, which they can use to give them their personal extension in a hotel room or airline lounges, including wireless Lans. However, Cisco has found that in the office people still prefer to use a separate IP handset than a so-called softphone.

"We save money and get a lot of productivity benefits, but the really exciting thing is to be making the business communication experience so much better," concludes Mr Debeer.

"The phone is the most pervasive appliance in the business environment," he says.

"It is on every desk, in every lobby and in every conference room and you can now use it as an intelligent terminal. We are changing the way people communicate in the business environment by enabling new services that were not possible before."