Skype vs. Traditional Phone Service: Small Business Case Study
This case study evaluates whether a small, non-global accounting firm should replace its traditional telephone provider with Skype as its primary communications network. The analysis compares the costs of Skype's unlimited U.S. and Canada plan against an existing TW Telecom arrangement, while also weighing security risks, IT overhead, and regulatory considerations such as the Sarbanes-Oxley Act. The paper uses a decision tree framework to organize the trade-offs and concludes that the cost savings associated with Skype substantially outweigh the non-monetary concerns for a firm of this size and scope.
- Introduction and Business Context: Frames the accounting firm's communication decision
- Cost Comparison: Skype vs. TW Telecom: Compares monthly and annual costs of each option
- Security Concerns and Limitations: Examines Skype's unknown security protocols and backdoor risks
- Regulatory Considerations and Business Features: Covers Sarbanes-Oxley exemption and Skype business tools
- Conclusion and Recommendation: Recommends switching to Skype based on cost savings
- Decision Tree and References: Visual cost breakdown and cited sources
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What makes this paper effective
- The paper anchors its analysis in a concrete, realistic business scenario — a small local accounting firm — which keeps the evaluation grounded and practical rather than abstract.
- It explicitly balances monetary factors (monthly fees, IT labor costs, setup expenses) against non-monetary factors (security risks, ease of use, regulatory compliance), showing the student understands that business decisions involve more than price alone.
- The decision tree framework provides a structured visual complement to the written analysis, organizing the trade-offs clearly for a non-technical audience such as firm executives.
Key academic technique demonstrated
The paper demonstrates applied cost-benefit analysis in a business context. Rather than simply listing pros and cons, it assigns actual dollar figures to each option — including first-year vs. ongoing costs and IT labor — and then weighs those figures against qualitative concerns such as security trust and regulatory oversight. This approach mirrors real-world technology adoption decisions made by small business managers.
Structure breakdown
The paper opens by framing the business problem and defining the scenario parameters. It then moves through cost comparison, security risks, and regulatory considerations before arriving at a recommendation. The decision tree (included as an appendix) visually summarizes the key variables. The structure is short and direct, consistent with an executive-facing case study format at the undergraduate level.
Introduction and Business Context
The temptation to adopt a phone or communication service that is virtually free — or available at a minimal monthly rate — is understandable, but businesses must also weigh issues related to sensitive information and the trustworthiness of the medium. Skype can connect people around the world at little or no cost to the consumer, but the question is whether businesses can truly afford to rely on it. This case study examines a small accounting firm that operates locally, or across at most two states, whose primary business is tax accounting and preparation. The firm's executives have requested an analysis of the value of using Skype as their primary communications network.
Because the accounting firm is a local company, the plan selected for comparison is Skype's unlimited U.S. and Canada subscription at $2.95 per month (Skype). TW Telecom has been used as the benchmark for the firm's current communication provider pricing (TW Telecom). The analysis also assumes that the company has a network server in place — specifically Windows Small Business Server — supporting other forms of communication, including an Exchange server for Outlook and email, with security features appropriate for the industry.
Cost Comparison: Skype vs. TW Telecom
The decision tree prepared for this analysis makes clear that Skype is the most cost-effective solution available to the firm. The current TW Telecom arrangement costs approximately $5,500 per year. By contrast, Skype's flat-rate plan amounts to roughly $210 per year for unlimited U.S. and Canada calling. When setup costs and IT assistance are factored in for the first year of implementation, Skype's total first-year cost remains substantially below the ongoing expense of the traditional telecom arrangement.
Beyond the direct monthly savings, switching to Skype also reduces the need for dedicated IT personnel to manage the phone system. While Skype's website notes that no IT technician is required (Skype), some configuration and periodic adjustments are inevitable. A moderate ongoing IT cost has therefore been built into the projection, along with a one-time setup assistance fee for the first year. Even with these additions, the savings are considerable when compared to the existing provider.
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