Interactive Intelligence, an Indianapolis provider of VOIP software largely used in contact centers, is having a banner year. Sales are double what they were a year ago, which is validation for a pioneer in the use of the Session Initiation Protocol (SIP). Carolyn Duffy Marsan chatted with Interactive Intelligence CEO Don Brown about his company and broader industry trends. Here are excerpts from their conversation:

Interactive Intelligence is on a roll, winning several major honors this year and posting strong financials. Why is the company doing so well?

We've had a really great software platform and a set of applications that a lot of organizations have been using since 1997, but what held us back is that our solution ran on proprietary hardware. What has changed and has propelled our growth in the last couple of years is our move to VOIP and, specifically, using the SIP standard. We were able to move away from this proprietary hardware and do everything in software. We have a decade's worth of applications that we have developed, including IP PBX, voice mail, faxing, unified communications as well as the more specialized customer service functionality. This trend has cut a good 40% to 50% off the cost of our overall solution.

Do CIOs and network managers care that your products are based on SIP?

They do, because it's an industry standard. IT managers and CIOs would much rather buy something that's based on standards as opposed to something that's strictly proprietary, especially in communications. SIP has been around for seven or eight years. Microsoft Windows XP has an embedded SIP stack. Anybody who knows anything about VOIP is familiar with SIP as the recognized standard.

What stage are your customers at in terms of SIP adoption?

Two years ago, we were seeing the early adopters. Last year, we were seeing the more aggressive companies, but not those on the bleeding edge. This year -- and you can see this in our financial results -- SIP has crossed over to the mainstream. Companies that a couple years ago wouldn't have dreamed of moving into VOIP or SIP are comfortable with it, because they've seen enough success stories.

How far into the future will the transition to SIP go on?

If we look at the last major transition -- which was the migration from analog to digital -- it lasted a decade. It'll take that long at least to move to SIP. This is a larger transition, because we're not just talking about changing the communications systems but also the merger of communications systems with the rest of data networking. It's a big, big project.

The other thing that's happening is that as communications merges with the IT infrastructure, it also gets intertwined with business processes and applications in a new way. The first step is moving to VOIP. From there, the longer term work of tying communications into businesses processes in totally new ways begins. That's what's really exciting.

What companies are shaping up as your primary competitors in the SIP market?

It's still the old guard for the most part. Avaya is a great competitor, and they have a tremendous advantage, because they are the incumbent in so many installations. Nortel and Cisco are obvious, because they own the IP network, although their contact-center products are fairly weak. Another competitor called Aspect Communications specializes on the contact center.

Interactive Intelligence is known for being first-to-market with IP telephony and SIP products. Is the bleeding edge a good place to be for the enterprise market?

When you talk about the infrastructure, that's one place where it is dangerous to be on the bleeding edge, because network managers and CIOs and other decisionmakers don't want to take too dramatic of a chance with their infrastructure. But the higher you go up the stack in applications, the less risk there is. We have built a SIP foundation for our software, but where we really distinguish ourselves is in terms of the applications. We provide the business applications that allow people in a contact center to digitally record calls and to record what's going on at an agent's screen. These are the sort of applications that we can be aggressive with and customers are very accepting, because they are not changing the underlying infrastructure.