Making Business Realities Work For You
Part VII: How to satisfy exponentially growing user
requirements with ever-shrinking budgets and headcount.
BY TONY RYBCZYNSKI
Business Reality: You have to do more with less.
In the dark days of a three-year slump, every IT organization has felt
the pressure to: (A) respond more quickly to (B) constantly changing demands
with (C) higher-performance networking, while (D) trimming workforce and
costs by as much as 30 to 40 percent. The old adage used to be, ï¿½Fast,
cheap, quality; pick any two.ï¿½ Now itï¿½s, ï¿½Deliver all three -- plus a
fourth, adaptability, and a fifth, profitability.ï¿½
Thatï¿½s right, profitability. In an Information Age economy -- where
information is the value-add, and not just a by-product of business --
executives are looking at IT in a new light. Could the network be doing
more? It supports business functions, but could it also be creating new
revenue and productivity gains? Could it be revolutionizing the very nature
of how business is done and how information about suppliers and customers is
shared and used?
Businesses havenï¿½t traditionally been thinking this way about IT, but now
CIOs are challenged to transform their cost centers into revenue centers,
and to use the network to drive employee productivity and new business
CIOs face several difficult challenges in this regard. For one, IT
organizations donï¿½t have excess idle capacity to support new strategic
initiatives, such as multi-channel customer care, wireless eBusiness access,
data warehousing, and collaborative tools. Theyï¿½re already expected to
support a growing number of enterprise-wide applications while facing
drastic budget restraints. Second, IT staff are already stretched to the
limits with the daily tasks of managing, upgrading, and engineering their
networking and computing environments. Itï¿½s not getting any easier to train
and retain skilled staff to run these complex IT environments.
Technology Response: Deploy network solutions that pay
Consolidate servers. While 15 to 20 percent of the IT budget is typically
allocated for in-building and wide-area networking, the vast majority goes
into desktop computing, servers, storage, I/O, and applications -- and the
staff to support them. Many enterprises have deployed highly distributed
client-server architectures, with one or more servers at each site. When
bandwidth was expensive, network latency was high, and processing/storage
capacity on computers was expanding as fast as prices were shrinking, this
distributed strategy made sense, even though it meant a lot of redundant
Times have changed. Bandwidth for the buck has risen so dramatically that
IT organizations should reconsider historical assumptions and revisit the
economics of networked computing models.
According to IDC and HP/Compaq, consolidating servers at regional and
central sites can reduce support staff costs by 7:1 and overall costs by 20
percent to 40 percent. For example, if it costs $2,000/month for remote
server maintenance for 50 remote sites, you could be trimming $1.2 million
from the budget by consolidating those servers into a central data center
and providing browser-based access to applications. Most enterprises have
undertaken some level of data center consolidation, but the norm is still to
have widely distributed print, e-mail, and file servers. The new model
brings the user to the application instead of bringing the application to
the user -- and slashes total application costs by 25 to 35 percent,
according to Gartner Group.
This new model capitalizes on a high-performance, application-optimized
infrastructure, such as Optical Ethernet interconnecting metro sites. By
providing efficient, low-cost bandwidth for server centralization, Optical
Ethernet has demonstrated a 33 percent reduction in operating costs, four
percent reduction in total cost of ownership (TCO) for metropolitan-area
networks, and five to seven percent savings in overall metro IT budget.
Need to trim the budget even more? Store and distribute content more
effectively with content switching technology in the data center, and with
content distribution networks. Intelligent load-balancing improves server
utilization and application reliability; IP security services enable
confidential transactions to traverse efficient IP networks; and SSL
acceleration mitigates the performance penalty normally associated with that
security. Content distribution networks manage information caching to
improve both user and network performance. One online retailer used Layer
4-7 intelligent content-switching and load balancing to achieve a five-month
payback, while increasing Web server performance and utilization and raising
service availability to 99.999 percent. One of the worldï¿½s largest
multi-service financial institutions recouped its investment in six multi-Gbps
switched firewalls in only nine months.
Looking to trim the cost of customer care? Take advantage of interactive
voice response (IVR) systems, which now use advanced speech recognition,
tailored scripts, and other sophisticated features that make them not only
tolerable, but preferred for many uses. In fact, IVR systems are key
enablers for the ï¿½engagedï¿½ business model. Using an IVR solution for
customer self-service, a major brokerage trimmed agent hours by 50 percent
while handling four million quotes per month -- and recouped the cost of the
system in only 10 months. This is just one example of how technology can
lower the cost of serving the customer, while delivering superior service.
Are you finding that bandwidth requirements double about every 12 months,
while your annual budget decidedly does not? If more traffic than ever heads
out across the network instead of staying in the LAN -- and itï¿½s getting too
expensive to feed the bandwidth hunger of all the networkï¿½s users, converge
networks. You can dramatically lower the cost per Mbps by converging onto
one high-performance, application-optimized network that eliminates
boundaries between services, users, and locations.
A converged network offers a consistent experience no matter where users
are or how they access the network. It enables your organization to engage
with customers, not just react to them. It streamlines every aspect of
operations, administration, and maintenance. A simpler network means fewer
boxes, simpler network design, and easier network installation and
maintenance. Convergence also opens the door for improved collaboration
across an increasingly distributed work force.
The ultimate converged network consists of two major elements:
1. Optical networking natively transports Ethernet traffic among major
metropolitan sites, and storage traffic among data centers; and
2. IP VPNs provide secure connectivity for remote user and remote-office
Storage Area Networks and IP VPNs pay for themselves both in dollars and
peace of mind. For example, although the events of 9/11 destroyed billions
of dollars in IT technology, there was no reported loss of financial data,
thanks to metro DWDM systems that enabled real-time mirroring of content on
backup data centers. One large insurance company repaid its investment in
secure IP VPN gateways in less than six months and saved $7 million annually
by providing remote access VPNs for 25,000 employees. A customer business
case for remote office intranet VPNs shows savings of 67 percent, compared
to upgrading routers with IP VPN capabilities.
If you need immediate gratification toward reducing total cost of
ownership, implement IP telephony. The foundation of engaged applications,
IP telephony lowers capital and operating costs by converging disparate
voice and data networks into a single, multi-service network with a
communications server at its center and Web-based network management. For
example, by deploying a VoIP office-in-a-box to converge its communications
infrastructure at the branch level, a regional bank enhanced business
agility and reduced overall expenditures by more than 30 percent.
Calculating The ROI -- In Dollars And Sense
In todayï¿½s budget-lean environment, IT investments must be justified with
sound business-case reasoning, not just for technologyï¿½s sake. Yet the ROI
calculation must also consider the high cost of maintaining the technology
Todayï¿½s user experience, built around todayï¿½s network solutions, can be
frustrating and incredibly non-productive at times. Connections are slow,
hung, or dropped. Data is lost or must be re-entered after lost sessions.
Desktop computers freeze and have to be rebooted. Root causes range from
misconfigurations, desktop OS and application interactions, insufficient
support skills, sluggish networks, and more. Root results range from
frustrated employees and disgruntled customers to overall loss of
productivity and revenue.
Itï¿½s time to exploit technology advances to deliver better network
performance and better service -- while simultaneously reducing costs.
Innovations in multimedia packet networking have fundamentally reshaped the
economics and possibilities of enterprise network computing. Take advantage.
Your competitors probably are, or soon will be.
A converged network that uses Optical Ethernet and IP VPNs lowers
lifecycle costs by simplifying the network from LAN to MAN/WAN to the
Internet, and by driving down cost per Mbps. Add up the efficiency and
productivity gains from load-balancing, content caching, server
acceleration, server and storage consolidation, Web application delivery,
and IP telephony -- then add bonus points for lower software licensing fees,
better resource utilization, and lower operations cost.
It starts to look like real money, easily doubling strategic funding
available for new strategic initiatives. What you do with the savings is up
to you. Let business realities work for you.
Tony Rybczynski is director of strategic enterprise technologies for
Nortel Networks with 30 years experience in networking. For more
information, visit the companyï¿½s Web site at
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