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February 15, 2007

Aberdeen Report Underscores Why Companies Should Upgrade Their WANs

At this point, pretty much every business owner knows that adopting next generation communications services such as VoIP and video conferencing requires network upgrades that can be costly. Furthermore, after these upgrades are in place, their networks are going to become more difficult to maintain and troubleshoot. When migrating over to IP communications, network performance becomes critically important. In particular, these networks must be able to deliver the needed bandwidth so that the quality of the voice and video signals stays within acceptable ranges (and furthermore that they don’t interfere with movement of other data, or negatively effect other mission-critical operations).

Still, many small and medium sized businesses – especially those with multiple locations - are finding it too costly to upgrade their networks in order to make the transition to next generation services. Nevertheless, they had better hurry up and make the investment – because the ones that wait until next year risk having their doors blown off by competitors who are looking to complete their upgrades today.

According to new research from the market research firm Aberdeen (News - Alert) Group, the cost of purchasing WAN (Wide Area Network) products and services is the “number one challenge” for 55 percent of organizations - especially in the face of the enormous demand for more bandwidth. The company’s new report, “Wide Area Network (WAN) Benchmark Report - Latency Matters,” is based on interviews with 126 networking executives from around the world, and is available for free for a limited time.

Interestingly (but perhaps not surprisingly), the report finds that “best-in-class” companies tend to get more bandwidth out of their networks for much less money. Not only do these companies have a higher tendency to “bite the bullet” and make the capital investments needed to improve network capacity sooner, they also tend to monitor, “tweak” and troubleshoot their networks better, thus enabling them to optimize network performance – thus giving them an advantage over those companies which simply are not paying attention.

“The best-in-class actually get more bandwidth without the cost,” said Peter Brockmann, vice president and research director, communications, Aberdeen, in a press release. “These organizations, representing the top 20 percent of Aberdeen survey respondents, had no expectation for bandwidth cost increases and less bandwidth growth than the market average or laggards. They also knew more about their WAN than any other class of users. These organizations measured more attributes of their WAN, more often and on a more detailed basis, than any other class of users and had fewer service defects to show for it.”

More specifically, the research finds that these “best-in-class” companies tend to measure network performance on a daily or real-time basis, as well as measuring network performance on a site-by-site basis. As such, the companies these companies tend to rate their ability to “measure ROI of the WAN as high or very high.” In addition, 94 percent of these best-in-class companies “rated their organizations’ WAN knowledge as high or very high, compared to 48 percent for others.”

The report also finds that these “best-in-class” companies expect 63 percent less bandwidth growth, with no spending growth, compared to an average 7 percent growth for the others. This class of users also had a complex environment - using legacy network services such as frame relay, Asynchronous Transfer Mode (ATM) and IP Virtual Private Networks. They also leveraged new services such as Multi-Protocol Label Switching (MPLS) and Ethernet WAN services.

“Eighty-eight percent of the best-in-class organizations have made convergence of voice and data the highest priority, compared to only 65 percent of the others,” Brockmann said. “Having the technologies to control and manage the WAN equipment as well as the operational tools, processes and disciplines to measure and manage voice services are key to best-in-class business performance.”

The report also reveals that the average Fortune 500 company spends about 3.6 percent of revenues on network services, equipment and assets. In addition, 94 percent of respondents said they expect total WAN bandwidth requirements to grow within the next 12 months.

But despite the high cost of migrating over to IP communications, most businesses are prepared to at least make the investment in infrastructure to improve capacity (i.e. bandwidth). According to the findings, 21 percent of organizations plan to deploy MPLS services and 12 percent plan to deploy Ethernet WAN services within the next year.

The study concludes that organizations which have not yet upgraded their WANS should accelerate the plans to migrate to new WAN services, such as MPLS or Ethernet WAN services, to capture cost benefits. They also should deploy tools and processes for more frequent measurement of WAN availability, audio quality and service performance for faster service defect detection and response. This might require some companies staff a network operations center which can provide continuous monitoring and, when needed, optimization and troubleshooting.

The “WAN Benchmark Report” is underwritten by Orange Business Services and Yipes Enterprise Services. A complimentary copy of the report is available at

Aberdeen Group, a Harte-Hanks Company, is a leading provider of fact-based research and market intelligence. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis.

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Patrick Barnard is Assignment Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.


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