Cutting the cost of networking

You need to cut IT spending, but you want to improve IT services. You need to put a freeze on all new capital investments, but your network infrastructure is showing signs of strain. You`re not alone.

In this time of global economic slowdown, most companies are subject to capital constraints and extreme prudence is required in all network and desktop investments.

However, this could eventually leave you with a network that doesn`t meet your new application requirements, restricts your users and costs too much to expand and improve. Maintenance alone will consume what little resources you have, if you don`t have a pay-as-you-grow strategy in place to help you control the costs.

The cost of updating, expanding and maintaining your networking capabilities in pace with your business growth and new application requirements can be carefully managed if you adopt network "building blocks".

Rather than planning major system enhancements that constitute significant capital investments, companies today have the option to make small, regular system enhancements, which spread the cost and deliver instant business value. This approach helps prevent what is commonly referred to in the industry as the `Chassis Tax`. Traditionally, companies have planned ahead on capacity and usage and have invested now for the requirements of tomorrow. They may only need a four-slot chassis today, but as they expect to require ten slots in five years time, they buy a solution `to grow into`.

As a result, they pay now for six slots that they don`t need. The initial cost of the solution is disproportionately high, and the company doesn`t start to benefit from the full capabilities of the product it has purchased for five years.

When budgets are tight, such large investments are hard to justify, so essential network enhancements are pushed to one side.

A pay-as-you-grow approach, by comparison, enables you to gain a far more linear approach to networking purchases. If a company needs a switch with 28 ports, it can buy a switch with just 28 ports. As its requirements grow, it can simply bolt on additional units with additional ports in small increments. Ultimately, you pay for what you need, when you need it.

The pay-as-you grow approach also saves businesses from the risky possibility of investing in a platform that is using older technology for compatibility reasons.

Companies could find that by the time they have `grown into` the solution that they invested in, it could quite possibly have gone out of date. In the pay-as-you-grow model, however, businesses are ensured of getting the newest technology each time they step forward to expand the network.

Companies appreciate the flexibility to adapt to change and growth, making the network core more of a dynamic entity than a stagnant centralised box, that it could become locked into.

The obvious benefit of a pay-as-you-grow approach is the impact on costs. Companies today recognise the importance of the corporate network and the need to maintain it, but find it hard to justify major capital outlays at a time of global economic slowdown.

Even if business managers put together compelling proposals for new business enhancing applications, such as e-commerce or customer relationship management, it can still be hard to get the board to sign the cheque for such big outlays. With the building block approach, however, a company can buy a product a month, spread the cost and gain incremental improvements in user features and performance with each purchase. It`s a smaller outlay and an immediate benefit. For small organisations, in particular, price sensitivity is significant and the avoidance of large up-front product purchases is an attractive attribute. This benefit is often associated with the benefit of outsourcing: paying for what you need.

However, the pay-as-you-grow approach is different because the network remains in-house along with the efficiency, cost savings and flexibility. Like small businesses, public sector organisations, such as educational establishments, have little funds for large up-front investments and low acquisition costs are crucial.

Costs, however, accrue at all points along the lifespan of a networking product - not just at the point of acquisition. Maintenance, in particular, can put a drain, not only on IT budgets, but also on the time and resources of the team in the IT department.

People are often the biggest cost factor in maintaining the smooth running of a network. The key is to select products that are simple to configure and manage, allowing the performance of the network to be optimised with less man-hours, freeing up the IT department to work on more value-adding activities. What`s more, the IT team will require no specialist training or sophisticated IT skills in order to be able to quickly install, maintain and manage the equipment.

In companies of all sizes, business requirements are driving technology requirements. The versatility of the pay-as-you-grow approach for networking makes it ideally suited to delivering the performance and functionality to support new initiatives to improve customer service, user productivity and network security.

E-commerce is penetrating all aspects of business - from direct customer sales to supplier management and procurement. Consumerism is rising as a result of increased choice and product availability over the Web and, with it, competition and downward price pressures are increasing.

One particularly important implication is the growing awareness of the importance of security for successful e-commerce. As a result, business leaders are asking IT managers to enhance security at all areas of vulnerability, at the same time as extend the e-business infrastructure and deploy new enterprise portals.

There is heightened awareness of the value of existing customers (as opposed to the cost of attracting new customers) and companies are looking at new ways to improve customer intimacy. Business leaders will want to have the option to consider customer relationship management applications and new collaborative technologies over the corporate network to enhance the experience of the customer.

As networks are opened up to customers, as well as partners and suppliers, via the Internet, the challenges for the network double. Your IT department is presented with a more diverse community of network users, each with their own different performance and application requirements to consider. Employees, too, are on the threshold of a whole host of new applications and networking innovations that will make them more productive, while less location-dependent. Business leaders will want to embrace wireless technologies and adapt their networks to provide mobile workers with quick and easy access to the information they need, in the format most suitable for their access device - whether this is a laptop, a mobile phone or a handheld.

New integrated telephony solutions are equally likely to top the corporate wish list, for the improved customer and employee applications they deliver like integrated voicemail, e-mail and fax messaging.

Increasingly, the applications mentioned above will become not so much a business enhancement as a business necessity. Pay-as-you-grow offers businesses the chance to keep pace with their competition, without needing to make a large upfront investment or recruit specialist IT experts.

Adopting a strategy with the pay-as-you-grow approach for network enhancement is the only logical option for businesses today. If you want to keep pace with new technologies, deliver added performance to your users, control your installation and maintenance costs and make the most of a limited IT budget, it offers a compelling solution.

Taking a step-by-step approach, companies can benefit from lower acquisition costs, reduced total cost of ownership and improved return on investment.