Despite the growing maturity of convergence in South Africa, many corporates still view this type of technology as radical, complex and risky. This perception is often based on the assumption that the company will need to acquire new skills and invest heavily in new infrastructure, while writing off other legacy systems.
The truth, however, is that by using a total cost of ownership (TCO) model to quantify the return on investment on converged telecommunications infrastructure, the benefits and cost savings soon add up.
“The real cost benefit of convergence is related to scale and efficiency,” says Wayne Speechly, Business Development Manager, Communication Services at Internet Solutions (IS).
“Running multiple infrastructures generally costs more money; often double that of what it would cost to run off of a single, unified infrastructure. These increased costs also relate to the organisational cost structures required to facilitate and manage multiple platforms on the network, as along with the hard costs associated with running multiple infrastructures like increased bandwidth requirements and hardware, companies also have to increase their human resource requirements to administrator multiple networks.”
The limiting factor related to human resources, according to Speechly, is the fact that people don't scale and they can't manage more than one network easily or with maximum efficiency. “It is uncommon for a single administrator to work across multiple disparate infrastructures as they generally require specific skill sets,” he says. “However, with all applications and services running on a single infrastructure, you can have a smaller, more specialised team. This leads to added benefits like increased security, more potential for reporting and proactive management, a better understanding of traffic behaviour, reduced costs and improved productivity.”
A single infrastructure also allows companies to follow a single vendor strategy, which gives them the ability to better manage and sustain a mutually beneficial partnership, especially when a vendor that can provide a company with all of their infrastructure requirements is chosen. “There are various benefits to using a single vendor. Firstly, the way in which you measure that vendor is applicable to multiple systems on your network, which makes the customer's life a lot easier,” says Speechly. “Holding a single vendor accountable for the whole network also ensures that there is no confusion, which is often the case when using multiple service providers.
“Also, the ability to choose one vendor that can provide end-to-end services means you don't risk having loopholes and deficiencies in your architecture, as everything from the last mile connectivity and infrastructure to security, telecommunication services and service level agreements are catered for by one party. This not only ensures that accountability for the optimal functioning of a company network rests with one provider, but it also reduces complexity and risk, as there are bound to be inefficiencies when trying to integrate spaghetti networks across multiple partners.”
A further benefit of adopting a single vendor strategy is that companies can decrease marginal costs, by achieving a lower cost per unit. “As you aggregate more services together your cost per unit decreases,” explains Speechly. “Using a single vendor adds to this benefit by improving buying power through economies of scale, because with every unit of technology procured the cost from the vendor decreases, which basically allows the vendor to offer a company more for less.”
From an operational perspective, convergence allows companies to amalgamate applications, services and users onto once piece of infrastructure. “This increases operational efficiency within organisations, as well as the value and productivity of that piece of infrastructure,” says Speechly. “Efficiency improves as all applications start to operate and communicate seamlessly with one another, creating an environment of true interoperability. Secondly, it also allows companies to start bringing applications and services together to increase the inherent value of the infrastructure. Lastly, productivity is improved as the ease of use for users, customers and partners' increases, as accessing a converged network infrastructure means they only require one connection to get what they want, when they want it.”
The last factor relating to the TCO of convergence is the technology's ability to heal business processes, enable mobility and empower businesses to relate to their customers more effectively. It gives organisations the ability to pull actionable information from of the communications stream to improve efficiency and the speed at which business transactions are conducted. “These value propositions, as they relate to convergence, are hard to dispute, but projecting their return on investment can often be difficult,” says Speechly. “The reason for this is that, at its core, convergence is the enabler. The people who use the technology need to unlock its potential to derive benefit. The issue is that changing user behaviour is almost impossible, so it is important to build converged systems that are easy to use and don't require a change in user mindset around day-to-day functioning. This is imperative as the total cost of ownership of a system that does not have user buy-in is far higher than one that everyone uses to help drive organisational efficiency and productivity,” he concludes.
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