According to the Aberdeen Group, network costs continue to rise. In 2008, network spending is expected to increase slightly more than 5 percent over 2007. Telecom management industry association AOTMP of Indianapolis, backs that up, estimating that spending for voice and data services alone averages $2,000 to $ 3,000 (about Rs 1 lakh to Rs 1.5 lakh) per employee.

The biggest area for steady cost growth is the ever-expanding network, either as a result of physical expansion or a thirst for connectivity. In the first case, a new branch office could require replication of the security infrastructure through technology like a point-to-point VPN connection. The network may need to add a multiprotocol labeling service to provide that branch office with a wide-area, high-speed connection. And those expenses are in addition to the cost of routers, switches and network appliances.

Internally, the need for speed is driving the increase of network costs. More devices, either in terms of number of ports for network access or the number of network-connected devices per employee, is increasing. One trend is the shift from standard PCs to mobile PCs. Over the next five years Forrester Research believes corporates will reach an inflection point where traditional PCs are eclipsed by mobile PCs.

"Now you have a device that perhaps needs a port or wired drop at the desk and may also need to be supported on a wireless network, so the number of means by which employees can connect to the network drives the size of the network in terms of end points of connectivity," explains Chris Silva, an analyst with Forrester Research.

Other factors also are contributing to spiraling network costs. Aberdeen Group found that companies expect to grow their bandwidth by 108 percent on average over the next 12 months and expect to increase the number of business-critical apps running on their networks by 67 percent.

The growth of wireless networking is also increasing IT costs. As companies begin to replace all or part of their networks with Wi-Fi networks to take advantage of newer technologies like 802.11n, they are spending liberally. And don't forget the hidden costs: as new devices enter and new network end points are developed, network management becomes more complex and expensive. For example, you might have your core wired network infrastructure from vendor A but overlay a wireless network from vendor B, which creates two separate management consoles. And as more employees connect to the network via devices like BlackBerrys and phones, IT must manage and secure these devices, too.

Clearly, companies must do what they can to manage these costs. AOTMP found that developing a strategy to manage expenses was the top telecom network initiative for companies in 2008, with reducing spending for telecom services and improved asset and inventory management services rounding out the top three.

 

Reducing Network Costs

The first step in controlling network costs, says Aberdeen analyst Began Simi, is to take the network's pulse. That means understanding exactly where the network's performance bottlenecks are and how efficiently the network is performing. "Throwing more bandwidth and money at the problem can be expensive," he says.

 

There are automated network monitoring tools available to measure these metrics. Both sophisticated products from vendors like Cisco Systems and NetQoS and free tools like PRTG Network Monitor and pier can provide a lot of value, such as reducing bandwidth

and server performance bottlenecks and avoiding system downtime.

Once you know what's going on in your network, there are many methods to reduce costs or prevent them from rising further.

 

Single Platform Management

One method is to consolidate physical network infrastructure by finding ways to make the switch that's at the core of the network perform more functions; by doing so, you can reduce the number of appliances and bolt-on solutions your network uses. .

Virtualization is a key part of network consolidation. By setting up network infrastructure to be delivered from a pool of shared resources, those resources can be used more efficiently across a network fabric, explains Peter Fetterolf, a partner at Network Strategy Partners, a Boston consultancy. Virtualization can improve network resource utilization, efficiency and agility, helping lower TCO.

What's more, virtualization leads to reduced overhead in areas like power and cooling; real estate; supervision, maintenance and personnel; and telecom services, he adds. And consolidation of service capacity in a single location creates more predictable demand patterns that permit better utilization, while overhead costs are spread over more productive assets like systems administrators per server.

 

Single Platform Management

 

Another part of consolidation is adopting technology that allows IT to manage both wired and wireless networks from a single platform via APIs or other types of app integration tools. Most big network vendors are battling to provide functions like these, but third-party vendors also can help.

"That means taking one network management console and managing not only just the flow of data bits and bytes, but managing the VPN service, the WAN optimization tool and other things in the network," Silva says. "You want to consolidate your different management interfaces and consoles into one virtual single pane of glass management, where everything is on one screen."

And don't forget what you already have in place. It doesn't make sense to invest in more technology if you're not maximizing the value of your current investments, Silva says. For example, you may have spent a lot on a wireless network and mobility technology, but if the network hasn't been configured properly, you're wasting money. If built correctly, the network can probably support technologies like voice over wireless LAN or VoIP, for example.

"Most often, you can squeeze more value from what you already have by using the same infrastructure with different overlay technologies," he says. "So in addition to serving data, that investment in a wireless LAN can also work toward cutting down monthly cellular bills of an organization because that network can also support voice. And the same template can be applied to support things like video, using the WLAN for asset or employee tracking and presence-enabling UC systems."

And examine the vendors and technologies you are using for best value. If, for example, you have relied on one vendor to develop your entire network, expenses could get very high very quickly. "There are a lot of different ways to build a network, and there are a lot of different options. They are all worth exploring," Fetterolf says. And once you have done that, don't be shy about pitting vendors against each other, he adds.

Finally, it can also make sense to look beyond the four walls of your organization for cost savings. Outsourcing network management, for example, can save significant money in some cases. In a recent study, Aberdeen Group found that organizations that outsourced network management reported an average savings of 26 percent when compared with their previous spending.

By Karen D. Schwartz

 

Virtualization Infiltrates Midsize Companies

Midsize companies have jumped on the virtualization bandwagon to achieve cost savings on hardware, power and space, according to one survey.

More than 75 percent of 519 IT professionals surveyed by King Research have already deployed some type of virtualization technology and about 10 percent intend to do so in the next 12 months. The survey, shows that virtualization isn't just for enterprise ITshops anymore as more than half (55 percent) of companies polled said cost savings on hardware, power and space were the primary drivers for adopting the technology. More than 80 percent of those who have deployed the technology reported experiencing savings from reduced hardware requirements.

About 56 percent of the companies surveyed represented midsize companies, or those with between 100 and 5,000 employees. Eighty-five percent of midsize companies have deployed or have plans to deploy some form of virtualization technology in the next 12 months, and about 64 percent of midsize companies report that their organizations have already adopted application virtualization or plan to do so within 12 months.

"The idea that virtualization is strictly an enterprise commodity simply doesn't hold - medium enterprises are embracing virtualization technologies and adopting them at a rapid pace, realizing immediate benefits," said King Research's Diane Hagglund.

Yet challenges remain. About 37 percent said that lack of virtualization expertise limited their adoption plans and 35 percent cited high costs as a prohibitive factor in adopting the technology.