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Enterprise networking in a post-recession era

This Lippis Report asserts that enterprise network design is back in vogue.

 

 

 

The Lippis Report Volume 28:

 

 

 

Enterprise networking in a post-recession era

 

 

From the Publisher,

Over the past 3 years most network designers were tasked with finding ways to reduce network cost rather than designing networks. In short, most corporations kept their network structure relatively constant but just made it more efficient and secure. In this Lippis Report I claim that enterprise network design is back in vogue. No longer are designers singularly sniffing out cost savings. Most of the Fortune 1000 are in fact analyzing, planning and starting to implement structural changes to their network. Most realize that the economic efficient phase has run its course and now the only way to increase productivity and achieve a further 15 to 30% reduction in spend is to redesign their network. And what is on the minds of most network architects? In a word, convergence. The time for convergence is right thanks to the maturity of IP Telephony offerings, the need to gain control of proliferating mobile devices and a more lenient time frame for ROI calculations. In short a post recession network is an IP converged network that wraps IP communications around corporate profit drivers. Read on to see how.


 

 The Lippis Report Volume 28:  Enterprise Networking in A Post Recession Era

  In This Issue:
  Enterprise Networking in A Post Recession Era
  Instant Messaging (IM) boom
  IP Networks Supporting Real Time Voice
  Phones are Going Smart and Soft
  Say Goodbye to Fixed Phones
  VoIP Service Provider Offerings Proliferate
  VoIP Economics Leaning Toward Private Implementations
  Broadband Proliferation
  WLANs Deployment
  Special Announcements:
 
Announcing the Enterprise Networks 2004 Design Excellence Awards
Enterprise Networks 2004 Conference; April 26 - 28, 2004; Boston Park Plaza Hotel; Boston, MA
  Upcoming Lippis Reports

Enterprise Networking in A Post Recession Era
Yes, it seems like the US economy is rebounding, the recession is over and yes, the networking industry seems to be as well, in certain markets. Over the past few months I have consulted to over ten chief network architects of Fortune 1000 firms and I hear the same request. Can I help them develop an IP convergence strategy and plan? The answer is of course, but what is most interesting and systemic is the reason the question is being asked in the first place. Most if not all enterprises have taken as much as they can out of their IT and total cost of network ownership. That is, the cost for capital, operational (meaning staff and maintenance) and facilities (meaning wide area transport and toll charges) have all been lowered to the point where there isn't much more fat in the system. Many companies have reduced IT spend by as much as 25% over the past three years. I'm convinced that just like mortgage refinancing, this too has run its course. 

The fundamental change in corporate network procurements is that return on investment or ROI is being extended from 12 months or less, to now 24 and in some cases 36 months. This is so very important to our industry because it means that CEOs/CFOs/CIOs and other key financial decision makers are willing to make network investments that pay off further out in time. Most CEOs, CIOs and CNAs (chief network architects) are coming to the realization that the only way now to reduce spending, and increase flexibility and profitability is by re-thinking how their enterprise network supports their business operations since simple cost cutting has bottomed out. Key in this thinking is the fact that during the economic down turn most corporations sought efficiency and cost reduction. This three-year efficiency exercise established new business processes, which are now being supported with new applications. But network spending to support new applications lagged since budget was held back to a tight 12 month ROI. In short, corporations could not spend to gain more efficiency. With ROI being extended, CNAs are now getting the go ahead to seek out "structural" changes that will reap huge rewards even if it takes a few years to realize. 

Not only is this good news for CNAs but for the equipment suppliers and service providers as well. A longer ROI metric will allow a longer protracted recovery in the networking industry. But companies don't just re-architect their network because they can; there has to be a compelling reason because it's very hard work. In the companies I've been working with, we have been able to reduce total cost of ownership by as much as 30% and in one case that means $30 million/year while increasing flexibility and productivity. How you ask? Convergence through IP Telephony is the answer. So if the new mantra is re-design your enterprise network, then where do you start? First let's review a few transformational trends that have been working throughout the economy.

Instant Messaging (IM) boom. In some companies I have seen IM traffic approaching that of voice and e-mail and over the next several years IM will be the dominant traffic type on corporate networks. IM needs to be embraced, controlled, managed and integrated into other communication mediums.

IP Networks Supporting Real Time Voice: IP networks have increasingly incorporated quality of service features to prioritize VoIP transport while the cost of bandwidth has fallen. These trends are true in both wide and local area networking.

Phones are Going Smart and Soft: Increases in computing, storage and display performance and capacity are causing phone, PDA and PC functionality to converge. For example, email, text, audio and video messaging are now included in mobile phones as are PDA features such as calendaring and limited Internet access. I call this next generation of communicating devices, "smartphones" and they will support Wi-Fi and GSM/CDMA interfaces, providing corporate users access to enterprise IP telephony services while in the office and a mobile provider service when they're not. Voice communications capabilities are now included in standard desktop software packages such as Microsoft's Outlook. Many softphone providers such as Avaya, Siemens, Cisco, Mitel, 3Com, et al, will have a phone icon that enable VoIP calls from Microsoft's Outlook using existing contact lists.

Say Goodbye to Fixed Phones: Fixed phones on corporate desktops have been part of a knowledge worker's productivity tools since the industrial revolution. As the economy enters into the convergence era, smart and soft phones will be the norm while fixed phones tethered to a desktop will be the exception. Driven by the ever-increasing need for businesses to be mobile and flexible, collaboration between knowledge workers will occur through soft and smart phones that offer optimal access, be it IM, VoIP, email, text messaging and/or video. I call this new set of collaboration capabilities "IP communications".

VoIP Service Provider Offerings Proliferate: Over the past six months, nearly every large interexchange service provider has announced a VoIP service with their IP VPN offering. In the next six months every large interexchange service provider will do the same. Add all the start-up service providers in the VoIP space such as Vonage, packet8, et al, and you get competition plus innovation, which results in choice. The major drivers for the service providers to convert to IP telephony are efficiency, bypassing as many of the $30B access and universal service fees as possible. 

VoIP Economics Leaning Toward Private Implementations: The incremental cost of adding voice service to the existing telephone network is approximately 1 cent. The incremental cost of adding VoIP to an existing frame relay, IP VPN/MPLS corporate network is close to 1/8th of a cent and at times even less. What this says is that for the first time in the history of telecommunications, corporations can provision voice service cheaper than service providers. Even with the massive scale of all service providers, corporations equipped with smart and soft phones and a converged capable IP infrastructure can deliver enterprise voice service at lower cost. Therefore, private IP Telephony implementations will be more popular and the service providers will potentially become even more hollowed out as they are relegated to transport providers during the convergence era.

Broadband Proliferation: Competition between cable and telecos for broadband customers has resulted in a high rate of adoption to both residential and small office connections. Factor in government incentives to encourage teleworking plus employee preferences and corporate cost cutting opportunities and you get a remote workforce on a scale that corporations have never seen before.

WLANs Deployment: Sure, corporate adoption of WLANs is slower than most equipment suppliers had hoped, but the industry will knock down the three key barriers of entry: 1) network security, 2) management and 3) automated RF management. WLANs will be a large part of enterprise networks, perhaps driven more by smartphones than laptops.

Chief network architects are still very interested in reducing network spend, but the smart designers are now able to architect a converged network thanks to longer ROI return metrics being put in place. Converged networks are not just about combining voice and data networks into one to obtain reduction in operational, facilities and capital cost. Converged networks have to support wide scale mobility through centralized control and management, perhaps through managed mobility services. To leave out mobility as part of a converged network architecture is missing a major opportunity to reduce cost and complexity and increase productivity. If examined, most network planners will realize that the consumption of cell phone minutes has doubled nearly every two years over the past five. Also, while cell phone bills have gone up, their unit cost/minute has fallen far more precipitously than toll. This increased use and decreased unit cost boosted cell phone consumption to the point where it could represent between 20 and 30% of overall annual voice spend. 

In short the set of communication tools we use to collaborate are many and our options will only grow in number. The glue that ties all these devices together is IP. What makes them useful is IP Telephony. What will make corporations achieve another level of productivity during the convergence era is collaboration through a set of IP communications that use the right medium, be it IM, email, voice, video, text, etc., to bring colleagues together to solve a problem or seize an opportunity. The industry is entering a new, post recession stage where convergence is the driver, IP Telephony is the platform and collaboration is the killer application. To put all this together for your corporation will take work, but it's worth it.

I welcome your comments. Please send them to me at info@lippis.com.

The following educational programs will help you manage your way in the new era of convergence. You'll receive the insight and practical guidance you need to successfully design your enterprise network. 

"Presence-Based Communications: What It Is and Why It Will Transform Unified Communication". Available on demand now. 

The Enterprise Networks 2004 Conference
April 26-28, 2004, Boston, MA
Join me at the Welcome Reception on Sunday April 25 6:30 to 9:30 PM

For more information and to register, please visit www.en2004.com

Register by April 2 and receive:
  • $200 savings
  • Free wireless card
  • Free copy of the new "IP Telephony Total Cost of Network Ownership Report", which I authored along with Dr. Mark Gaynor of Boston University


Nick

 



The Lippis Report is written by Nick Lippis, a world-renowned authority on corporate computer networking and consultant to CxOs of Global 2000 companies. 

Special thanks to Barbara Thomsen barbarathomsen@peoplepc.com for copy editing this Lippis Report. 

Please feel free to forward The Lippis Report to your peers. If you received The Lippis Report by it being forwarding to you, you are welcome to a free subscription at the www.lippis.com site. To be removed from this list please reply with "remove" in the subject field.

Reporters are free to quote The Lippis Report with acknowledgement.

past issues

 



Special Announcements:


Announcing the Enterprise Networks 2004 Design Excellence Awards

Brought to you by Network Magazine, the Enterprise Networks Design Excellence Awards (ENDEA) acknowledge and honor network architects who have designed a new or updated network infrastructure, leveraging the latest technological advancements in the networking industry. Network architecture submissions from across all industries are considered, and will be judged based on the following criteria: 

  • Ability to support new business processes and/or applications

  • Use of new technologies, such as IP telephony, utility computing and Wi-Fi

  • Architectures that take a holistic approach to network security<

  • Infrastructure designs that intrinsically support strategic and operational business goals efficiently

  • Dramatically improves IT responsiveness and/or cost of ownership as a direct result of the new network design


Network architects will be recognized with awards in each of the following three categories: 

  • Medium Sized Enterprise (under 2,000 employees)

  • Large Enterprise (2,000+ employees)

  • Overall Excellence In Design

All winners will be invited to attend The Enterprise Networks 2004 Conference, where CMP Media and Network Magazine will present awards and invite each lead architect or appropriate network design team lead to speak on a conference panel discussion moderated by Art Wittmann, Editor-in-Chief of Network Magazine. Enterprise Network Design Excellence Panel will be held on Wednesday, April 28 from 1:15 to 2:45 PM.

Enterprise Networks 2004 will provide all winners with free admission to the Conference. CMP Media and Network Magazine will provide all winners with travel and lodging.

The Lippis Report is written by Nick Lippis, a world-renowned authority on corporate computer networking and consultant to CxOs of Global 2000 companies.


Enterprise Networks 2004 Conference; April 26 - 28, 2004; Boston Park Plaza Hotel; Boston, MA

Enterprise Networks 2004 is the ultimate educational experience for anyone responsible for architecting, designing and managing enterprise networks. Comprised of six online forums and a three-day conference, the content has been developed by Nick Lippis and a team of enterprise network designers for enterprise network designers. Enterprise Networks 2004 is presented in association with Network Magazine.

Enterprise Networks 2004 Schedule 

Date 

Media 

Content 

Available On Demand Now 

Online Forum 

Strategies For Deploying Integrated Network Security 

Available On Demand Now

Online Forum 

IP Telephony Economics: Does It Add Up To Savings and Productivity? 

Available On Demand Now

Online Forum 

Integrating Wi-Fi Into An Enterprise Framework 

Available On Demand Now

Online Forum 

Presence-Based Communications: What It Is and Why It Will Transform Unified Communication 

April 26 - 28, 2004 

Conference

Enterprise Networks 2004 Conference; Boston Park Plaza Hotel; Boston, MA 

May 25, 2004 

Online Forum 

Distributed Intelligent Networking: A New Enterprise Network Framework Emerges 

June 17, 2004 

Online Forum 

IP Telephony Tools: Where Are They? 

For more information and to register, please visit www.en2004.com.

 


 Upcoming Lippis Reports:

IP Telephony Architecture: Migration is a Hybrid or Pure play choice:
It is true that voice is the future of enterprise networking, but how do corporations migrate to an IP Telephony environment? Over the past four years many have installed IP-PBXs in small or remote offices with only a few implementing large-scale 1000-10,000 installs. Merrill Lynch provides one approach: Do both a TDM PBX and IP Telephony. This approach allows enterprises to become comfortable with IP Telephony before a massive migration takes place. It in essence provides network executives with a control knob, which they can change as they become more assured of IP Telephony's security hardness, its reliability and total economic impact. In this Lippis Report we argue that there is but one IP Telephony architecture and deciding hybrid vs. pure play is a matter of migration.

IP Telephony Total Cost of Ownership Model
In this Lippis Report we offer a cost of ownership model that network managers can use to evaluate IP telephony implementation plans. We'll show you what you should put into your model including capital, operational and change management cost. We'll also give you some rules of thumb indicating where you may find savings with IP Telephony installs.

The Total Economic Impact of IP Telephony

What is the total economic impact of an IP Telephony installation? Are savings found in moves, adds and change cost? What about toll by-pass savings? Is it in avoiding the cost of maintenance agreements and truck roll elimination to re-configure user options? Are the savings in the convergence of two local and wide area networks into one IP network? Or are the savings in call center efficiencies thanks to IP Telephony's virtual workforce feature? Can new productivity boosting communication options be quantified? In this Lippis Report we explore where the cost savings are in IP Telephony installations and provide guidelines to estimate its total economic impact.

Anatomy of an IP Telephony install
What is required to install an IP Telephony solution? Power over Ethernet switches, call manager servers, IP phones, soft phones, SIP phones, software licenses, management software, media gateways, unified communications, extra LAN switch ports, etc. In this Lippis Report we will walk you through the key components required to install an IP telephony solution.

IP Telephony Drives New WAN
There are multiple models for connecting IP Telephony sites. Between larger sites many enterprises are considering the addition of Multi-Protocol Label Switching (MPLS) to their frame relay network in hopes of obtaining some quality of service so they could move voice-over IP traffic onto that transport. This is very popular in Europe, with intercontinental links and between regional and headquarter sites in the US. Another model is the implementation of dual broadband links in smaller sites, eliminating frame relay and 1MB voice circuits to transport VoIP and IP traffic. Still many are eyeing 10 and 100Mbs metropolitan area network links to consolidate voice and data traffic onto a single infrastructure. No matter how you slice it, IP telephony is forcing enterprises to re-think wide area network architecture and design. In this Lippis Report we will present all the options along with their strengths and weaknesses.

IP Telephony Case Study
In this Lippis Report we dive into the decisions and results of an IP Telephony installation. We'll share with you the trade-offs, vendor considerations, economics, concerns and best of all the results obtained by a large IP Telephony installation.

What do you get when you combine IP Telephony, Wi-Fi, SIP and network Security? A killer app and a new category of communicating devices.
Enterprise voice service has always been tethered to a desktop. When's the last time you saw a colleague walk around the office talking into their corporate phone? Not ever is the answer, unless they were using a cell phone and being charged minutes in the process. The combination of IP Telephony, Wi-Fi, the SIP protocol and secure voice communications will untether enterprise voice services. Motorola and others are building dual-mode phones, and the WLAN switch firms are looking to add value beyond simple data mobility. The IP Telephony vendors are looking for new ways to add value by extending their feature sets to mobile phones that don't charge up cell phone minutes while delivering secure IP voice communications. In this Lippis Report we will explore a new communications industry category that combines Code Division Multiple Access (CDMA), Wi-Fi, IP Telephony, SIP and network security allowing corporate employees access to their communications any time and any place.

Entire contents C 2004 Lippis Enterprises, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Lippis Enterprises, Inc. disclaims all warranties as to the accuracy, completeness or adequacy of such information. Lippis Enterprises shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.



 

   
 

Lippis Media LLC 110 Shawmut Rd, Canton, MA 02021

 
This was last published in August 2003

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