In this difficult economy, network costs can be expensive

With today’s tough economy, it’s more important than ever to get the most out of every IT dollar spent.

Today’s networks will continue to expand their range of business and social services with an ever-growing array of bandwidth-consuming applications, such as voice, video, VDI, and other applications going over bandwidth-limited Internet and WAN networks.

Enterprise applications are routinely delivered over networks to remote offices and mobile workers, challenging networking IT personnel with an exponential increase of users. These ever-growing remote users require the same level of reliability and performance as the workers in the home office.

The costs associated with over-taxed, slow-performing networks can be difficult to quantify. If not controlled, slow networks can lead to dissatisfied customers and lost business. These consequences are unacceptable in a market where it costs ten times more to attract a new customer than it does to maintain an existing one. Lost productivity also negatively impacts employee performance and an organization’s bottom-line.

Success in reaching revenue goals, providing quality customer support, and achieving regulatory compliance are directly associated with the reliability and performance of an enterprise’s applications, data centers, and networks.

Improving network performance can save costs and improve productivity. There are generally two types of savings when quantifying the impact of improved network performance and reliability:

  • Hard costs, which are directly reflected in the savings associated with improved network and application performance (e.g. using less-expensive networks or removing the need to upgrade a network)
  • Soft costs, which are generally linked to improvements in employee productivity and business efficiency

Bandwidth costs represent a major part of an enterprise’s networking budget, and IT personnel are always in the position of keeping bandwidth sufficient while not over-spending by over-provisioning their networks.

The expanded use of bandwidth-consuming applications has compounded network challenges. These applications consume unnecessary amounts of bandwidth, and throwing more bandwidth at a network problem typically doesn’t solve it. Yet companies still get stuck paying for new, more expensive network contracts.

For example: a company with network performance problems that pays $3,500 per month for a 100 Mbps point-to-point network between two offices might consider upgrading to a 1 Gbps point-to-point network. The cost to upgrade the network could easily be $9,500 per month (a monthly increase of $6,000), or $72,000 annually. If this cost is extended out five years, the added bandwidth cost is $360,000. Rather than upgrading bandwidth, which may not even fix the problem, a one-time purchase of an enterprise-class WAN optimizer, for $60,000, would save $300,000 over the five year period.

The illustration above only addresses hard costs. Many organizations have a hard time quantifying the total hard- and soft-cost impact of poor network performance.  It’s easy to state that end-users will be negatively impacted if the order processing system goes down for half the day; it’s much more difficult to accurately quantify what the specific financial impact is on the company. For example, there is a big difference between the lost productivity of a high-paid attorney, compared to a legal aid that may be inconvenienced but can still attend to other tasks. Expand this to dozens, hundreds, and even thousands of employees and you can easily understand a substantial soft-cost impact. Just improving network performance by 20% can yield a significant financial improvement.

Under-utilized bandwidth is like a bucket filled to the brim with water wastefully cascading over the side. WAN optimizers improve bandwidth utilization by keeping the bucket full, while preventing bandwidth from spilling out. Areas that can benefit from network efficiency and cost savings include site consolidation, site backup and recovery, cloud computing and storage, and desktop virtualization.

Enterprises are under continuous pressure to reduce operational expenses and improve profitability. By optimizing network connectivity to remote offices and mobile workers, employees are more productive when they have fast access to enterprise applications, and IT personnel benefit by gaining greater utilization of existing bandwidth.

Image credit: 401(K) 2012 (flickr)

About the author
Marc Goodman