Of all of the ongoing expenses needed to keep corporate IT running, network-related costs are perhaps the most unwieldy. New technologies, changing requirements and ongoing equipment maintenance and upgrades keep IT staff on their toes and money flowing out the door. But there are ways to manage network costs.
The Problem
According to Aberdeen Group, network costs continue to rise steadily. In 2008, for example, network spending is expected to increase slightly more than 5 percent over 2007. Telecom management industry association AOTMP of Indianapolis, Ind., backs that up, estimating that spending for voice and data services alone averages $2,000 to 3,000 per employee.
The biggest area for steady cost growth is the ever-expanding network, either as a result of physical expansion or a general 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 (MPLS) 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 that the branch office may need.
Internally, the "need for speed" is driving the increase of network costs. More and more devices, either in terms of number of ports for network access or the number of network-connected devices per employee, is increasing.
One growing trend is the shift from standard PCs to mobile PCs in the corporate world. Over the next five years Forrester Research believes corporate America 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 of Cambridge, Mass.
Other factors also are contributing to spiraling network costs. Aberdeen Group, for example, found that companies expect to increase their bandwidth by 108 percent on average over the next 12 months and expect to increase the number of business-critical applications 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 the network 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, the IT staff must manage and secure these network-connected devices as well.
Clearly, companies must do what they can to manage network costs. AOTMP, a telecom consultancy based in Indianapolis, found that developing a strategy to manage network 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.
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