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When wireless is the most cost-effective solution

Sometimes the business case can be made for a wireless network, and sometimes it can't. In addition to the total cost of ownership, companies need to consider user needs, building design, and Internet access costs before going the wireless route.

While most managers would like their employees to be connected all the time, wireless networks are not going to replace wired systems any time soon. Some industry analysts predict that wireless will be used as needed by businesses to supplement or enhance existing networks, rather than replace them outright.

If you are considering installing a wireless network, it may make more business sense in some cases than others. This article will discuss the costs of a wireless network and what geographic and business situations are more appropriate for such a network.

WLAN costs
According to a recent Gartner Group study, the most expensive component in wireless LANs (WLANs) is the network interface card, which runs about $169 to $250 per device, compared with an average of $80 for a 10Megabit to 100Megabit/second wired network interface card. The cost for access points runs from the $1,000 to $4,000 on average.

Gartner Group forecasts that wireless LAN revenue will total $487.5 million this year versus $187.9 million two years ago. The total value of installed wireless LANs will be $35.8 billion in 2004, according to the recent Gartner reports.

Businesses of all sizes can benefit from a wireless LAN, which now can provide a powerful combination of wired network throughput, mobile access, and configuration flexibility. The economic benefits can add up to as much as $16,000 per user—measured in work productivity, organizational efficiency, revenue gain, and cost savings—over wired alternatives, according to 3Com Corp. statistics.

Total cost of ownership considerations
Increased worker productivity and lower installation costs are two of the potential benefits to a wireless network. Before deciding to install a WLAN, businesses should look at the total cost of ownership (TCO) to see if this cost is balanced by the potential benefits.

In the Gartner Research Note, “Why Measure TCO?” analyst M. O’Connell writes that IT decision-making that incorporates advanced forms of TCO helps an IS manager to:
  • Move beyond costs to include head count, activity-based costing, performance metrics, and service-level comparisons.
  • Understand the TCO concepts that can be applied to the manager’s particular organization.
  • Explore various scenarios, taking into account variables such as changes in organization, training, processes, best practices, products, and architecture in order to forecast the impact of the contemplated changes to IT infrastructures.
  • Quickly quantify and prioritize a wide range of IT planning alternatives.
  • Explore various scenarios, taking into account variables such as changes in organization, training, processes, best practices, products and architecture in order to forecast the impact of the contemplated changes to IT infrastructures.
  • Quickly quantify and prioritize a wide range of IT planning alternatives.

There are several tools available to measure TCO. Managers need to select a method of estimating TCO based on the decision at hand and the required depth of information. Gartner recommends a spreadsheet or software-based products for assessing the basics of TCO and the project’s impact on specific budget areas. For a bigger picture of the total cost of ownership of a wireless network, managers should use a benchmark-based tool to decide whether the best IT processes are in place to minimize costs and maximize performance and to justify and prioritize IT investments.

When wireless makes the most sense
For environments that are difficult to wire, such as a temporary office space, a historic building, or a library, a wireless network is more cost-effective in the long run than a wired one.

Wireless is also a good solution if you need to connect several buildings without installing a wired connection. Wireless LAN bridges can extend LANs that are typically one to five miles apart. These wireless bridges span multiple-building LANs without incurring the monthly costs of a T1 or higher speed lines.

For an interesting report on how a wireless network connected legislators in a building built in the 1800s, read how systems integrators at Pythia Corp. in Indianapolis installed a wireless network in the Indiana State Legislature.

On its Web site on mobile computer and wireless networking, MobileInfo.com lists these examples in which businesses found wireless networks to be more cost-effective than wired systems:
  1. Extending an Ethernet Network 2 - Ontario Blue Cross
    Campus-XL3000 Ethernet Repeater System continues to give Ontario Blue Cross significant cost savings (CDN$1,000/month in fiber rental alone) and provide the flexible and reliable solution they need.
  2. Building-to-Building LAN Connectivity
    The total cost of installing a wireless Ethernet system was just under $30,000. The resulting net payback period was 11.9 months. In less than a year the customer gained back over $2,200 a month in equivalent phone line cost savings.
  3. Networking Schools for Distance Learning
    A school district needed to tie satellite schools with the administrative center's computer system and reduce or eliminate the need to copy and distribute instructional videos throughout the district. Due to the cost and bandwidth constraints of the local telephone company's T1 services, a more cost-effective, higher-capacity method to link the district's computer networks was needed.
  4. New Media Technology Delivers Last Mile Solutions for University
    University finds Campus T1/E1 solution based on wireless LAN bridge can be amortized in three years (compared to a 10-year payoff period for fiber).
Is part of your network wireless? Has your company found an innovative way to use this technology? Tell us what experiences you’ve had with a wireless network.

Dawn Marie Yankeelov contributed additional research and writing for this article.

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