If your environment includes a wide area network (WAN) then you might be interested in this cost saving strategy. Review the model below and consider the recent results of a distributed office environment in the example that follows.

Telecom (data)

  • Description: Systems connectivity costs including WAN (wide area network) circuits, T1 type services, and other telecom services used for remote office connectivity
  • Category: Direct
  • Identifying: Conduct an inventory of all telecom expenses from your telecom carrier invoice.
  • Quantifying: Total up the circuits/lines that are no longer in use or that can be eliminated along with the savings potential you have by reducing the bandwidth of certain remote office services but that still provide adequate response time. Review alternative telecom services such as DSL and VoIP that offer higher connectivity speeds at lower cost.
  • Investment: New telecom services and implementation costs
  • Tips: Savings opportunity lies in:
    – Lines, circuits no longer used or needed
    – Ability to consolidate remote operation services
    – Ability to reduce bandwidth while maintaining acceptable processing speeds
    – Ability to modify services for improved performance at lower cost

I recently discussed the achievements of a recent remote office connectivity improvement project with an Infrastructure Manager I have worked with over the years. He has a positive track record of implementing cost-effective solutions that improve technology services to support business needs.

The example he shared with me has positive implications for many companies:

The challenge
The company’s WAN was built many years ago to support predominately green screen terminals (IBM terminals that are basically telnet, text-based, low bandwidth connections). With the proliferation of e-mail, planned use of scanned document-sharing, and other newly-developed applications, the existing WAN architecture would not provide the level of responsiveness needed in the near future.

The challenge was to improve circuit performance to address new needs and definition of acceptable service without incurring the 30 percent cost increase of just turning up the existing frame circuits.

The environment
The company had approximately 130 remote offices located around the country with frame relay connectivity at 64 KB and 128 KB.

The plan
They decided to convert the existing remote office connections to a mix of 256 KB through frame circuits and an implementation of DSL, where available, at a minimum of 384 KB. A pilot sampling of 20 remote offices was picked to validate the reliability of DSL versus frame relay. The results overall were positive and the company made the decision to use DSL where possible. There are a few DSL discovery items worth mentioning:

  • The company uses an outside network monitoring service and was able to retrieve additional insight with DSL versus frame relay through the vendor’s much larger base of reference.
  • DSL was determined to be as stable as frame in regards to downtime events per connection.
  • The mean time for repair is longer for DSL. In the company’s frame relay environment, over 90 percent of connectivity problems are repaired within 24 hours. With DSL, only about 50 percent of the events are repaired within 24 hours. Although this is a considerable difference, it was determined to be a manageable issue and worth the other benefits of using DSL (higher speed at less cost).
  • The project is being implemented by Region (geographic area groups of offices). The final architecture will include a mix of frame connections and DSL.

Costs include firewalls, installation of DSL, expenses incurred during on-site work, and double telecom costs for one month. The double telecom costs insure each office continues to have connectivity during the switch from frame to DSL.

The company is experiencing an average of a six- to eight-month ROI for each phase of implementation. When completed, the project improves bandwidth performance for each of the remote offices by 100 percent to 600 percent and saves the company approximately $100,000 per year.

That’s the kind of project CEOs and CFOs love to see because it improves people productivity and the monthly savings goes straight to the bottom line.

Mike Sisco is the CEO of MDE Enterprises, an IT management development and consulting company. For more of Mike’s management insight, take a look at www.mde.net/cio.