Cost reductions from WAN outsourcing: research

Peter Dinham
Wednesday, 02 September 2009 10:24

IT Industry - Market

Telstra claims that the majority of Australian organisations managing their own Wide Area Networks (WANs) are incurring network operational costs of up to 38 per cent more than they should be, according to research it commissioned into the market.

Telstra enterprise & government’s director data and IP sales, Michael Riad says the research, undertaken for Telstra by Frost & Sullivan, reinforces the fact that as Australian organisations are becoming increasingly enabled through WANs, “optimising their performance cost effectively whilst managing associated indirect costs, such as lost productivity due to downtime, has never been more critical.”
 
Riad says that multiple routine tasks are involved in WAN management, such as monitoring routers and switches, help desk enquiries, resolving problems and upgrading technology, and he claims that often these operational tasks are performed by “highly expensive and specialised staff or not carried out adequately,” a fact he added, “was recognised by 70 per cent of surveyed network managers, who all considered reducing costs to be the key driver when purchasing managed WAN services.”

As you’d expect from Telstra, Riad says a managed services network offers many benefits, such as enabling staff to focus on more strategic objectives like service quality and the integration of new technology, and he claims Telstra’s own  Managed Wide Area Network (MWAN) solution has “helped many of our enterprise customers realise significant costs savings by reducing downtime, improving and enhancing application performance and reporting, and reducing expenditure on management tools and systems.”
 
Frost & Sullivan’s consulting director, ICT Practice and co-author of the research, Andrew Milroy, said that engaging a third party to manage key IT activities is a “highly effective way in which organisations can increase productivity and control costs without major capital investment.”

Milroy says the current global economic crisis is placing increased pressure on organisations to cut back on technology projects that require significant capital expenditure, but he says, however, that engaging a third party is typically funded operational expenditure, which “in today’s climate can significantly reduce direct and indirect costs and offer organisations much greater flexibility.”

According to Milroy, the research findings also demonstrate that “such an approach can allow enterprise companies to benefit from the higher service levels that relate to network availability, performance and reporting.”

Frost & Sullivan’s research involved 12 in-depth interviews with IT and network managers and 90 online interviews with network managers of Australian organisations with between 400 and 2,000 employees.