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.
Reducing network costs
The first step in controlling network costs, says Aberdeen analyst Began Simi, is to take the network's pulse. That means understanding exactly where the network's performance bottlenecks are and how efficiently the network is performing.
"Throwing more bandwidth and money at the problem even though you don't understand the bandwidth consumption per application or network location can be expensive," he says.
There are automated network monitoring tools available to measure these metrics. Both sophisticated products from vendors like Cisco Systems and NetQoS and free tools like PRTG Network Monitor and pier can provide a lot of value, such as reducing bandwidth and server performance bottlenecks and avoiding system downtime.
Once you understand what's going on in your network, there are many methods companies can use to reduce costs or prevent them from rising further.
One method is to consolidate the physical network infrastructure by finding ways to make the switch that's at the core of the network perform more functions; by doing so, you can reduce the number of appliances and bolt-on solutions your network uses. Many networking vendors like HP and Cisco are making inroads in this area.
Virtualization is a key part of network consolidation. By setting up the network infrastructure to be delivered from a pool of shared resources, those resources can be used more efficiently across a network fabric, explains Peter Fetterolf, a partner at Network Strategy Partners, a Boston consultancy. Virtualization can improve network resource utilization, efficiency, and agility, helping lower the total cost of ownership.
What's more, virtualization leads to reduced overhead in areas like power and cooling; real estate; supervision, maintenance, and personnel; and telecom services, he adds. And consolidation of service capacity in a single location creates more predictable demand patterns that permit better utilization, while overhead costs are spread over more productive assets such as systems administrators per server and network managers per network element.
Another part of consolidation is adopting technology that allows the IT staff to manage both the wired and wireless network from a single platform via APIs or other types of application integration tools. Most of the major network vendors are battling to provide functions like these, but third-party vendors also can help.