Billions will be overspent on networks: Gartner

Savvy forecasting, careful buying and getting more value from vendors are the keys to reining in budgets, analysts say

ICT spending decision-makers will waste an estimated US$100 billion (NZ$150 billion) during the next five years by over-spending on network products and services.

That was the startling message delivered by Gartner analysts Mark Fabbi and Bob Hafner at a recent Gartner Symposium on network design. Fabbi created quite a buzz at the earlier spring ITexpo when he told IT execs that Gigabit Ethernet to the desktop was a US$10 billion waste of money.

He expanded on that premise at the more recent Gartner Symposium to argue that network executives should buy only what they know they will need for the next two years, rather than buy more than necessary just in case network requirements grow. More often than not, “just in case never comes”, he says.

Companies should use WAN optimisation tools to reduce network traffic rather than purchase more bandwidth, he says. According to Fabbi’s calculations, WAN optimisation tools can slash traffic 60-80%. Bandwidth needs still will grow by 35% a year, but when that is factored in, the use of WAN optimisation will let a company defer the purchase of additional bandwidth for three and a half years.

Even though companies consider bandwidth to be cheap, mainly because they’re comparing today’s prices with what they were paying for private lines or frame relay, bandwidth is still a significant expense, Fabbi says.

Hafner says companies should avoid spending money on such things as IP phones with large display screens. He says it makes more sense to buy less-expensive phones and take the US$150 — US$350 savings and use them on unified communications applications that will help employees be more productive.

Hafner says if a company is looking for a large display, it makes more sense to deploy a softphone that ties into the PC monitor. Hafner says that because desk phones will be gone in five to ten years, he recommends against making a big investment in physical phones.

Another key area where companies can save money is by doing what Fabbi calls “bandwidth arbitrage”, which means that instead of running all WAN traffic over a service provider’s MPLS network, they should think about a hybrid approach that pushes more traffic over the internet. “The performance is not that different,’’ Fabbi says.

He also says companies could save as much as US$15 billion over five years by playing hardball with vendors. Organisations that currently never look at alternatives to their current vendors should take a whole new approach that involves “making the vendors earn their business”.

Finally, Fabbi and Hafner say ICT executives who save a big chunk of money on such things as bandwidth should use that money on technologies such as application acceleration, unified communications, mobility and voice over wireless LAN. “Don’t focus on a better network”, Hafner advises. “Focus on a better business.’’

Cisco Systems chief executive John Chambers delivered a keynote speech in which he said the company has saved US$100 million in air-travel expenses by switching to video-based collaboration. Chambers says he believes that “collaboration is the next frontier for productivity.’’

Chambers was grilled by Gartner analysts David Willis and Tom Bittman, who wanted to know where Cisco fits into such technology areas as virtualisation, network management, middleware and services.

“I’m very proud to be a plumber,” Chambers responded. He says Cisco is staying out of such areas as network management and services, focusing instead on virtualisation, collaboration, storage and mobility.

Over time, both consumers and enterprise customers will require access to all their applications at any time on any device, Chambers says, and the network will be the platform that will provide those services, he says.

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