British IT Directors Overlooking the 30% Spent on Telecoms

According to a new commissioned study conducted by Forrester Consulting on behalf of COLT, UK enterprises typically spend 25 to 30% of their annual IT budget on telecoms, but many are not giving this spend the attention it deserves. By moving to leading-edge Ethernet for their company networks and taking the time to understand which underlying technology works best for their business, enterprises stand to save up to 30%­ on their network spend and benefit from better performing networks. This could translate into a major annual saving for large firms.

COLT, a leading European provider of business communications, commissioned Forrester Consulting to interview IT decision-makers of large UK businesses about their existing network infrastructure and their current ICT priorities. The study found that many firms regard networks as a commodity and not something they need to understand in spite of the fact that network performance is now critical for all enterprises' efficiency and increasingly, competitiveness. According to the study: "These firms will waste money and have networks that won't perform as well as those of their network-technology-savvy-competitors."

A separate independent survey conducted by Forrester Research in Q1 2009 found that 24% of European enterprises surveyed said they didn't know whether Ethernet was used in their networks or not, whilst 40% said they were not interested in using Ethernet in their wide area network (WAN).

The study found that data traffic growth is accelerating year on year and cost reduction is a key driver for IT departments. The legal firms interviewed for the study said that their WAN needs were growing by around 30% and the media firms by up to 100 - 200%. Across all industry sectors, the top CIO-led priorities were data centre consolidation, server centralisation and desk virtualisation, as well as bandwidth hungry applications like unified communications and disaster recovery projects, all of which put increasing demands on networks.

The Forrester Consulting study concludes that deploying more Ethernet WAN technology is one of the key ways to mitigate the costs of growing data traffic levels. Many of the survey group who had already chosen Ethernet services in their WAN said that low cost was the key driver, followed by simplicity and flexibility, resilience and low latency.

"In 2009, firms are putting all their telecom costs under the microscope and this will increase the rate at which firms migrate to Ethernet from older technologies." The study continues, "All service providers are now using MPLS core networks to deliver Ethernet services, but their approaches vary considerably, as does the performance of the resulting services." To maximise the benefits of using leading-edge Ethernet services, Forrester concludes that enterprises need to be 'knowledgeable and inquiring buyers'.

Commenting on the finding of the study, Tanuja Randery, head of UK, Ireland & Global for COLT's Major Enterprise Division, added, "Networks are a critical part of the jigsaw in making IT and communications applications available to users securely, reliably and at a reasonable cost. As managed service and cloud computing models become more established, we are going to see networks become increasingly important. It is key that enterprises understand that there are differences between what service providers offer in terms of resilience, latency and speed and make the right choice for their business. What came out clearly in the study is that firms who are using Ethernet WANs are getting significant benefits, not just in terms of cost savings, but also in terms of performance, and that this can directly impact their competitiveness."

Posted to the site on 5th November 2009