Outsourcing managed WAN services makes sense

The majority of Australian organisations that manage their own wide area networks (WANs) are incurring network operational costs of up to 38% more than they should be, according to research released by Frost & Sullivan and commissioned by Telstra.

The research report, entitled ‘How cost savings are driving the case for third party managed WAN’, indicates that using a specialist managed network services company to manage WANs can be much more cost effective than self-managed WANs, even when excluding indirect costs and only comparing direct costs.

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.

“The current global economic crisis is placing increased pressure on organisations to cut back on technology projects that require significant capital expenditure. However, 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,” Milroy said.

“Our 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.”

Telstra Enterprise & Government’s Director Data and IP Sales, Michael Riad, said the research reinforced the fact that as Australian organisations are becoming increasingly enabled through WANs, optimising their performance cost effectively while managing associated indirect costs, such as lost productivity due to downtime, has never been more critical.

“Multiple routine tasks are involved in WAN management, such a monitoring routers and switches, help desk enquiries, resolving problems and upgrading technology. Often, these operational tasks are performed by highly expensive and specialised staff or not carried out adequately. This was recognised by 70% of surveyed network managers, who all considered reducing costs to be the key driver when purchasing managed WAN services,”  Riad said.

For this research, Frost & Sullivan used a mix of existing information, secondary research and primary research. Existing information was augmented with 12 in-depth interviews with IT and network managers and 90 online interviews with network managers. The research focuses on organisations in Australia with between 400 and 2000 employees.

To view the full research report, visit http://www.telstraenterprise.com/productsservices/NextGenerationServices/Pages/ManagedNetworkServices.aspx.