Building out Infrastructure and Raising ROI 

Over the last thirty years, the process of Total Quality Management has increase productivity, improve vendor integration; better alignment with customers, and increase a competitive advantage. However, Information Technology (IT) has revolutionized business practices throughout organizations, leaving very little that hasn’t been touched and positively impacted by its empowering capabilities. But in recent years the pace of innovation, change, and strategic advantage from IT has slowed considerably. IT matured out of its growth phase to become more utilitarian. Hence ”The Next Big Thing:” 

Wireless Mesh technology with its innovation will increase or even sustain their current levels of technology investment. This suggests a real need to control Mesh build out and operational costs in order to make more funds available for true innovative initiatives. Only then can Wireless Mesh (WM) continue to be truly strategic, truly innovative, truly disruptive, truly The Next Big Thing. 

Mesh Hardware must adopt similar strategic practice when dealing with IT Management and equipment lifecycles.  Currently Wireless Mesh pioneers are reverting to Cowboy techniques to seed the growth of the Network.  As a result lesson learned from IT practices are ignored and similar hardware problems will occur again.  The purpose of this paper is to propose hardware related initiatives for lowering the build out and operational and upgrade costs within a WM, which will then make more of the budget available for truly strategic initiatives.

The four hardware opportunities are:

While it’s understood that Mesh hardware expenses are only a portion of the overall WM spending. The scope of this paper only addresses potential savings in hardware spending. The conclusion of this paper is not that WM is no longer strategic or that spending on WM should decrease. Instead, this paper is focused on finding creative ways to allocate existing budgets through operational savings that enable strategic WM spending when the opportunity does arise. Thus making the Cowboys into Digital Farmers.

Extending The Useful Life Of Mesh Hardware

We’ve passed through some wild and exciting times in computer technology. The ‘80’s and ‘90’s brought waves of innovation, which in turn spawned the promises of labour reduction, increased productivity, improved responsiveness, better alignment with customers and suppliers, and radically new economies.

True to Moore’s Law, everything (processing power, storage capacity, network speed) seemed to double every 18 months, providing a technology staircase that led to more promising innovations. It was within these exciting times that “best business practices” regarding rules of obsolescence and replacement cycles were formulated. Organizations typically adopted the practice of refreshing technology every two to three years to keep up with the incredible pace of innovation. Over these years aggressive replacement cycle assumptions became embedded in everything from WM budget plans, hardware depreciation schedules, and vendor maintenance agreements – all of which helped perpetuate the two to three year replacement cycle.

When Is Mesh Hardware Obsolete?

Functionality Combinations of hardware, software and infrastructure are called upon to perform certain tasks with a certain level of productivity. When functionality requirements increase, or performance decreases, and the shortfall between expectations and results are critical enough to justify an upgrade, then the existing equipment is obsolete. Compatibility Changes, upgrades and developments in one part of the network often create incompatibilities in other areas, rendering these components obsolete. Reliability Security and reliability are important core attributes of Wireless Mesh. When age or other factors result in unacceptable levels of reliability, the equipment becomes obsolete.

When the opportunity for achieving competitive advantage requires a technology upgrade, and the upgrade promises a sufficient ROI, then the existing technology is obsolete.  Short replacement cycles could be justified at times when rampant innovation necessitated it and WM budgets were more forgiving. Yet current economic conditions have forced cost reduction measures in all areas, and delaying the replacement of hardware has proven to generate savings that far outweigh any negative impacts.

To reducing direct capital costs, there are substantial indirect savings that come from replacing hardware based on its true useful life rather than replacement cycle best practice assumptions. These include:

When lack of availability becomes a big enough concern to justify an upgrade, the equipment is obsolete. Support Costs Hardware maintenance costs usually increase with the age of equipment. When these costs can’t be reduced, and they justify an upgrade, the equipment is obsolete.

We’ve become accustomed to regular refreshes of technology and want things that are new, fresh and fast. While this category is difficult to cost justify, it does factor into obsolescence decisions. Even after a product becomes inadequate for a certain situation, there are often opportunities for redeploying the product in less critical or less demanding applications. Stated differently, equipment becomes ultimately obsolete only when the cost of redeployment outweighs its benefits.

Organizations interested in optimizing their hardware investments will establish new replacement cycle best practices that are aligned with current WM objectives and resources. The replacement cycle policies based on budgets, depreciation schedules and maintenance agreements don’t always reflect an asset’s useful life, and may result in the underutilization of hardware assets. Only by addressing these ingrained planning and operational assumptions can full useful product lives be attained.

Recommendations for achieving the full useful life of hardware assets include:

1.     Review underlying assumptions of your replacement cycle best practices. 
The two greatest factors affecting the true useful life of hardware are an organization’s rate of innovation (how fast things change) and the rate at which support costs escalate as hardware ages. These two factors have changed significantly over the last 3 years and replacement cycle assumptions should reflect these changes.

2.     Find creative ways to ensure availability for replacement or growth . 
A product’s discontinuance or lack of availability often leads to the premature replacement of hardware. To avoid this, organizations should take advantage of the availability that refurbished hardware offers. In addition, refurbished hardware can significantly reduce hardware costs, particularly when hardware is being added or upgraded in the mid-life of a product’s lifecycle. Refurbished equipment may be the only alternative for equipment that is discontinued by the manufacturer.

3.     Establish maintenance programs that support longer hardware replacement cycles
Vendor maintenance programs are notorious for forcing hardware into obsolescence before the end of its useful life. Maintenance costs often become so excessive that the best financial alternative is a premature replacement. Managers should consider third party maintenance, self-maintenance and hybrid maintenance alternatives to place competitive pressure on or to replace vendor maintenance programs. Maintenance programs should be negotiated to accommodate longer product lifecycles as well as more lenient acceptance of refurbished equipment into maintenance programs.

Consolidation & Standardize

As WM managers and owners struggle to deliver quality services with fewer resources, a growing number are considering a strategy of simplification, standardization and consolidation to achieve improved operational efficiency. Particularly promising is the combination of standardizing on relatively few hardware platforms and centralizing on what was once a distributed infrastructure.  The operational benefits that arise from standardization and optimization strategies include: Lower administrative costs Standardizing on fewer hardware and software platforms reduces the workload for system managers and helpdesks. Physical consolidation moves servers, storage and applications closer to support personnel or move the support personnel closer to the hardware. More efficient hardware utilization   Consolidation and standardization create a more manageable environment, which reduces the number and severity of outages. New applications and features are easier to deploy because there are fewer variables to accommodate. Accountability Costs, performance, and operational standards are difficult to measure and manage in a distributed, nonstandard environment.

Consolidation

Consolidation and standardization cover a broad spectrum of re-architecture, ranging from relatively simple to very complex implementations.

1.       Centralization: relocating Uplink nodes to fewer locations, which are easily accessible by support personnel.

2.       Aggregation: Replacing many smaller uplink bandwidth nodes of the same type with fewer more capable uplink larger bandwidth nodes.

3.       Standardization: Creating a homogeneous environment by standardizing on fewer hardware and software platforms as well as fewer standard images and revision levels.

4.       Device consolidation: Aggregating multiple devices into a fewer number of core devices.

5.       Application Integration: Standardizing on fewer, more robust applications that integrate the functionality of multiple existing applications. Example you SIP as your VoIP.

Recognize the costs, risks and benefits of consolidation projects

Consolidation and standardization initiatives can range from relatively simple to extremely complex.  Similarly, the project costs, risks and benefits increase as complexity increases. Organizations should weigh their needs, objectives, resources and willingness for reengineering in determining the scope of consolidation projects.

Take the opportunity to re-architect

The tide of decentralization brought immediate solutions at a time of unprecedented change in WM, and it also created an environment that is expensive and difficult to manage. Large and small consolidation initiatives should be consistent with a greater vision for re-architecting the network for improved efficiency and reliability. The cumulative effect of multiple consolidation efforts will then be synchronized towards a more efficient architecture.

Consider refurbished equipment to reduce costs

The downside of consolidation is it requires significant upgrades to the WM infrastructure, and therefore a significant investment. Refurbished hardware can be a very effective way to reduce costs. It is ideal not only for production hardware but also for development, test and training machines. For physical consolidation initiatives, the refurbished market can provide hardware savings of as much as 65% by purchasing the equipment an WM owners is consolidating away from, and selling back to them the refurbished hardware that they plan to standardize on.

Purchase Based On Hardware Lifecycles

When markets were booming and innovation was occurring at a break-neck pace, WM owners chose to buy primarily new hardware to avoid obsolescence, headaches, or anything else that might detract from trouble -free implementations. But that was then and this is now. The priority pendulum for most companies has swung away from leading edge technology and towards cost savings. 

With companies focused on risk management, operational efficiency and productivity, return on investment has become the new standard by which most projects are measured. Many companies are establishing the business practice of utilizing mid-life refurbished hardware where the latest in technology isn’t required, thereby avoiding the higher cost and rapid devaluation inherent in new equipment.

Frequently, used equipment is also purchased for spare parts or replacement machines on-site and for enterprise disaster recovery initiatives.

Buy the level of technology that’s required by the application

Hardware is not becoming technically obsolete as quickly as it did in the past, and not all server or storage applications require the latest in technology. Look for opportunities where mid-life technologies can be utilized. Always consider refurbished prices against new prices Regular quotes on refurbished hardware provides insight into the new / used price differential, identifies significant opportunities for savings, and if nothing else, provides leverage when negotiating with vendors. Buy refurbished in times of uncertainty When the life of a specific application is in question, upgrades are looming, new technology seems to be around the corner, or budgets are uncertain, refurbished hardware provides a low cost, already depreciated alternative to new.

Review Maintenance Contract Alternatives

Security and reliability are the cornerstones of any well-managed enterprise network, and services that are critical to ensuring up time should not be compromised. That being said, it is worth reviewing hardware maintenance alternatives to ensure a good fit with the resources and demands of an organization. Alternatives to consider include consolidating service suppliers, renegotiation of vendor contracts, and self-maintenance.

Using 3rd Party Maintenance Providers To Consolidate Service Suppliers

WM owners have to manage multiple points of contact, unclear delineations of who is responsible for what, and potential confusion at a time when systems are down and speed is critical. To address the complexity imposed by multiple service vendors, many organizations are consolidating their outsourced services among a fewer number of suppliers. The benefits associated with this consolidation of vendors include:

The key to consolidating service providers is identifying those areas where a single supplier can effectively manage and service products from multiple vendors.

Negotiating Service Contracts

In the past, hardware maintenance contracts were non-negotiable. Now, with a slumping economy and more determination from WM managers, vendors are more willing to negotiate in order to close a deal. Recommendations for hardware maintenance negotiations include: ·  Avoid evergreen clauses – Evergreen clauses allow a contract to automatically renew if the client doesn’t formally cancel the service at a specified time. The result is a commitment to paying for a service you don’t want or need.

·  Lock in rates – Negotiate for a fixed rate for three to five years, or agree to limited increases tied to a standard economic indicator (e.g. the consumer price index). ·  Accommodate longer product lifecycles – Make sure that the contract period or renewal clauses allow for what you consider to be the hardware’s true useful life.

·  Don’t be afraid to ask – When a deal is on the line, vendors can be very accommodating. Be creative in identifying changes that provide real benefit for your organization, and then ask for them

Consider Self Maintenance

Self-maintenance is not for everyone. Typically it is an alternative for companies with a strong focus on containing costs, less complex / less critical environments, and sophisticated WM managers who have the time and talent to go it alone. Self-maintenance organizations typically act as their own general contractor with vendor relationships for the following: ·  

The key to effective self-maintenance is making sure that

1: all of the bases are covered between subcontracted service providers and internal resources,

2: resources are available to quickly react when necessary and effectively coordinate resources to resolve issues.

It’s a buyer’s market out there right now, which makes it a great time to review maintenance alternatives, renegotiate where possible, consolidate where it makes sense, and possibly move towards self-maintenance for those that fit the profile.

Making Room For Strategic WM

Obtaining funding and resources for strategic WM projects will be very challenging in the years to come, with three key factors that are placing severe pressure on WM budgets and reducing the ability for WM managers to truly innovate:

1.       A weak economy and a newfound commitment to ROI make approval difficult for new projects, upgrades, and improvements.

2.        2. Spending on information processing equipment and software is projected to exceed 50% of all business capital investments in 2003, which raises the question of how much more companies can afford to spend even after the economy recovers.

3.        3. Only 10% of a typical WM budget is available for innovation and new functions, with the rest allocated to operations, management and maintenance.

The leaders in past rounds of technology innovation were those who were both technical and business visionaries. The leaders of the next round of innovation will be those with technical, business and efficiency vision. Prior to the innovation opportunities, they will have created a technology cost structure and productivity that makes room for and justifies strategic technology spending. This means a tenacious commitment to lowering operational, management and upgrade costs, which allows for allocating more of the WM budget towards innovation. 

From a hardware standpoint, substantial cost savings can be achieved by adopting the four key opportunities of extending the useful life of hardware, consolidating and standardizing, purchasing based on hardware lifecycles, and exploring maintenance contract alternatives. More broadly, this paper does not recommend to challenging  budgeting, accounting and managing of Wireless Mesh operations that have been ingrained with the build out but it has clearly focus towards reducing operational and upgrade expenses, in order to accommodate new strategic initiatives when they arise.