 | Issue: | Global-ICT 2003 |
| Article no.: | 13 | |
| Topic: | Managing Networked Communications Across Expanding Horizons | |
| Author: | Jose A Collazo | |
| Title: | Chairman, President and CEO | |
| Organisation: | Infonet Services Corporation | |
| PDF size: | 92KB |
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Article abstract
Attracted by lower costs and new markets, companies are extending their operational footprints across the globe. The costs, regulations and telecommunications infrastructures MNCs face in new markets, often impedes the extension of applications and networks, pivotal to their success, to their global operations. Large numbers, however, are migrating their data traffic from expensive WANs to IP VPNs. VPNs offer the security and quality of service of private networks, but use shared infrastructure transmitting encrypted data to realise significant cost savings.
Full Article
Foreign direct investment Satellite operations of multinationals account for one-tenth of global GDP and one-third of world exports . India, with its low labour costs and educated workforce, has been the rising star of foreign direct investment. Attracting a high degree of technology, and financial service businesses, the country is expected to secure US$4.660 billion of capital in 2003, according to figures released by the Delhi government . Meanwhile, the expanding 27 economies of the former eastern block countries are projected to receive $33 billion in inward investment this year. While China, with its market of 1.3 billion people, has risen to the top of the inward investment stakes. It pulled in $53 billion in 2002 – almost double the amount of the UK and America. These figures validate the importance of establishing low cost base facilities in emerging markets in the global economy. However, to truly transfer their competitive edge across international boundaries, Multinational corporations (MNCs) must ensure that uniform working practices and proprietary information are passed on quickly and seamlessly to wherever their business has operations. However, in parallel with building world-class networks, companies are mindful of the recessive environment and the concomitant need to reduce costs. Indeed, it can seem a daunting task to develop an infrastructure that enables the company to expand its operations, while at the same time works to cut operational investment. Yet, it is a process that executives can simplify by asking the right questions and seeking straightforward answers. Building networks to compete and expand – asking the right questions Who covers where? Once a business decides to expand to a new region, it should assess which providers are best positioned to build out its network. Although some regions (notably the European Union) have tried to de-regulate markets, the recent collapse in telecoms pricing and the reluctance of some governments to engineer change ensures that the last mile still remains in the hands of incumbent operators. Therefore, it is advised that companies select a global service provider that has strong bonds with the primary telecoms company and local regulators in target markets. These relationships can save MNCs a huge amount of time in working to understand local regulations and ensure that when a business is ready to switch its network on, its local loop infrastructure is given priority. The net result is that the business expands its operations in a timely manner to quickly accrue the commercial benefits offered by the new location. Is our network partner financially stable The recent demise of several global data providers has made companies conscious that providers could shut down a network if its business model fails. Indeed, MNCs should select a global network provider that is financially stable and scrutinizes its partners to ensure that they are secure in the long term. In addition, the provider should have arrangements to handle contingencies in place should any problems occur with partner carriers that support any part of its global infrastructure. What should the network look like and how much bandwidth do we need? Assessing which applications need to run on the network is crucial to its design. Applications that underpin the transition of corporate resources and intellectual property between locations include Enterprise Resource Planning (ERP), Supply Chain Management (SCM) and Customer Relationship Management (CRM). The transfer of data that is core to the business can be conducted over private data networks or increasingly through more cost-effective IP Virtual Private Networks (VPNs) with connections over the last mile dictated by the local loop infrastructure. The provider should advise on the composition of last mile connections. Ideally, this should be protected with at least one back up link if problems arise. With recession pressures top of mind, restricting cost is crucial to helping global companies capitalise on the competitive benefits offered by new locations. The success of VPNs is due largely to the technology’s ability to marry the conflicting demand of keeping costs down while expanding the network. Large numbers of MNCs are now migrating much of their data traffic from expensive Wide Area Networks (WANs), which often include private lines and closed packet technology, to more cost-effective, secure IP VPNs. VPNs offer the security and quality of service of private networks, but use shared infrastructure transmitting encrypted data to realise significant cost savings. VPNs are also easier to provision than meshed networks and are highly scaleable. This flexibility allows new locations to be connected quickly to the network to support the company as it strives to take advantage of emerging market operations. Significant cost savings can also be made through migrating traffic from frame relay Wide Area Networks (WANs). Companies typically have two connections for Internet and WAN traffic. By consolidating WAN traffic over IP VPNs, the Internet frame connection can be eliminated to greatly improve return on investment from the IP network. Additional savings can be made through advanced network management techniques. ERP applications such as SAP’s, demand significant bandwidth. Traditionally, companies requested more ‘pipe,’ and more transmission capacity if an application was not operating efficiently. However, with cost-cutting at the forefront of commercial strategies, an alternative option, ‘enhanced provisioning’ can negate the need for more bandwidth. To guarantee that the network fully supports the business, it is advisable to audit the applications that will be used, by whom and when. The operator should then be able to simulate traffic using modelling tools to ‘tune’ the network to the application and user profile to the business’s unique demands. Network intelligence systems can also be used to prioritise important users and applications, while frequently used content can be cached at strategic locations to prevent large files being sent long distances. Such planning significantly enhances information access, file sharing and delivery, which in turn helps the business run more efficiently and increases its competitive stance across the regions in which it operates. . What new developments should we be aware of? Having seen the benefits of integrating Internet access, email and enterprise applications, multinationals are now going further to use IP VPNs for converged voice, data and video to provide a raft of productivity and cost benefits: * Videoconferencing over IP is on the increase as customers cut down on travel costs. Desktop based systems are being used to enable virtual teams in dispersed locations improve project collaboration. * Unified messaging can enhance employee productivity while mobile workers can consolidate devices by using IP voice services via software telephones on PCs. * Voice over IP (VoIP) can be used to connect PBXs in remote locations to reduce international toll charges – for many MNCs this can bring huge cost savings. * VoIP can also support the relocation of call centres to low-cost destinations. VoIP bypasses local voice-based telecoms service issues to provide a high quality of service for remote call centres. Together with live data feeds that advise the agent on how to handle the call, VoIP is reducing the costs of running traditional customer contact centres while delivering a uniform quality of service across multiple call centre facilities. What about quality of service? MNCs should require their service providers to offer Service Level Agreements (SLAs) to cover all key performance issues, including network availability, problem resolution, service and support packages and connection quality between premises. The IP backbones of truly global service providers should ensure that system outages are very rare and quality of service very high. It is also important to select a service provider that has a proactive rather than reactive approach to network problems. While SLAs are important, they come into play only when a problem has occurred; by provisioning, planning and monitoring the network properly, problems can be predicted and solved before issues arise. Capitalising on convergence IP-based network technologies are highly secure, flexible and cost-effective. The technology reduces global connectivity costs for MNCs while delivering a high-quality of service and the platform to converge voice, data and video. Selecting a network provider with an extensive IP-backbone, solid local knowledge in key markets and the ability to accurately provision networks and support MNCs who wish to retain a mix of private and IP-based technologies is also crucial in delivering cost savings. By asking the right questions, the quality of the answers provided by operators should help identify the ideal partner. New territories offer low cost business and, in some cases, access to lucrative local markets. The emergence of converged services over secure, reliable and flexible IP VPNs ensures that the costs of competing in the global marketplace are falling while the business opportunities in exciting new markets are rising.
