If you’re a CIO, one of your biggest concerns is probably ‘missing the boat’: focusing on the wrong technologies or not investigating the right ones.
Communications is one area where CIOs may feel quite vulnerable in this regard. There’s so much going on in the communications space that it’s nearly impossible to keep up with the various emerging technologies.
To help make sure that the boat doesn’t sail without you, we talked to several experts to clarify some of today’s most significant communications technology trends.
When we asked our experts which technologies CIOs should be paying attention to, they all agreed on one: convergence of voice, data and ultimately video on one IP-based network. Not that it takes a clairvoyant to see this – the industry hype machine has been ballyhooing IP convergence for years. But now the hype is starting to take on more substance.
Ian Angus, of Angus TeleManagement Group, Ajax, Ont., has been an IP convergence sceptic, but today he says it is “potentially the biggest shift in how we do communications since the move in the 1980s from dumb terminals to PCs and networks.”
The big payoffs will come, he believes, from applications that merge data and voice functionality. One example is a hotel system that allows guests to order from room service by pressing buttons to select from menus on their telephone’s screen. Another is an inbound sales system that automatically loads a customer’s record onto a PC screen when a call comes in.
“None of these are things that you can’t do without IP,” he stresses. “It’s just that IP makes it affordable and relatively easy to do.”
Mark Quigley, director of research at Yankee Group, also sees IP voice breaking through soon. “We’ve been talking about it for years,” he points out. “But now we’re finally getting to the point where IP networks are able to provide the service levels needed – the vaunted five nines of reliability [99.999 per cent up time]. And now we can start to see the cost savings and potential increases in internal efficiency and productivity.”
Many companies are experimenting with IP telephony in branch offices, notes Quigley, adding that it’s a low-risk strategy that more should adopt.
At the very least, IP convergence should be part of long-term planning now, says Angus. Most firms should also now be making moves to convert, upgrade or expand infrastructure to accommodate future implementation of converged systems.
“A lot of the things that companies are definitely going to want to do with IP convergence in 2005, they won’t be able to do if they don’t make changes in 2002 and 2003,” Angus warns. “If you haven’t thought about it at all or you’ve been continually brushing it off, then you’ve made a mistake and you’ll be playing catch-up next year.”
In fact, only about 40 per cent of companies have started to make the move to IP, and fewer than one per cent have completed the migration, Angus estimates. Gartner Group data also shows a slow migration. IP-capable systems accounted for 10 per cent of new phone system sales in 2001, up from three per cent the year before. They will account for 20 per cent this year.
But there is nothing wrong with that, says Mark Fabbi, vice president and research director with Gartner Canada. “We think the adoption rate should be slow. We don’t feel there are compelling application reasons for doing it right now. Total cost of ownership [compared to traditional telephony] is break-even at best. In the vast majority of cases the network needs to be upgraded. And IP terminals are not cheap – we’re still in a pre-standard environment.”
He adds, “It’s clear everybody will be IP eventually, but there is no reason to drop what you’re doing today or to shorten the life of an existing PBX. The roll-out will take a relatively long time.”
Roberta Fox, president of Fox Group Consulting, Markham, Ont, is also sceptical of any across-the-board rush to migrate to IP voice. “In most cases, there are no compelling financial reasons for doing it,” she argues. Current discounts for telco voice circuits make it unlikely that IP voice would generate significant savings. There are exceptions, though, she notes – for example, aggregating long-distance traffic to a centralized call centre over an IP backbone network.
The fact that many vendor proponents come from a data background and have to fight for credibility in the voice arena is another hold-back. Now that some telcos in Canada are getting behind IP with service offerings, companies may have more confidence to move ahead.
Next Up: Video
The immediate impetus for IP convergence is the promise of increased productivity, efficiency and savings from running voice over the network. But Yankee Group’s Quigley believes the whole area of IP content – including video and interactive multimedia – represents a significant opportunity as well.
“A lot of what has happened in the last year and a half,” he points out, “has concentrated on services for consumers – MP3s and video-on-demand on the Net. But there is also tremendous value in bringing those same types of services to an enterprise, whether it be to have enterprise-wide interactive training sessions or one-to-many video connectivity to off-lay travel expenses.”
Video conferencing, or at least multimedia conferencing – voice plus application-sharing – should also get a new lease on life from IP convergence, Fox says.
“We should be trying it more,” she argues. “People are tired of traveling. Nine-eleven should be forcing people to look at this, given that [increased airport security] is adding two hours to every trip and a lot of personal grief.”
Our experts agree that CIOs should be investigating wireless data networking.
There are two overlapping aspects of this: mobile data networking using cellular networks (especially new higher-speed 2.5G networks based on 1xRTT and EDGE technology), and wirelessly extending the enterprise network using 802.11 broadband fixed wireless technology in a facility or on campus.
One point of overlap is public broadband wireless-access hotspots in hotels, airports, conference centres and coffee shops. Some mobile service providers are already working on integrating mobile and 802.11 hotspot networks to provide customers with seamless, optimal coverage wherever they go.
Angus prefers the expression “mobile business” to the more popular “m-commerce” when referring to this technology’s impact on business, because he believes the real opportunities are not in selling things to customers over mobile networks but in extending the enterprise outside the office. “Where we’re seeing quick payoffs is in equipping mobile workers with wireless services,” he says.
One of Angus’s clients, a company that sells service contracts to consumers, recently equipped sales people with wirelessly connected PCs that allow them to log in to a corporate server from the customer’s premises, run quotes based on up-to-the-minute pricing, figure personalized variations for prospects, and initiate sales online.
“They tripled their close rate,” Angus says. “Before, they would have to go back to the office, check prices, submit forms. By the time they came back, half the people had changed their minds. It wasn’t a big application – it’s not a big company – but it made a huge impact.”
Wireless is already on CIOs’ radar screens, Quigley says. They understand horizontal applications such as e-mail and Web access. But most have not yet grappled with how to apply the technology to their own operations. They need to do that.
There are significant obstacles, though. The cost of equipping a sales force of 200 with Pocket PCs or Palms, developing an application, implementing servers and managing a network “is not going to be insubstantial,” Quigley points out. And as Gartner’s Fabbi notes, managing wireless devices, many of which have already come into the company through the back door because employees bought them to manage personal information, could become “an incredible nightmare”.
“CIOs have a hard enough time managing what’s inside their four walls,” Fox notes.
Wirelessly extending the enterprise LAN, allowing employees to stay connected while they work in the conference room or the foyer, also makes increasingly good sense, our commentators say, despite well documented but manageable security issues.
Angus points out that the emergence of the multi-service IP network will enable another useful wireless service: low-cost wireless telephony within the office. If you already have an IP voice system and an 802.11 wireless LAN, there are vendors with standards-based wireless phones that will work seamlessly with the phone system over the wireless network.
Some CIOs are already grappling with the question of whether or not to migrate to Gigabit Ethernet (1 Gbps) network infrastructure – and if so, when? Our experts suggest it should be a less pressing concern for most, although there are exceptions.
Vendors will attempt to force the issue and create demand, Fabbi says, by first introducing network interface cards that offer 10-, 100- and 1000-Mbps functionality in one product, and then introducing switches with 10-, 100- and 1000-Mbps capabilities. Most CIOs should resist these inducements, he warns. Increased bandwidth in switching and interface equipment will generate demand spikes that will create latency problems for IP voice and put pressure on backbone infrastructure. And the next level of 10 Gbps backbone infrastructure is still far too expensive, he says.
“If you’re in seismic research or medical imaging, or you’re a video production house, Gigabit Ethernet may make sense,” he says. “Anytime you routinely have to move files of 100 MB to 1 GB – wherever time saves money or lives. But that represents maybe 10 or 15 per cent of the user population; the rest of us don’t need Gigabit.”
Fox adds one more type of candidate to the list: companies centralizing data storage on a large scale might also need Gigabit Ethernet in local and wide area networks to support the increased traffic that results.
Network Security & Web Enablement
Much of the CIO’s concerns around communications now centre around having the right firewalls and intrusion detection systems in place, and having reliable network infrastructure.
“Clearly security is top of mind and that’s probably where it should be,” says Gartner’s Mark Fabbi. “What do I do in case of terrorist attack? We get tons of those kinds of questions. The answers revolve around building redundancy into network designs, designing data centres properly, and so on.”
Longer term, intrusion detection systems should begin to give way to intrusion prevention systems, according to Gartner. “Are there systems out there? No, not now. We’re just at the brink of a new technology that will allow us to take the next step in security,” Fabbi says.
The current preoccupation with Web enablement – converting enterprise
client-server applications to work over the Web and making more corporate content available online – also has medium- and long-term implications for network infrastructure design.
“We’re no longer dealing with just raw packets,” Fabbi points out. To make Web-enabled applications work well, enterprises must begin to implement application-layer capabilities in the network to allow networks to make intelligent use of information in the packet headers.
Delivering content and application services will also mean scaling up networks. Scaling up in terms of sheer volume – bandwidth and server capacity – is straightforward enough, but widespread Web enablement should also mean scaling up complexity of network design.
For example, rather than simply adding undifferentiated server capacity, it may now make sense to split content and applications into logical chunks (e.g. finance, HR, operations) and assign a different server or cluster to each, or add regional servers rather than more central server capacity. Then with application-layer capabilities deployed, it becomes possible to streamline routing.
It’s still early days, though, for what Fabbi refers to as “intelligent network overlay” technology. While the market for switching and routing equipment is close to $25 billion a year, the market for intelligent overlay technology is only about $500 million.
What About Vendor Viability?
If CIOs aren’t worried about whether communications hardware and services suppliers are viable for the long term, they should be, our experts say. The danger signs are everywhere.
The demise of Global Crossings earlier this year was only the latest in a string of bankruptcies among competitive carriers. Canadian competitive carrier Group Telecom announced it was seeking bankruptcy protection in June. WorldCom in the U.S. followed with a similar announcement. Hardware vendors are also disappearing, or selling or abandoning product lines.
“It’s a question a lot of our clients are asking us – Is our supplier going to be around next year or next month?” says Ian Angus. “You’d always get this from customers of Frank’s Storm Door & Telephone Company, but now we’re getting it from people working with the biggest names in the industry.”
No company can afford any longer to have one vendor that supplies its lifeblood, Angus cautions. The supplier that you always relied on because they were so good may continue that way, but the headlines show that you should not assume it. CIOs should at least be thinking about and planning what they will do if that vendor ever stopped being as good, or disappeared. This goes even for blue-chip communications companies.
CIOs should also be learning more about their vendors. “How many CIOs know how to read a telecom vendor’s annual report?” Fox asks. They should know, she argues. And they should be delving into and understanding stock reports too. CIOs also ought to attend vendor conferences themselves rather than sending someone from their department, Fox adds. Such conferences can be key sources of intelligence on suppliers.
It goes without saying that the same kind of scrutiny should be paid to prospective new suppliers.
“Price should not be the be all and end all anymore,” notes Yankee Group’s Mark Quigley. “Survivability has to play a larger role now.”
Well, those are our words of wisdom from the experts. Now it’s up to CIOs themselves to make sure the communications ship doesn’t sail without them.
Gerry Blackwell is a freelance writer specializing in information technology and IT management. He is based in London, Ont.