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Ethernet switch for WAN could cut telecom bill by 30%

Ian Grant

Most firms could save 30% of their telecommunications bill by optimising their wide area networks and switching to Ethernet, according to research.

The findings, by market researcher Forrester Consulting on behalf of network operator Colt, suggest that many firms are wasting already tight budgets by not reviewing their telecommunications arrangements. Telecommunications already consumes some 30% of their IT budgets, researchers said.

The Europe-wide study found that CIOs' top priorities were data centre consolidation, server centralisation and desk virtualisation, as well as bandwidth hungry applications such as unified communications and disaster recovery.

These all made increasing demands on networks, but most firms regarded networks as a commodity and not something they need to understand, the study found. This was despite the fact that network performance was critical to their efficiency and competitiveness.

The study found that data traffic growth was accelerating. Law firms, which said that their wide area network (WAN) needs were growing by around 30% a year, and media firms, which are reporting traffic doubling and trebling year-on-year, are seeing the greatest data growth.

A separate survey by Forrester Research in Q1 2009 found that 24% of European enterprises surveyed said they didn't know whether they used Ethernet in their networks or not. Some 40% said they were not interested in using Ethernet in their WAN.

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. This was helping to cut their communications bills by up to 30%, Forrester found.

"Firms are now putting all their telecoms costs under the microscope. This will increase the rate at which firms migrate to Ethernet from older technologies," researchers said.

Although many firms were outsourcing their networks, they still needed to pay attention to the underlying technologies proposed by their suppliers.

"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," the study said.

The head of Colt's enterprise business, Tanuja Randery, said: "As managed service and cloud computing models become more established, 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."


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