Spending curb could push hosted services

Ahead of the inaugural EMEA Enterprise Networking and Communications Summit, to be hosted by Gartner in London towards the end of April.


Ahead of the inaugural EMEA Enterprise Networking and Communications Summit, to be hosted by Gartner in London towards the end of April, analysts have been mulling over the state of the market as the second quarter of 2008 gets underway and the US recession continues to threaten to spread across the Atlantic.


Speaking to MicroScope, Gartner research vice-president Steve Blood agreed that businesses would be trying to contain their network costs in the face of the slowdown.

"Because there are more distributed workers, costs are going up so naturally we see a focus on getting a grip on that. There are ways of managing that, too, such as application acceleration," he said.


With the national headlines at the close of the quarter dominated by the sudden fall of US financial giant Bear Stearns and the turbulent state of the global economy, the attitude among network resellers was split.


Many reported above-average business during the first quarter, with large installations still par for the course in many cases. Others lamented a slow start to 2008, as one Cisco dealer complained: "We expect December to be rubbish, but usually things improve in January. This year it’s been a tricky start so we’ve still got our heads down, trying to ramp things up."


But if the slowdown was to spread it would begin to bite soon, some thought. As one market watcher remarked: "I would have thought the numbers will get hit in about three months time. Around the summer we’ll probably know if there’s any impact."

Telindus marketing director Darragh Richardson also expressed frustration with customers busily talking themselves into a recession.


"There’s a longer sales cycle because more people are involved in making decisions," he said. "Projects are taking a lot longer as people procrastinate."


Chris Lauwers, CTO at video-conferencing specialist Avistar, which has just launched a series of desktop video solutions, believed that as capital spending was becoming more challenged, it was driving parts of the market towards hosted solutions, which he expected to become even more widespread in summer.


"On the customer premises side of the business the sales cycles are lengthening, but on the hosted side they are able to evaluate the technology as they go, it takes away some of the internal cost and the customer doesn’t have to staff up or train internal IT people. From a total cost of ownership perspective, it is even more attractive," he said.


One aspect driving the business is around business agility and productivity according to Blood, who had harsh words to say to some vendors, accused of misstating precisely what productivity meant.


"It makes me cringe when vendors start talking about making people more productive. It’s unbearably naff. You can’t make a business case on personal productivity," he said.


Blood believed it was imperative for firms to switch to a more enterprise-wide focused view of productivity.


Alcatel-Lucent market and business development director of enterprise solution division, Peter Tebbutt, agreed, citing research carried out by the vendor that demonstrated the importance of taking people, knowledge and business processes as interlinked entities.


The third key issue around the networking scene concerns the much-hyped ecological angle. With recent figures now suggesting the Arctic Ocean may be ice-free during the summer months by the end of the decade, the green network picture is likely to gain a degree of coherency by the end of the year.


Vendors should take the initiative in this area, according to Tebbutt at Alcatel-Lucent, who said his partners were starting to ask more questions about the power consumption of Alcatel-Lucent kit, among other things.


"Business partners are increasingly asking about the green differentiation," he said. "And we already have a good story there."


Power has clearly become a key issue for the green network, but Blood at Gartner believed that some green angles that have been played up will be exposed as hot air before very much longer.


One such area could be the telepresence and video-conferencing element of the unified communications picture. Here, several companies including big names such as Cisco and Polycom have talked up the reductions in carbon footprints caused by not having to fly managers around the world for meetings.


"Telepresence has its place," said Blood, "but I really do question just how green it is. Does it really save that many flights?"


"You can’t hold an eight-hour meeting between London and California via video-link without seriously disrupting somebody’s day," he added.


Peter Tebbutt agreed that the green discussion around UC was "softer", explaining that Alcatel-Lucent sold the concept on support for document sharing, collaboration and other such productivity-centric enhancements, as opposed to on carbon savings.

"But if efficiency means green, which I think it does in most cases, then there’s definitely a play for telepresence," he added.

Read more on Network Infrastructure Solutions and Services