10 Ways to cut Network Costs

download report

Transcript 10 Ways to cut Network Costs

Catalyst - July 14, 2005
Ten Guiding Principles of
Reducing Network Costs
Sorell Slaymaker
Director Network & Security Architecture
[email protected]
Outline
Catalyst July 14, 2005
•
•
•
Introduction
Overview of United Health Group
10 Principles of Reducing Network Costs
1) Costs – Know what your component costs are
2) Compare – Get industry rates and compare with yours
3) Competition – Bid out those services that are not competitive
4) Control – Task outsource
5) Consumption – Manage demand as well supply
6) Centralize – Get the technology & support out of the field
7) Consolidate – One IP network for all services
8) Catalog – Offer services not products or technologies
9) Clean-up – Get rid of unused circuits, hardware, maintenance
10)Communication – Publish or perish
•
•
Conclusion
Appendix
2
Introduction
Catalyst July 14, 2005
• Our challenge - Cut costs while:
–
–
–
–
Adding services with business value
Improving reliability & performance
Adopting new technologies & products
Increase bandwidth demand
• It is possible – But, cutting costs does not make you popular.
Improving reliability & performance does, so do not sacrifice these.
• Disclaimers:
– The 80/20 rule works 80% of the time
– 50% of all numbers are made up…. Or is that 60%?
– Your mileage will vary, for it is all up hill
3
Catalyst July 14, 2005
Overview of United Health Group
Who is UHG?
•
•
•
•
•
•
•
•
•
•
•
Diversified Health Care Company
41B in revenue (Fortune #40)
11B in acquisitions in 2004
6 Primary divisions with 150 offices, primarily in the U.S.
42,000 employees - 5,000 in IT
Serve Healthcare to 55 million Americans
Use technology as a competitive advantage
4 primary and 11 secondary data centers
500 business applications, key applications are home grown
Goal of IT infrastructure is to be reliable, efficient, cost effective
In-sourced voice & data network starting in 2003 and have
achieved a 70M/year savings with a 25% improvement in network
availability and performance. These savings go directly to the
bottom line!
4
Catalyst July 14, 2005
Costs
Understand what your component costs are
•
10 most common component costs:
1) Long distance voice – 800, On-On, On/Off
2) Access – T1, DS-3, OC48, GigE
3) WAN Bandwidth – Cost per Megabyte – 512K,1M, 6M, 20M
4) ISP Bandwidth – Dial, Broadband, 1M, 45M
5) Conferencing – Audio, Web, Video
6) Local Service – C.O. & FB lines
7) Cellular – Voice, Data
8) People – Contractors, Staff
9) Maintenance – Hardware, Software
10)Depreciation – 3 or 4 years
5
Compare
Catalyst July 14, 2005
6
Benchmark your costs to industry rates
Examples:
Service
Feature
Industry Pricing
Comments
Long Distance
Access
WAN
ISP
Conferencing
Local Service
Cellular
People
800 and on/off
T1
MPLS 6M ePVC
Full 45Mbps
Voice
C.O. Line DID
Voice
Network Engineer
1.5 - 2 cents/minute
$200-250/month
$1000-1300/month
$5000-6000/month
2.5-3.5 cents/minute
$35/month (no usage)
$60-80/month/user
80-100K/year
1+ Million Minutes/Month
Your Cost ?
Flatrate - anyw here in U.S.
Includes 4 queues incl. Voice
Tier 1 backbone provider
Reservationless
Average - Varies per market
Unlimited usage for 1000 users
Sr. Data Netw ork Eng.
Catalyst July 14, 2005
Competition
Put up for bid services that are not competitive
• MAC - Keep minimum annual commitment <50% of projected
• Strong SLAs – Procurement, delivery, availability, reporting,
billing
• Term - Keep contract period short (3 years) but have option of a
couple of 1 year extensions
• History - Understand that demand will go up, so per unit supply
cost must go down. History has shown this for the past 15 years
• Rate Reduction - Avoid the good deal year 1 and the bad deal
year 3 by scheduling yearly rate reductions
• Contracts - Have a strong legal contract with options to get out if
need be. You are the customer!
7
Catalyst July 14, 2005
Control
Task outsource some things, but retain control
• Installation & Operations - are areas for task outsourcing
• Architecture & Engineering is where you and your team provide
value for the business. Use consultants to help if needed.
• Cookie Cutter - For all new services (technology & products)
build a “cookie cutter” and once baked, crank them out.
• Financials – Billing, charge backs, budgeting should be a core
competency. You must understand every penny.
• Common – Anything done once can be repeated & standardized
• 10/25 rule – With cost, quality, and delivery as your measures, if
something is within 10% of how you do it today, then stick with it.
If it is greater than 25%, look seriously at changing.
• Outsourcing - Companies who have outsourced or insourced
everything, struggle. The ones who retain control, but task
outsource and bring in consultants, for specific engagements,
have done the best over the long run. [My experience]
8
Catalyst July 14, 2005
Consumption
Manage demand, not just supply
• Users
– VPN - Users who have multiple VPN access connections –
Broadband & Dial and only use 1 or users who spend
>$75/month on dial when Broadband is available
– Audio Conferencing – Users who use audio conferencing
for 2 or 3 person conferences. Monthly reporting and
reminding helps enforcements
– Cellular – Users who plans do not match up to their
demands – Unlimited vs. minute based
• Sites
– Voice Lines – Local & Long Distance – P.01 in & P.05 out
– Data Network – Use QoS to size network for what runs the
business vs. that which is used to administer the business
– Maintenance – 8-5 vs 24/7, self sparing
9
Centralize
Catalyst July 14, 2005
Centralize all network services to two sites
• Centralize
–
–
–
–
Voice Mail
Call Centers
PBXes
Keep the edge of the network optimized, for most of the
value comes in the core
• Example – UHG Virtual Contact Center
– 62 call center sites supporting 9,000 agents with technology
at every center consolidating down to 2 sites
– 600 servers to support environment (Routing, Call
Recording, Training, Reporting, IVR, PBX) reduced to 80
– Agents can now work at home, offshore, new real estate
site, or 3rd party and as long as an agent has a good network
connection, they can be an agent anywhere.
– Interstate vs. Intrastate Toll – 1M in routing calls out of state
– See Appendix 1 for more detail
10
Catalyst July 14, 2005
Consolidate
With IP, all networks can be consolidated to 1
• Voice – IP telephony is coming – UHG will be 100% IPtel
(except call center - VCC) by end of 2006.
• Data – Consolidate parallel data networks (UHG had 5 parallel
data networks – Corporate FR, Corporate ATM (higher speeds),
Private Line, ICM FR, & Storage)
• Conferencing – Audio, web, video
• Economies of scale – Getting an entire enterprise on one
shared network lowers per unit costs
• Active/Active - Move to an active/active model (2 sites that
back each other up)
• Staff & Support – People work better together when they are
together. Staff where the equipment is saves maintenance and
enables faster changes.
11
Catalog
Catalyst July 14, 2005
12
A Service Catalog enables the organization to mature
• What your customers want:
–
–
–
–
Description of what to provide – Service Catalog
Process to acquire service – Service Request
SLA’s for quality & delivery w/ reporting – Service Level Management
Market competitive costs – Service Based Charging
• What we want:
– Provide and encourage a shared infrastructure to be used across all business
units that is standardized and simple
– Make requests standard and repeatable vs. stand alone projects
– Separate technology/products from the service offered – Customers should list
functional requirements, not technical specifications
– Standard way to define, market, and deliver services
– Educate customers on how their consumption impacts cost
• See Appendix 2 & 3 for examples
Communication
Catalyst July 14, 2005
We are in the communications business?
• Output
– External Web Site – Publish your catalog, reports, org charts, ….
– Internal Web Site – Publish all documentation, process, circuit IDs,
vendor contact & escalation information, ….
– Roadmaps – Everyone needs to know where you are going
• Technology – Other IT Groups
• New Services – Business Groups
• Input
– Vendors & Partners – Win/Win relationship takes lots of
communications and negotiation
– Consulting Groups – 2nd opinions, keeping on top of the trends
13
Catalyst July 14, 2005
Clean-up
Pay for only what you use
•
•
•
•
Inventory – Account for all hardware, software, and circuits
Audit – Make sure above inventory is correct
Billing – Compare bill to inventory
Update – Every project must have clean-up as a step before
project ends
• Maintenance
– Self Spare – Edge ethernet switches, phones,
– 8-5 vs. 24/7 – Is full redundancy good enough
– Time & Material – If you are planning on replacing it in the next 618 months, why pay maintenance on it
14
Catalyst July 14, 2005
Conclusion
It is possible to cut costs & improve quality
• UHG cut 70M from a 180M/year network budget by:
–
–
–
–
–
–
–
Control – In-sourcing primary network functions – 20M
Competition – 2nd Carrier, VXML Hosting, … – 10M
Centralization & Consolidation – VCC, MPLS – 10M
Consumption – VPN, Conferencing, … – 10M
Clean-up – Circuits, Billing, Maintenance … 10M
Costs & Comparisons - yearly rate reviews – 5M
Other – 5M
• UHG improved quality by:
– Catalog – We talk about services and business needs, not vendor
products & designs
– Centralize & Consolidate – Less to support & fail
– Control – Full accountability – One stop point for business
– Communication – Getting all documentation in one place and
publishing it. Helped MTTR with outages.
– Competition – Redundant carriers for a redundant network
15
Catalyst July 14, 2005
16
Appendix
Catalyst July 14, 2005
Appendix 1 – Virtual Contact Center
Telephony Contact Center Vision - Centralize All Call Center Infrastructure
Any Caller to Any Agent located anywhere with consistent, cost-effective, quality service
Business Value
• Simplicity - Common infrastructure, fewer devices,
• Flexibility - Agents can be anywhere and access any application
• Customer Service - Consistency across all channels
• Scaleable – Balance load across multiple channels & sites
• Greater Reliability - Dual carriers & platforms in a data center
Lower Costs
• Transport - No more take back & transfer, pre routing
• Hardware - Fewer voice switches and voice servers
• Maintenance & Support – 2 sites, not 62
• Economies of scale – trunking, licensing,
• Agent Staffing - Optimized acrossed all sites
• Queuing - International calls queued domestically
17
Catalyst July 14, 2005
Appendix 2 Creating a Services Catalog
Services
Service
Owners
Marketed by
Are
documented in
Define and
manage
Relationship
Managers
Delivered
according to
SLA’s
Metrics & Reporting
18
Service
Catalog
Charge Backs
Catalyst July 14, 2005
Appendix 3 – Service Catalog Example
UHT Service Catalog
19
Email Service
Definition
Index
Who we are ………………….……………….1
How we do business …………………………2
Individual Private Services:
Network Services
Data – LAN, WAN, Internet, Remote Access
Voice – Telephone, Voice mail, Audio Conf
Call Center – IP Agent, Reporting, IVR,
Computer Services
Mainframe Hosting – Database, Storage
Distributed Hosting – Presentation, Application
Desktop & Groupware Services
Desktop – Laptop, Software Distribution
Collaboration – Email, IM, Calendaring
Security Services
User – Virus, Firewall, Spyware,
Site – Firewall, IDS, Event Correlation
Other Services
Consulting – Network, Security, Architecture …
Procurement Help Desk
Project Management
Public Service Solutions:
Employee – Move, Add, Terminate, Work from Home
Real Estate – New Site, Site Expansion
New Data Application – Small, Medium, Large
New Voice Application – Small, Medium, Large
End ……………………………………………… 120
Electronic Messaging – Used to send messages both within and outside
the company. It refers to the ability to receive, send, & store email.
What is Included
A. Basic Service
-Lotus 6.3 Suite
-200MB Storage
-Spam & Virus Filtering
B. Premium Service
-PDA Synchronization
-500MB Storage
-eFax Service
Service Levels
Response Time – 10 min
Availability – 99.99%
Cost
Unit of Charge – Fixed price per user per month
Major Cost Drivers – # of Accounts, Support, Filtering, Maintenance
Cost Saving Steps – Delete or Archive old messages, Use file sharing
to copy multiple internal users on a large file
Current Charges – Cost per account per month
$17
$14
$14
$12
2003
2004
Basic
Premium
Delivery
Setup Time – 5 Business Days, (2 Business Days Expedited)
Acquire Service - http://frontiers.uhc.com/uht/servicecatalog/eamil
More Information
http://frontiers.uhc.com/uht/servicecatalog/eamil
p. 57