SouthTrust Bank Background

SouthTrust Corporation is one of Cisco’s first and largest IP telephony deployments and it is now successfully deployed. SouthTrust Corporation is a $51.9 billion regional holding company headquartered in Birmingham, Alabama. This Fortune 500 financial services company employs nearly 13,000 people and operates almost 800 banking and loan offices and 850 Automatic Teller Machines (ATM) in nine states. Services include traditional retail banking, corporate and commercial banking, mortgage banking, brokerage and trust services, and insurance products. 2003 revenues were $2.3B while net income was $705 million. As an aside to this case study, on August 9th, U.S. antitrust authorities have approved Wachovia Corp.’s proposed acquisition of SouthTrust Corp.

SouthTrust had grown through a merger and acquisition strategy over the years and as most companies that grow this way, it inherited multiple different key systems, PBXs and networks to manage. An effort to rationalize the cacophony of disparate systems was underway at the same time it required more wide area bandwidth to support increased data traffic. Capital and operational economic efficiencies realized through consolidation of vendors and equipment types drove a converged network review. The bank understood early on that it could realize savings in both local access and long distance (LD) voice trunking charges if it consolidated voice and data into IP. It had a Frame Relay (FR) data network that linked each branch, and they were able to add a separate PVC for VoIP traffic, thus supporting voice and data traffic on a single T1 access circuit terminated into AT&T’s frame relay and voice network. This strategy would prove out handsomely with an 80% reduction in local access and LD trunking spend, saving SouthTrust nearly $225K/month or $2.7M/year. That’s nearly a half of a percent of increased net income, or put another way, the network architects were able to add $2.7M of profit to SouthTrust annually.

SouthTrust’s vendor selection was Cisco for data networking and IP telephony, with AT&T’s frame relay integrated access providing transport, plus local calling service. Delta Communications was used for long distance calling, as all off-net voice calls were backhauled to SouthTrust Birmingham facility. In addition to economic considerations, SouthTrust decided to deploy IP telephony knowing that it provided a foundation for IP communications, their new business platform. SouthTrust knew that over time it would want to add value to its branch offices with features or applications such as:
??ᬨ? Rich media for e-Learning, stored locally, but centrally managed
??ᬨ? Multi-site videoconferencing capabilities
??ᬨ? Unified messaging for branch personnel
??ᬨ? Increased bandwidth in order to deliver rich media through ATM machines for advertising and promotions

The Devil Is In The Details

SouthTrust installed IP telephony in 790 sites in 9 states with more than 10,500 IP phones deployed. They have over thirty sites that have been operational for more than 3 years. They have built three new data centers in Atlanta, Houston and Orlando. There are three Corporate Offices, two in Atlanta and one in Birmingham. There are two call centers in Atlanta. The centralized call processing in Birmingham processes some 8,000,000 calls per month. There are some 6,000 integrated voice mail and e-mail boxes in operation. So what are the economics behind this IP telephony deployment at SouthTrust? Millions of dollars of savings per year. For example, SouthTrust has realized savings in the following areas:
- Local Service 38%
- Long Distance 42%
- Move/Add/Change 75%
- Maintenance 50%
- Conference Calling 93%

In the process not only have the network architects at SouthTrust improved its corporate bottom line, but they did so with state of the art equipment and new features/attributes that the network did not possess before its implementation. For example, SouthTrust saw a 6 fold increase in bandwidth. It received all new voice and data equipment. Desktops now have desktop video. With the mobility benefits of IP telephony, SouthTrust is now better prepared to recover from potential disasters. It also has a network architecture that can accommodate more changes, i.e., an easier acquisition by Wachovia and the ability to add new
competitive IP communication applications. Also, with voice delivery as software residing on a few centralized servers, the cost to add more IP phones does not require a large capital outlay as in the days of PBXs.

Most of the cost savings above came from facilities, operations and maintenance cost reductions. In short, IP telephony can drastically reduce wide area communication spend. This reduction in monthly expense is usually much greater than the cost of new hardware or capital. The major characteristics of the SouthTrust network are the following: VoIP over FR is used for on-net
calling and backhauling long distance off-net traffic to the central PSTN gateways at headquarters; the backhauling of long distance off-net traffic to a centralized location is a key cost saver as it increases volume to a service provider delivering steeper discounting; VoIP over Ethernet is used for on-net calling in the campus or between two extensions in branch sites; local off-net calling from a branch to the PSTN is accommodated by AT&T’s Integrated Access PSTN gateway.

The Hub-and-Spoke network topology of the original FR network is preserved with the hub site at the headquarters location, while FR bandwidth to the branch offices has been expanded from 56 K or 64 K to 256 K for small and medium branches and to 512 K for the larger branches. Compressed Real-Time Protocol (CRTP) is used on all branch PVCs. Each branch is equipped with a PVC for VoIP and one for IP traffic. For companies that have a greater need for inter-site communications I recommend MPLS and
starting to move away from FR since FR cost will increase over time. Also, I view the hub and spoke architecture as too rigid for most non-retail applications. Standard QoS features like FR Traffic Shaping (FRTS), Low Latency Queuing (LLQ) and FR fragmentation are enabled to preserve voice quality across the IP network and to gain WAN bandwidth efficiency.

Cisco’s SRST (Survivable Remote Site Telephony) is deployed in all branches to protect IP Phone survivability. Emergency calls to 9-1-1 are handled by SRST and a local voice gateway to allow the call to complete via analog Foreign Exchange Offices (FXO) to the local Central Office (CO). Non-emergency local calls are also handled during a WAN outage, but these will be routed via the local voice gateway’s PRI access into the AT&T network. Cell phones offer another level of redundancy as well to WAN
outages.

The Call Manager (CM) and Unity deployment in the network is based upon a centralized call processing model used with a Publisher and Subscriber CM cluster in each five geographic regions. Each cluster manages approximately 100-150 locations. There is a single Unity server per region. Number portability was used to transfer BellSouth Direct-Inward-Dial (DID) numbers from the old voice network to AT&T for the new network. Cisco 7960 IP phones are used. G.711 compression is used for calls within a site, and G.729 is used for calls across the WAN. Fax is handled via the PSTN.

There are a tremendous amount of details to review and sort through as you plan your converged network. As mentioned above there are now a few stability points upon which to build but that just lets you be creative about the type of converged network structures that are possible. To do this right, network architects have to map business requirements/process into network requirements and get your CIO engaged early on. The job of the network architect is to be a business partner to various corporate
divisions/stake holders making sure their requirements are met in the converged network architecture. With business profit drivers in hand and translated into network requirements, the network architect can start the process of design, financial model development and review. For most companies converged networking delivers significant cost savings as SouthTrust proves. IP telephony is doing an odd thing - it’s turning network architects into corporate heroes.

Posted 2 August 2004 at 7:34 pm under Lippis Report, Enterprise Mobility. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.