With a focus on operational cost reduction and a means to finance branch office deployments without capital cost and its effect on increasing operational cost through depreciation and IT staff, many IT leaders will find the new managed branch office services welcome news. Some facts will help focus the mind, according to Nemertes’ Branch Unified Communications 2008 Benchmark:

• The number of new branch openings has been growing at 6.8% per year; this includes data from the fall of 2008
• 90% of new employees work in branches
• 93% of organizations are centralizing their infrastructure
• 91% spend some or all of their time working away from headquarters
• Organizations spend 31% of their IT budget in the branch
• Only 15 percent of branches have IT staff on-site
• 63% of organizations utilize or plan to utilize managed services in some of their branches today
• For those that use managed services they extend the service to 89% of their locations realizing the strategic value it offers

Branch Office Network Constraints

All these facts point to the growing demand for branch office deployments and the realization that business application delivery for many IT leaders has become data center and branch office focused. While application placement ebbs and flows between data center and branch or centralized versus distributed, one thing is clear: branch office deployment cost will continue to grow because that’s where the people are now. Delivering business innovation to branch office locations has always been challenging with few, if any, IT personnel on site plus limited and inconsistent application and service delivery and widely varying technology deployment including inconsistent WLAN, security, local storage and servers, backup, etc. services among and between branches. But even with these constraints branch office employees demand the same level of service available at headquarter facilities and more. With video conferencing, web 2.0 plus collaborative applications in demand, should IT leaders focus on connectivity or value added applications?

To mitigate these constraints IT leaders now have an option to accelerate the absorption of business innovation and focus on business applications with managed branch office services delivered by service providers, harnessing the power of Cisco’s Empowered Branch solution. IT projects always increase operational cost with depreciation and staff salaries. In the current difficult macro-economic scenario managed services trades off capital and its associated depreciation cost while capping salary and facilities cost into predictable manageable quantities. IT leaders understand this value as more and more have been buying managed services, which is currently a $34B industry projected to grow to $65.5B by 2012, an 18% CAGR between 2007 and 2012 according to Ovum. That’s more than twice the CAGR of the IT industry’s 8%.

As business and IT leaders have grown savvier by allowing business to drive their technology strategy versus the other way around, for some the maintenance and management of branch office networks can be outsourced to service providers allowing IT to focus on projects which are core to business operations. This shift allows IT leaders to focus on increasing innovation absorption in the branch such as video and unified communications, which offer competitive advantages through increased customer service. Further, with the large footprint or geographic coverage of service providers IT leaders can roll out services to hundreds or thousands or even tens of thousands of branch offices much more quickly than with in-house staff allowing a corporation to obtain operational efficiency results faster, which is a paramount concern today among business executives: get results in scale and at speed, fast!

Time To Review Branch Office Operations

For those who have not reviewed their branch office deployments in some time, they will find that network complexity is increasing their operational cost and making them less competitive. In short, network complexity is inflationary to operational cost. Network complexity increases when deploying different supplier solutions or appliances for every new IT service needed in the branch such as mobility, unified communications, security, LANs, fax machines, video surveillance, etc. An empowered branch that consists of a single integrated device such as the Cisco ISR (Integrated Services Router) has been proven to reduce operational spend between 50 and 70% thanks to its efficient deployment model of provisioning a wide range of IT services in a consistent manner to many branch offices.

In fact the ISR is the most widely used branch office network platform with over 5 million in production. The platform approach not only reduces corporate spend but offers energy efficiency through state-of-the-art power supplies plus environmental sustainability thanks to the elimination of multiple pieces of hardware into one with a reduced eco-footprint. With a branch office network platform that has a 5-to-7 year lifespan, IT leaders are assured that new services will be offered thanks to continual platform investment enabling their business to adopt innovation quickly without rolling out new hardware per branch.

The Managed Empowered Branch Service Model Emerges

Most business and IT leaders select to envision, design and deploy their own branch office network, as control, innovation absorption pace and security are high on their list of decision factors. But three out of every ten business leaders select to use managed branch office services and this number will only increase as the number of managed service offerings increase based upon Cisco’s Empowered Branch Solution. Service providers used to lag Cisco in the products and features offered, but this gap is closing. Managed service providers are bringing together routing, switching, integrated security, mobility, application performance and unified communications into their managed branch offerings at a pace comparable to in-house staff capabilities.

Service providers such as Verizon, TELUS, Cybera, AT&T, NTT, Orange, T-Systems, Alestra, Telefonica, Cable & Wireless, Telstra and many others are now offering Managed Empowered Branch Services around the world that start with a managed wide area connectivity service but are capable of offering the above services. This is a first in the industry as service providers were forced to deploy new hardware for every new service added to a managed service offering. For example, Verizon’s Managed ISR service offers a suite of five services that are delivered in any combination, one-by-one or all together. Verizon deploys a single fully provisioned ISR in the branch capable of delivering all five offerings which are provisioned remotely upon IT’s order.

Accelerating Innovation Absorption

With Empowered Branch Managed Services IT leaders will be well positioned to take advantage of new connectivity services such as 3G wireless and SIP trunking too. While 3G offers an alterative and diverse route for network traffic, SIP trunking offers lower facilities cost as analog voice lines are consolidated, there is improved inter-company connectivity, better dial plans and much more. And that’s good news as the number of SIP trunks being consumed is skyrocketing to nearly 3m lines in 2008 with a projected 54% CAGR between now and 2012 according to Frost & Sullivan. With 300 or so service providers offering an Empowered Branch Managed service based upon Cisco’s branch office platform 3G, SIP trunking, extended analog to IP connectivity, application recognition and control plus end-to-end application performance visibility are being enhanced on the platform and are available from Cisco’s managed service providers. Therefore, the pace of innovation absorption gap between in-house and service providers is closing.

Cisco’s new ISR 880 supports both 3G wireless networking plus its SRST for Survivable Remote Site telephony, which gives the ISR portfolio some breadth and in a fixed form factor 3G enabled router, is something for which Cisco customers, especially smaller branches and businesses, have been asking. Many corporations have been seeking the ISR 880 as it now collapses 3G and SRST into a single box solution. With SRST on this platform, branch offices are offered analog voice ports for redundancy and business continuity, plus SRST supports 911 service too.

For SIP trunking, the ISR includes CUBE or Cisco Unified Border Element version 1.3. CUBE is what Cisco uses to enable SIP trunking on all its platforms. CUBE version 1.3 adds extensive SIP trunking support features, including a strong focus on deep interoperability. The ISR 880 platform and all of the Cisco ISRs have a rich set of SIP capabilities that enable SIP trunking, which is well timed with the SIP market well underway. SIP trunking is another service managed service providers can layer into their multi-service offerings, and it’s one that almost every corporation will consume as SIP trunking is the new dial tone option in the IP world.

The Empowered Branch option allows IT leaders to capture and deploy innovation without additional hardware or expansion of the branch office IT footprint. What is different now in the market is that corporations that deploy innovative branch solutions via a Managed Empowered Branch offering can be on the leading edge with a service provider, meaning that corporations are not going to be trailing the market by 9 to 12 months in terms of branch office solution innovation. In the past service providers were 24-plus months behind those that built their own branch office solutions. This is no longer the case and it’s important especially in today’s economy where the time to deliver value back to an organization has collapsed down. Initiatives identified by executive management are required to be implemented in scale and without haste to gain value quickly. Speed is paramount and Managed Empowered Branch offerings have both narrowed the innovation gap and are best positioned to deploy branch solutions in scale and at speed.

Do Your Own Analysis

This is a key attribute as the facts presented earlier paint a picture that corporations are expanding their sprawl in an effort to be closer to customers. The managed empowered branch will reduce operational spend for most or re-structure operational expenses for others. As these managed services are new, IT leaders are advised to perform their own three-year economic analysis to understand its impact on total cost of ownership and which deployment option best fits its business initiatives.

A Word on IT Jobs

During the current economic climate reduction in force (RIF) is occurring and will potentially accelerate over the next two quarters. In IT departments, operational staff is vulnerable during these cycles. For IT professionals it’s important to be of high value by focusing on projects that are core to business operations and strategic initiatives. Therefore, focus on projects that are contributing to core business initiatives, and if that means outsourcing to a service provider for items such as transport or unified communications, so be it. In short, your projects need to be of high-visibility and importance in your CIO’s mind. If your projects are not viewed as core to the business then you should consider making the case for a managed service so that your job can be re-focused on projects that contribute higher value to your corporation.

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Performance and stability of the network is a business requirement for datacenter networking, where a single scalable fabric carries both network and storage traffic. Management processes must be scalable for successful deployment and operation, requiring a high degree of automation and integration into the customer’s unique environment. The design and architecture of the network operating system provides the foundation for meeting these requirements. The monolithic software architecture that runs on almost all of today’s network switches presents a fundamental design limitation to high network reliability. The stark reality is that a single bug or defect anywhere in the OS exposes the entire system to disruption since there is no mechanism for software fault containment. At the same time, with no isolation between multiple tasks it is difficult to scale these systems from a performance perspective or to add new functionality. In fact, making any significant changes to a code base that is measured in millions of lines of code will reduce product stability and reliability. The fragile monolithic approach inherently prevents extending the network operating system to implement new features such as integration with customer specific management processes.

Arista’s Extensible Operating System (EOS) leapfrogs traditional network OS designs. Learn how by downloading this paper.

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Consolidation of data center resources offers an opportunity for architectural transformation based on the use of scalable, high density, high availability technology solutions, such as high port-density 10 GbE switch/routers, cluster and grid computing, blade or rack servers, and network attached storage. Consolidation also opens doors for virtualization of applications, servers, storage, and networks. This suite of highly complementary technologies has now matured to the point where mainstream adoption in large data centers has been occurring for some time.

Find out how by downloading this paper.

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Multi-Protocol Label Switching (MPLS) as a technology has been around for over a decade and has been used extensively in several service provider networks world-wide. Over the last few years, the standardization of applications such as VPN technologies over MPLS has opened the door for this technology to be used in an enterprise network. This paper explores the use of MPLS in an enterprise network and its associated benefits of lower cost and increased security.

Find out how to use MLPS in your enterprise WAN by downloading this paper.

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A burgeoning global trend toward branch-infrastructure consolidation is creating a significant new managed-service opportunity. Enterprises that centralize their application, file, and print services need assurance that their branch-office employees can access services over the WAN as quickly as they could over the LAN. Service providers can meet this need by offering a managed application-acceleration service in conjunction with their existing Multiprotocol Label Switching (MPLS) VPN service.

Cisco estimates that the worldwide market for managed application-acceleration services will reach US $1.3 billion in 2011. Providers that introduce a managed application-acceleration service have a strong value proposition. The service optimizes branch-office application, file, and print services across the WAN while also reducing operational expenses, increasing operational efficiency, and enabling centralizing backup, which protects data and helps ensure regulatory compliance. Enterprises with a few to thousands of branches might be initiating consolidation efforts, experiencing slow application performance, or beginning WAN refresh projects.

This white paper, intended for service provider business executives, explains why business customers subscribe to a managed application-acceleration service, how the service works, and benefits for providers as well as their customers.

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If you are looking for a new model to deliver branch office innovation and cut capital costs, then you have to listen to this podcast.

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RIF causes many organizations to increase workload on existing employees. In short, as corporations reduce staff, remaining employees are required to increase their workload. For those business and IT leaders who view IT, networking and communications in particular as strategic, they will leverage IT to ensure that employees can increase productivity. Productivity improvement will come not only in the short term by reducing expenses but over the long term as well by re-thinking business processes that exploit IT to allow a smaller workforce to consume the workload of a larger employee pool. As occurred in the last recession business productivity increased and it will increase now again. Business leaders can choose to guide their firms into a period of huge productivity growth on the order of 5 to 10% during this downturn as RIF is complemented with business processes automated through IT.

There was good news in the 1973 and 1929 analog graph: industrial production, inflation and the jobless rate are in better shape now than during those two awful macroeconomic periods. With unemployment at 6.1%, and projected to grow to 6.3% when October numbers are released during the week of Nov 3rd, IT leaders should be focused on developing IT strategies that review business process and workflow that increase corporate productivity. There is no doubt that most executive management and corporate boards are focused on expense reduction initiatives, with RIF being one of their levers to pull. In addition to reviewing business process with an eye toward efficiency by reducing human and system delay in workflow between employees, suppliers, partners and customers, IT leaders need to enable corporate operational cost and expense reduction across the board.

A Flight to Safety Among IT leaders

An important point to remember and act upon is that IT suppliers went through a much worse economic period during the 2001 internet and telecom bust. This is important as these firms have been through a much more difficult downturn and survived. This means that IT suppliers are in a position to be a trusted advisor or business partner sharing best business practices with their customers as an important value add to the customer-buyer relationship. While 2009 IT budget projections are anywhere from -2% to as high as 5%, the industry will not know until January and February of 2009 when most IT budgets are approved. There is no doubt that there will be a consolidation in the general economy and in IT as there will be a flight to safety among IT leaders. This bodes well for companies such as Cisco, IBM, Microsoft, Oracle, HP, AT&T, Verizon and many other large and financially secure IT firms. Many IT firms have strong balance sheets as they avoided debt thanks to the post 2001-2003 dotcom bust where the winners were simply “The Last Man Standing”. Also, smaller firms with innovative products which can be inserted into larger IT projects will also fare very well. One company in particular is Arista Networks which is an emerging leader in cloud networking.

In the switching and routing space Cisco, HP’s ProCurve, Brocade/Foundry and potentially Juniper should either thrive or just survive this downturn. In the communications space Cisco, Microsoft, IBM, Citrix, Avaya, Alcatel-Lucent, Siemens, and Mitel should either thrive or just survive this downturn. Avaya, Siemens and Mitel have the benefit of being private firms that have greater latitude to transition products and change management without being under the eye of Wall Street quarterly calls. All of these firms survived the 2001-2003 IT depression and will have both economic and management strength to survive the crash of 2008.

Most of the above IT firms can be part of a business process review task force, which include business process consultants, IT and business leaders plus strategic IT firms. Most IT leaders will be selective on which business processes to review based upon their potential for operations and expense reduction. Structured business processes such as financial reporting, supply chain management, customer resource management and customer support via contact centers are low hanging fruit that will deliver expense reduction, increased productivity and better customer experience. Note that enterprise networks are the foundation of all IT projects and must not be ignored or have upgrades significantly delayed so as to reduce application performance.

IT Projects That Deliver Corporate Productivity Gains

We highlight a few horizontal IT projects that should be a part of any strategic IT initiatives for 2009. IT project horizons will need to be short as few businesses will have patience to gain results that take a year or longer to deploy during 2009. Short hits that reduce expense and increase productivity through business process efficiency will be the winners.

Unified Communications with Web 2.0 and Collaboration: Unstructured business process such as communications is also low hanging fruit which can add as much as 15% productivity to each and every employee through unified communications and collaboration tools, eliminating multiple voice mail boxes, IM accounts and making contacts, presence, call logs and email mobile. Many unified communication platforms from suppliers such as Cisco, Avaya, Siemens, Microsoft, IBM, Mitel, NEC, Nortel, et al., are increasingly adding Web 2.0 services such as wiki, mash-ups, social networking tie-ins, blogs, video on-demand clips and web conferencing to take advantage of productivity gains afforded by collaboration.

Visual Networking: Visual networking which is an umbrella term that captures video conferencing, Telepresence, click-to-conference and IP video services demand will skyrocket during this downturn. As travel and training expenses are cut, business and IT leaders will turn to the new generation of visual networking products not only as a means to reduce travel cost but also to hasten business process by allowing groups to communicate visually in an effort to move workflow quickly. GE just purchased a set of Telepresence systems and talking with some of their business leaders you come to the conclusion quickly that visual networking not only pays for itself with travel cost reduction but improves business productivity which is just what businesses need now.

Cloud Computing: While cloud computing and networking are in the early stage of market acceptance, it could not have come at a better time. According to a 2008 paper published by IEEE Internet Computing “Cloud Computing is a paradigm in which information is permanently stored in servers on the Internet and cached temporarily on clients that include desktops, entertainment centers, table computers, notebooks, wall computers, handhelds, sensors, monitors, etc.” In short, cloud computing is a model where corporate applications and communications are not resident on desktop, laptop or smart mobile end-points, but offered as a service in the “cloud” or in the internet. What is significant about cloud computing is that it offers a new IT delivery model and economics. Gone are the days of supporting applications for every end-point and managing its hot-fixes and upgrades plus funding its helpdesk. Companies such as Google, Amazon, Saleforce.com and other SaaS providers are offering cloud computing services and their numbers are growing. Cloud computing offers a new economic model for IT that requires very little capital investment to deploy and scalable cloud applications which do not beef up operational cost with depreciation. Again, this is an IT model for this economy.

Data Center Consolidation and Virtualization: Data centers are the largest IT budget item and are the focus of many IT leaders as they look to reduce their own expenses. Consolidating the number of data centers while increasing capacity within a smaller footprint via virtualization and reducing energy consumption via Green initiatives are all winning projects today. Outsourcing legacy computing is booming right now as IT leaders look to take depreciation expense off their books and exchange it for a manageable expense.

Branch networking and Teleworking: As data centers consolidate and become virtualized branch office and teleworking solutions represent the new sprawl of corporate employees. Teleworking reduces real estate requirements and allows employees to be more productive as well as reduce their own spending on energy traveling back and forth to an office. Branch offices allow corporations to be close to customers, a very good strategy for today’s economy. IT application delivery to branch offices can be centralized in data centers allowing complexity and cost to be contained and managed.

2009 will be a challenging time. If there was ever a moment when corporations needed IT leaders it’s now. Now is the time to be engaged with executive management to ensure that IT is not an expense but a strategic enabler of corporate initiatives. IT will be challenged by business line managers who will be short on patience for new services and executive management who need their initiatives implemented quickly. IT leaders will flock to the safety of the most secure IT suppliers and lean on them for rapid deployment of cost saving projects. While there will be RIF, don’t let employees burn out with workloads they cannot sustain; you have to delivery IT solutions to help them be more productive.

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Delivering an ideal enterprise network solution implies having a mission-critical network infrastructure, secure on-demand network access, non-stop operational management, unified business communications, and the highest return on investment. These key requirements are essential in building the next generation enterprise network, and are readily available in Foundry’s Enterprise products.

Find out how Foundry builds next generation enterprise networks by downloading this paper.

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This one page document explains cloud computing and cloud networking in simple terms. It also distinguishes Server Virtualization from Cloud Computing. It’s short and to the point and if you’re interested in cloud computing, cloud networking and server virtualization you will be happy that you took the 2 minutes to read it.

Find out about cloud computing, cloud networking and server virtualization by downloading this paper.

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