At the Midsize Enterprise Summit’s Peer Exchange Workshops, MSB CIOs shared some of their perspectives on the cost saving opportunities inherent in their IT infrastructures. Gartner has compiled a Research Note with some of the more interesting cost saving opportunities by presenting these CIO experiences along with Gartner’s analysis and perspectives. A few highlights:

Moving from frame relay to an Internet Virtual Private Network
MSBs are intrigued by the cost savings associated with running their networks over an Internet backbone, especially considering that frame relay networks are likely to continue increasing in price.One MSB with 50 locations cited a migration from a frame relay data network to a VPN, resulting in $80,000 savings per month. Key concern: MSBs must evaluate the impact of using a network without guaranteed service levels for mission-critical traffic.

Voice over IP (VoIP)
One MES attendee used IP phones over its WAN and claimed savings of approximately $2,000 a month by routing all phone call from a new remote office through the corporate office. Key concern: MSBs must be aware that the Internet is not yet a reliable network for running a mission-critical, real-time application such as voice. Mission-critical voice applications like customer service desks must be carefully designed with sufficient resilience and backup.

Checking bills for errors
The average MSB processes approximately 3,000 telecom-related bills per year. Many companies simply aren’t checking their monthly telecommunications bills. Gartner finds that it is not unusual for a company to overpay by 5 to 10 percent each month. One MES attendee cited $48,000 annyual savings by reviewing, finding and correcting telecom-billing errors.

Comparing competitive bids
It’s a great time for MSBs to evaluate telecom providers, since carriers are hungrier than ever. Key Concern: Many companies look at offers from new network service providers and take it for granted that if the bid is 10 percent below that of the incumbent, that’s what they’ll save. This isn’t true. Be sure to evaluate the cost of the transition itself. To truly save money, the new voice contract should be at least 10 percent less expensive than the incumbent, a new data service contract should be at least 15 percent less expensive, and a managed services contract should be 15 to 20 percent less expensive.

Bottom Line: Many midsize businesses do not have the resources to plan, design and operate their networks effectively. This causes many MSBs to spend more than they need to on networking. Using best practices and external services can help MSBs save money on network expenditures.

Receive a PDF of the Research Note.