Network Cost Cutting Measures in a Tight Economy

Now is a very volatile economic time. Even with Government intervention, there is still a lot of uncertainty in the market. Whether you're a public or private company, now is the time to evaluate how you could trim your networking costs. Below are seven cost-cutting initiatives your company can take immediately to save on networking costs. 1. Bid multiple network providers It may be more comfortable to continue to go with your present provider. But don't be shy. Providers anticipate buyers will look at other providers and have set up various measures to ensure they can meet buyers' expectations. One way to have choice of network providers is to colocate your core networking equipment in a carrier-grade colocation facility that provides you with the most access options. By meeting networks at their source, you gain benefits that include "the ability to reduce costs by not paying local loops to connect directly with providers," states Joe Cooper, vice president of sales at Mzima Networks, a nation-wide Internet bandwidth provider. "By eliminating the local loop from the service providers' core routers to your primary networking equipment, companies can save thousands of dollars a month." Another way to have more network provider choice is to be more flexible with respect to the type of access and technology you require (e.g. T1 versus cable access versus DSL access). 2. Look for promotions In tough times, many companies offer promotions which provide cost-savings opportunities for buyers. As a buyer, you can leverage these opportunities to gain both short and long-term cost savings. Promotional opportunities make noise in the marketplace and may also instigate competitors to provide their own 'price-break' opportunities as a response. Don't hold back on doing your research and subsequently sharing your knowledge about promotional pricing being offered. 3. Know what you need If you are growing and anticipate buying more network services within the year, forecasting your growth and requirements are to your advantage. Buying network services on an 'as needed basis' is less risky than holding on to too much bandwidth or capacity fearing you won't be able to sell it off. However, with tight margins, aggressive pricing and the growing demand of larger bandwidth, your risk of buying more now may pay off in the end. Buying a GigE pipe now versus multiple 100Mbps pipes on an 'as needed basis' could save you thousands of dollars a month. Many companies offer a pay as you grow solution as well. Don't hesitate to negotiate from a position of power and knowledge. 4. Look at other technologies If you have an older network that is based on technologies like private line or frame relay, take a look at newer technologies like MPLS or IPSec VPN or Ethernet. Often these newer technologies come at lower price points and may also come with newer features that you may need. 5. Explore secondary/tertiary provider options as an alternative to incumbents Many Incumbents have legacy infrastructure that has organically grown over the years. Competitive providers have the advantage of deploying the latest technology at the onset, thereby offering the market lower pricing since their network costs are more efficient. So shopping around with these providers is certainly a viable option. However, there is some risk here. If you are looking at a player you are not very familiar with check references, look for complaints online, and make a limited commitment to ensure they have SLAs that back up what they say. 6. Alternative Models An alternative provider isn't just a secondary or tertiary provider in the market. It is a completely different business model altogether. These could be exchanges, agents, alternative channels as well as cooperative buying solutions available in some markets. For instance, Arbinet offers a network-neutral marketplace and managed services that enable providers to increase network utilization, achieve better pricing and improve profitability and cash flow by reducing the number of interconnections, streamlining legal, billing and collection expenses and virtually eliminating disputes and bad debt. By using alternative providers, you leverage their knowledge and skills of the marketplace. 7. Look at all the tools available Tools like QoS and Application Acceleration can wring more performance out of the network you have. This allows you to better optimize your network and put off costly upgrades. At the end of the day, it's up to you to manage your business as efficiently as you possibly can. By analyzing your cost structure, you have a better understanding of how you can price your services and where you may need to cut additional costs. Leveraging this ability by regularly inviting new suppliers to submit proposals keeps you up to speed on the latest network pricing trends and solutions and offers you the opportunity to request better service from your present provider. In addition, exploring alternative means to manage cash flow more efficiently will be a growing trend and requirement if the credit markets remain tight. For example, Arbinet offers alternative products and services to help mitigate a company's cash exposure. Its RapidClear accelerated settlements service is an option for companies who have to free up cash flow to remain competitive in an already challenging marketplace.  So stay knowledgeable, shop around and ask the hard questions to ensure your business benefits from the leading trends offered throughout the industry. Buying network services isn't complicated, but trying to shave costs can be tricky. IP Rose Klimovich is vice president, product development and product management at telx.