Network-optimization Becomes Top Goal for Businesses in 2004

NEW YORK … March 17, 2004 – An overwhelming number of employees—87%—works away from the headquarters building or campus, according to Nemertes Research’s latest benchmark series, “Maximizing Your WAN: Bandwidth Trends and Benchmarks.” That’s one of several reasons bandwidth demand is rising on average 50% to 100% a year, and in some cases up to 500%.

Other factors influencing bandwidth demands include deployment of Web services, growth in graphical and high-capacity voice, video, and collaborative applications, and data-center consolidation, according to the five-month research project.

“Nearly every organization requires a faster, higher-capacity network. And it’s absolutely crucial for companies to operate these networks as efficiently as possible,” says Robin Gareiss, Nemertes’ principal research officer. “Yet, adding bandwidth is not always the best answer.”

Businesses increasingly must rely on carriers or explore the growing area of network-optimization products that leverage existing bandwidth. IT executives rate the traditional long-distance providers (AT&T, Sprint, and MCI) higher than the incumbent locals (BellSouth, Qwest, SBC, and Verizon) in 10 categories. But network-optimization vendors (Expand, Internap, Packeteer, and Peribit) scored higher than all of the carriers, according to the 130-page research benchmark series, which included input from about 100 IT executives.

Nemertes also found that network optimization is the No. 2 priority for 2004 among enterprises. “The question is, who’s best positioned to address that need? IT professionals are growing wary of continually adding more capacity to their networks,” Gareiss says. “We’re seeing growing interest in network-optimization products to leverage bandwidth and manage traffic more efficiently.”

According to the research:

• Sprint earned the top rankings among the carriers in seven of the 10 categories measured;

• ROI for bandwidth optimization typically is three to nine months for circuits at T1 speeds or lower; 73% of companies surveyed are using or plan to use the products;

• The most mission-critical WAN applications are E-mail (50%) and ERP (39%)

• 81% of companies have Web-enabled all, some, or most of their applications;

• The average 1,000-person company spends about $460,000 a year on fixed remote-access services, 47% of which are labor costs for troubleshooting outages.

• WAN services and salaries account for 28% of the IT budget.

The report includes 17 recommendations, based on detailed discussions with IT executives, about where vendors and carriers should focus their efforts in the coming year. Topping the list are improved customer service (44%); reduced costs (42%); and improved infrastructure (31%).

The report contains input from organizations across a range of industries, including financial services, healthcare, manufacturing, and government. More than half of the companies had annual revenues of $1 billion and up.

Nemertes Research is a leading research firm that specializes in analyzing the business impact of technology. For more information, visit www.nemertes.com.

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