Converging its networks cuts CMH’s telecoms costs

May 19, 2014

Retail motor Group CMH has cut its telecoms costs and increased its network capacity fourfold by migrating to a converged MPLS VPN network.

Like most local companies, CMH was running separate voice and data networks. Telkom line infrastructure was in place for voice, and costs were being managed by utilising cell phone-based least- cost routing.

The Group was running point-to-point diginet links into its car dealerships and car rental offices countrywide, something that was proving both expensive and inefficient. There was also limited redundancy. If a line went down the dealership or office concerned was offline until someone could get a physical 3G dongle to the location or the line was repaired.

In October 2011, Group IT manager Roelof Minnaar met with Peter Walsh of CommsCloud, a specialist telecommunications consultancy. Whilst initially the discussions were about gaining clarity on an array of VoIP proposals from multiple service providers (aimed at driving down costs) in the end Minnaar engaged CommsCloud to assist with analysing the Group’s telecommunications usage and costs, document its business need, and put together a Request for Proposal (RFP) for a tailor-made converged network.

It soon became clear to all the role players that converging the disparate voice and data networks would aggregate costs, increase savings, reduce operational impact and deliver significant benefits to the business.

Says Minnaar: “We drafted an RFP for a fully converged network servicing 54 dealerships and about 42 car rental depots, and distributed the RFP to the major players in the market. Thereafter we started a lengthy process of interacting with the respondents and working through the thick piles of RFPs they’d come back to us with.”

Minnaar says CommsCloud created a massive comparable matrix, analysing and plotting all the information in each RFP – from last mile redundancy to technical details, hardware and costs.

The service provider list was then trimmed down to three potential providers, with CMH conducting two site visits to the short-listed service providers’ support centres, gaining a better understanding of how CMH would be looked after post implementation.

Assessments concluded, CMH went with Vox Telecom because it felt it would get dedicated attention. A three-year deal was signed and planning was done. Each site was analysed to establish what connections it had and what it needed.

“The whole purpose was to ensure redundancy, increase throughput for the end-user and have a much better, more stable network. By converging the voice and data network we could ultimately afford a far better network,” Minnaar comments.

The decision to converge its network saved CMH almost R20m over the three-year contract period, of which half was reinvested back into last mile connectivity at its sites. The main links were sized based on specific needs and segregated to carry voice, video and data traffic. In addition, the secondary links were set up to be used by CMH IT to manage its own network, leaving the primary links for mission critical business applications.

CMH has also removed its least cost routers and significantly reduced the cost of calls. Voice traffic (VoIP) now runs over the converged network, at a lower cost, with inter-branch calls being routed at a negligible rate.

With careful planning, CommsCloud’s analysis and input and the willingness of its service provider to go the extra mile, CMH has been able to optimise its telecoms infrastructure, which has contributed significantly to ongoing savings.

One spin off of the move has been to enable Minnaar to centralise the Group’s IT systems in its service provider’s datacentre. This is not only ensuring mission critical applications reside in a secured, controlled environment with generators and a replicated site allowing for immediate failover, but also ensures there is no single point of failure in accessing CMH’s business applications.

“CMH has almost completed its rollout,” says Minnaar. “And whilst it was not all smooth sailing, redundancy is now in place, throughput to the desktop has improved and the ongoing demand from dealerships for more bandwidth is manageable”.

CMH’s network now services 78 sites housing 110 branches countrywide. It is scalable, provides alternative routing, and enables the Group to leverage technology for its businesses requirements. CMH is now free to focus on improving the customer experience and increasing productivity.

Convergence a challenge for organisations

May 15, 2014

Peter Walsh, CommsCloud director

For mid-sized organisations without a large IT budget, convergence and the move to IP-telephony is posing a serious challenge. Disruptive technologies like cloud computing are here to stay. The ‘bring your own device’ trend has set in and more and more things (from fridges to phones) are being connected daily. According to Intel, the number of networked devices will be double the world’s population by 2015. For IT managers trying to cope with current needs, like managing the BYOD explosion, while planning for future network and bandwidth requirements, things are not going to get easier any time soon.

While IT managers (and CIOs) have traditionally faced the challenge of being in a continuous upgrade cycle, falling behind now could have disastrous consequences for organisations.
Managing telecommunications infrastructure is both complicated and technically difficult.

Upgrading and keeping pace with change is resource intensive, requires a strong understanding of costs and business needs, and is further complicated by the current legislative and regulatory environment.

Chasing price when managing telecommunications infrastructure is the wrong way to do it – as evinced by the cut-prices the corporate world has obtained from operators like MTN and Vodacom over the years without great service to show for it. IT managers need to understand their costs, and their business need better than their service providers do. They need to benchmark costs by product and solution (to measure and monitor progress); this will show where inefficiencies lie and where there is opportunity for improvement as well as what needs to be prioritised. IT managers should also document their business need so that they can clearly communicate this to the service providers they engage with.

Most businesses will not be able to conduct this process internally. Telecommunications expense management is a relatively new discipline in South Africa and not yet well understood or well used. Local TEM expertise does exist in specialist consultancies, however, and IT managers would be well-served to get one on board to conduct this assessment.

Once the assessment is complete, price your needs on the open market via an RFP/RFI or tender process. Bandwidth costs are coming down and if you’ve not renegotiated pricing in the last 24 months then chances are you are paying too much.

Use your documented business need along with clearly defined deliverables, and ensure responding service providers have all the information they need to propose a viable solution. Request an SLA and get a legal mind involved in the signing of commercial agreements.

If you have to change networks bear in mind that it is a challenging project that requires detailed planning, strong communications and change management skills, good project management and will involve some degree of disruption.

Get the process right and you can upgrade the network to one that is scalable, resilient and redundant while fulfilling the business’ strategic IT requirements and driving down costs. You will also be able to future proof your business and embrace an evolving IT landscape.