Creating a new network value equation

There are many shades of gray in OEM upgrade proclamations—as well as innumerable ways for CIOs to extract greater value from existing networks

Creating a new network value equation
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Having worked on Wall Street for many years, I’m a big believer in extracting the biggest return on technology investments. After all, anything that impacts the bottom line should be thoroughly analyzed from all sides of the value equation. 

Now more than ever, CIOs are being scrutinized for their ability to increase ROI while driving innovation and digital transformations. According to more than 3,000 CIOs and technology leaders gathered for the 2016 Harvey Nash/KPMG CIO Survey, the role of today’s CIO is being stretched in many directions amid shifting priorities and pressures. 

+ Also on Network World: Network World annual State of the Network survey results +

More CIOs report directly to CEOs than at any time in the past decade, rising 10 percent in the past year to 34 percent of the survey respondents. And, while 37 percent of the CIOs surveyed are still focused on saving money, almost two-thirds are helping CEOs identify IT projects that generate revenue. 

In fact, CIOs in smaller businesses are more than five times as likely to spend most of their time on external-facing projects instead of traditional IT functions like systems and infrastructure. This onslaught of new demands prompted Lisa Heneghan, KMPG’s global CIO advisory service network leader, to acknowledge the evolution of the “creative CIO.” 

According to Heneghan, the creative CIO is a technology and business strategist—and a business model innovator. 

“This creative CIO is moving away from ‘keeping the lights on,’ to enabling the business to create value,” she explains. 

I wholeheartedly agree that in addition to creating new value, truly inventive CIOs must get more creative about how they actually keep the lights on. 

For instance, too many CIOs have only top-level awareness of what’s installed and supported currently in their networks. Often, the nitty-gritty of managing hundreds or thousands of network switches and routers is left to OEMs’ support organizations. The reality is these groups frequently have limited visibility into what’s installed because they rely on disparate tools and processes to keep track of what’s where. 

Then, every three to five years, OEMs advise customers to undergo massive upgrades to the latest and greatest products. They lure customers with promises of new features and functionality regardless of whether all the new bells and whistles are needed. 

Upgrading equipment isn't a black and white issue

Oftentimes, analysis to determine thoroughly if the business warrants the additional functionality—and investment—is inadequate or non-existent. The same goes for consideration regarding the toll a massively disruptive upgrade would place on an already stable and reliable environment. Instead, OEMs present the upgrade as a black-and-white issue: If you want continued support for critical gear, migrate to the newest release. A bold but simple fait accompli. 

The way I see it, there are many shades of gray in OEM upgrade proclamations—as well as innumerable ways for CIOs to extract greater value from their existing networks. For starters, CIOs should develop a value equation for core networking gear that measures the following: 

  • How is the equipment currently used to support the business?
  • What’s the business benefit to upgrading?
  • Can your capex survive the hit?
  • What impact will the disruption have on your opex?
  • Can you extend the useful life of existing gear?
  • What’s the street value of current equipment?

By looking at all sides of this value equation, creative CIOs can determine when and how to keep the lights on without caving to costly OEM pressures. The bottom line is lots of hidden value can be found in reliable network equipment that has been operating without fail for years. The key is to conduct a full assessment of the network to determine where creativity can be applied to capex and opex decisions. 

Conducting an independent audit of network inventory makes it much easier to reconcile asset management, as well as determine which equipment currently holds the most value in terms of resale or trade-in. Equally important is determining where alternative support strategies can help keep higher-value gear operating longer.

The new network value equation doesn’t require complicated analysis. But it’s one that’s been overlooked by many CIOs because they didn’t have the time, inclination or awareness of how much money actually was being left on the table. Fortunately, savvy CIOs are figuring this out, which frees capital and resources to focus more on revenue-generating IT projects.

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