The New Economics of Wireless LANs

It's no longer about the price of the system - it's about minimizing operating expense over the life cycle of a given installation.

With all of the crazy terms floating through the universe of wireless LANs (think Wi-Fi, MIMO, beamforming, control plane, etc.), there's one that deserves a lot more attention, especially as the recession persists in many IT organizations: TCO, or total cost of ownership. No, it's not as sexy as 60 GHz. radio or any of the other cool technology developments that practically define this increasingly vital element of enterprise wireless, but it's one that every IT manager needs to understand in order to make the most of their investment in WLANs - and to keep the CFO in a mood amenable to signing that next PO.

TCO has two key components - capital expense (CapEx), and operating expense (OpEx). CapEx includes all of the costs involved in getting operational - purchasing the required hardware and software, planning, installation, configuration, and any other associated non-recurring-engineering (NRE) expenses. OpEx is the cost to keep the network on the air over its useful life - management, maintenance, support, help desk, troubleshooting, monitoring, and many more functions are included here. Perhaps not obvious, OpEx is almost always much greater than CapEx over time. This is because wireless LAN equipment is on an engineering/manufacturing cost curve and also usually sold at discount, and prices always decline here as the faster/better/cheaper of high technology works its magic. But OpEx is labor-intensive, and costs thus run the other way - people only get more expensive over time, and thus the strategy needs to focus on improving the productivity of the highly-skilled staff operations required, mostly though improvements in management-console and related functionality. It's vital, then, to get the operations staff involved in major system purchasing decisions and to consider their requirements as one very important element of the needs-determination and solution-evaluation process.

But note that we're not talking about return on investment (ROI) or profit here. The ROI for a WLAN is measured in pretty much the same fashion as that for any network or really any element of IT, via improvement in the productivity of users (and note there's a corresponding cost resulting from the potential hit to productivity when things don't go so well). Since productivity is often very difficult to measure, this whole question is perhaps best evaluated in terms of opportunity cost - the cost of the next best option in place of installing or upgrading a WLAN. Since that's the use of wire, one loses the benefits of mobility, which are mostly evaluated in terms of improved user responsiveness or, again, productivity. Given this and that the cost of a WLAN can be far lower than that of wire (resulting from free clients and less wire to install and maintain at the edge of the network), I think going wireless is financially a basic no-brainer. As for profit, well, I view IT on the whole as a cost center, but I as a profit center. So the WLAN is always a cost of doing business, but keep in mind that there is no profit at all in the more classic sense in most enterprises today without the effective use of information. So, no matter how one might evaluate the financial aspects of a WLAN, the minimization of TCO really is the key.

So, how so we do that? My advice is, wherever possible, to convert OpEx into CapEx. In other words, buy more stuff and spend less later on solving problems. As an example, Cisco's CleanAir spectral analysis capability - detecting, classifying, localizing, and remediating interference - integrated into their WCS management console. Such could save big bucks and avoid downtime, and some of their competitors are now offering similar (and other) operations-productivity-enhancing tools.  But it's not about having every single feature under the sun - in general, look for more efficient product implementations, management tools that address your current and even more importantly your planned needs, and non-disruptive scalable growth as new coverage, enhanced capacity, and evolving application demands drive network expansion. The days of huge operations staffs are coming to an end - and successful WLAN systems vendors will be providing solutions to reduce OpEx to the bare minimum required. It's probably time to schedule a discussion with your vendor as the New Year arrives - the recession may be over, but its lessons (and budgets) will linger for quite some time.

Copyright © 2010 IDG Communications, Inc.

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