* More corporations are migrating to IP-based converged nets, but cost, security concerns remain
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More corporations are migrating to IP-based converged networks, but concerns about run-away costs and security threats remain. These are the key findings of a survey of more than 200 global executives conducted this summer by the Economist Intelligence Unit (EIU) for AT&T.
“It’s a fairly positive picture that our research paints about convergence, but it’s balanced by some sobering conclusions,” says Denis McCauley, director of global technology research for EIU, the business information arm of The Economist Group, publisher of The Economist.
“Convergence is certainly gaining momentum and corporate expectations of the value-added benefits of convergence now equal or outweigh the cost efficiencies expected,” McCauley says. “But it’s not all smooth running. Implementation barriers remain in terms of security and cost. And these implementations require changes to business practices that are beyond the network.”
EIU has conducted a survey for AT&T on the attitudes of corporate executives toward networking and business strategy for each of the past three years. The 2005 survey, which was completed in June, included interviews with 236 global executives, half of whom were CEOs, CFOs or CTOs. Survey results were released last week.
The 2005 survey showed a significant rise in the number of companies moving toward network convergence. In 2005, 25% of the survey respondents said that most or all of their organizations had implemented network convergence. This figure is up from 15% in 2004.
An additional 62% of the respondents in the 2005 survey said they expected that most or all of their organizations would implement network convergence within the next three years.
“This suggests an acceleration of the migration to IP networks within enterprises,” McCauley says, adding that this survey result is “very positive.”
However, McCauley says that enterprises are taking a step-by-step approach to network convergence rather than migrating their entire enterprises in one big upgrade. “Survey respondents are taking a cautious approach to IP-based convergence,” he adds. “This is very much the case this year as well as last year.”
EIU’s survey found that many corporate executives understood the importance of network convergence as a means of meeting broader business goals. Convergence was viewed as important or critical to the achievement of their firms’ strategic IT or business objectives by 45% of survey respondents.
“This points to a shift in executive thinking about convergence,” McCauley says. “They’re not just thinking about streamlined network management or reduction of costs…There seems to be an increasing emphasis on using converged networks to innovate and to add value.”
In the 2005 survey, respondents ranked improved customer service and better collaboration with suppliers, partners and customers as more significant benefits of network convergence than lower telephony costs, which had previously been the key driver.
Survey respondents noted the following benefits of convergence:
* 73% cite better collaboration with customers, suppliers and partners.
* 69% mentioned better customer service as a critical payoff.
* 68% cite lower network management costs.
* 67% see a benefit in simplified network management.
* 67% identified better-quality communications.
Despite the promise of converged networks, corporate executives are wary about the costs of implementation as well as the security risks associated with converged IP nets. McCauley says widespread adoption of Multi-Protocol Label Switching technology may help alleviate executives’ concerns about IP security.
Survey respondents identified the following challenges to convergence:
* 64% see network security issues as a barrier to implementation.
* 62% expressed concerns about network availability.
* 47% expressed concerns about voice quality over an IP network.
“Network security issues ranked right up there with implementation costs as the most significant barriers to converged networks in [the respondents’] enterprises,” McCauley says. “Corporate executives have jitters about greater hacker activity as well as the spread of viruses.”
More details about the EIU survey are available in a new report called “Competing Through Convergence,” which is available at: https://www.att.com/presskit/eiu.
