Martin Courtney, Computing, Monday 23 November 2009 at 10:06:00

Recession is a good time to renegotiate ICT contracts

Most companies will maintain or expand investment in information and communications technology (ICT) in 2010, say analysts. The current downturn in spending means IT managers have a significant opportunity to renegotiate existing deals with telcos, service providers and equipment vendors.

Many firms are looking at ICT to help them trim operational costs, with unified communications (UC), video conferencing and teleworking applications representing top priority.

David Maloney is principal analyst at research company Ovum. He says that many things being done to cut operational costs are those that companies do in any recession, like reducing headcount, capital expenditure and going through invoices much more carefully. But he adds whilst IT infrastructure projects, like green computing and cloud services, are being delayed, others are being pushed to the top of the investment agenda.

“According to our research, 50 per cent of companies do not expect their ICT budgets to change, especially for fixed voice and mobile internet where the room the price negotiation is best, whilst 30 per cent expect their overall communications budgets to increase over the next 12 months,” he said.

For example,Hidden Hearing (a subsidiary of Danish manufacturer Oticon) sells hearing aids from over 90 retail locations in the UK and employs around 600 people. It is currently evaluating UC technology, which combines IP telephony, instant messaging, voice mail and conferencing and collaboration features into one platform, to see how its internal comms infrastructure could be improved.

“As a business we are facing a stagnant profit market and rising operating costs, so we are looking to cut costs and build more intelligence into the ICT architecture we have,” said Hidden Hearing, IT operations manager, Peter Symes, who heads up a team of 12 ICT support staff and internal software developers. ” Cutting call costs were not high on our agenda. Because we have such a distributed infrastructure with only one or two phone lines at some locations, we needed to make sure staff could route incoming customer calls elsewhere in the company even when they were making an outbound call.”

The company takes its lead on its choice of IP telephony equipment supplier from its parent company based in Copenhagen, which already uses Cisco’s UC architecture -”a corporate standards thing,” according to Symes – and is now looking to replace Nortel analogue PSTN equipment in its UK locations with the same kit.

Another factor boosting ICT budgets is recently introduced government regulations on flexible working focussed on providing better options for remote workers, particularly the parents of young children.

Katja Hal, director of employment policy for UK business organisation, the CBI, says when this legislation was first proposed a few years ago, some CBI members were pretty daunted at its implications. Yet now, with the right to flexible working extended to an estimated 8m workers and some 60 per cent of UK firms offering some form of teleworking to their employees according to the CBI’s own estimates, it can be considered to be a great success, she adds.

If supported properly with suitable technology, teleworking can also help companies trim costs during the recession.

“Technology is the enabler, turning these [flexible working] aspirations into reality,” said Hal. “Technological advances have given us the tools to make a tangible difference, like teleworking and social media, as well as the economical potential of high speed broadband which will allow workers to communicate and collaborate in a more efficient way.”

Symes says flexible working has not proved popular at Hidden Hearing to date, but improved remote management tools may change that in the future

“We moved away from flexible working over the last 18 months – the teleworking/homeworking function fell apart because of management worries about what the staff were doing,” he said. “But the Cisco UC software seems to offer better management tools that would make it possible that our front line IT support team could work from home in the future.”

Increased use of video and web conferencing tools, and high definition telepresence systems, can also eliminate company travel costs, particularly for international organisations with multiple offices spread around the globe.

“The standout is telepresence where the productivity gains and return on investment (ROI) gains make it a bit of a star turn for multinationals, many of which are accelerating rather than delaying telepresence projects,” said Ovum’s Maloney.

Full-scale telepresence systems which offer virtual rooms, life-size video and high quality audio for multiple participants cost anywhere from $100,000 to $350,000 to install, but service providers are starting to offer hosted services at lower cost.

At the other end of the scale, smaller companies are using low-cost web conferencing applications like WebEx to replace face-to-face meetings and cut business travel costs, though many executives remain unimpressed by audio/video quality and usability.

“I’d be lying if I said that WebEx had been embraced by Hidden Hearing managers,” said Symes. “What they seem to want is a big clunky button that they can push to access many different comms services under one umbrella.”

Whatever the ICT solution under evaluation, now is a good time for IT managers to get a good deal out of their suppliers, according to Sean Whetstone, IT director at Reed Recruitment, which last month hammered out a £10m deal with virtual network operator (VNO) Azzurri Communications which Whetstone estimates will shave 20 per cent of Reed’s previous ICT bill over three years.

“I’m not going to give out recession tips, but now is a good time to renegotiate [comms contracts],” he said. “Put together best of breed technologies and put them in a management service wrapper.”

“In many cases IT directors are more dependent on third party ICT services, so it is difficult to make infrastructure changes,” said Maloney. “But they can attack on price, and WAN bandwidth and mobile outsourcing probably represent the best example of those opportunities.”

Full published article at: http://feeds.computing.co.uk/c/554/f/10979/s/74f52dc/l/0L0Scomputing0O0Ccomputing0Canalysis0C22537420Ccomms0Ebudgets0Estay0Ehealthy/story01.htm

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