InformationWeek

February 1, 1999

Enterprise Networks: Merge Ahead

Separate networks for voice, data, and video still predominate, but more companies are taking a serious look at network convergence

By Mary E. Thyfault

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etwork equipment providers and telecommunications carriers were out in force last week showing off new technologies and services for funneling voice, video, and fax traffic over data networks. The promises of network convergence-lower costs, simplified management, and a richer environment for deploying applications-are compelling. So why aren't more companies embracing it?

Cisco Systems, Lucent Technologies, 3Com, and Cabletron Systems last week introduced products for carrying delay-sensitive voice traffic over packet data networks-a tricky technical problem that's been hard to solve. AT&T and MCI unveiled services that let customers use a single line into the carrier network to handle both voice and data traffic.

Some progressive companies, including General Motors, Hallmark Cards, Marriott International, and Burlington Coat Factory, are latching on to the idea. GM, for example, has tabbed convergence as its No. 2 networking priority, right behind standardizing its global network, says Dennis Walsh, the automaker's chief information technology officer. GM is building a voice, video, and data network using Cisco switches that will let its engineers collaborate in real time. "This is going to reduce our operational and instructional costs as well as improve our services," Walsh says.

Tough Sale Companies can dramatically cut networking costs-for equipment, public network services, and even personnel-by turning voice into data packets and running them over efficient IP, ATM, and frame-relay networks, say advocates. Indeed, Burlington Coat Factory, in Burlington, N.J., estimates it saves about $1 million a year by putting its internal long-distance phone traffic on a private frame-relay network leased from Qwest Communications International Inc.

But these early adopters are the exceptions. According to a survey by InformationWeek Research, 72% of companies continue to operate separate voice, data, and video networks. Among the concerns about convergence cited by the 200 IT executives polled: reliability, the complexity involved in moving to converged networks, and the fact that voice-over-data services are new and unproven (see chart, above). "Convergence is still in its infancy," notes Scott Davis, an Internet specialist with Marriott in Bethesda, Md.

Still, the potential benefits of a converged network architecture have many IT managers taking a serious look. For instance, 23% of companies plan to use a single carrier service for transmitting voice, data, and video within the next 12 months, according to InformationWeek Research. (Twelve percent are already using such services.) And 43% say network convergence is a telecom priority in 1999 (see chart, below).

Top Telecom
Priorities For '99 Who are these companies? Those most interested tend to consider multimedia applications-video collaboration, unified messaging, voice-data call centers, long-distance learning-as strategic to their business, or they have particularly high costs for voice services.

Cutting costs is a major factor for many companies considering a move to converged networks. Yet ironically, 64% of IT executives surveyed by InformationWeek Research expressed concern that telecom costs would actually increase in a converged network environment. For the market to take off, carriers and switch makers will have to demonstrate more clearly the savings involved.

"We're getting a lot closer," says Paul Pansini, director of voice and data networking systems for Toys "R" Us, which wants to send voice and eventually video communications and training programs over its IP network to its stores. "There will be a lot of products in place third or fourth quarter, and they will become more stable into 2000. But right now it's a little kludgy."

Marriott's Davis is optimistic. "Ultimately, there will be benefits-ease of use and reduced costs," he says. "If we can get voice and data from one vendor for $1,000 cheaper a month, that would be the biggest benefit."

Modest Beginnings
For now, many companies are starting small. In a month, Marriott will begin testing a service, supplied by CrossMedia Networks Corp., that provides access to voice mail and E-mail over the same line. Marriott plans to use the experience to test the business case for unified messaging and network convergence, says Davis.

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