by Tanya Seda, Chief Strategy Officer
We have reviewed tens of thousands of customer contracts where we have seen the carriers work hard to keep network costs high. To go along with that, over the past year, we have noticed more and more carrier errors, many of which have come from MPLS or internet circuits. With that in mind I thought I would take some time to outline a few of the billing factors we review as part of our monthly account review for customers, all focused on keeping costs down.
In the old days, what might have been a point to point circuit is today likely to be the core network and the access circuits that connect you to the network. Add to that all the hardware – typically WAN routers, LAN switches and WiFi Access Points, and the like. And then there’s the management service which covers anything from design through delivery, installation, configuration, monitoring, change control, troubleshooting etc.
Commonly, circuits make up the majority of the cost and of your price. Believe it or not, the circuit might be the only element that a carrier was selling you in older contracts. This meant that the carrier has a vested interest in maximizing the value that they get from selling you the circuits. On the other hand, Managed Service Providers (MSPs), Systems Integrators and VARs, are not usually making a profit from the circuits as third-parties so they don’t have the same motivation. Times have changed dramatically today, but that will be another blog entry!
We have a few key checkpoints for reviewing commercial contracts for enterprise customers. These are not in any particular order and there are many more to talk about at a later point in time.
Checkpoint #1: Misapplied Discounts
One of the key challenges for most enterprises in cost control is understanding the discounts being applied to your circuits. These discounts are applied in different ways for different types. Most of us are aware that a MPLS discount operates differently from, say, an ethernet discount scheme, in the carrier world. For example: for an ethernet circuit, the cost is made up from these components – an access cost, port cost and CoS. The access charge is for the physical circuit (100Mb) from the POP to your office. The port cost is the bandwidth enabled over that circuit (50Mb). So, for a 50/100Mb circuit there is a separate discount on both the port and the access element of that circuit that needs to be understood and applied. This discount needs to be applied to all the ethernet circuits as outlined in the contract.
Checkpoint #2: Over-billed Services
IT Managers often make things more complex by making multiple changes to the network infrastructure over the life of the contract. This might involve changing the bandwidth or changing the class of service configuration. Without the ability to keep track of these changes billing can be a very difficult task. We see billing get out of synch with the network that’s being supplied all the time–it’s very common. For example, a circuit that has been cancelled might continue to be billed; or a new circuit might be billed before it has been installed; or volume discounts may not have been correctly applied.
Checkpoint #3: Poor Network Visibility
A common issue with a WAN is poor application performance. This is usually blamed on the WAN, but could actually have been caused by issues anywhere across the network, the infrastructure or the application itself.
One common mistake made to networks over time is to increase bandwidth to counter poor application response times, when all that might have been needed was appropriately prioritizing traffic might give a better result at a lower cost. Finding the root cause of the issue is imperative. We ask for carrier performance reports to help identify these issues. There are quite a few reports we request that look at circuit and on-premise equipment. This helps IT follow the issue from application to circuit routes.
Gartner has indicated time and time again that up to 70% of performance issues derive from the application or infrastructure; recognizing when this is the case could help you avoid paying for more bandwidth without gaining any improvement in performance.
Tackling these issues and others that exist are quite daunting for an already over loaded IT staff. This is usually when a TEM provider can—and should–be brought in to help. The problems above can easily be mitigated if you have the right tools and people by your side to help identify, report and resolve issues with the carriers on your behalf.