Taking on the Techies: The CFO’s Guide to IP Migration

Who would win in a fight between a tiger and a shark? This obviously depends on where the fight would take place, as each animal would naturally have the advantage on home turf.

It is a question which could equally be asked in the context of the boardroom. CIOs and CFOs typically do not venture onto each other’s ‘turf’; they traditionally leave each other to their own work, in the knowledge that they both have their own areas of expertise and the common goal of improving overall business performance.

However, when CFOs can see a clear business case for a technology such as internet protocol (IP) which delivers both operational and financial benefits, they need to have the necessary knowledge to justify venturing onto CIO turf, and crucially, to team with the CIO in making the switch.

There are two main objections to moving to an IP infrastructure: the perceived financial outlay, and the risk to business operations. Below is information to enable effective communication between CIOs and CFO’s to develop a compelling business case for migrating to IP.

Understanding the lie of the land

It is important to have a basic understanding of the technology and terminology involved to engage in meaningful conversation with the CIO. Wikipedia can prove invaluable in helping you to get to grips with the technical jargon you are likely to be talking about, and here are some of the key concepts and technologies:

The public switched telephone network (PSTN) is the network of the world's public circuit-switched or legacy telephone networks, in much the same way the internet is the network of the world's public IP-based packet-switched networks.

Originally a network of fixed-line analogue telephone systems, the PSTN is almost entirely digital, and includes mobile as well as fixed telephones. PSTN lines can handle both voice and data over a fixed bandwidth, but have to be specifically set up, independently for each type of service.

IP-based packet-switched networks send voice and data as chunks or ‘packets’ of data, and can handle multiple types of packets with variable bandwidth at the same time with the facility to prioritise the different packet types, referred to a quality of service (QoS).

CIO speak in financial terms

The flexibility of IP networks means they are likely to be more cost-effective than legacy networks. Traditional (legacy) telecoms and IT systems use multiple lines, which to the finance department boils down to multiple costs.

An existing legacy system typically uses three access lines: a primary network for data applications and other lines for your voice, fax, video and alarms. Each line has its own monthly charges, potentially from multiple service providers, all of which can create substantial annual business overheads.

For instance, a home telecoms and IT set-up is highly likely to include a telephone, internet and satellite television, possible an alarm, all running over the same broadband connection and with one single provider. This saves the need for multiple lines with no affect on service and almost certainly at less cost and on one bill.

IP adds up

It is exactly the same in the business environment. Switching to IP enables you to meld business applications onto a single network, which simplifies operational infrastructure and eliminates the cost implication of having multiple lines.

With IP in place, you will not only be able to run data, voice and video applications, you will also be able to run other applications including thin-client access (a screen and keyboard connected via broadband to a centralised server) and ERP (such as SAP), further streamlining overall network management and reducing the associated costs and administration.

There is clearly a cost of change associated with upgrading to an IP infrastructure, and moving all your business operations to IP in a single project could prove costly, with the additional bandwidth and hardware required. In short, it may not make sound financial sense.

Stepped change makes financial sense

A more financially viable option is to opt for a ‘stepped change’ approach, taking progressive technical steps away from legacy toward a full IP infrastructure. In this way, you continue to manage existing legacy systems over the course of their useful lifecycle, gradually carrying out future installations over IP so that the savings self-fund the cost of migration.

The costs of IP and the management of legacy systems are falling. This means that the savings can be used to fund IP migration and a combined lower end cost, with a plan to eventually remove the legacy entirely.

Once migration is complete, you will have a robust, flexible converged voice and data infrastructure. You will also have reduced the costs associated with the management and maintenance of two separate infrastructures and their associated personnel.

Justifying your business case

The CIO may oppose this idea on the grounds of disruption to business processes.

A stepped change approach to managing the migration to IP over a defined period of time, application-by-application, to fit in with natural product lifecycles will remove unnecessary risk and disruption to operations, as well as simultaneously improving network performance.

The end result is a converged, streamlined network capable of operating multiple business applications – from credit card transactions to IP-CCTV - over a single connection. The network will also automatically prioritise these applications, ensuring network performance is optimised and operations streamlined, and critically helping to make the CIO’s life easier.

Pulling in the same direction

Migrating to IP delivers operational and financial benefits, streamlines IT and telecoms management, and reduces overall spend, so it should not be difficult to get the CIO fully onside.

It is also worth taking time to evaluate your IP supplier because a shift in technology often merits a shift in supplier, otherwise you can risk getting the same service in different clothing.

It is important to look at new operating models that can deliver the change you are looking for, at a cost which makes sound financial sense to your business.

By making the gradual migration to IP, you will get the benefit of clearly set-out communications expenditure, and the advantage of a future-orientated infrastructure with no shocks on the balance sheet, an approach which will find favour in finance and in the server room alike.

The tiger and shark? Combine their talents and what a formidable team!