7/8/2016

Today, companies and firms, whatever their size or business model, need to stay connected.

However, the cost of their network equipment is often not in line with their real use. Obtaining a network infrastructure that meets business demands and adapts to their actual needs is an important challenge. Keeping costs in line with the ups and downs of the business is also an ongoing challenge. If you don’t want to pay for network equipment when it is not in use, then applying a cloud model to equipment is an ideal solution for minimizing payments. By paying for only what you use at fixed daily costs, you avoid paying for a network that isn’t used over a weekend, during holidays or even for several months if there is low seasonal activity.

This new model first appeared two years ago in Australia where companies were quick to appreciate the benefits. And, it wasn’t just in one industry, but across many such as school districts, ski resorts, sports arenas, hotels and more, who only pay for what they use.

For example, Accor recently asked ALE teams to see if they could be charged for network equipment, such as Wi-Fi, Ethernet, telephony/video-over-IP, based on occupancy. Benefits for Accor with this new cloud service is that if a room is not rented out, there is no need to pay for the connections in it. The time for paying for unused equipment is gone. It’s time to align costs to actual corporate activities and cash flow.

A payment model that is in sync with revenue

The model has already exceeded seasonal sectors: In the UK, the government will pay nothing in CAPEX (equipment purchase), only OPEX (expenses by activity). It's all about evolution. Companies want to invest at the same pace as their business grows and have specific needs for certain features such as telecommunication solutions.

Many companies, who do not have the financial resources to spend for the long term, are open to this type of service. For example, when construction begins on a new building, its network equipment needs will put demands on the existing building’s network. Buying enough equipment to support the expected new network requirements is a financial burden that puts pressure on the project from the start. Meanwhile pay-on-demand connections level the playing field against competitors.

This ability to provide on-demand network capabilities is also important for CIOs to address. If the technical directors do not find ways to act quickly, they will be hampered by a need to find more purchasing budget to start their projects, then they run the risk of losing visibility and control over their IT responsibilities.

Manage the physical infrastructure as a service

In practice, network on demand equipment has enterprise applications with a reporting function, which send a statement every hour to the seller that installed the equipment to generate a monthly bill. Taking readings at the source is no problem and relies on the economic model of a domestic Internet server. The equipment continues to belong to the provider and the user is charged according to the specific services they use, such as video on demand or long-distance telephony. Often these facilities enable companies to regulate their consumption and avoid any unpleasant surprises.

This metering capability also provides resellers the ability to offer additional managed services. In addition to pay-per-use, the new tools analyze the cost of network traffic and provides resellers information that they can use to give advice on how to be even more efficient in their use of the network. To date, this is the only network management tool that takes the analysis to an application level (how such software is used, is the network appropriately sized for this use, etc.) This allows for more accurately prioritized business flows to prevent degradation of the user experience on applications.

For quicker expansion, this type of service is rendered by a supplier. Moreover, the company retains the option to train its internal teams and to buy access to analytics to optimize its own network themselves. But, from the moment the infrastructure is considered a service, companies tend to rely on a supplier whose mission will be to ensure proper operation. In this model, internal technicians are able to refocus their time on the integration of cloud applications such as Salesforce, along with the rest of the company's business applications. It’s predicted that by 2017, many companies will choose to pay for all of their network functions “on demand”, as this system is attractive for all the reasons I’ve mentioned.

Tags - New Business Models, Network on Demand Solution

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About the author
Philippe Bletterie

Philippe Bletterie

Head of Network Solution Marketing

Philippe Bletterie is Senior Director of Business Development in the Network Business Division. He is responsible for solution marketing and business development strategy and execution of Alcatel-Lucent Enterprise Network solutions.

Prior to his current position, Philippe held different positions in Alcatel-Lucent and Alcatel-Lucent Enterprise including Contact Center Solutions lead, Visual Communication Solutions lead, Corporate Strategist, Terminals Product Line Manager, R&D developer in core PBXs and Export Manager in charge of mobile networks infrastructure and intelligent networks deployment across the globe. 

Philippe holds a Masters Degree in Engineering from Grenoble Polytechnic National Institute (INPG).

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