3 Network Budget Items You Can't Neglect

Network organizations are working to complete their 2009 budget process. The typical budget categories, including staff salaries, costs of telecom services, and corporate overhead allocations are easy to identify. However, attention must also be focused on several other seemingly, less critical areas that will definitely increase in importance.

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This article was originally published by Info-Tech Research Group. Copyright (c) 1998-2008 Info-Tech Research Group. All rights reserved. Reprinted by permission.

Executive Summary

Preparing an accurate 2009 network budget is challenging because of the dynamic nature of the services it must support. Moreover, regardless of changing technology and more stringent business unit requirements, network organizations are still expected to deliver and support quality services.

As a result, the following budget categories, which are sometimes considered as discretionary, or of lower importance, must be considered:

  • Staff training and education expenses.

  • Business unit support costs.
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  • Ongoing performance management requirements.

Many enterprises simply allocate a discretionary sum of money to support the above categories based on gut instinct or past experiences. However, a lack of focus and insufficient funding in these areas could generate serious network issues in 2009.

Planning Point

Typical network cost categories, such as salaries and cost of services, are easy to identify and validate when compared to other categories considered less important. Likewise, many organizations do not allocate the required time or effort to accurately identify this lower-priority, cost area.

However, times have changed and the budget categories discussed in this research note should be assigned a higher priority in 2009. There are various reasons for this recommendation including: the complexity of new technologies and services; business unit demands for more stringent service levels; and increased training requirements for network staff to perform their jobs.

Key Considerations

Enterprise network environments continue to become more dynamic and complex as business requirements change and new services are introduced. Network executives are discovering that providing the appropriate mix of quality services and support requires a more focused approach on annual budget needs and costs. More intuitive and effective performance management tools, increased staff skill levels, and support activities that provide improved alignment with business units require careful consideration.

Although a crystal ball will not help, budget planners must still anticipate a myriad of situations, especially changing business unit requirements, which could impact the network budget's bottom line and the services it funds. As a result, network organizations should pay special attention to the following items when preparing 2009 budgets.

Training & Education Expenses

Numerous network organizations easily spend $100K or more to maintain a high skill level among their staff. While some training is included in many budgets, it may not be considered as a primary category that mandates closer scrutiny. At times, this is the first item that takes a hit when expenses must be reduced. However, network technologies and the services they support will continue to increase in complexity. Without proper training; it is extremely difficult to deliver and maintain the requisite service levels. Consider the following points when preparing this section of the budget:

  • Annual staff fluctuations. There will likely be a mix of new hires, promotions, and departures that present training issues. While these events cannot always be accurately predicted, the associated time and costs to address the training needs for each of these scenarios should be included in the budget. For example, if VoIP is being introduced and two new hires will each require a week of vendor training, this should be included.

  • The growing impact of mobility. Mobility will continue to provide its own set of challenges. It is difficult to support enterprise mobility needs that traverse both wired and wireless technology networks. Business unit clients could be using either technology at a given time depending upon their location. As a result, technical support needs must be revisited and appropriately funded to support this challenging requirement.

  • The introduction of new services. Network changes are pervasive and continue to challenge network organizations as various types of wireless local area networks (WLANs) are being installed and existing wired solutions are being upgraded. Network architectures are being collapsed, expanded, or completely redesigned as business requirements change. Consequently, identifying suitable training needs and the required skill sets to support these changes is important.

  • Discretionary cost estimates that are inaccurate. Technical training is not inexpensive and more accurate requirements must be identified and funded—including travel expenses. Most outside training costs can be identified and budgets should reflect this point. Also, when staff members are in training, their job responsibilities must be assumed by others. This could require significant overtime expenses or inter-department billing costs that must be considered.

Next: Business Unit Support Costs

{mospagebreak title=Business Unit Support Costs}

Business Unit Support Costs

The costs to provide quality network services continue to increase as network organizations attempt to align their services with changing business unit requirements. Consequently, network organizations must now take a more circumspect view of this important area. Otherwise, money will be wasted in non-essential areas and/or not appropriated for critical support activities. Consider the following items and their associated costs when evaluating ways to improve business unit alignment.

—Business unit alignment processes. These processes should address those areas that require improvement. Until this area is flushed out, it is difficult to determine the resources needed and estimated costs involved. In general, the following actions can help achieve better business unit alignment:

Collecting and validating business unit needs. This activity will likely require the development and testing of new processes and procedures as well as an automated system to collect information and help with its analysis. Unless business unit needs are understood, network services and the applications they deliver will be out of synch.

Monitoring and maintaining service levels. Discuss this item with business units before new services are deployed to ensure the network infrastructure can deliver the expected service levels and effectively monitor them. Once requirements are validated, the "how to do it" should be discussed during the budget process to determine its impact.

Identifying personnel requirements and expenses. The costs to implement and support the above items depend upon the activities required to achieve the desired business unit alignment. For example, if several internal business units require individual account managers based on their size and enterprise importance, personnel costs will increase accordingly. Include these requirements in the personnel budget category.

Next: Ongoing Performance Management Requirements

{mospagebreak title=Ongoing Performance Management Requirements}

Ongoing Performance Management Requirements

In most networks, this is a moving target that is difficult to contain. The introduction of new technology and network services, coupled with the decommissioning of older services and products creates problems for network organizations. Many times, a new network services contract is negotiated, but the performance management needs are not considered until later and are not included in the current budget. Network organizations should consider the following points:

—Existing network performance tools will require upgrades. In some network organizations, this problem will occur gradually rather than all at once. New technology services must first be tested and gradually phased-in before performance management tools can be fully stress tested to ensure they deliver as promised. As a result, it will take time to select, test, and deploy new performance management tools as well as upgrade existing ones.

—New performance management requirements must be identified. New functionality requirements as well as existing deficiencies must be identified. While this "needs analysis" activity requires a degree of controlled speculation, the staff must do their best to identify performance management needs. For example, the ability to effectively provide and maintain "Class of Service" for mobile business users will become more difficult and costly as more business critical applications are accessed via various wireless services. Consequently, the best available tools, their life expectancy, and their estimated costs must be identified.

—Performance management needs should be discussed with vendors. Vendors represent an excellent information source to help the network staff understand what is available in the performance management market. However, this activity requires sufficient time to interact with product vendors to review their current capabilities as well as those that are forthcoming in the next year.

Next: Recommendations

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Do not overlook the growing importance of the three key items discussed in this research note in 2009 network budgets. Even though these items sometimes fall into the discretionary or less important categories, their classifications should be reconsidered. In addition, consider the following points:

Expect expenses for staff education and training to increase. Stringent service levels and the complexity involved in selecting and managing new technology and services will require more technical skills and highly trained technicians.

Understand the importance of business unit alignment. This is probably one of the most important categories for network groups to consider. Unless network organizations can deliver and support the correct mix of services to their business units, major problems will occur.

Be prepared to spend money for performance management. User mobility and the ongoing need to deploy different technologies in various geographic locations will tax existing performance management systems. Also, existing systems will require upgrades and/or the addition of new products to meet changing needs.

Bottom Line

Network organizations are working to complete their 2009 budget process. The typical budget categories, including staff salaries, costs of telecom services, and corporate overhead allocations are easy to identify. However, attention must also be focused on several other seemingly, less critical areas that will definitely increase in importance.

This article was originally published by Info-Tech Research Group. Copyright (c) 1998-2008 Info-Tech Research Group. All rights reserved. Reprinted by permission.

Info-Tech Research Group is a professional services firm dedicated to providing premium research and objective advice to IT managers of mid-sized enterprises. The firm's products and services combine actionable insight and relevant advice with ready-to-use tools and templates that cover the full spectrum of IT concerns. Its practical approach is designed to have a clear and measurable positive impact on your organization's bottom line. Info-Tech serves over 21,000 clients at 8,000 organizations around the world.

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