Telecom Value Recovery Effort Brings Network of Savings

Originally posted on April 26, 2004.

With the ongoing effort among most enterprises to squeeze cost out of IT operations, one of the single biggest chunks of the IT budget—WANs—has gotten serious scrutiny. But chances are, even after a lot of tweaking, those data networks and their voice counterparts are still costing plenty more than they should. For large and small enterprises, the complexity of the networks, the myriad choices, the rate of change, and the arcane billing methods carriers and telephone companies use make it impossible to see “the forest” when it comes to creating and maintaining optimal network designs.

But one hospital in Vermont found a way out of the optimization morass, thanks to a chance encounter with a consultant who specializes in finding and fixing inefficiencies in voice and data networks.

“We had concerns about the cost of the voice and data networks. Our contract with AT&T [Corp.] was due to expire, and we had infrastructure that had been around for years,” said Robert Soucy, chief operating officer at Retreat Healthcare, in Brattleboro.

After learning about the services of MultiSystems Interconnect Inc. in a coincidental conversation between Retreat’s chief financial officer and MSI founder and President Joseph Passafiume, “we wanted someone to look at the voice infrastructure [before signing a new contract] and evaluate the in-state service we had switched to a year earlier as well as look at the routing and frame relay data ports,” said Soucy.

Last fall, MSI, of Stow, Mass., had just put the finishing touches on a new network optimization service offering, dubbed Knight Vision, designed to provide in-depth analysis of an enterprise WAN or voice network’s ability to support business-critical traffic and recover the value in the network.

“Many networks today evolved instead of being designed from the core. As they grow, they tend to become inefficient and don’t behave very well,” said Passafiume. “We bring analytical skills to bear and look at the infrastructure, come up with a characterization we can quantify that shows the overall activities on the network and whether [the network is optimal for business needs].”

Retreat’s CFO, eyeing $300,000 in annual telecommunications costs for the small hospital, saw potential in MSI’s services, portions of which are paid for from the savings opportunities the consulting service uncovers.

In the first discovery phase of the Knight Vision service—which includes extensive scrutiny of the network topology, usage patterns and billing, and an assessment of the organization’s goals—MSI focused its efforts on the hospital’s voice services. Consultants found thousands of dollars per month of waste in several areas.

“We look at billing, contracts, the tariff side and actual activities. On the data network we measured Internet usage, traffic over the frame relay network and internal traffic to get a base line for future reference. We looked at their trunk groups, routing patterns; looked at how they forward calls. We looked at usage patterns by day of week and on a month-by-month basis. We used their data to feed our proprietary models and looked at whether they were using resources correctly, looked at—based on their usage patterns—projections of required resources and looked at actual resources to see how they matched up. We looked at calling patterns for incoming and outgoing calls. We looked at any and all available patterns to see how they have their PBX provisioned and how they use their resources in terms of trunking,” said Passafiume.

“After we put all this raw data into our model, it tells a story about what’s really going on and whether there are any route pattern or trunking issues—separate from how much they pay for services,” Passafiume said.

MSI’s sleuthing uncovered problems in the way the Avaya Definity PBX was programmed “at every step of the way,” said Passafiume. “There were a large number of call route patterns that could be consolidated, and we found the actual call processing was incorrect, which drove costs up considerably.”

“Some calls were going out on long-distance that didn’t really need to,” said Doreen Lincoln, director of IS at Retreat. “[MSI] did a great deal in helping us clean up some of the routing paths calls were taking. They were really a mess.”

Although Lincoln knew the PBX and carrier services she and her staff had “inherited” in 1997 needed scrutiny, they lacked the time and expertise to uncover problems.

After MSI completed its discovery and analysis phase, it set out to gather quotes from competing carriers for a new long-distance contract, helped create the appropriate selection criteria and negotiated a new contract with the selected carrier: Sprint. MSI also had a hand in managing the transition.

Although Lincoln knew that the Avaya PBX needed to be updated, Passafiume saw no need to replace it.

“That’s a consistent result,” Passafiume said. “We often see that the existing equipment may need to be reconfigured so it uses resources in an optimal way. We don’t often replace it. The world seems to solve problems by throwing new equipment at things, but we get the required information to make what you have work the way it’s supposed to work.”

Between the savings from a new contract obtained through competitive bidding and the optimized call routing, Retreat is now experiencing 58 percent to 63 percent savings per month in its voice network. Its monthly bills have dropped from around $18,000 per month to about $6,000 or $7,000 per month, Lincoln said.

“I was surprised at how much could be saved when you went over it with a finetooth comb. It was an unbelievable amount of savings,” Lincoln said.

In addition, MSI also found in its investigation that Retreat’s previous carrier—AT&T—had overbilled Retreat. MSI, armed with the necessary data and bulldog persistence, managed to wrestle a $25,000 cash rebate—not a credit.

MSI also found that Retreat was billed for taxes it wasn’t supposed to pay as a taxexempt nonprofit; learned that a requested frame relay restructuring was not executed properly, although Retreat was billed as if it had occurred as agreed; and discovered that some line disconnects did not take place in a timely manner, which also resulted in billing errors. MSI was able to create “a paper trail” to prove it to the carrier.

“Very often you have to construct a very technical argument about why it’s a refund issue. You have to keep the process moving. The follow-through is very involved,” said Passafiume.

Despite the advantages larger enterprises have with larger staffs and access to greater WAN and voice expertise, MSI finds that the problems grow exponentially with the size of an organization.

“When there’s more cooks stirring the pot, it tends to obfuscate the internal activities. Each [person] does what they think is right, and they don’t always look at the big picture. Then the various behavioral properties of the network start to diverge, and the result is that on a global basis, you get a suboptimal solution—even if in the small picture it appears to work,” Passafiume said.

By Paula Musich

April 26, 2004

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