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Issue Date: September 2004 (es)

Senior execs say convergence is gaining momentum

1 September 2004

Two-thirds of companies are planning to shift applications across most or all of their business to converged networks within the next five years, according to a new global survey. Implementation has already begun for 55% of firms, although most of these have deployed only in selected parts of the organisation thus far.
The survey, conducted by the Economist Intelligence Unit and sponsored by Nortel Networks, explores the topic of network convergence with 103 executives representing over 17 industries across the globe. For the purposes of the survey, convergence is defined as the coming together of voice, data, video and other applications on a single broadband delivery platform-networks based on IP (Internet protocol).
The survey findings, published in a white paper entitled 'Deploy or delay? Converged networks in the enterprise', indicate that, among convergence applications, voice over IP (VoIP) will attract the lion's share of enterprise investment over the next three years. VoIP's potential to slash telephone costs is currently a key motivation for executives in pushing network convergence, as is the broader promise of reduced network management costs. The majority of executives surveyed (57%) also hope converged networks will enable broader use of applications such as videoconferencing and collaboration software, which enables multimedia dialogue and document sharing between teams. At the same time, only 13% expect convergence to deliver significant productivity benefits in the medium term.
Concerns remain, however, which continue to hold some companies back from deployment. Paramount among them is the cost of implementation, cited as a significant or very significant concern by 74% of executives. Implementation and IP equipment costs are declining, but so are the costs of traditional services and equipment. Executives also worry about the security implications of bringing all critical applications together on one network.
Last but not least among lingering concerns is the quality of voice transmission on IP networks.
"The logic of converged networks is difficult to deny in the long run, but managers need to weigh the costs and benefits carefully, particularly in comparison with the existing technology," says Daniel Franklin, editorial director of the Economist Intelligence Unit. He adds that converged networks - and the applications that run over them - are only as effective as the organisation and people that use them: "Management structures and work practices must be adapted to the technology to reap its maximum benefit."
Convergence will deliver the greatest efficiencies once all applications are moved to the unified IP network, but the circumstances of many enterprises will dictate a gradual migration over time. "When planning, you have got to design a blueprint for convergence," according to Malcolm Collins, president, Enterprise Networks, Nortel Networks. "It does not need to be ubiquitous. You may only need to give it to 20% of the workforce."
Converging on convergence
Executives were asked how widely IP convergence has been implemented in their organisations and how widely will it be implemented in five years' time.
Currently:
* Some departments or remote sites only - 40%.
* No plans to implement - 19%.
* Entire organisation - 2%.
* At planning stage only - 26%.
* Most of organistion - 13%.
In five years time:
* Some departments - 19%.
* No plans to implement - 8%.
* At planning stage only - 6%.
* Most of organisation - 38%.
* Entire organisation - 29%.
Deploy or delay? Converged networks in the enterprise is available free of charge from the Economist Intelligence Unit's Executive Briefing website ( http://eb.eiu.com).
For more information contact Nortel Networks South Africa, Tony Wilson, 011 808 4000.


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