What Does it Cost You Per Mbs for Bandwidth Shaping?


Sometimes by using a cost metric you can distill a relatively complicated thing down to a simple number for comparison. For example, we can compare housing costs by Dollars Per Square Foot or the fuel efficiency of cars by using the Miles Per Gallon (MPG) metric.  There are a number of factors that go into buying a house, or a car, and a compelling cost metric like those above may be one factor.   Nevertheless, if you decide to buy something that is more expensive to operate than a less expensive alternative, you are probably aware of the cost differences and justify those with some good reasons.

Clearly this makes sense for bandwidth shaping now more than ever, because the cost of bandwidth continues to decline and as the cost of bandwidth declines, the cost of shaping the bandwidth should decline as well.  After all, it wouldn’t be logical to spend a lot of money to manage a resource that’s declining in value.

With that in mind, I thought it might be interesting to looking at bandwidth shaping on a cost per Mbs basis. Alternatively, I could look at bandwidth shaping on a cost per user basis, but that metric fails to capture the declining cost of a Mbs of bandwidth. So, cost per Mbs it is.

As we’ve pointed out before in previous articles, there are two kinds of costs that are typically associated with bandwidth shapers:

1) Upfront costs (these are for the equipment and setup)

2) Ongoing costs (these are for annual renewals, upgrades, license updates, labor for maintenance, etc…)

Upfront, or equipment costs, are usually pretty easy to get.  You just call the vendor and ask for the price of their product (maybe not so easy in some cases).  In the case of the NetEqualizer, you don’t even have to do that – we publish our prices here.

With the NetEqualizer, setup time is normally less than an hour and is thus negligible, so we’ll just divide the unit price by the throughput level, and here’s the result:

I think this is what you would expect to see.

For ongoing costs you would need to add all the mandatory per year costs and divide by throughput, and the metric would be an ongoing “yearly” per Mbs cost.

Again, if we take the NetEqualizer as an example, the ongoing costs are almost zero.  This is because it’s a turn-key appliance and it requires no time from the customer for bandwidth analysis, nor does it require any policy setup/maintenance to effectively run (it doesn’t use policies). In fact, it’s a true zero maintenance product and that yields zero labor costs. Besides no labor, there’s no updates or licenses required (an optional service contract is available if you want ongoing access to technical support, or software upgrades).

Frankly, it’s not worth the effort of graphing this one. The ongoing cost of a NetEqualizer Support Agreement ranges from $29 (dollars) – $.20 (cents) per Mbs per year. Yet, this isn’t the case for many other products and this number should be evaluated carefully. In fact, in some cases the ongoing costs of some products exceed the upfront cost of a new NetEqualizer!

Again, it may not be the case that the lowest cost per Mbs of bandwidth shaping is the best solution for you – but, if it’s not, you should have some good reasons.

If you shape bandwidth now, what is your cost per Mbs of bandwidth shaping? We’d be interested to know.

If your ongoing costs are higher than the upfront costs of a new NetEqualizer and you’re open to a discussion, you should drop us a note at sales@apconnections.net.

How to Determine a Comprehensive ROI for Bandwidth Shaping Products


In the past, we’ve published several articles on our blog to help customers better understand the NetEqualizer’s potential return on investment (ROI). Obviously, we do this because we think we offer a compelling ROI proposition for most bandwidth-shaping decisions. Why? Primarily because we provide the benefits of bandwidth shaping at a a very low cost — both initially and even more so over time. (Click here for the NetEqualizer ROI calculator.)

But, we also want to provide potential customers with the questions that need to be considered before a product is purchased, regardless of whether or not the answers lead to the NetEqualizer. With that said, this article will break down these questions, addressing many issues that may not be obvious at first glance, but are nonetheless integral when determining what bandwidth shaping product is best for you.

First, let’s discuss basic ROI. As a simple example, if an investment cost $100, and if in one year that investment returned $120, the ROI is 20 percent.  Simple enough. But what if your investment horizon is five years or longer? It gets a little more complicated, but suffice it to say you would perform a similar calculation for each year while adjusting these returns for time and cost.

The important point is that this technique is a well-known calculation for evaluating whether one thing is a better investment than another — be it bandwidth shaping products or real estate. Naturally and obviously the best financial decision will be determined by the greatest return for the smallest cost.

The hard part is determining what questions to ask in order to accurately determine the ROI. A missed cost or benefit here or there could dramatically alter the outcome, potentially leading to significant unforeseen losses.

For the remainder of this article, I’ll discuss many of the potential costs and returns associated with bandwidth shaping products, with some being more obscure than others. In the end, it should better prepare you to address the most important questions and issues and ultimately lead to a more accurate ROI assessment.

Let’s start by looking at the largest components of bandwidth shaping product “costs” and whether they are one-time or ongoing. We’ll then consider the returns.

COSTS

  • The initial cost of the tool
    • This is a one-time cost.
  • The cost of vendor support and license updates
    • These are ongoing costs and include monthly and annual licenses for support, training, software updates, library updates, etc…  The difference from vendor to vendor can be significant — especially over the long run.
  • The cost of upgrades within the time horizon of the investment
    • These upgrades can come in several different forms. For example, what does it cost to go from a 50Mbs tool to 100Mbs? Can your tool be upgraded, or do you have to buy a whole new tool? This can be a one-time cost or it can occur several times. It really depends on the growth of your network, but it’s usually inevitable for networks of any size.
  • The internal (human) cost to support the tool
    • For example, how many man hours do you have to spend to maintain the tool, to optimize it and to adapt it to your changing network? This could be a considerable “hidden” cost and it’s generally recurring. It also usually increases in time as the cost of salaries/benefits tend to go up. Because of that, this is a very important component that should be quantified for a good ROI analysis. Tools that require little or no ongoing maintenance will have a large advantage.
  • Overall impact on the network
    • Does the product add latency or other inefficiencies? Does it create any processing overhead and how much? If the answer is yes, costs such as these will constantly impact your network quality and add up over time.

RETURNS

  • Savings from being able to delay or eliminate buying more bandwidth
    • This could either be a one-time or ongoing return. Even delaying a bandwidth upgrade for six months or a year can be highly valuable.
  • Savings from not losing existing revenue sources
    • How many customers did you not lose because they did not get frustrated with their network/Internet service? This return is ongoing.
  • Ability to generate new revenue
    • How many new customers did you add because of a better-maintained network?  Were you able to generate revenue by adding new higher-value services like a tiered rate structure? This will usually be an ongoing return.
  • Savings from the ability eliminate or reduce the financial impact of unprofitable customers
    • This is an ongoing savings. Can you convert an unprofitable customer to a profitable one by reducing their negative impact on the network? If not, and they walk, do you care?
  • Avoidance of having to buy additional equipment
    • Were you able to avoid having to “divide and conquer” by buying new access points, splitting VLANs, etc..? This can be a one-time or ongoing return.
  • Savings in the cost of responding to technical support calls
    • How much time was saved by not having to receive an irate customer call, research it and respond back? If this is something you typically deal with on a regular basis, the savings will add up every day, week or month this is avoided.

Overall, these issues are the basic financial components and questions that need to be quantified to make a good ROI analysis. For each business, and each tool, this type of analysis may yield a different answer, but it is important to note that over time there are many more items associated with ongoing costs/savings than those occurring only once. Thus, you must take great care to understand the impact of these for each tool, especially those issues that lead to costs that increase over time.

Analyzing the cost of Layer 7 Packet Shaping


November, 2010

By Eli RIles

For most IT administrators layer 7 packet shaping involves two actions.

Action 1:  Involves inspecting and analyzing data to determine what types of traffic are on your network.

Action 2: Involves taking action by adjusting application  flows on your network .

Without  the layer 7 visibility and actions,  an administrator’s job would degrade into a quagmire of random guesswork. Or would it?

Layer 7 monitoring and shaping is intuitively appealing , but it is a good idea to take a step back and break down examine the full life cycle costs of your methodology .

In an ironic inverse correlation, we assert that costs increase with the complexity of the monitoring tool.

1) Obviously, the more detailed the reporting tool (layer 7 ) , the more expensive its initial price tag.

2)  The kicker comes with part two. The more expensive the tool, the more  detail  it will provide, and the more time an administrator is likely to spend adjusting and mucking, looking for optimal performance.

But, is it a fair to assume higher labor costs with  more advanced monitoring and information?

Well, obviously it would not make sense to pay more for an advanced tool if there was no intention of doing anything with the detailed information it provides. Why have the reporting tool in the first place if the only output was to stare at reports and do nothing? Typically, the more information an admin has about a network, the more inclined he might be to spend time making adjustments.

On a similar note, an oversight often made with labor costs is the belief  that when  the work needed to adjust the network comes to fruition, the associated adjustments can remain statically in place. However, in reality, network traffic changes constantly, and thus the tuning so meticulously performed on Monday may be obsolete by Friday.

Does this mean that the overall productivity of using a bandwidth tool is a loss? Not at all. Bandwidth monitoring and network mucking can certainly result in a cost-effective solution. But, where is the tipping point? When does a monitoring solution create more costs than it saves?

A review of recent history reveals that technologies with a path similar to bandwidth monitoring have become commodities and shunned the overhead of most human intervention.  For example, computer operators disappeared off the face of the earth with the invention of cheaper computing in the late 1980′s.  The function of a computer operator did not disappear completely, it just got automated and rolled into the computer itself. The point is, anytime the cost of a resource is falling, the attention and costs used to manage it should be revisited.

An effective compromise with many of our customers is that they are stepping down from expensive complex reporting tools to a simpler approach. Instead of trying to determine every type of traffic on a network by type, time of day, etc., an admin can spot trouble by simply checking overall usage numbers once a week or so. With a basic bandwidth control solution in place (such as a NetEqualizer), the acute problems of a network locking up will go away, leaving what we would call only “chronic” problems, which may need to be addressed eventually, but do not require immediate action.

For example, with a simple reporting tool you can plot network usage by user.  Such a report, although limited in detail, will often reveal a very distinct bell curve of usage behavior. Most users will be near the mean, and then there are perhaps one or two percent of users that will be well above the mean. You don’t need a fancy tool to see what they are doing; abuse becomes obvious just looking at the usage (a simple report).

However, there is also the personal control factor, which often does not follow clear lines of ROI (return on investment).

What we have experienced when proposing a more hands-off model to network management is that a customer’s comfort depends on their bias for needing to know, which is an unquantifiable personal preference. Even in a world where bandwidth is free, it is still human nature to want to know specifically what bandwidth is being used for, with detailed information regarding the type of traffic. There is nothing wrong with this desire, but we wonder how strong it might be if the savings obtained from using simpler monitoring tools were converted into a trip to Hawaii.

In our next article, we’ll put some real world numbers to the test for actual break downs, so stay tuned. In the mean time, here are some other articles on bandwidth monitoring that we recommend. And, don’t forget to take our poll.

List of monitoring tools compiled by Stanford

Top five free monitoring tools

Planetmy
Linux Tips
How to set up a monitor for free

Bandwidth Control Return on Investment (ROI) Calculator


Are you looking to justify the cost of purchasing a bandwidth control device for your Internet or WAN link? Our ROI calculator is Industry neutral, click here to see custom results based on your network.

Aside from our customers’ comments about the overall improvement in their network performance, one of the most common remarks we hear from NetEqualizer users concerns the technology’s positive return on investment (ROI).

However, it’s also one of the most common questions we get from potential customers – How will the NetEqualizer benefit my bottom line?

To better answer this question, we recently interviewed NetEqualizer customers from across several verticals to get their best estimates of the cost savings and value associated with their NetEqualizer. We compiled their answers into a knowledge base that we now use to estimate reasonable ROI calculations.

Our calculations are based on real data and were done conservatively as not to create false promises. There are plenty of congested Internet links suffering out there every day, and hence there is more than enough value with the NetEqualizer. So, we did not need to exaggerate.

ROI calculations were based on the following:

  1. Savings in Bandwidth Costs – Stay at your current bandwidth level or delay future upgrades.
  2. Reduced Labor and Support Costs – Avoid Internet congestion issues that lead to support calls during peak usage times.
  3. Retention of Customers – Stop losing customers, clients, and guests because of unreliable or unresponsive Internet service (applies to ISPs and operators such as hotels and executive suites).
  4. Addition of New Customers – Put more users on your link than before while keeping them all happy.

To see what the NetEqualizer can do for you, visit http://www.netequalizer.com

Other ROI calculators

A Case Study: Hospitality Industry and the Cost of Internet Congestion


In the hospitality industry, expenses are watched closely. All expenditures must be balanced with customer satisfaction, and reality dictates that some customer complaints cannot immediately be remedied. With the reduced revenue that’s come with the current economic climate, difficult decisions must be made about what issues to address and when.

While the quality of basic hotel services and comforts may still serve as the baseline for guests’ satisfaction, high-speed Internet service is quickly becoming a factor when choosing where to stay. This is especially true for business travelers.

In this article, we use interviews with NetEqualizer customers in the hospitality industry and our own experience to define the cost of a congested Internet pipe in terms of dollar impact on a hotel business. The conclusions below are based on a business-class, three-star travel hotel with 200 rooms. These same metrics can be scaled up to larger conference centers or smaller travel hotels.

We start with the online behavior that’s behind bandwidth congestion and then discuss the financial repercussions.

Causes of Bandwidth Congestion and Slow Internet Speeds

A hotel of this size typically has two to 10 megabits of shared bandwidth available to guests. We assume 30 percent of the guests (roughly 60 people) are using the Internet for business purposes (e-mail, browsing, Skype, etc.) in the early to late evening hours. We also assume that 10 percent of the guests (20 people) will use the Internet for more intense recreational purposes such as Youtube or Hulu.

With this ratio of users, the Hulu and YouTube users will easily overwhelm a 10-megabit link, causing a rolling brown out for most of the evening.

Cost of Rolling Brown Out

We conservatively assume that about 5 percent of hotel customers will remember a poor Internet experience and try another hotel the next time they’re in town. Considering this, the approximate loss of revenue amounts to about $500 per week as a result of poor quality of Internet service.

Obviously this loss could potentially be offset by new guests and competitors’ customers that were unhappy with their experience and crossed over to your hotel. However, if you solve the congestion issue — especially if other hotels in your area are encountering similar problems — your retained customer base would slowly rise over time.

And, as the old business adage goes, it’s generally cheaper and more efficient to keep customers than to constantly find new ones.

Cost of Support

Most franchise hotels outsource their IT services to a third party. Your IT consulting staff will likely try to remedy the congestion through trial and error by adjusting various on-site equipment. We will assign a $500-a-month cost to this effort. Even if this cost is absorbed by an IT consultant already on retainer, it still cuts into time they could spend improving other services.

Cost of Additional Bandwidth

One potential remedy that’s often tried, and comes with a price that’s most likely not simply absorbed into a retainer, is simply purchasing additional bandwidth. The good news is that bandwidth contracts are always getting less expensive. However, most operators have found that doubling or tripling the size of their Internet pipes has only a temporary effect on the congestion issue.

So, we’ll assign a cost to this solution of $400 per month, with varying effectiveness.

Conclusion

Based on these findings, bandwidth congestion on a hotel Internet link will conservatively cost about $1,000 per month depending on the specific circumstances and attempted solutions. Although there is no universal solution to the problem — even continuously purchasing additional bandwidth — an automated congestion control device like the NetEqualizer can potentially reduce this cost by 90 percent. And, unlike purchasing additional bandwidth, the cost isn’t recurring and the NetEqualizer generally pays for itself within a matter of months.

Therefore, as we repeatedly see in the experiences of our customers (in the hospitality industry and elsewhere), the solution to Internet congestion, and its ultimate cost, are often less dependent on the amount of bandwidth that’s available and more defined by how it’s managed.

Partial List of NetEqualizer Customers in the Hospitality Field

(Note: These are individual franchises)

Simple Is Better with Bandwidth Monitoring and Traffic Shaping Equipment


By Art Reisman

Art Reisman CTO www.netequalizer.com

Editor’s note: Art Reisman is the CTO of APconnections. APconnections designs and manufactures the popular NetEqualizer bandwidth shaper.

For most IT administrators, bandwidth monitoring of some sort is an essential part of keeping track of, as well as justifying, network expenses. However, the question a typical CIO will want to know before approving any purchase is, “What is the return on investment for your equipment purchase?”.  Putting a hard and fast number on  bandwidth optimization equipment may seem straight forward.  If you can quantify the cost of your bandwidth and project an approximate reduction in usage or increase in throughput, you can crunch the numbers. But, is that all you should consider when determining how much you should spend on a bandwidth optimization device?

The traditional way of looking at monitoring your Internet has two dimensions.  First, the fixed cost of the monitoring tool used to identify traffic, and second, the labor associated with devising and implementing the remedy.  In an ironic inverse correlation, we assert that your ROI will degrade with the complexity of the monitoring tool.

Obviously, the more detailed the reporting/shaping tool, the more expensive its initial price tag. Yet, the real kicker comes with part two. The more detailed data output generally leads to an increase in the time an administrator is likely to spend making adjustments and looking for optimal performance.

But, is it really fair to assume higher labor costs with more advanced monitoring and information?

Well, obviously it wouldn’t make sense to pay more for an advanced tool if there was no intention of doing anything with the detailed information it provides. But, typically, the more information an admin has about a network, the more inclined he or she might be to spend time making adjustments.

On a similar note, an oversight often made with labor costs is the belief that when the work needed to adjust the network comes to fruition, the associated adjustments can remain statically in place. However, in reality, network traffic changes constantly, and thus the tuning so meticulously performed on Monday may be obsolete by Friday.

Does this mean that the overall productivity of using a bandwidth tool is a loss? Not at all. Bandwidth monitoring and network adjusting can certainly result in a cost-effective solution. But, where is the tipping point? When does a monitoring solution create more costs than it saves?

A review of recent history reveals that technologies with a path similar to bandwidth monitoring have become commodities and shunned the overhead of most human intervention. For example, computer operators disappeared off the face of the earth with the invention of cheaper computing in the late 1980s. The function of a computer operator did not disappear completely, it just got automated and rolled into the computer itself. The point is, anytime the cost of a resource is falling, the attention and costs used to manage it should be revisited.

An effective compromise with many of our customers is that they are stepping down from expensive, complex reporting tools to a simpler approach.  Instead of trying to determine every type of traffic on a network by type, time of day, etc., an admin can spot trouble by simply checking overall usage numbers once a week or so. With a basic bandwidth control solution in place (such as a NetEqualizer), the acute problems of a network locking up will go away, leaving what we would call only “chronic” problems, which may need to be addressed eventually, but do not require immediate action.

For example, with a simple reporting tool you can plot network usage by user. Such a report, although limited in detail, will often reveal a very distinct bell curve of usage behavior. Most users will be near the mean, and then there are perhaps one or two percent of users that will be well above the mean. You don’t need a fancy tool to see what they are doing. Abuse becomes obvious just looking at the usage (a simple report).

However, there is also the personal control factor, which often does not follow clear lines of ROI.

What we have experienced when proposing a more hands-off model to network management is that a customer’s comfort depends on their bias for needing to know, which is an unquantifiable personal preference. Even in a world where bandwidth is free, it is still human nature to want to know specifically what bandwidth is being used for, with detailed information regarding the type of traffic. There is nothing wrong with this desire, but we wonder how strong it might be if the savings obtained from using simpler monitoring tools were converted into, for example, a trip to Hawaii.

In our next article, we’ll put some real world numbers to the test for actual breakdowns, so stay tuned. In the mean time, here are some other articles on bandwidth monitoring that we recommend. And, don’t forget to take our poll.

List of monitoring tools compiled by Stanford

ROI tool , determine how much a bandwidth control device can save.

Great article on choosing a bandwidth controller

Planetmy
Linux Tips
How to set up a monitor for free

Good enough is better a lesson from the Digital Camera Revolution

Created by APconnections, the NetEqualizer is a plug-and-play bandwidth control and WAN/Internet optimization appliance that is flexible and scalable. When the network is congested, NetEqualizer’s unique “behavior shaping” technology dynamically and automatically gives priority to latency sensitive applications, such as VoIP and email. Click here for a full price list.

Why is NetEqualizer the low price leader in Bandwidth Control


Recently we have gotten feed back from customers that stating they almost did not consider the NetEqualizer because the price was so much less than solutions  from the likes of: Packeteer (Blue Coat), Allot NetEnforcer and Exinda.

Sometimes low price will raise a red flag on a purchase decision, especially when the price is an order of magnitude less than the competition.

Given this feed back we thought it would be a good idea to go over some of the major cost structure differences betwen APconnections maker of the NetEqualizer and some of the competition.

1) NetEqualizer’s are sold mostly direct by word of mouth. We do not have a traditional indirect sales channel.

– The down side for us as a company is that this does limit our reach a bit.  Many IT departments do not have the resources to seek out new products on their own, and are limited to only what is presented to them.

– The good news for all involved is selling direct takes quite a bit of cost out of delivering the product. Indirect  sales channels need to be incented to sell,  Often times they will steer the customer toward the highest commission product in their arsenal.  Our  direct channel eliminates this overhead.

-The other good thing about not using a sales channel is that when you talk to one of our direct (non commissioned) sales reps you can be sure that they are experts on the NetEqualizer. With a sales channel a sales rep often sells many different kinds of products and they can get rusty on some of the specifics.

2) We have bundled our Manufacturing with a company that also produces a popular fire wall. We also have a back source to manufacture our products at all times thus insuring a steady flow of product without the liability of a Manufacturing facility

3) We have never borrowed money to run Apconnections,

– this keeps us very stable and able to withstand market fluctuations

– there are no greedy investors calling the shots looking for a return and demanding higher prices

4) The NetEqualizer is simple and elegant

– Many products keep adding features to grow their market share we have a solution that works well but does not require constant current engineering

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