Hoover Dam, at 5.5 million tons and one of the most massive objects ever built by human hands, wasn't designed to hold back water. Rather, the idea was to manage and control the tremendous flow of the Colorado River rushing through Black Canyon, then harness and distribute the torrent for producing power, irrigating fields and providing drinking water throughout thousands of square miles of the thirsty Southwest.
In many ways, you face challenges in designing your company's remote-access strategy similar to those encountered by the builders of Hoover Dam. The customer information stored in your corporate databases does little good whether it flows unchecked or remains behind a firewall at headquarters. Only after it's released in a consistent, easily managed, cost-effective manner does the data translate into selling power-and increased revenue.
This task has become increasingly difficult as telecommuters, partners, suppliers and employees on the road have all come to require 24/7 access to updated information. But like it or not, implementing a bullet-proof, budget-wise plan for giving remote users the data they need when they need it is becoming a requirement for any sales executive. As daunting as the job might seem, take heart: Hoover Dam was finished two years ahead of schedule-and it's still one of the few federal projects to achieve total ROI.
Priming the Pump
Michael Howard, president of Infonetics Research, points out several of the key advantages to remote-access that you'll want to bring to bear the first time someone questions your plan to improve corporate data flow. The San Jose, Calif.-based market research firm sampled 117 Fortune 1000 companies last year and found that 57 percent say remote-access technology increased their revenues, 69 percent claim it increased customer response, 67 percent report it improved corporate communications and 62 percent find it increased personal productivity.
As a rule, remote-access costs are easily quantified since most companies are better at tracking IS costs than benefits. Howard estimates that in 1997, an average of 18 percent of companies' entire IS budgets was spent on remote dialup access solutions.
One problem that makes estimating a remote-access price tag complex is that total cost of ownership (TCO) of remote-access solutions is often underestimated. In addition to initial equipment expenses, hidden costs often pop up later, making executives wonder about the ROI of such projects.
The GartnerGroup recently published a five-year TCO model for dialup remote access and noted that more than 70 percent of costs incurred can be attributed to the remote users themselves, rather than to the cost of remote-access equipment. The model predicts that between 1997 and 2002, the average notebook-toting employee will cost a company almost $80,000. However, the costs for the average home-based user with a company-owned PC will average more than $130,000.
"Between 1997 and 2002, the average notebook-toting employee will cost a company almost $80,000."
Not long ago, remote-access referred to a PC running a remote-control software solution. Today, remote solutions are much more sophisticated. Faster modems and the growth of the Web have fueled such solutions as Point-to-Point Protocol (PPP), corporate portals and remote-node configurations. Virtual Private Networking (VPN) has become a mission-critical business concept, describing inexpensive remote access via tunneled connections over the Internet or an IP-based public network.
Most organizations today must contend with sets of mobile employees and telecommuters, as well as employees who need after-hours and weekend access to enterprise data. The traditional answer has been to build and maintain Remote-Access Servers (RAS), which host direct-dial calls from remote clients.
With mobile users and telecommuters, a thorough cost analysis requires information on whether local calls are paid for on a flat-fee basis and how many users dial locally. You also need to know how many users dial in from outside the area code in which the company's central network is located. Calculating the TCO of remote-access architecture means you must consider how functional, robust and manageable the solution is. This means knowing what types of modems the RAS supports, how easy it is to upgrade them and what type of network connectivity the RAS has.
A Nod to Networking
It's also important to determine whether the network can support both ISDN and analog dial-up and what protocols are supported. Also, since you'll need to be tracking productivity in new ways, determine what types of corresponding accounting and reporting applications are available. Find out if these applications run on your existing network management platform or if additional products will be needed.
You also need to know whether the product and the vendor are focused on tariff management; for example, does the product support bandwidth-on-demand time-outs, minimum call-duration timing and automatic dynamic switching between cheaper and more expensive circuits based on bandwidth requirements? Also, check for callback and compression techniques to minimize the connection charges.
Other potential expenses pertain to RAS-based solutions, including vendor contracts, spare servers, the degree of administration assistance required and the number of support personnel needed. Training becomes a greater issue when you're dealing with employees who work mainly off-site. Is it more cost-effective to pay a large up-front fee for on-site training, or is it less expensive to send selected staff members to the vendor's facility for training courses?
The Virtual Private Network has been an industry favorite for the past few years, with some analysts predicting that it will become the preferred way to transfer data across the Internet. Infonetics' Howard reports that in a 1998 study, 15 percent of companies said they're planning to implement remote-access via VPN by the end of this year. The report also notes that 27 percent of all remote-access users will be VPN-based by 2001.
Infonetics' research shows that lower long-distance charges and RAS support costs are the main money-saving benefits of a VPN. Howard estimates that organizations with many long-distance remote-access callers will see a return on investment for a standard VPN investment in as little as 12 months.
Cary White, director of MIS at Reliant General Insurance Services in San Diego, has adopted a VPN strategy. He says his company was incurring $10,000 to $12,000 per month in 800-number service charges for only 10 remote-computing users. "Anyone that was not within 5 or 10 miles of the office could not call our local number [without incurring charges]," says White.
White decided to replace the RAS with a T1 Internet connection and Axent's PowerVPN remote-access software. He then purchased cable-access accounts from the local ISP for the company's remote users. Now, says White, "We spend about $2,500 a month. That's nearly 80 percent less than what we were paying for long-distance 800-number phone charges." He predicts his VPN investment will pay for itself in three months.
One reason Reliant General's implementation is so economical is that most of the company's remote users access a terminal emulation application over their VPN, which does not burden the network the way a graphical client-server application might. For companies with more demanding applications, Internet-based remote-access solutions might not be the best choice.
"TIMET's IT department can centrally support any of its desktops and networks around the globe."
A VPN Alternative
In fact, GartnerGroup recommended that companies avoid remote-access with VPNs over the Internet. In a report called "What's Hot for Remote-Access in 1998," the company advises, "Many enterprises believe the Internet and the use of multiple, regional ISPs will save them money because they fail to anticipate the reduced quality of service (for example, variable response, busy lines and limited support) that accompanies inexpensive connections."
Organizations that have mainly local remote users might not find true value in the VPN approach. Savings in dialup costs can be negated by a large number of local calls billed on a flat-fee basis. Based on this situation, many companies that are planning on VPNs are also maintaining their RAS platform, says Howard.
Bedford, Mass.-based Shiva is one vendor that recommends the adoption of both strategies. The company has a hypothetical pricing model for its remote-access solutions. In this model, 750 remote-access users are categorized based on the ratio of dialup access via flat-fee local calls to dialup access via long-distance calls. There are four percentage-based ratio categories: 80 percent to 20 percent for telecommuters, 20 percent to 80 percent for mobile workers, 80 percent to 20 percent for day extenders and 0 percent to 100 percent for branch offices.
Shiva assumes expenses of $852 per month for T1 service and 8 cents per minute for 800-number service. This adds up to $38,201 for total monthly costs for an all-direct-dial RAS solution. Under this same model, an all-VPN solution would cost $29,102 per month. A hybrid solution comprising direct dial RAS and VPN technologies has the lowest monthly cost of $21,485. In this scenario, long-distance users would access the network via the VPN, while local users would dial in directly.
For Denver-based Titanium Metals (TIMET), implementing efficient remote-access for its sales force and customers was part of a major infrastructure overhaul.
One of the world's largest titanium suppliers, TIMET employs approximately 3,100 people and operates in five countries. Remote access is the company's best bet for a total global infrastructure. For design and implementation support, TIMET brought in Interlink, an information systems firm also based in Denver. Together they replaced and migrated a number of legacy systems and networks.
TIMET's Darren Bordeaux, network and desktop manager, explains the need for a solid remote-access architecture. "As we started the SAP project, management recognized the need for a global infrastructure to tie it all together. We quickly determined that replacing or fixing existing legacy systems would be too costly; totally replacing existing systems with SAP's enterprise resource planning system proved more economical and efficient while providing enhanced global business functionality."
Also, with ERP the company can provide its sales force with something it didn't have before: global business applications, global e-mail, Internet access, remote access and remote systems and network management.
According to Bordeaux, TIMET opted to centralize the hardware platform in Denver and provide 800-number access throughout the United states. During this past summer, the company implemented a second-level central site in Birmingham, England, and provided an 800 number for European users to dial in. The company expects to move from approximately 75 remote users to 300 remote users by project completion.
Going from almost no access to global access produces multiple benefits for TIMET and its customers. Basic remote e-mail provides a business-critical tool with faster intracompany communications for world-traveling managers and sales personnel.
But, Bordeaux explains, "The most important application we're serving remotely is SAP R/3, specifically to remote salespeople, who can now check inventory levels and order status and place orders mostly from the customer's location."
Maintenance is a common concern with widely dispersed and remotely used equipment. TIMET and Interlink developed a process that allows centralized maintenance from the Denver IT group in order to head-off potential problems. By implementing a managed desktop using Microsoft's Systems Management Service (SMS), TIMET's IT department can centrally support any of its desktops and networks around the globe.
"If a user has a problem, the Denver IT group can take control of the desktop and walk the user through the problem with a mouse, reconfigure the machine or reboot the machine," explains Interlink solutions manager Gordon Herwig. "This eliminates much of the need for on-site support."
Bordeaux notes that the standardization and centralized control of remote machines produce major cost savings and other efficiencies, including reduction in IT maintenance time and travel, greater control of standards throughout the organization, lower cost of ownership and higher, faster service levels for remote locations. To provide prompt equipment fixes when centralized troubleshooting isn't the answer, TIMET has service contracts with repair firms in remote locations, and it keeps an inventory of critical components that can be shipped overnight.
Managing the Users
In 1998, International Data Corp. (IDC) completed a study called "The Business Case for Effective Management of Remote and Mobile Systems." In it, the group stated that investing in systems management for remote users can deliver a "significant return on investment in terms of IS staff savings and improved user productivity."
There are products that specifically address this market of mobile and remote users. Callisto Software's Orbiter and sterling Commerce's Connect:Remote are two such products. RemoteWare, from XcelleNet, is a systems management application optimized for a large number of remote and mobile users. Steve Rob, product marketing manager at XcelleNet, says that implementation of the solution costs about $88,000 per 100 users; however, he says these costs include a 20 percent recurring annual cost, as well as the cost of hiring one or two support personnel.
Even though management solutions like XcelleNet's are a significant investment, they tend to pay for themselves relatively quickly. The IDC study, for example, shows a 45-day payback period on a remote systems management investment, and annual cost savings of over $7,000 per remote user.
Organizations could circumvent the cost of some of these management products by managing users through remote control. For example, Citrix Systems' WinFrame thin client-server software allows remote sessions to be run on a Windows NT server, while being remotely controlled by a client. Only screen images are passed back and forth between the remote system and the server. The only software that must be maintained on the remote systems is the dialup client and the WinFrame client.
The Outsourcing Option
Because of the potential complications that arise from implementing and maintaining remote-access applications, many companies outsource their remote-access programs. Infonetics reports that 44 percent of firms committed to VPN technology outsource part of that strategy.
Many carriers and ISPs are rushing to provide other options. Most of the major carriers are rolling out some type of VPN-over-the-Internet service. In late 1997, AT&T announced a service that bypasses the VPN-over-the-Internet strategy-WorldNet Virtual Private Network Service, which AT&T says extends into 42 countries. AT&T guarantees business-class service because traffic is handled on AT&T's private IP backbone.
When New York-based Bertelsmann MediaSystems, part of the German entertainment giant Bertelsmann AG, began investigating remote access for its global empire, it had to first decide what its implementation strategy would be, says Schene Groom, project manager of global networking solutions. Bertelsmann recently acquired Random House and also owns a number of record labels, including BMG.
Bertelsmann MediaSystems functions as a centralized IT department for all of Bertelsmann's global companies. "We function a lot like an integrator; they can use us or not, so we have to be cost-effective," Groom says.
Groom explains that the company decided to implement remote access for 2,000 of its stateside workers in-house, primarily because of security and flexibility concerns. As far as security goes, if a company relies on a third-party provider for even part of its remote-access solution, there's no guarantee it will supply encryption, tunneling or some other means of securing connections, nor that it will allow only authorized personnel to access the corporate network. From a flexibility standpoint, relying on a third-party outsourcing firm means you'll likely be at its mercy when it comes to upgrades. If the provider doesn't offer a feature you'd like, you're out of luck.
The bottom line is that remote access, corporate portals and VPNs are here to stay. It may sometimes be difficult to quantify the costs and return on investment of these technologies, but that is the price that must be paid for remaining competitive. The key is a well-thought-out implementation, and remaining vigilant for hidden costs.