Some organizations have hundreds of thousands of dollars lurking in their walls, and they don’t even know it. Nearly every building has a structured cabling system. The cost to install and maintain the system adds up quickly, yet organizations that have made every effort to cut costs by laying off workers and decreasing expenditures are still at risk for wasting hundreds of thousands of dollars, and perhaps even millions of dollars per year, on unnecessary structured cabling costs.
The waste begins with an organization’s technology purchasing process. Often a disconnect between executive management and the IT department results in a battle over business objectives and IT needs. For instance, a large national health insurance company that spends nearly $25 million in cabling costs each year is currently paying an additional $5 million a year for a cable that adheres to an internal IT department-designated “standard” that could easily be replaced by a less expensive cable with equal and/or greater performance. This insurance company uses a brand of cabling that was purchased by another brand some ten years ago. The company that acquired the cable brand used the same plant with the same workers to manufacture it. Only the name of the product changed, yet the health insurer does not purchase the “lesser quality product” because the name is different.
Five simple cost-cutting tips will help executive level management and the IT department to meet in the middle and develop a technology purchasing process that makes business sense.
Are technology purchases bound by narrow, internal cabling standards? All structured cabling manufactures must comply with cabling standards from Underwriters Laboratories (UL), Intertek Group (ETL), and the National Electrical Code (NEC), as well as the design and engineering standards of the EIA/TIA Commercial Building Wiring Standards. This means that organizations are free to choose any brand of cable and components as long as they meet the industry standards. Unfortunately, due to aggressive marketing techniques, many organizations continue to be bound by a narrow, internal company standard that restricts purchases to one specific brand.
The IT department may have a designated “standard” for a specific high-cost brand of Category 5 or 6 cable when another brand of cable of the same quality may cost significantly less. In fact, business intelligence sources today show that many of the various brands of cable are actually made in the same factory. A recent search on a publicly available business intelligence website showed that three out of the four largest cabling manufacturers share the same original equipment manufacturer (OEM) factory.
A network security company in Atlanta recently fell into this same trap by paying as much as $30,000 more for a brand name cable that meets the same industry standards as a less expensive cable that can be purchased directly.
A global professional services firm with over 137,000 employees will only use one brand of cabling system. They’ve held this position for the last six years. The company manufacturing the incumbent brand knows this and hasn’t lowered their prices in years, even though prices in the industry as a whole have gone down. This same manufacturer has convinced the client to start installing Category 6a to the desktop although they operate in a thin client environment.
Manufacturers are less willing to offer competitive pricing if they know your organization only purchases a certain brand of cabling. Keeping options open during the bidding process increases bargaining power. An open competition based on the standards provides the greatest purchasing power.
Do technology purchases line up with business objectives? Who makes the organization’s structured cabling purchase decisions? For most organizations, the decision-making responsibility falls on network analysts, network engineers, facility managers, project managers, or other members of the IT department. These individuals are on the frontlines everyday managing voice, data, video, and security needs. They understand the technology needs of their organizations, but when was the last time the leadership team sat down with these key decision makers to discuss the overall business goals and objectives? How involved is the executive management in the purchase decisions? Have they asked the IT department what their priorities are and what criteria they use to determine the most suitable technology? Do their priorities line up with the business goals?
Without having a clear view of business goals and objectives, IT departments are forced to make blind decisions regarding technology. Despite IT’s best efforts, their decisions may or may not be in line with overall goals.
It is more and more common for organizations to push structured cabling decisions deep into the company, out of sight from the overall business goals and objectives of the organization. As a result, these compartmentalized decisions may not always be in the best economic interest of the organization. The ideal situation is to have both the executive management and the IT department play a key role in the decision making process, bringing together the organization’s business goals and technology needs.
Most organizations that have settled for only one brand of cable do so because they want to standardize across their enterprise. To standardize is to simplify, but you don’t have to stick to one brand to do so. Standardization comes from design, not product brand. A good Registered Communications Distribution Designer (RCDD) can design the same system across multiple offices using multiple brands of cabling products.
The end user should always consider picking the best of breed. Analogous to purchasing an audio visual (AV) system, most consumers want to choose the best Blu-Ray player, the best amplifier, the best speakers, etc. In comparison, computer networks probably include desktops from one company, servers from another, applications from still another and security and networking from another. Why do so many organizations only choose one cabling product? Often it is at the suggestion of a sales rep from a cabling company.
Does the organization measure features or benefits? Since all manufacturers must adhere to the same cabling systems standards, the organization must determine which features will offer the most valuable benefits. Some features that vary by manufacturer include:
- Ease of use
When a product’s features exceed standards it may mean that a product has been tested using a process that cannot be proven or replicated in the field. For example, some manufacturers claim that their products exceed the megahertz rating of a particular category of cable. While these manufacturers can test their cable at a higher megahertz rating in their laboratories, there is no proven way to test at these levels in the field, which means there is likely not a use for these additional features in the field. Purchasing products that offer only the necessary benefits, without any unnecessary features, helps keep cabling budgets on target without compromising technology needs.
Understand the Supply Chain
The traditional supply chain of structured cabling manufacturers follows a multi-tiered distribution channel. Some organizations are not even aware that direct-buy cabling products exist. These groups may be able to save as much as 100 percent by purchasing cabling direct instead of purchasing cables that are marked up by third-party vendors.
In a typical structured cabling project, 50 percent or more of the cost of the materials is cabling-so organizations benefit by determining which cable is the best fit for its project and budget. More expensive does not always mean higher quality. However, any structured cabling product must comply with the cabling standards of Underwriters’ Laboratories, as well as the design and engineering standards of the EIA/TIA Commercial Building Wiring Standards.
Is the network an open system? Manufacturers develop cabling technologies to be used in interoperable, open systems. The TIA’s Commercial Building Wiring Standard (TIA-568) was established to encourage interoperability by allowing diverse manufacturers the opportunity to build equipment and components that will interoperate.
In recent years, end-to-end solutions, which are systems developed using only components made by a specific manufacturer, have been marketed as superior to “open systems,” which operate using products from multiple vendors. “End-to-end solutions” can reduce bargaining power on the prices of individual components, some of which may have high markups. Using an open system creates opportunities to request bids from multiple vendors competing and to choose the exact products needed for the project.
The warranty or guarantee can lock the end user into an end-to-end solution. Accepting the terms of a guarantee may limit technology options in the future to those developed by the end-to-end solution manufacturer, instead of taking advantage of new developments from multiple vendors. In addition, out of the 40 manufacturers of cabling systems products, each company offers a warranty of 15 years or more.