Achieving Network TCO

The global network infrastructure market is predicted to reach $256 billion by 2028, the Wi-Fi 7 market topped $1 billion in 2024, network and cloud security investments achieved all-time highs by the end of 2023, and the edge computing market is set to grow by 1108% over the next eight years. All present urgent needs to expand network budgets. However, as network planners and managers are well aware, their annual budgets are not growing exponentially. What’s the best way to keep pace with network technology when your budget only goes so far?

First, let’s take a look at the business drivers that present a need for significant network upgrades:

Technologies like Wi-Fi 6 and Wi-Fi 7 will deliver network services quicker to internal users and will present a virtually boundless number of network IP addresses for new devices as they are added. Edge computing will continue to be deployed at manufacturing plants, retail stores, and remote offices. New cloud-based network management and security solutions are available that enable you to virtualize your network—with the likely result of sites using hybrid networks that will be part cloud-based and part on-premises. As these new networking technologies and tools are implemented, network staff will need to be recruited or trained to operate them.

Network managers can build compelling cases for all of these upgrades, but at some point, the CIO, CFO, CEO, or all three will ask the TCO (total cost of ownership) question: What is it costing us now just to keep things going, and if we agree to make a major investment into technology XYZ, how long will it take us to recoup our investment?

Understanding the elements of TCO

In past practice, it was relatively straightforward to calculate network TCO. You totaled your costs in network hardware, software, staff labor, contractor labor, service contracts, power consumption, floor space, and so on, and then came up with numbers for operating expenses and asset capitalizations. The assumptions were that you would incrementally swap out aging assets or add new ones in any given budget year but in a phased approach.

The question is, will this type of TCO approach be sustainable in the long term, given the many business drivers for edge computing, rapid information transport, security, and network monitoring that are contending for investments all at once?

The answer is “no.” TCO calculation methodologies won’t fundamentally change, but the elements that highlight TCO discussions will.

Navigating a new TCO landscape

TCO discussion should shift from a unilateral cost justification (and payback) of technology that is being proposed to a discussion of what the opportunity costs for the business will be if a network infrastructure investment is canceled or delayed.

If a company determines strategically to decentralize manufacturing and distribution but is also wary of adding headcount, it's going to seek out edge computing and network automation. It’s also likely to want robust security at its remote sites, which means investments in zero-trust networks and observability software that can assure that the same level of enterprise security is being applied at remote sites as it is at central headquarters.

In cases like this, it shouldn’t be the network manager or even the CIO who is solely responsible for making the budget case for network investments. Instead, the network technology investments should be packaged together in the total remote business recommendation and investment that other C-level executives (e.g., the COO or VP of operations) argue for with the CIO and/or network manager, HR, and others.

In this scenario, the TCO of a network technology investment is weighed against the cost of not doing it at all and missing a corporate opportunity to decentralize operations, which can’t be accomplished without the technology that is needed to run it.

Getting budget approvals

The takeaway from the above example for network managers is that they need to consider and present the business value and opportunity costs of every network funding proposal that they make. The more network managers do this, the more successful they’ll be in securing funding.

Here are some examples of network needs that are likely to link closely with business opportunities:

Software monitoring and security

Companies will continue to move more IT to the cloud because they like the feeling of “pay per use.” Accordingly, more networks are likely to evolve into hybrid combinations of both internal and cloud-based resources.

At the same time, companies also want airtight security on both cloud-based and internal networks so they can avoid data breaches and intellectual property thefts.

Most companies are already running an IAM (Identity and Access Management) system that enables network staff to have a “single pane of glass” view of all user access and permissions, whether these occur internally or in the cloud. Unfortunately, an IAM security solution doesn’t provide the same level of security visibility and granularity that a CIEM (Cloud Infrastructure Entitlement Management) software does, so a network manager might propose investing in CIEM, although CIEM can be quite expensive.

In this example, traditional TCO arguments will certainly come up, but so should the opportunity cost (and risk) of not having all of the company’s cloud-based property secured.

A final word about network TCO

Network managers annually struggle to upgrade networks within the budgetary dollars they’re allotted—and many dread the TCO justification and payback discussions for network infrastructure investments that others fail to see value in.

This page can be turned by presenting the business opportunity costs if a proposal is denied or deferred—and it can best be presented alongside managers from the business who want to advance corporate strategies that require network infrastructure investment. 

It's time to transform the network into an integral and strategic part of IT and the business and not just a supporting role.