Network integration - Unscrambling the omelette

Network integration - Unscrambling the omelette

Understanding network integration is becoming almost as hard as nailing jelly to the wall or unscrambling an omelette. The message for most resellers is that it will become even harder, and to stay ahead of the game they will have to invest in skills that end-users are beginning to demand.

Compounding the networking problem from a reseller's point of view is that there are so many options. At the simplest level there is straightforward sharing by several PCs of a single resource, such as a printer. But as most of us have experienced, this can be far from simple and straightforward. There is at least one end-user company where no matter what has been tried and experimented with, in such a simple network, one PC refuses to talk to the printer.

Further up the ladder we have local area networks where files and resources are shared. Beyond that are wide area networks.

Confusing the scene even more so in the past few years has been the enormous interest in the Internet and the concept of using intranets to link together information and resources.

"If you had asked someone two years ago about network integration, you'd have had a fairly simple answer," said Scott Petty, marketing manager for Com Tech Communications. "The market had settled down to two or three major companies with network operating systems. "Today, you've probably got to look at nine or 10 companies because of the explosion of interest in the Internet and intranets," Petty said.

Com Tech recently split its marketing organisation in two - one selling direct to the end-users and the other acting as a traditional distributor.

Behind the move was falling profit margins on distributing products and the demand from end-users for more technical skills. Petty said security issues with the Internet were also becoming a major focus for end-users.

Off the shelf

At the other end of the networking business, he said there was an increasing number of small organisations that had sufficient skills in-house to put together a local area network.

"At that end of the business, it's almost a matter of buying the components off the shelf at Harvey Norman and putting it together yourself," said Petty. "There's no need for a traditional reseller."

Showing the level of investment needed to make a success of network integration, Southmark - a major Melbourne-based reseller - has publicly committed to investing $300,000 in setting up integration centres in Perth, Adelaide and Sydney.

Now a wholly-owned subsidiary of Fujitsu, Southmark already has an integration centre in Melbourne.

"I believe we have the best integration centre in the reseller community," said Terry Wilde, Southmark's general manager. "We will be replicating this centre of excellence in three other States to cope with the growth experienced over the past 18 months."

Southmark will be establishing integration centres in Sydney, Adelaide and Perth, which will provide a pre-delivery build, test and configuration service for all computer equipment sold. The Perth facility is already in construction and will be completed by the end of 1996, as will Adelaide, while Sydney will be operational in the first quarter of 1997. The investment in an Adelaide Centre anticipates increased volumes due to Southmark's inclusion on the government contract in South Australia.

Wilde said the new facilities will partly fund themselves through reduced freight bills and better customer service.

Southmark's integration centre in Melbourne can test and configure up to 28 machines at any one time, and its eight engineers are kept busy with around 1,000 systems a month going through the centre.

Facilities include a Novell file server with an 18Gb hard disk and 115Mb of RAM running 8Mb of custom-written software, 25 test stations, 60 network points and a nine-stack CD tower to download customers' system configuration details stored on CD-ROM.

If you don't want to (or can't) dish out a few hundred thousand on setting up your own integration centre, Vantage Point Technology may have the answer for Sydney-based resellers.

It is setting up a serviced assembly area - in effect an extension of the concept of the serviced office. Resellers will have their own lockable assembly/test area. Located alongside Vantage Point's own warehouse/assembly/test area, Vantage Point is hoping resellers will source basic components from its product line and thus reduce freight costs.

The company is a distributor for Philips, Unisys and Acer. It is looking at adding modem and printer manufacturers to the companies it represents.

"A major advantage for smaller resellers is they will have access to our own certified engineers for any technical problems," explained Paul Jenkins, general manager of Vantage Point Technology.

He said individual resellers would be able to rent their assembly/test areas from between $200 and $300 per week for a typical size area. If a reseller needs a major assembly area, it would be able to use Vantage Point's own assembly line where it builds to customers' orders.

Jenkins said there were no immediate plans to build similar serviced production operations in other States. "It's on the table at the moment," he said. "We'll see how Sydney goes before we look at other locations."

As well as selling to its own resellers, Vantage Point also operates its own network and systems integration company - Clear Technology - which has installed well in excess of 3,000 networks across Australia.

If this looks confusing for resellers, it is no less confusing for some of the major hardware companies. Neil Adamson, marketing manager for Unisys, said the whole networking business was tougher this year than last.

"Margins are getting so tight on the hardware side and that will push a lot of resellers into network and systems integration from just the distribution business," he said.

Unisys has had the luxury of a steady revenue stream from maintaining the large installed base of its legacy mainframe systems. But as that mature but profitable business declines, the company is casting about elsewhere for new revenue sources.

"One of the growth areas is acting as the external resource for such items as help desks, rapid replacement of PCs and asset management," Adamson said.

Digging deep

"Any organisation in our position has to look for larger markets than the average reseller," he said. "While the Internet is an exciting area, it's hard to derive a commercial advantage from it. Also, security on the Internet is still a major issue."

With its desktop replacement service, Unisys is in line with Southmark. When announcing the expansion of its integration centres, Southmark's Wilde also mentioned its move into a desktop replacement service. Southmark is working with Macquarie Bank to offer the service for organisations wanting to outsource the ownership, management and maintenance of computing and networking requirements.

The new service enables an organisation to contract its desktop environment, including local and wide area networks, support, integration, cabling, communications, asset management, product updates and even the ordering process if required.

"Many computer buyers spend a disproportionate amount of time on the hardware costs and insufficient time managing and resourcing the rest of the expense," said Wilde. "With computer hardware accounting for only 25 per cent of the total cost of ownership and the balance being the cost of support, this is a real imbalance which we can help to rectify by offering one all-inclusive amount per period.

"We put systems on the client's desktop, ready to use with minimal involvement of its staff, then record the asset and monitor it throughout its determined life. At the end of its life, we replace the system with the new model and the cycle continues. In cases where the customer has existing PCs in place we are able to buy these back and begin the process afresh - all off the balance sheet.

"The product is covered for technical failure by repair or replacement and the latest technology is always available for the customer's use."

The client pays a standard monthly fee as an expense to individual departments and is freed from responsibility for asset management, writedown, cross charging departments, disposal of obsolete product or other financial concerns.

"We are finding many large corporate and government bodies are looking favourably at this system. It is increasingly difficult for them to keep up with technology and they are coming to realise the real cost of buying and maintaining desktop-based systems. They realise that the network is core to their business but not their core business. They have a need for a totally managed IT function but do not have the expertise or resources in-house to provide it," said Wilde.

Southmark already provides this service in varying degrees for Colonial, Brambles, Powercor and Worsely Alumina.

But as with the integration centres, a full desktop replacement service is going to need deep pockets. Highlighting this was Southmark's decision to partner a bank in the venture.

Also hoping to come to the rescue of resellers in the network integration business is none other than IBM. The company recently announced a swag of networking products and a new approach to network integration.

IBM is hitching its wagon to the Internet. It noted that "users are adopting, with increasing frequency, the Internet network model in the form of corporate intranets, external web pages and the wide use of the Internet itself.

"New Internet Protocol (IP) networks are being built, and many networks are transitioning to IP. In doing so, network owners face a complex environment consisting of multiple networks, systems and applications, and their concerns and requirements are equally complex. They want and need to integrate data, voice, and other forms of communications onto a single, high-performance network that is both easy to use and manage. They are concerned about building on their existing networks, software and applications and they demand assurances that networking investments made today will not be obsolete tomorrow."

Filling the gaps

Commenting on the announcement, Dave Holland (managing director of MNIT Networks - one of IBM Australia's larger resellers of networking products), said: "This is the biggest and most comprehensive networking announcement that we've seen for a very long time. For IBM, it 'fills in the gaps' - it now has a broad range of networking products."

As a reseller, Holland said it would be easier for his company to put together a more complete IBM solution that can be easily integrated and managed.

"We took a major risk saying we were going to sell IBM networking products. In networking people would say: 'IBM who?'

"I'm now convinced products such as ATM are the way of the future," said Holland. "At the end of the day IBM is a good organisation from a business point of view. You can trust them."

But as Holland pointed out, even for IBM, the total solution did not come entirely from its own research and development facilities.

As IBM said in a recent background paper on its networking strategy: "IBM realises that customers are not as interested in where products come from as they are in how well designed the products are and whether these products will be fully supported and extended in the future."

The company has an increasing web of alliances with others to provide the technology its resellers and end-users need.

One such alliance is with 3Com for high-end hubs, which include the ATM switching function developed by IBM. This year, IBM struck two more alliances - with Cascade Communications for wide area networking and with Xylan for campus networking.

IBM has added Cascade's frame relay and ATM switches to its wide area network product line for resale as well as setting up a joint development team with Cascade to enhance these switches.

IBM will integrate its token ring support into the Xylan product line. IBM developed its Multiprotocol Switched Services in-house and will integrate it into the Xylan switches, as well.

In adaptors, IBM provides home-grown token ring, Ethernet and ATM products as well as some ATM and Ethernet adaptors from other vendors. In switching, IBM offers its 8270 token ring and 8285 ATM switches, while its Ethernet switch, based on Kalpana technology acquired by Cisco, will be replaced by the jointly developed IBM/Xylan switch.

IBM said it continues to assess additional opportunities with other companies, ranging from OEM agreements to alliances to possible acquisitions under the right circumstances.

"IBM may not have the sexiest products in networking, but they work and that's all the end-user wants," said MNIT's Holland.

If all this points to the need for resellers to gear up or get out, Lance Heather, Southmark's national services manager, agrees.

"On the desktop and in the network, product life cycles are getting shorter and that means resellers are going to have to think outside the circle to stay in business," Heather said.

Fast Facts

- The network integration business is becoming increasingly fractionalised, with the emergence of more players- Improved LAN skills among end-users is taking business away from systems integrators- Security issues with the Internet are becoming a major focus with end-users

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