January 02, 2001, 1:42 PM — If corporate issues your IT department a challenge to save $20 million annually, would you start spending money? Nationwide Insurance's property and casualty division did, to overhaul a high-maintenance token-ring network, and in the process netted some 35% savings per year.
To top it off, the Nationwide division also brought on cost-saving voice over IP, imaging and video applications, and built a VPN, among other projects. Such smart spending on network technology earns it runner-up status in Network World's 2000 User Excellence Award competition.
In August 1999, the insurance underwriter was running antiquated, bridged token-ring networks. Employees at the company's Columbus, Ohio, headquarters shared 4M bit/sec, as did workers in a second office in the nearby suburb of Dublin.
Fast forward to the beginning of this year, and Nationwide Insurance is a model of switched-networking efficiency, running 10M, and in some cases 100M bit/sec, to 1,400 desktops. IP Multicast further improves bandwidth use. The grand result is big money saved.
Nationwide Insurance spent about $70,000 for the network upgrade; it kept upgrade costs in check by using fiber and network interface cards (NIC) it already owned. Existing Category 5 cabling running from the switches to the desktops did not need to be replaced, nor did the fiber running from the network closets to the data center routers. Also, many desktop PCs sported preinstalled Ethernet NICs.
In return, the company estimates it is saving some 35% per year, or about $235,000, in support costs alone. Ethernet costs around $24 per desktop to support vs. the $37 token-ring cost, says Ron Edgington, officer and chief strategist for architecture and support at Nationwide Insurance. Plus, supporting the less-popular token-ring topology would have driven costs up an additional 5% to 10% annually. For instance, the company would have had to buy network cards for new PCs. This cost is eliminated with Ethernet because most PCs now ship with Ethernet NICs.
VPNs, imaging and video
Users get at least double the network performance because of the fatter, dedicated pipes to their desktops and the switching. Most receive a full 10M bit/sec to the desktop; power users and those running desktop servers can get 100M bit/sec to the desktop as needed, Edgington says.
Thanks to all this bandwidth, plus the adoption of IP, the company has changed the way it handles voice calls between its downtown and suburban locations. It now channels voice from PBXs onto its TCP/IP network rather than onto the voice-traffic, toll portion of an Ameritech SONET ring that connects headquarters, the Dublin office and an off-site data center. Edgington doesn't have exact figures, but he says savings have been significant and have contributed to that $20 million goal: "We now have no local call traffic where before we had a tremendous amount."