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."
The new network also lets Nationwide Insurance better support remote users, particularly field representatives. By implementing Dynamic Host Configuration Protocol over the new backbone, the company was able to roll out a long-needed imaging system. Remote representatives dial in to the imaging system via 56K bit/sec connections and import photos of damaged property. The goal is quicker claims processing. In addition, some home users get access to the corporate network using cable connections and tunneling thhrough a new VPN, also added as a result of this network upgrade.
Another application the new network supports is IP Multicast, which allows delivery of a single stream to all users rather than an individual stream to each user. Now executive briefings are broadcast to all employee desktops using Cisco's IPTV viewer so no one has to travel to see the presentations.
Edgington says the cost-cutting challenge issued to the chief information officer in essence became an enabler for cutting-edge technologies. By saving money on support costs and adding an up-to-date Ethernet network, Nationwide Insurance has jumped toward that goal, while boosting worker productivity with better applications and faster data sharing.
The upgrade was relatively painless, too, Edgington says. The network group had to replace old token-ring hubs and bridges with new Cisco Catalyst 5000 switches in the wiring closets. A few of the older switches remain, but those are being phased out.
A team of three contractors, consisting of two desktop support consultants and an electrician, worked with two project managers and up to five network technicians from Nationwide Insurance on the four-month project, which wrapped up in December 1999. Not all Nationwide Insurance employees involved worked full-time on the project.
Team members then prepared computers for the change. They worked during business hours to ensure all user applications still worked after switching off token ring. For desktops, the network upgrade meant reconfiguring every one by hand: updating drivers, plugging a patch cable into the Ethernet port and rebooting.
Nationwide Insurance is a Microsoft shop with 75% Windows NT 4.0 machines and 25% Windows 95 on the desktop. The company is still experimenting with Windows 2000 on its Internet site, but it is not currently in use on the corporate network.
A few machines required new cards, but to Edgington's pride, for most end users, the supplanting of an old network with a new one was just a minor disruption in the course of a day. "Users may have noticed a slightly different login screen, but the impact was minimal," he says.
Not surprising, with an expected 5% to 10% return on investment over the next three years, the network has done its share to meet that $20 million challenge -- all while improving performance.
This story, "A great policy for network ROI" was originally published by Network World.