The Total Cost of a Wireless Network

Still stuck on the business case for Wi-Fi? Our experts can help: We kick off our new TCO series by working with an integrator to map out the total cost

December 1, 2006

19 Min Read
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Technologists are under pressure to justify the investments they propose each year. Senior technology executives must explain the immediate cost of acquiring some new system, as well as the long-term financial impact. Thus, IT decision-makers must calculate the total cost of ownership (TCO) over the lifecycle of the technology and identify benefits that justify that TCO.

But TCO can be tricky to estimate because it includes so much more than the invoice you get from the vendor.

This article is the first in a new series to help with that task. Using a fictional company as a model, we walk you step by step through the costs involved with deploying a wireless network, including the planning, installation, management and other costs that arise over a reasonable lifetime of use. We chose a WLAN because more and more enterprises are going wireless to boost user productivity and take advantage of the inherent mobility of laptops.

Cost Estimate

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Network Computinghas partnered with Jim Portaro, CTO of Integral Wireless Solutions, a wireless integrator, to provide a detailed estimate of the wireless network. To help you work out your own deployment costs, a customizable spreadsheet is available here (download the PDF).

As with any large project, the cost of a WLAN will no doubt be questioned by the CFO. So we also try to help you identify the return on this investment.

If the internal critics of this project are really clever, they might suggest other ways to achieve the benefits the wireless network is expected to deliver. To help you address those points, we also discuss these alternatives and how they compare to the wireless solution.


Introducing The TCO SeriesStill stuck on the business case for Wi-Fi? Our experts can help: We kickoff our new TCO series by working with a integrator to map out the total cost ofownership for a fictional company's WLAN -- from initial planniing toinstallation and future use.Also:Check out our customizable spreadsheet that shows all the costs you'll need to calculate TCODownload the Spreadsheet

The Wireless Networking Project

Congratulations! You've just been promoted to CTO of HealthPlex (see "HealthPlex Software", for a sketch of the company). One of your first tasks is to evaluate the deployment of a WLAN. With 70 percent of the employees already using laptops, there's strong pent-up demand for a WLAN. From the perspective of those users, the company has paid for mobility by buying laptops, but then effectively restricted that mobility by failing to have a WLAN in place.

In addition, HealthPlex has close relationships with its customers, business partners and suppliers. Representatives from those companies frequently visit the office with their own laptops and ask to be connected to the Internet.

But these demanding employees and visitors aren't responsible for the IT budget, nor do they have to justify it to the finance staff. That's your job.

About Our Integrator

Jim PortaroJim Portaro is CTO and sr. vice president at Integral Wireless Solutions, which designs and deploys wireless networks for a variety of industries, including health care, education, retail, manufacturing and homeland security.

Portaro has more than 20 years' experience designing and installing wireless networks, and is credited with implementing the first wireless communications network in a major medical facility. He is actively involved in wireless standards organizations, including the IEEE 802.11 committee.

The RequirementsFirst, let's look at what you think this wireless network should do. HealthPlex will need to provide coverage on all four floors of the headquarters building, including, at a minimum, the first floor reception area, the employee cafeteria, the large first floor conference room and the 12 smaller conference rooms in the rest of the building.

You decide that this project can only be implemented by bringing in some experts--a systems integrator with hands-on experience deploying WLANs in buildings like yours. To get them to pin down the costs, you'll lay out a set of required deliverables that the integrator will provide. In turn, you'll expect to see an estimated cost for each deliverable.

At the top of the list is a general system design and a list of proposed equipment for sufficient wireless bandwidth to accommodate the expected number of laptops in each collaborative space in the building. Even in the relative near term, the bandwidth demanded by each laptop will grow continually and the number of laptops is bound to increase as new employees are hired, if recent experience is any indication. So the design needs to plan for that growth.

The design also should address any potential problems associated with RF interference, including physical features of the building and sources, such as microwave ovens and Bluetooth devices. The integrator should lay out a project plan for the deployment of this network, which includes not only the costs of installation, but also pre-install site surveys and post-install verification. Because the WLAN will be connected to the wired network, this plan should also address the need for any required upgrades to the wired network.Next, you require specific recommendations and estimates of the costs associated with the ongoing management, configuration and monitoring of the wireless infrastructure. That infrastructure has its own requirements--such as utilization monitoring and load balancing--that must be managed. In other words, what will it take to keep it up and running?

This cost estimate also should include WLAN management capabilities. Ongoing costs include support and maintenance fees for all components and labor costs, both of added staff that the integrator recommends as well as their own consulting staff--if you decide you need to keep them around.

The wireless integrator also must specify the ways in which the WLAN will be integrated with the wired network and how service will support the overall computing environment. Among issues to be addressed, the integrator must provide a solution to allow users to roam as seamlessly as possible between floors and IP subnets.

Because wireless devices radiate their signals, the perimeter of HealthPlex's network will become much more porous than it has been. Thus, the integrator must provide specific recommendations on what HealthPlex needs to do to ensure that the WLAN does not weaken the security of its network--with specific attention to the areas of authorization, authentication, encryption, wireless IDS/IPS and guest access to the Internet for visitors.

This WLAN project represents a substantial investment, so you need a "future-proofing" strategy to ensure that the WLAN remains viable. This includes long-term capacity planning, as well as software and firmware upgrades.This strategy should also delineate an upgrade path to 802.11n. Although there are no immediate plans to deploy 802.11n devices, you want to keep your options open once standards-based products come on the market. Similarly, though wireless networking products have mostly used 2.4-GHz unlicensed frequencies, it may be necessary in the future to take advantage of the 5-GHz unlicensed frequencies as well. The "future proofing" strategy should describe the means to incorporate both frequency bands.

Once the WLAN is up and running, there will be on-going costs, so you'll need an estimate of the lifetime of the equipment and associated management and other systems to support the network. If you don't have an estimate of the lifespan of what you'll be buying, it will be hard to determine the TCO over the lifetime of the system. Clearly, network equipment, especially wireless equipment, has had a relatively short life. This partly reflects the continuing developments in technology and new standards. It's not just the equipment that may have a short life--so will the management software for each new generation of the equipment.

Also, data mobility, is only the beginning. Several constituencies, particularly sales, might benefit from mobile voice capabilities such as voice over Wi-Fi. Although this isn't a key requirement of the original WLAN deployment, you'd like to get ballpark numbers on the costs associated with wireless voice. Adding voice to the network, for instance, will require consistent service. Voice traffic must be prioritized to ensure good quality, so the integrator must recommend how to ensure QoS. It should also estimate the cost of any additional infrastructure, such as more APs (access points), that would be required to provide voice on the wireless IP network, as well as any upgrades to the wired network to support voice.

Together, the information you receive about all these aspects of the network will help you determine the expected total cost of deploying the WLAN. Because you've asked about potential upgrades and capabilities, the integrator will provide a range of costs to account for various scenarios. The range will start at a minimum of what you must have today and go to a maximum of what you anticipate you'll need over the next several years.

The Consultant's ResponsePortaro reviewed the requirements of this fictional company and mapped out a WLAN strategy.

He recommended an initial analysis to put together the overall wireless design, which includes the RF design to mitigate issues such as areas where physical features of the building might disrupt the radio signal.

He also suggested using a controller-based wireless setup because it provides a single interface for managing APs. It can also help simplify upgrades and address connectivity between subnets. Vendors include Aruba Networks, Cisco Systems, Meru Networks and Trapeze.

In HealthPlex's controller-based design, the wireless controller sits in the core of the network. For a campus design, vendors will likely recommend one or two controllers per building or in wiring closets. APs will establish a tunnel back to the controller and all the wireless traffic is then connected into the network. Users can move among APs on each floor and between floors without disrupting their connections.

The controller simplifies upgrading APs by providing a central management interface to push software and firmware updates out to the APs.Controllers are priced by their capacity, based on the number of APs they can support simultaneously. According to the integrator, controller capacity can range from three to 300 APs, and pricing can run from $3,000 to $50,000 dollars per controller.

AP costs also vary based on capability, which accounts for the wide range of prices--from $200 to $900 per device. A Cisco AP with modular radios, external antenna ports, RF monitoring capabilities and locking mounts would list at $900, whereas a virtually disposable Trapeze single-radio AP would be closer to $200.

For HealthPlex Software, Portaro recommends two controllers for redundancy and 20 to 30 APs, for an estimated hardware cost of between $12,000 and $127,000. A more precise cost estimate would require further consultation to determine the right balance of price and capability.

Portaro assumes HealthPlex has network-wide authentication measures in place, including a RADIUS server and Active Directory. He may also identify other areas where authentication components must be installed.

The security picture includes the use of 802.1X authentication for network access, WPA2 clients with AES for wireless encryption and segregated VLANs for voice, data, video, guest access, and network management. Most controller-based systems already provide basic management capabilities for wireless IDS and IPS, using various software-based approaches to detect and contain rogue users or those attempting to spoof their way into your network.If you expect to deploy a true wireless VoIP system, the number of APs will have to increase, since each can properly handle only 8 to 10 active calls. For a company the size of HealthPlex, this means an additional 10 to 15 APs--at $200 to $900 per AP depending on the manufacturer. An increase in APs also means an increase in other infrastructure costs, including cabling and larger controllers to handle the additional APs.

Additional switches would must be purchased to support the additional APs and the VoIP handsets. The wired network infrastructure would also have to be evaluated to determine if an upgrade was necessary to ensure it could properly support voice.

Another issue to consider is location-based services, which provide the physical location of a caller dialing emergency services. Location-based services will eventually be mandated to meet E911 regulations, and a number of vendors are working on Wi-Fi based location systems. This service will affect the RF design because the location service has to triangulate the user's position among several APs, affecting both the number of APs and their placement. This planning should be done ahead of time in preparation for an eventual rollout of wireless VoIP. Otherwise, location-based services may require a redesign with additional costs.

Integral Wireless estimates a wireless VoIP system for HealthPlex would cost between $125,000 and $200,000 (not including the cost of a new PBX). A detailed assessment would be required for a more precise estimate.

As HealthPlex CTO, you must decide whether to build out the wireless infrastructure to support voice now, or look to upgrade the WLAN at a later date.Portaro recommends deploying products that support both the 802.11a and 802.11g wireless standards. While a and g will be replaced by 802.11n, standards-based products won't likely be available until 2008. Portaro recommends against deploying pre-standard gear, as it may be incompatible with the final version of the standard.

However, while not planning for 802.11n might reduce your initial cost, that investment would have a short life span. Therefore the recommendation is to spend the extra money to purchase controllers that can support 802.11n with a software upgrade. In addition, as HealthPlex refreshes aging laptops in the coming years, new models should include built-in support for 802.11n while being backward-compatible with a and g.

That said, Portaro notes that once HealthPlex upgrades to 802.11n, all the APs will need to be replaced.

Operating expenses should also be calculated, as some IT time will be required to manage and troubleshoot the WLAN, help with guest access and so on. Given the size of HealthPlex, Portaro estimated modest management needs--less than half of one full-time employee over the course of a year--and determined that the existing IT staff could absorb the duties without difficulty.

The Costs And The BenefitsTake a look at the estimates provided by our systems integrator (the complete project estimate is available here ). As a savvy CTO, you'll assume the higher estimate of $330,550 for this project.

For financial officers, infrastructure improvements do not have the same attractiveness as other IT projects. Also, calculating return on investment is much simpler when installing a new software package than when installing new infrastructure.

However, you can provide some financial justification for this wireless project by noting that the cost of personnel in a company like HealthPlex is much more than what you're spending on technology. (And see "A Different Solution?" on page 82 for alternatives to a WLAN.)

Over the expected life of this WLAN investment, the cost is about $1,700 for each of your current laptop users. One way to put that into perspective for the finance department is to note that, over three years, this is less than one-half of one percent of the base salaries for those people, not even including fringe benefits and the other liabilities that companies are expected to carry on their books these days.

The key driver for a WLAN at HealthPlex is to facilitate collaboration and make it more convenient for teams to work together. Intuitively, the benefit is obvious: the wireless network will make is easier for this creative workforce to generate revenue.You can point out that management has made it clear that they think the workforce is more productive when they work together. Your WLAN initiative makes increased collaboration possible.

You can also note the frequent executive exhortations to people to get out of their offices and cubicles so they can interact more often with suppliers and customers. The WLAN also makes it easy for HealthPlex staff to do exactly that--by meeting customers in rooms which are equipped with a wireless network.

It won't take long before you can see evidence of increased collaboration, at least through increased use of common conference areas or greater volume of data passing through the network. Then you can try to track how much more quickly new products are developed. Finally, even though HealthPlex is in a market with a relatively long sales cycle, you should be able to demonstrate an increase in sales. However, these benefits are hard to justify quantitatively, and a CFO might not buy it.

You can also go beyond ROI, by identifying the benefits that the WLAN would bring in a crisis, such as when an important new product release is late or there is a looming Federal requirement, or even something more devastating.

The wireless LAN will support the fluid relationships between different teams that emerge when any company faces severe challenges. You could quickly put the crisis team together in a conference room, for example, and they would be connected, but also working together. The kind of response that can be generated in that environment is so much better than having everyone still working away in relative isolation in their cubicles.All these and other measures of the real return following the investment will help make it easier for you to justify other network and infrastructure investments in the future.

Our Imaginary Company: HealthPlex Software

Our imaginary company, HealthPlex Software, develops billing and office-management software for hospitals, clinics and private medical practices. It's located in a leased four-story building in an office park in northern New Jersey. The space contains private offices, office cubicles, conference rooms, a lobby and an employee cafeteria. Each floor has 20,000 sq. ft. of usable space.

The first floor contains a 1,000 sq. ft. reception area, a 1,000 sq. ft. conference room (which accommodates about 30 people), the 2,000 sq. ft. cafeteria, four 225 sq. ft. individual private offices, and seventy-four 175 sq. ft. cubicles. The remainder of the space--a little more than 2,000 sq. ft.--is for everything else, including restrooms, storage, and copier areas. That means that 14,000 sq. ft. of the first floor is used for individual working space.

Vital Stats

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The second through fourth floors each have four 500 sq. ft. conference rooms (which each accommodate about 15 people), eight 225 sq. ft. individual private offices, seventy-five 175 sq. ft. cubicles, and a bit more than 3,000 sq. ft. for everything else, including restrooms, kitchenette and data centers. That means that 15,000 sq. ft. of each floor is used for individual working space. The rest is for common uses.

Currently, the company has a 100-Mbps switched network with Cat 5E cable to each office and cubicle.

HealthPlex Software's workforce of 275 is mostly professional and well paid. The developers typically earn from $80,000 to $100,000; the sales staff is paid from $60,000 to $80,000; and the marketing staff's salaries fall between $50,000 and $70,000 per year.

Just under 70 percent of the employees--193 people--have laptops, all of which are already equipped with built-in wireless (802.11) capability.

Case Study

HealthPlex Software is a fictional company that creates billing and office-management software for hospitals, clinics and private medical practices.The company's developers, sales, and marketing staff work collaboratively to enhance the company's existing products, create new ones, devise better ways to serve customers and, in general, to find ways to increase revenue.

They carry out this collaborative work almost everywhere, but especially in conference rooms, the cafeteria and other common areas. The employees like to bring their laptops to all these locations and want to stay connected to the network.

HealthPlex's customers and business partners also are frequent visitors to the office and would like to have easy access to the Internet.

Thus, HealthPlex is considering deploying a wireless network to enhance productivity and take advantage of the mobility built into the current generation of laptops.

Cost Estimate

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The company called in a wireless integrator to outline the total cost of ownership of a wireless network, in order to better understand the full impact on HealthPlex's IT budget. The integrator's assessment includes an RF survey, wireless hardware costs, network upgrades, installation costs and operating costs.

The integrator provided a detailed spreadsheet that includes a low and high estimate. The final tally came to $105,400 for the lower estimate, and $331,150 for the high end. The difference is due to several variables that our fictional company has to decide on, such as whether to chose low-cost APs or opt for high-end ones with multiple, modular radios, RF monitoring capabilities and other features.

Other cost variables include the choice of controllers, and the amount of labor for installing and testing the equipment and training the IT staff.

While nailing down the costs of the TCO took some work, providing a clear ROI could be trickier. Increased mobility and collaboration may boost user productivity, but it would be nearly impossible to measure with any accuracy. The enhancement to productivity that the WLAN will produce comes to only about $1,700 per laptop user, which is just a fraction of what the users will be paid over the three years of this project. This may help take some of the sting out of the final price tag.

A Different Solution?THE TCO for this project may not scare only you, it'll also frighten those who must approve the expenditure. They may ask if there are less expensive ways to achieve wireless nirvana.

And there are. First, you could simply buy consumer-grade wireless routers and place them in common work areas. However, you would give up essential management and security capabilities, roaming wouldn't be possible, and additional services such as voice over Wi-Fi wouldn't be feasible.

You also could deploy more connections on the wired network. However, to accommodate the gathering of staff in groups and meetings, you would need to provide several LAN connections in each meeting room or gathering area. This may be more expensive.

The other, somewhat less common alternative is to provide virtual access to the users' desktop PCs, or convert to thin network-based clients. Unfortunately, in a world dominated by Microsoft "fat client" software and because of the diverse variety of applications required by each business unit, delivering a virtual desktop to every location would add extraneous costs and network burdens.

Dr. Norman J. Jacknis is the first CIO of Westchester County, NY. He has had extensive experience in the private sector, most recently dealing with enterprise middleware software products. Write to him at [email protected].

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