Continued from page 1
Total Project Cost = $106,825
After you quantify conversion costs, quantify benefits. At this point, my colleague didn't have an answer off top of his head. After a few seconds to think, he said "ethernet cards come built into PC's we purchase. There's no incremental cost. If we keep Token-Ring around, we'd have to buy a new Token-Ring card for every new PC." Now we're getting closer, but we still haven't justified this project yet. I asked him how many new PCs did he expect to purchase next year. He said about 100 and provided me with following costs:
Card - $150 Toke-Ring Cabling - $250
Total cost for a new PC = $150 + $250 = $400
"See. I told you. This is a no brainer!" But then I asked him, "Of 100 PC's, how many were incremental vs. replacements of old PC's ?" He gave me following information, by site location:
Site A - 20 incremental, 10 replacements Site B - 50 incremental Site C - 10 replacements Site D - 10 incremental
The $250 per PC cabling cost does not apply to replacements, so costs would only be $150 for each PC replacement. You also cannot replace part of a floor, but you could have ethernet installed on some floors, and Token-Ring remain on others. I asked him to breakdown PC count to a floor level:
Site A- 20 incremental are all on one floor, 10 replacements are scattered throughout other floors Site B - Only one floor in building Site C - 10 replacements are scattered Site D - 10 incremental are scattered
Now light bulb started to go. We figured out costs of keeping Token-Ring vs. installing Ethernet on a site-by-site, floor-by-floor basis. We came up with following costs (I didn't bother describing calculations. You could easily figure it out for yourself using assumptions made earlier):
Site A - Token Ring ($8,000 for one floor, $1,500 for others), Ethernet ($6,500 for one floor or $28,450 for entire building) Site B - Token Ring ($20,000), Ethernet ($13,900) Site C - Token Ring ($1,500), Ethernet ($14,675) Site D - Token Ring ($4,000), Ethernet ($49,800)
The light bulb was completely on at this point. The best approach to this project would be to phase in ethernet by converting one floor at Site A and all of Site B. Let's compare what would have happened if my friend had gone with a full replacement vs. a phased replacement.
Full Replacement - Spend $106,000 to save $34,500 Phased Replacement - Spend $20,400 to save $28,000
My colleague was very thankful at this point. He realized that careful planning and analysis could ensure that his company's money was being spent wisely. Clearly, there are other benefits of changing a LAN architecture that were not even touched upon. Router integration costs and application performance could also help drive decision. Take time to identify all of possible costs and benefits of a Token-Ring to Ethernet conversion before starting project. You could be throwing money down drain!
Andy Quick is co-founder of FindMyHosting.com (http://www.findmyhosting.com), a free web hosting directory offering businesses and consumers a hassle free way to find right hosting plan for their needs. Feel free to contact Andy at email@example.com in case you have any questions or comments regarding this article.
Andy Quick is co-founder of FindMyHosting.com (http://www.findmyhosting.com), a free web hosting directory offering businesses and consumers a hassle free way to find the right hosting plan for their needs. Feel free to contact Andy at firstname.lastname@example.org in case you have any questions or comments regarding this article.