Signaling the growing importance of staying connected for business criticality, the overall telecom spend by large enterprises during FY '06-07 has grown by 20% over the previous fiscal. The survey reveals that the average telecom spend per organization is Rs 3 crore. Verticals such as BFSI, IT/ITeS and Oil & Gas are the biggest spenders on Telecom infrastructure.
At an overall level, the total telecom spend is 30% of the total IT spend in large enterprises. As a percentage of the overall turnover, the average telecom spend of a large enterprise is 0.17% while the average ICT spend is around 1% of the overall turnover.
As businesses have grown over the years, the key emphasis in enterprise connectivity is scaling up communication networks quickly and efficiently, than on technology choices. This is a welcome sign as mature enterprises are laying more emphasis on networks that are high on functionality and low on redundancy, rather than the cost factor.
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Average telecom spend of large enterprises has increased 20% over last year
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Total telecom spend is 30% of the total IT spend of a large enterprise
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DSL and ISDN enjoy 70% penetration and will stay hot for the next 2 years
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Organizations across all verticals will spike investments in domestic leased line and VPN, in the next two years
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Enterprises have ranked VSNL highest on satisfaction level
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48% of enterprises do not sign SLAs with connectivity service provider
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Multiple access technologies have become the order of the day as staying connected becomes a crucial business enabler, but this has led to a confused state of affairs.
As per the V&D-IDC survey, currently, in an organization, the average number of access technologies is three. In the next two years the preferred choice will narrow down to two. This is primarily because large enterprises are getting more focused with their choices for access technologies, and managing a wide mix of access technology is difficult and costly to maintain.
In case of telecom services, the current number of technology is four per organization. In the future, this choice will narrow down to three. Web hosting will be the least preferred. This could mean that the companies have already invested in Web hosting over the years and it is stabilizing. Application hosting, conferencing and web hosting currently have maximum adoption.
Multiplicity Advantage
DSL and ISDN are the two access technologies that have the highest penetration (number of organizations using) and continue to dominate future adoption. Both are head-to-head with over 70% of the companies choosing both technologies.
Manufacturing and Oil & Gas industries are the biggest users of ISDN, while DSL is the favorite among Media/Entertainment, IT/ITeS and Banking/financial services companies.
DSL has clearly outperformed cable connectivity and finds a favorable positioning as an access technology. Broadband connectivity has finally hit the right keynote with enterprises especially with broadband service providers eagerly churning out bundled end-to-end services.
Over 60% of companies have gone for domestic leased line and 58% have opted for PSTN. The highest takers of these two technologies are Oil & Gas and Media & Entertainment. The drop in bandwidth prices encouraged enterprises to increase their investments in leased lines.
However, it is interesting to note that when it comes to the maximum spend in future, domestic leased line and VSAT comfortably dominate over other technologies. The main reason is due to the performance versus cost factor. VSAT and international leased lines remain constant in the adoption trend at 35-37% and 15-17% penetration in current and future respectively.
Currently, the highest takers for VSAT are BFSI and Energy/Infrastructure/Utilities verticals. However, when it comes to future investments, VSAT will increase its penetration in FMCG/Consumer Durables/Food & Beverages industry vertical from the current 27% to 47%. VSAT services are used for broadcast applications and enabling connections between remote factory locations.
Telecom Services
The rapid growth of Internet and increasing business demands, have paved the way for the development and management of bigger and complex applications. At the same time, the need to share such applications has also increased in the enterprise sector.
Application hosting (ERP, CRM & SCM) and Web hosting have an overall penetration of 56% and 53% across verticals. Large professional websites require great deal of traffic/resources like e-com applications, application hosting, private brand resellers, and so on.
