As IP-based voice, data and video convergence projects become more common, some IT managers are increasing their scrutiny of whether such initiatives will provide ample returns on investment.
But at Sunshine Village Ski & Snowboard Resort in Canada’s Banff National Park, an IP convergence project started three years ago “has paid for itself many times over,” according to Jon Chestnut, director of IT at the Alberta-based resort.
Chestnut said this week that the project cost C$278,000 (US$236,717) in 2002, a modest investment compared with some of the massive IP convergence deployments done elsewhere. But Sunshine Village’s project involved an extensive network infrastructure upgrade built around Hewlett-Packard Co.’s ProCurve switches and a fiber-optic backbone that runs up a mountain for four miles.
The initial cost was recouped within a year with savings on long-distance calls and the elimination of repairs to old phones and copper lines strung along towers that were susceptible to lightning damage, Chestnut said. “We faced astronomical costs to maintain old systems.”
The resort’s management did ask serious questions about ROI early on, and Chestnut said he wasn’t sure then that a payback would materialize. In one example of the cost savings that Sunshine Village has been able to reap, a single leased-line connection to a bank that supported credit card transactions cost C$1,800 a month — a tab that has now dropped to C$10, Chestnut said.
In addition to the financial benefits, the resort has gained new business capabilities, including IP-based video surveillance and the ability to get data from 1,276 safety switches along a four-mile gondola lift. The IP network also has greatly enhanced financial data transmissions, Chestnut said. Previously, a credit card transaction could take up to 14 seconds, he noted. Now 94 credit card machines can simultaneously handle such transactions in less than a second.
And because of the flexibility of IP, communications are more stable than before. If a cable is knocked out by high winds, a virtual mesh re-establishes a connection to another functional link, Chestnut said.
Further technology deployments are being considered. For example, the resort is testing voice over Wi-Fi telephones from SpectraLink Corp. in Boulder, Colo., said Chestnut. He said he eventually wants to deploy dual-mode phones that can convert to cellular operation when users are beyond the reach of Sunshine Village’s wireless LAN. That way, workers could leave the resort’s administration building and still be connected at 26 other buildings on the grounds.
Zeus Kerravala, an analyst at Yankee Group Research Inc. in Boston, said he has seen network cost savings of up to 35 per cent on some large IP convergence projects. The biggest savings can be derived from lower maintenance expenses and reduced labor costs for tasks such as adding new phones, Kerravala said, although he added that many projects are too young to have a real track record.
