The U.S. subsidiary of Telstra, Australia's leading carrier, last month won a three-year, US$8.4 million network outsourcing deal from Hyatt International - a major victory for an ISP that isn't usually on the short-list of preferred providers for US network executives.
Telstra is providing Hyatt with network services based on Multi-protocol Label Switching (MPLS), an emerging protocol used to support different classes of service for data, voice and video communications. Telstra also handles Hyatt's network management and hardware operations.
Hyatt has chosen Telstra to provide high-speed IP connectivity between its Chicago headquarters and 50 hotels located throughout Europe, Asia Pacific and South America. Hyatt's new network also links several shared service centers that handle key business applications such as reservations and accounting.
Previously, Hyatt operated a six-year-old frame relay network that connected each of its hotels with its headquarters in a hub-and-spoke design. The dedicated lines were low-bandwidth - ranging from 16K bit/sec to 256K bit/sec - and expensive.
"One goal of our network upgrade was to look at new technologies because we hadn't upgraded in six years," says Mark Retnam, director of global communications technology for Hyatt International. He says Hyatt's other goal was to increase the bandwidth between the shared service centers and between the shared service centers and headquarters.
"The shared service centers needed communications between them and between them and the hotels directly, rather than having all the communications come back here to Chicago," Retnam says.
Retnam says he was interested in MPLS technology because it allowed the hotel chain to give priority to its most critical application, which is the reservation system.
Hyatt developed an RFP and invited 20 ISPs to bid on it. The RFP encompassed WAN services as well as VPN and firewall management services. Hyatt executives were willing to select multiple carriers, depending on the quality of the bids.
"The top criteria for us were price, for sure, then technology, management team, experience and contract structure," Retnam says. "We needed flexibility to create a contract structure that would work for us. Hyatt International would sign a master contract with the company, but then each of the hotels needed to sign service contracts."
In the end, Telstra won the WAN services piece of the contract, while VeriSign won its bid to provide managed firewalls.
Retnam says Telstra was best able to meet all the criteria for the global WAN services.
"We were happy with their price, the team that was here in Chicago and their contract structure," he says, adding that Hyatt already had a positive experience with Telstra as a provider of network services in Australia and Europe.
Key to Telstra's win was its aggressive pricing. "It was very important for us not to increase our costs," Retnam says. "At none of our sites, did we increase our costs. And at many sites we decreased our costs and went to higher bandwidth."
Hyatt's incumbent provider was Equant, which had provided frame-relay services.
Hyatt also uses MCI for its network services in India, where it runs a shared service center, but that contract doesn't expire until 2005. The India service will likely be migrated to the Telstra deal when the MCI contract ends.
In the end, Telstra's strong showing on its bid pleasantly surprised Hyatt executives.
"I was surprised that they were able to compete globally," Retnam says. "We were open to doing regional deals for Asia, Europe and the Americas. I actually thought that there was a high chance we would end up with three WAN providers. I was surprised that Telstra was able to be as aggressive as they were in the pricing globally."