Imagine being the IT director faced with this problem: Your company has just been bought by a private equity firm that wants to take the operation global. You need to upgrade a 10-year-old network, but you don't know what countries you'll need to support or when you'll need to support them.
That's the challenge the IT team faced at Shaklee, a provider of natural foods and household cleaners based in California.
Shaklee ended up signing a four-year, multimillion-dollar network-outsourcing deal with Virtela Communications this summer, after having chosen the VPN provider for several smaller projects.
"Now we can walk into any meeting and say to the management team, 'Give us 60 days and an address, and it will be done,'" says Greg Fina, director of IT architecture and quality at Shaklee. "We don't even need the full 60 days to get our circuits in place," he says.
Industry analysts say virtual network operators (VNO) like Virtela are a good fit for businesses going global.
"For any small-to-midsize business with global aspirations, this is a great way to go," says David Passmore, research director at Burton Group. "Where VNOs make less sense is with very large enterprises that can cut their own deals with carriers and gain economies of scale," he says.
Shaklee is a 50-year-old company that was purchased in 2004 by investors who planned to expand it rapidly worldwide. At the time Shaklee had businesses in the United States, Canada, Mexico, Japan and Malaysia. "We had no global network, and no flow of data among the five countries," Fina says. "Our technology was outdated. . . . We hadn't made a major investment in 10 years."
The aggressive goal of Shaklee's new management team was to expand into 50 countries in 10 years. "In order to do that, we not only needed to enable technology in the countries we already had, but we had to build a foundation for rolling out in two countries a year starting in 2006," Fina says.
Shaklee's IT team determined its data and telephone networks could not support global expansion, so they outlined a three-step replacement process: First, they would hire a WAN provider, next, they would upgrade the company's voice and data network gear, and finally, they would hire someone to manage the network end-to-end.
IT staff spent six months evaluating bids for the WAN contract and ended up choosing Virtela. Other bidders included MCI, AT&T, Sprint and Infonet. "We felt that they had a very innovative solution. We thought the price point for what they were providing was good, and we liked the relationship we had developed with them over the six months" of the procurement process, Fina says.
Shaklee signed a two-year contract with Virtela for a fully managed IP VPN service, including line provisioning, router management and trouble ticketing. The network supports 500 users and runs key applications including data warehousing, CRM, e-mail and VoIP.
The new WAN was completed in November 2005 for around US$250,000. Once the IP VPN was in place, Shaklee closed its processing centers in Canada and Mexico and consolidated operations at its headquarters location. "Through that consolidation, we were able to pay for the WAN in its first year and recover all of the initial investment," Fina says.
Next, Shaklee upgraded its U.S. and Canadian offices' voice and data equipment. After evaluating equipment from Cisco and Avaya, Shaklee bought NEC phone systems and Foundry Networks data switches, and rolled out 100Mbps Ethernet to its desktops, replacing 10Mbps Ethernet connections.
"We have Power over Ethernet on the Foundry switches," says Kirk Allen, director of technology at Shaklee. "We're using this to power the instruments for NEC's VoIP solution. We went to VoIP in any facility that required a technology refresh."