Estimating the ROI of eCDN
Estimating the ROI of eCDN doesn’t need to be a complex exercise. When it comes to network optimization, bandwidth is the key measure of success. The amount of bandwidth you save is a tangible calculation that translates directly into cost savings. Add in the significance of other eCDN ROI measures and the value of your eCDN cannot be underestimated.
New Demands as Video Returns to the Office
Video has proven, today more than ever, to be a favorable and effective way to communicate with your audiences regardless of location. From crisis communications to everyday business operations, the return on investment (ROI) of enterprise video during the global pandemic is evident and rarely called into question. But what happens when your employees return to the office in large numbers and they bring video with them? The rapid growth of video inside the enterprise presents challenges for IT departments.
Video transfer is bandwidth intensive, and the higher the quality (HD and Ultra-HD) or the more interactive (augmented reality and 360° video), the more bandwidth it consumes. Most corporate networks were not designed to handle large volumes of video traffic. Network administrators need to be concerned about capacity, consumption and scalability issues, especially at internet connections, WAN links and on Wi-Fi networks. You will be faced with the very real possibility that video will jeopardize the delivery of higher priority information and transactional data, thereby impacting business-critical operations.
To alleviate network congestion and avoid limiting the use of video, IT departments will need to deploy enterprise content delivery networks (eCDN) to optimize bandwidth consumption. But new software and/or services to support video come with a price tag and therefore conversations about eCDN ROI. How do you justify spending even more on video after the company already rapidly approved large expenditures to enable a remote workforce?
The ROI of eCDN: Six Steps for Calculating Costs and Savings
Generally speaking, ROI is a profit ratio of gains compared to costs. We typically use the term to refer to the financial benefit—a monetary calculation of positive return. Fortunately, in this context, the ROI of eCDN is a pretty straightforward calculation.
Step 1: Estimate the bandwidth required to support video without an eCDN
Multiply the following numbers: 1) The number of employees you expect to watch a video event at the same time. 2) The bitrate of the video stream. Most enterprise streaming vendors provide this information, such as this adaptive bitrate documentation for Microsoft Stream.
Step 2: Estimate the cost of bandwidth to support video without an eCDN
Multiply the result from the previous step by your actual cost to secure additional bandwidth. If you don’t know your cost of bandwidth,BusinessInternet.com indicates the average cost of 1 Mbps of bandwidth is US $2.50 per month.
Step 3: Estimate the cost of deploying your eCDN
Determine how much it will cost you to deploy your eCDN, as well as the ongoing maintenance, utilization and/or subscription costs.
Step 4: Estimate the bandwidth savings when using your preferred eCDN
Most eCDNs optimize bandwidth at 80-99%+. Our white paper “ROI of Enterprise CDN: Estimating network optimization and bandwidth delivery costs for enterprise content delivery networks” provides a detailed analysis of the optimization levels for each type of eCDN—multicast, video cache and P2P network—and walks you through the process to perform your own calculations.
Step 5: Estimate the cost savings when using your preferred eCDN
Multiply your new estimate of the total bandwidth you will use when employing the eCDN by your actual cost to secure additional bandwidth. This figure will be probably be an exaggerated estimate of your actual bandwidth costs since you may already have enough capacity on your network when an eCDN is being utilized
Step 6: Calculate the ROI of eCDN
Subtract your cost of deploying the eCDN (step 3) and your estimated cost of bandwidth when the eCDN is utilized (step 5) from the total cost of bandwidth required to support video without an eCDN (step1)
The ROI of your eCDN is simply the difference between your bandwidth costs without an eCDN and your bandwidth costs with an eCDN, plus the cost of your eCDN itself—which will be a small fraction of your overall savings.
To produce some of your own quick estimates, check out our interactive eCDN ROI calculator.
The Other Measures of eCDN ROI
Your eCDN ROI assessment is shortsighted if you only consider the tangible costs of bandwidth and the eCDN solution itself. You should also take into account benefits and consequences that are more difficult to quantify.
For example, the purpose of deploying an eCDN is to protect precious network bandwidth that enables business-critical operations. Do you know the impact of saturating your network with video? Will it slow email and collaboration tools, impacting employee productivity? Will it interfere with point-of-sale or transactional systems, preventing you from processing orders and generating revenue? Or, as in the case of one of our customers that provides outsourcing and hosting services, will it take down both your company operations and those of your customers?
The financial impact of such a scenario can be nearly impossible to predict in advance or even calculate after the fact—loss of revenue, service-level penalties, redirecting staff resources to recover from a failure. Furthermore, no financial assessment can truly measure the negative impact it can have to your company’s reputation or the trust your internal and external stakeholders have in your organization.
From an IT point of view, our customers consistently tell us one of the most important eCDN ROI metrics is the number of help desk/support tickets opened during large-scale video events. Prior to deploying their eCDN, one of our customers reported 7-8% of their support requests were related to their live broadcasts. After deploying Ramp, they drastically reduced the number of broadcast-related trouble tickets to .01%.
In one final example, let’s look at eCDN ROI from a communications perspective. A typical use case for enterprise video streaming is employee communications—events such as executive town halls, department-level broadcasts, and e-learning classes. Communicators embrace video because they know it’s more engaging and effective than traditional written formats. As a result, it has quickly become employees’ preferred way to receive important information.
But what happens when the network is overwhelmed? Viewers experience buffering and jitter, or worse yet, can’t watch the video at all. Certainly nothing is less effective than your message never reaching your audience. Without an eCDN your video initiatives could return a negative ROI. On the other hand, if your messages successfully reach every viewer, your company should reap the soft, but remarkably significant, benefits of timely and effective communication, employee engagement, productivity and more.
Your Detailed Guide to ROI of eCDN
While the concept of eCDN ROI is quite simple, don’t let the reality of estimating it become complex. For network optimization, bandwidth is the fundamental measure of success. The amount of bandwidth you save is a tangible calculation that translates directly into cost savings. At the same time, the significance of other eCDN ROI measures should not be underestimated. When putting together your own eCDN ROI story, be sure to consider how stakeholders across the organization will be affected. What impact do you expect on your network, what consequences might there be, and what could be the real cost to company?
Download our ROI of Enterprise CDN white paper for a more detailed discussion of how to calculate ROI for each type of eCDN.