Background: Know: Network Manager, Recognize:
Anticipates: NM software (e.g. SNMP), Accounting
Business aspects of NOCEdit
Network managers need to justify the business case for network systems, such as determining the Return On Investment (ROI) in network infrastructure.
The Total Cost of Ownership (TCO) of a system includes the obvious costs of that system, such as the cost of purchasing it, as well as indirect costs, such as the cost of running and disposing of the system. For network management, the TCO depends on both:
- Capital Expenditures (CAPEX): Expenditures that create future benefits, for example, expenditures spent on network equipment.
- Operating Expenditures (OPEX): The ongoing running costs, including the costs of services from peer network operators and network management labour. This takes up to 80% of network TCO.
Often there are trade-offs between OPEX and CAPEX so that one can be saved at cost of the other one. For example, labour cost (OPEX) can be saved if more sophisticated network management software is used for the network system, but at the cost of additional CAPEX for buying the software.
NM accounting can also shift network services from a cost centre to a profit centre. e.g. rather than the network just being a cost to the organisation that runs it, if they can account for its use then they might be able to open it to other organisations to use excess capacity, and charge them for access, and so receive revenue from those other organisations.
The page on Rising levels of abstraction show the Business Management Layer at the top of the pyramid of management layers.
The Accounting management part of this wiki also considers financial aspects.