Are spaghetti the cheapest dish?
With the development of regulations and liquidity fragmentation, we saw an increasing need to communicate. Due to business demand, data and voice lines proliferated.
The selection of network providers was very often done based on 2 laudable criteria: first, the ability the network provider had to provisioned rapidly the link and secondly, the price. This led to the creation of “spaghetti networks”. Today, some bank infrastructures have 6 or more network providers coexisting.
But this anarchic development of data and voice lines of all types brought many issues:
- First the optimum of a set is not the addition of the optimum of all elements of the set. Managing several providers induces a lot of hidden costs: administrative work is multiplied, longer negotiations, more contacts to deal with … which at the end of the day makes the bill higher and implies to spend much more money and energy than managing a limited number of providers.
- Second, the management is more complex: many hot-lines to deal with, different SLAs to manage, much more difficult to achieve a comprehensive supervision of the whole network and thus have a global picture of the communication pattern.
Therefore, the quality of services is worse in most of the cases. The weakness of a chain lies in its weakest link. What’s the point of having a Ferrari if you drive on a road full of holes ? you won’t take the best of your last generation wide band enabled turret if your voice network does not enable to carry it. You can spend millions in algorithmic trading but it will be useless if your network provider does not manage latency properly.
In other words, it can be wise to rethink what went out of control and select a limited number (2 or 3 max) of network providers to optimise your TCO and provide a better service to your end-users whilst limiting the operational risk.
The main selection criteria to consider carefully are: geographical coverage offered, SLAs management, latency, use of SIP to offer greater flexibility, size of the community managed by the provider. In this perspective, spaghetti can become again a tasteful delicious and inexpensive dish !
Head of Marketing & Strategy, Orange Trading Solutions