Why Leave Token-Ring?

By Andy Quick
Posted Monday, December 6, 2004

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Introduction

One day I was having a discussion with a telecommunications director, swapping stories about network projects we were each working on. "We propose to spend $100,000 replacing all of our token-ring local area networks throughout the system next year.", he said. "Token-Ring is old, out dated junk that has reached the end of its life." "So what?", I responded. "Just because something is old doesn't mean it needs to be replaced." "Come on.", he responded, "Token-Ring completely limits the ability of new applications on the desktop to take advantage of client-server and web-based applications. PC's are useless on Token-Ring networks." "I completely disagree", I argued. "I'll bet you're about to waste some of your company's money on this project." Before you decide to make a blanket switch from a Token-Ring architecture to Ethernet, analyze the costs, benefits, and risks.

Show Me The Money

"What money are you saving by switching to Ethernet?", I asked my colleague. "What's the financial justification?". "Like I said", he responded, "Ethernet is cheaper and faster. Over time, our company will spend less on keeping the networks up." Although this may be true, investing $100,000 without quantifying the benefits up front may mean you're throwing money down the drain. We shouldn't rely on our gut to make these types of spending decisions. Unfortunately, many technology professionals attempt to justify projects using qualitative benefits. Always strive to convert qualitative benefits into hard numbers. "That would be nice, but it would take forever to quantify the benefits" he said. "This is a strategic project. You really can't put a value on this type of initiative." I totally disagree. But rather than argue further, I decided to perform the analysis on the spot with the help of my colleague.

Identify Conversion Costs

Before you can determine whether switching from Token-Ring to Ethernet makes sense, you have to identify the costs of the actual conversion. Usually, these are easy to quantify. My friend provided me with the following figures:

Per PC, the conversion costs are:

Labor - $75
Cabling - $200 (they're running category I cabling and need to convert to category 5)

Per floor, the conversion costs are:

Ethernet switch - $150 (includes labor)

Per site, the conversion costs are:

Intra-floor cabling - $200 (includes labor)

The next question I asked was how many sites, floors per site, and PC's per floor were in the scope of his project. He again provided me with good numbers:

Site A - 5 floors, 20 PC's per floor
Site B - 1 floor, 50 PC's per floor
Site C - 3 floors, 17 PC's per floor
Site D - 8 floors, 22 PC's per floor

So the entire project cost would be calculated as follows:

Site A Conversion Cost = $200 + (5 x $150) + (5 x 20 x $275) = $28,450 Site B Conversion Cost = (1 x $150) + (50 x $275) = $13,900
Site C Conversion Cost = $200 + (3 x $150) + (3 x 17 x $275) = $14,675 Site D Conversion Cost = $200 + (8 x $150) + (8 x 22 x $275) = $49,800

Total Project Cost = $106,825

Identify the Benefits

After you quantify the conversion costs, quantify the benefits. At this point, my colleague didn't have an answer off the top of his head. After a few seconds to think, he said "ethernet cards come built into the PC's we purchase. There's no incremental cost. If we keep Token-Ring around, we'd have to buy a new Token-Ring card for every new PC." Now we're getting closer, but we still haven't justified this project yet. I asked him how many new PCs did he expect to purchase next year. He said about 100 and provided me with the following costs:

Card - $150
Toke-Ring Cabling - $250

Total cost for a new PC = $150 + $250 = $400

"See. I told you. This is a no brainer!" But then I asked him, "Of the 100 PC's, how many were incremental vs. replacements of old PC's ?" He gave me the following information, by site location:

Site A - 20 incremental, 10 replacements
Site B - 50 incremental
Site C - 10 replacements
Site D - 10 incremental

The $250 per PC cabling cost does not apply to replacements, so the costs would only be $150 for each PC replacement. You also cannot replace part of a floor, but you could have ethernet installed on some floors, and Token-Ring remain on others. I asked him to breakdown the PC count to a floor level:

Site A- 20 incremental are all on one floor, the 10 replacements are scattered throughout the other floors Site B - Only one floor in the building
Site C - 10 replacements are scattered
Site D - 10 incremental are scattered

Now the light bulb started to go. We figured out the costs of keeping Token-Ring vs. installing Ethernet on a site-by-site, floor-by-floor basis. We came up with the following costs (I didn't bother describing the calculations. You could easily figure it out for yourself using the assumptions made earlier):

Site A - Token Ring ($8,000 for one floor, $1,500 for the others), Ethernet ($6,500 for the one floor or $28,450 for the entire building) Site B - Token Ring ($20,000), Ethernet ($13,900)
Site C - Token Ring ($1,500), Ethernet ($14,675)
Site D - Token Ring ($4,000), Ethernet ($49,800)

The light bulb was completely on at this point. The best approach to this project would be to phase in ethernet by converting one floor at Site A and all of Site B. Let's compare what would have happened if my friend had gone with a full replacement vs. a phased replacement.

Full Replacement - Spend $106,000 to save $34,500
Phased Replacement - Spend $20,400 to save $28,000

My colleague was very thankful at this point. He realized that careful planning and analysis could ensure that his company's money was being spent wisely. Clearly, there are other benefits of changing a LAN architecture that were not even touched upon. Router integration costs and application performance could also help drive the decision. Take the time to identify all of the possible costs and benefits of a Token-Ring to Ethernet conversion before starting the project. You could be throwing money down the drain!

About the Author
Andy Quick is co-founder of FindMyHosting.com (http://www.findmyhosting.com), a free web hosting directory offering businesses and consumers a hassle free way to find the right hosting plan for their needs. Feel free to contact Andy at andy@findmyhosting.com in case you have any questionsor comments regarding this article.