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Network integration is not just about buying products and boxes and building a network with them. It is much more than that. An enterprise trying to build a network or upgrade an existing one must look at the entire value-chain of network integration services. The value chain consists of: consulting; products; project management; integration and implementation; and network management. The best network integration partners are the ones who can take care of the entire value chain.

l Consulting: This is important for designing and building the right network. Look for a consulting partner who can give you independent view of products. In other words, the consulting partners should not be influenced by his association with the equipment vendors while advising you on the products. A good idea would be to go for certified partners.

l Products: Once the process of consultation and design is over, go for product selection. Don’t decide on products in isolation but keep in mind the whole picture. Many enterprises commit the mistake of deciding on products on the basis of their costs. The choice should be based on your overall network design and requirement and not on cost.

l Project Management: Time, cost, and quality are benchmarks of good project management. A project delivered in time cuts down costs. So does good quality work. Go for a partner who has qualified and experienced project management personnel on his rolls. And also, as a customer, an enterprise should be willing to pay a premium for good project management. Most enterprises do not take project management seriously. They do not attach premium to design, consultancy and project management. All this is important because if things are done right in these areas, it can enhance productivity and protects investment.

l Integration and Implementation: Project management lays the foundation for smooth integration and implementation. The networking partner must follow standard processes. Implementation and integration, like project management, is again about right people, process and skills.

l Network Management and Maintenance: An enterprise must ensure that whatever SLA has been promised should be delivered. This again is people and process dependent.

MARKET INFORMATION
For almost everyone, fiscal 2002 ended with figures that exceeded their expectations. FY 2001-02 was a tough one for most of the integrators and the first quarter of FY 2002–03 was dull too. During that phase, most of the integrators were conservative about their numbers. But towards the beginning of the second half, there was a change of course. Things started picking up and most of the integrators ended the year on a highly positive note. The total integration market (products and services taken together) for the year 2002–03 is estimated to be worth Rs 2,871 crore.

For the first time ever, there was stiff competition among top-rung vendors. Datacraft India emerged as the top integrator of 2002 with total revenues of Rs 288 crore. Wipro, which had been the largest integrator for the past several years, ended a close No. 2. Its total revenue from the NI business was Rs 247 crore. The top five integrators were Datacraft, Wipro, Tulip, CMC, and HCL Comnet, respectively. Together, they commanded 39.7 percent market share.

The trends suggest that those with focus on niche technology domains like VSAT, contact center, wireless, and network security, succeeded.

l Market Trends: Out of the total NI market of Rs 2,871 crore, the networking products market was an estimated Rs 2,173 crore while the services market an estimated Rs 698 crore. While large projects continued to dominate, another interesting trend was the advent of total outsourcing and remote management services. Most major integrators like Wipro, IBM, and HP have targeted the total outsourcing market. IBM has won ABB, Tisco, Siemens, and Whirlpool, among others. Wipro has won a major deal from Colgate.

This is just the beginning of things to come. While the first few companies to start complete outsourcing of infrastructure management came from the manufacturing segment, the banking sector has been the next in line. Although the deals are yet to materialize, the Bank of Baroda and Bank of India have already taken the initiative. Other major government banks are also looking at this option.

The market place became exceedingly competitive and there was severe pressure on winning the projects. To win, integrators have quoted extremely low prices. This has seen depleting margins on the products. But services revenues—coming from facilities management, design, and implementation—are on the rise. While the average service revenue for an integrator has been in the range of 18–22 percent of the total NI business, those in VSAT services have done close to 30–35 percent on the services side. Increasingly facilities management is getting remote. Most buyers have looked at both offsite and remote management services. Wipro, HCL Comnet, NetSol, Tulip, IBM, and HP have been doing significant business remotely. With the focus on consultancy and services, storage and security have really emerged as the bright spots. Implementations in VoIP, wireless LAN, and WAN, and centralized computing, have kept the ball rolling. Here too, what separated the winners from others was the ability to clearly rebuild and refocus.

l Drivers: The banking sector, telecom, the government, and BPOs and contact centers spent on NI projects. It is estimated that the banking and finance segment has been the largest contributor to the NI business with a total spend of Rs 900 crore. The IT-ITeS-BPO sector was the second largest contributor, with a total spend of Rs 871 crore. Government buying accounted for about 21 percent of the total market share and telecom for about 11 percent of the market share.

One of the largest deals during the year was the SBI project. This project includes connecting 1,447 branches, ATMs and other electronic delivery channels across 47 cities in the country by a network. This network will provide a secure and encrypted 3DES infrastructure required to carry out all present and future traffic like branch transactions, ATM, Internet voice, groupware, Intranet, and other similar applications. Datacraft won the project, estimated to be worth Rs 88 crore. Tulip had a major win from Punjab National Bank. Bank of Rajasthan also placed some major orders.

In the telecom sector, Reliance was one of the largest procurers. Its networking orders were close to Rs 90 crore. Among others, the government sector also bought in a big way. One big buy was for the NIC project, an e-governance project for providing voice and data connectivity to various government departments of Gujarat. The project is based on connectivity using leased lines and wireless. Gujarat State Wide Area Network (GSWAN) is a multimedia backbone network carrying voice, data, Internet traffic and Video for the exclusive use of the Government of Gujarat. It was about Rs 8.5 crore in size. Then there were orders from AP government, Eastern Command, etc.

Besides domestic projects, companies like Wipro, NetSol, and HCL Comnet are already doing or are in the process of doing international NI projects. This could be the year where companies would bag international projects. Also, to address the big gap that needs to be filled in the telecommunication network design and integration space, integrators like IBM and 3D are adding the necessary skill sets and teams. This year could be a good one for the industry as things are already looking brightening up. Several bids are on and there is a huge backlog of projects that would get accomplished this year. Players are building niches to capitalize on their existing strengths. Take for example HCL Comnet and Tulip. While HCL is looking at the remote services in a big way, Tulip is virtually the king of the wireless product integration. CMC and HCL Infosystems are consolidating their hold in the government sector. Similarly, NetSol and IBM are consolidating among existing clients. Going by the trend, the market this year is expected to grow close to 20 percent.