Editor’s Note: This is a post by Michael Rau, Vice President, CTO, for the Borderless Network Architecture Cisco.

Did you know that when building an enterprise IT network, about 20% of a typical budget is spent acquiring hardware while a whopping 80% goes toward operating costs?

But looking at just the acquisition costs is akin to buying a new cell phone and only considering the cost of the actual phone. The reliability of the carrier’s network, services they offer, technical support, and monthly fees are all factors to consider.

Yet some industry watchers and vendors simply look at acquisition and maintenance costs when calculating the total cost of an enterprise IT network, ignoring functionality that may improve productivity or business opportunities that are lost when the network goes down.

If you have higher integration costs, more downtime or serious security breaches, that 20% you saved on upfront costs will be more than offset by increases in the 80% of operating costs. That’s why capital and operational expenditures don’t provide a true total cost of ownership (TCO) picture. The initial CAPEX doesn’t factor into what the network can do beyond delivering basic data – things like additional end user productivity or additional capabilities that applications and services can deliver.

While “good enough” network vendors ignore these costs, enterprise “next generation” network vendors promote a systems approach that not only reduces networking costs related to the 80% of the pie, but also drives IT service improvements and new business opportunities. Next-generation networks can deliver secure services to any device anywhere, are capable of streaming video concierge services to customers from anywhere in the world, and can deliver virtual desktop solutions to branch offices.

The Network: A Holistic Entity

This is the approach endorsed by industry experts: “The integration of the network with business processes and applications requires that organizations treat the network as a holistic entity by taking a systems approach,” said Zeus Kerravala of the Yankee Group Research.

Tactical networks require that a customer cobble and assemble a variety of point products. However, next-generation network vendors like Cisco understand the costs involved in integration and invest in testing and documenting systems to ease network IT acquisition, configuration, and deployment. Cisco’s Smart Business Architecture (SBA) offers a set of pretested and pre-integrated solutions that work together. You can’t necessarily say that about your network if it’s pieced together using multi-vendor solutions.

Reducing Downtime; Increasing IT Beauty Rest

A tactical network doesn’t look toward the future, whereas Cisco sees the network as a platform that must be supported with ongoing software innovations that can deployed with technologies like in-service software upgrade (ISSU) technology eliminating the downtime costs associated with software upgrades. It can deploy an upgrade in less than 200 milliseconds, all without having to take the network down in order to do so. In some mission-critical situations, such as global financial trading systems, the network simply can’t be taken down because it would be too costly. With ISSU, upgrades happen without interrupting production. So an Enterprise Next Generation Network offers investment protection through its ability to be extended through hardware and software innovation over the life of the investment while protecting reliability through advanced operational features. Truly the best of both worlds.

Today’s Networks Need To Do It All

These days, we’re asking our networks to do more. To be more productive, employees need to access data from any device, from anywhere. We’re holding more video calls so we can interact with employees and customers around the globe – and save on travel and lodging expenses. Networks are delivering new virtualization services, virtualized desktops, and helping us reduce overall operating expenditures.

Unfortunately, the value of these services and features can be lost in financial calculations that focus merely on capital acquisition costs. Although some IT decision make these decisions based solely on their capital budget, that isn’t the entire picture as it leaves out the complete financial impact.

When the true total cost of ownership is taken into account, the tactical “good enough” network quickly becomes the more expensive network.

Six myths down…one to go. Stay tuned for the final myth number seven next week.

What are some of the “good enough” myths that you’ve been hearing in the industry?

Note:  The seven myths are outlined in a recent white paper from Cisco: Debunking the Myth of the Good Enough Network.