Report: Reed hires virtual operator to cut costs

Reed Managed Services, best known for its high street recruitment operation, Reed Employment, recently signed a contract with virtual network operator (VNO) Sirocom for converged voice and data services over WAN links to over 3,000 IT users across 300 locations in the UK and Ireland.

Reed's decision to change its VNO was partially prompted by changes to the way its IT department provides services to staff. The company was taken off the stock exchange in 2004 when it became a privately held company. At the same time the IT department became a profit centre, charging all internal customers a monthly fee for it to manage the network and the attached client devices.

"We were asked to give a 20 percent group discount, so we had to reduce our budget and try to do more with less," said Sean Whetstone, head of IT services at Reed.
Reed's IT strategy is underpinned by the Sirocom contract for managed voice and data services, but the plan also involves a range of new technologies. These include centralised storage using Network Appliance systems, 64bit HP blade servers, VMware virtualisation tools for server consolidation, Red Hat Linux, and a big investment in Citrix to provide centralised applications for 3,000 thin-client computers.

The company previously used rival VNO Vanco. Whetstone said Vanco had proved very good at providing data-only WAN connections to its offices, but Reed wanted to unify spending on voice, line maintenance and data systems.

The primary method of connection is ADSL, which supports routing and load balancing between smaller sites. Larger offices use single or dual Symmetric DSL (SDSL), which provides greater upstream bandwidth. And Reed's main sites are connected through leased lines attached to carriers' Multi-protocol Label Switching (MPLS) backbones.

"Twenty to 30 sites are running metropolitan Ethernet; the datacentres are triangulated with Gigabit Ethernet and there are dual 10Mbit/s circuits elsewhere," Whetstone said.

The Sirocom contract includes various types of service-level agreement (SLA), reflecting the access technologies used. Better performance guarantees are available with SDSL and metropolitan Ethernet connections than with ADSL.

Simon Rogan, Sirocom's chief executive, said its customer relationships are "transparent" in that firms can choose which carriers they want to work with, and each component of the contract is renewed every 12 months in the hope of getting a better deal.

"If there is a particular sticking point with customers over one of our multiple carrier relationships, we would recommend an alternative supplier. We will and can only contract for a one-year period – of course, the MCIs and BTs of this world don't like that but they do want our business," Rogan said.

The Sirocom contract will cost Reed E17m (£11.6m) over three years, and Reed estimates this will cut around E5m (£3.4m) from the cost of its voice and data services during the period.