Del Monte expects network savings with Verizon IP services

IDG News Service — Wed, 19 Mar 2008 13:38:52 -0700

Del Monte Foods recently signed a three-year contract with Verizon Business for Internet Protocol (IP) trunking and managed IP PBX services to link 4,500 employees at 40 sites in the U.S. and three other countries.

The deal fits well with Del Monte's small networking and telecommunications staff of four people, who can now be freed up to do more strategic planning instead of day-to-day operations, said Dennis Tokarski, manager of telecommunications and network operations at Del Monte, in a telephone interview. The company, based in San Francisco, has its operations headquarters in Pittsburgh and is not to be confused with Fresh Del Monte Produce Inc. or Del Monte International, he said.

Tokarski said the investment with Verizon Business, a unit of Verizon Communications Inc., is sizable, but he would not reveal numbers. Asked if the managed service will result in savings to Del Monte, he said, "in the long run, yes."

A big benefit of the new agreement comes with disaster recovery, since IP trunks will allow automated switching around locations damaged in a storm or other disaster. Before IP trunking, reconfiguration for a disaster would have been done manually, resulting in lost time. "It was a patchwork," he said.

Del Monte Foods has been developing voice over IP since 2003 and runs hardware from Cisco Systems Inc. The company evaluated Verizon along with several large service providers, including AT&T Inc., Sprint Nextel Corp., Global Crossing and others. But Verizon was the "right fit" since it already had been offering network services with Del Monte Foods and was able to re-bid at a good rate, he said.

Barbara Englehart, director of marketing for VoIP globally at Verizon, said Verizon offers four levels of IP communications services, some that almost completely eliminate the need for customer-premises voice switches. All four categories have shown double digit growth for Verizon in the past year, with IP trunking growing more than 70%, she said. Verizon gives customers a choice of a variety of vendors' hardware, including Cisco, Nortel Networks, Avaya Inc. and others.

In the case of Del Monte Foods, Verizon is managing both the wide area and local area traffic, she said.

Since it began offering IP switching services five years ago, Verizon has offered business customers bundled pricing for long distance calls but recently introduced a per minute metered rate at the request of some customers that preferred to pay for calls they actually made. In some cases, a metered approach fits better with a customer's accounting system, Englehart explained. Del Monte Foods is staying with a bundled cost, however, Tokarski said.

While Del Monte Foods would not discuss its costs or savings with IP from Verizon, the carrier was able to say that one of its customers, a large national retailer, is expected to save 25% on its monthly telecom and networking costs by using some of the same features Del Monte Foods is using.

The retailer, which Verizon would not name, has 1,130 stores nationally, with about 12 local lines per store, resulting in about US$736,000 in monthly costs for all its stores with traditional Time Division Multiplexing technology. By switching to IP trunks and related upgrades, the retailer will be able to reduce by half the number of trunks it needs to operate. With the IP trunks and other savings, the total savings should be 25% on the $736,000 in monthly costs, Englehart said.