Siemens AG is one of the largest global electronics and engineering companies with reported worldwide sales of US$91.5 billion in fiscal 2004. Founded more than 155 years ago, the company is a leader in the areas of Medical, Power, Automation and Control, Transportation, Information and Communications, Lighting, Building Technologies, Water Technologies and Services and Home Appliances. With its global headquarters in Munich, Siemens AG and its subsidiaries employ 440,000 people in 190 countries.

Situation

Currency devaluation in many Latin American countries had a big impact on the bottom line of Siemens' operations in the region, and Latin American business units were severely affected by rising networking costs. To remain viable in the region, Siemens officials decided to consolidate five data centers into one – located in Sao Paulo, Brazil. However, the existing multi-carrier, private line-based private network transport lacked the bandwidth to support critical applications like SAP from a single center. Additionally, using its existing network to connect all business units to a single data center would have been cost prohibitive.

A Monumental Migration

Siemens officials in North America and Latin America watched with interest as an AT&T Enhanced VPN pilot for Siemens' UK operations produced significant savings and increased network performance levels. As a result, Siemens' North American operations, which represent the company's second largest business market, jumped on board to deploy Enhanced VPN and soon after, the decision was made to simultaneously convert Latin America. AT&T's Enhanced VPN gives Siemens a robust, fully managed Multiprotocol Label Switching (MPLS) network with the ability to connect each site to the nearest MPLS cloud and avoid expensive international private lines.

The U.S. Enhanced VPN was initially scheduled to be installed before any changes to the Latin American network, but Jan Dressel, Siemens VP/CIO for the Americas, was convinced that Latin America could benefit immediately. Siemens officials agreed to migrate Latin American sites while the U.S. deployment was still in process, as long as the team could accomplish the project with only two staff members from its corporate division.

 The original game plan was to piggyback on the work being done in North America and convert as many sites as possible. However, Luis Navas, Siemens Latin America Network Program Manager, soon found that their North American colleagues were inundated with the process of migrating their own, much larger network.

“We quickly realized that we would have to find a way to do the work in Latin America with the in-country infrastructure staff and AT&T,” Navas said. “The success of this whole program was the combination of our project manager, Siemens in-country staff and the AT&T team.”

He added that the migration itself was seamless.

“With the help of the infrastructure management teams from Siemens in each country and the AT&T team, it was really just a phenomenal implementation. We had absolutely zero down time, thanks to the teams working hand in hand,” Navas said. “It's very hard to distinguish between AT&T and Siemens people working on these projects.”

Overall, Siemens Latin America moved 82 routers from 75 sites in Brazil, Argentina, Chile, Colombia, Venezuela, Peru, Ecuador, Mexico and Central American countries to the Enhanced VPN with no network interruption.

“We basically were able to switch over the entire network with zero down time to our business units,” said Navas. “To this day, it's one of the few projects that the business units and in-country CIOs recognize as helping their productivity without hampering them in any way, shape or form. The migration was transparent to them and their users. We attribute that to the team AT&T had in country and the support from the Siemens regional companies.”

The Enhanced VPN will enable Siemens to converge data and voice traffic over a single network. The company plans to add AT&T Voice over IP service in the second phase of its Enhanced VPN migration, which is expected to result in additional savings on long distance and international calls. “It's a strategic move for us,” said Navas. He also commented that Siemens is “very satisfied” with Enhanced VPN.

On a global scale, AT&T is Siemens' primary networking services provider in North and South America, Asia Pacific, the Middle East, Africa and parts of Europe, providing a standardized 800-plus node network-based IP VPN solution to the global Siemens organization.

Enhanced VPN Boosts Business Transformation

Latin American point-to-point networking costs had been twice as expensive as the same services in North America. Additionally, the existing network had given Siemens no way to prioritize the most critical network operations. Once all Latin American business units had to access critical applications like SAP from a single data center, latency would have significantly hampered operations. “It would have been cost-prohibitive, if not impossible,” Navas said.

Enhanced VPN was attractive to Siemens from both a financial and operational perspective, saving the corporation US$4.8 million in the first year.

“We experienced improvements in latency between the countries, compared with our private network that was based on point-to-point circuits between each of our locations,” said Navas. “Strategically, Enhanced VPN allowed us to consolidate data centers, which enabled significant cost savings.”

Consolidation and Cost Savings Comfort CIOs

Before moving to Enhanced VPN, Siemens contracted with AT&T to manage its proprietary private line networks that were supported by multiple carriers. At the time, some of Siemens' Latin American CIOs were concerned as they were not aware of AT&T's footprint in that part of the world. Since the implementation, however, the situation has changed dramatically.

“Today, every one of them says the move is one of the highlights of our strategic implementations and they're extremely satisfied with the performance levels,” Dressel said. “When we moved to Enhanced VPN, the ability to specify the class of service and associated Service Level Agreements made a dramatic improvement. Latin American CIOs and business units have fully bought into the Enhanced VPN because of the significant cost savings and improved service levels.”

Navas agrees. “Our hat is off to AT&T and their team for pulling this project together,” he said. “It has given our group CIO quite a bit of leverage in being able to put in some of these strategic initiatives. This has not only lived up to our expectations, but has exceeded them.”

For more information on Siemens, visit: www.siemens.com.