Boosting bandwidth

A strong network infrastructure with an abundant supply of bandwidth has become a must for mid-sized enterprises, says Deepali Gupta

A strong domestic market and rising export revenues have led Indian mid-sized companies to invest in bandwidth and connectivity. Quick decision-making and rapid communication between divisions and locations of a company to ensure quick delivery without compromising on quality have become essential to survive—and bandwidth can enable all of that.

With the revenues of most mid-sized companies being linked to global markets, every company needs to be connected 24/7. As downtime can result in loss of orders or projects, most mid-sized companies are investing heavily in bandwidth. This can be seen from the fact that an overwhelming 62 percent of the respondents predict an increase in their bandwidth requirements. 21 percent predict a bandwidth boost of 100-200 percent, 19 percent a range of 110-150 percent, while another 16 percent expect a rise of 160-200 percent. The deployment of enterprise-wide applications, VoIP and video conferencing are driving bandwidth usage. For Internet access, leased lines are the most preferred option with 60 percent of respondents opting for the same. This is followed by ISDN and DSL. For inter-office connectivity, leased lines are the preferred option followed by VPN and RF links.

With a large number of service providers offering attractive broadband schemes with guaranteed bandwidth, some enterprises prefer them to traditional options such as leased lines. A few service providers are even offering point-to-point connectivity solutions with encryption to corporates. With speed no longer a hurdle, some medium enterprises prefer using the Internet to communicate with their branches.

Take the example of C G Smith Software which has a 512 Kbps link. This company has not invested in a leased line or VPN to communicate with its branch offices. It spends Rs 10 lakh annually towards bandwidth. When asked why the company chose a broadband Internet connection from a service provider over other potentially more secure media, the company has a simple answer. Says Srinath, its IT Manager, “It is extremely cost-effective for us.” The company requires the high-speed connection only for transferring small files or e-mail access. Also, with the company using only 60-70 percent of its bandwidth, it has no plans to increase its bandwidth usage. Smith Software is representative of a small number of companies in the medium segment which upgrade their bandwidth requirements as per current need and not future requirements.

The need for bandwidth requirement is high in most mid-sized software houses as they have to upload software projects to a client’s server. Neilsoft has invested in a 2 Mbps connection for this purpose. Another company, DTDC Courier and Cargo, has been using a 64 Kbps link primarily for e-mail; the company is debating whether or not to upgrade the said link because its purpose is served.

As medium-sized organisations scale up and increase their headcount, the primary application driving bandwidth consumption remains Internet access. Agrees K Krishna, Senior Director, Marketing, Hughes Escort Communications, “Internet access is one of the key drivers of bandwidth requirements among mid-sized enterprises.”

In most medium enterprises, the allocation of bandwidth according to employee profile is not a priority. Every employee in these organisations has access to the Internet and there is no controlling authority. That said, some companies such as Blue Star Infotech use access filters to curtail access to illegal sites.

EWA hikes bandwidth requirements

The rise in bandwidth and connectivity requirements is also being generated by an increasing number of organisations adopting Enterprise Wide Applications (EWAs) such as ERP or inventory management. 27 percent of respondents say that their increase in bandwidth is driven by EWA. For example, Cummins Diesel Sales & Services India has 30 depots that are connected to the main office through a WAN. Since these depots access the ERP system, a high bandwidth connection is necessary. Similarly, Brown & Burk Pharmaceuticals has invested in a 256 Kbps leased line connection as it has a high number of users accessing its ERP system.

Depending on the need, companies are investing in separate bandwidth connections. For example, Blue Star Infotech has a 512 Kbps Internet link for its employees, apart from a 2 Mbps VPN link for developers. Says Mitul Shah, Deputy Manager, Systems, at the company, “If we have a combined link, the bandwidth for the VPN may get used up. The VPN link is critical for our business.”

The only difference between medium-sized enterprises and large ones is that medium enterprises spend on current need while large enterprises plan for the future. Also, most medium-sized enterprises are not swayed by technology, and decisions are made more for ensuring a minimum of business continuity rather than for gaining a competitive edge. For the moment, apart from the rising need for bandwidth due to EWA, the medium segment is mostly using bandwidth for e-mail, Internet access and inter-office communication.

VoIP and video conferencing applications, though a nascent trend, are picking up. Export-oriented industries are driving this need. This can be seen from the fact that compared to the industry average of 8 percent of respondents who say that VoIP applications are driving bandwidth requirements, a high 37 percent in the IT sector say so. While VoIP is a popular option among IT companies, video conferencing is being used in situations where a head office needs to frequently interact with remote branches. Says Krishna, “In most medium-sized businesses in sectors like cement, construction and automotive, companies have a factory at a huge distance from the head office. Instead of travelling every day, the authorities prefer to remain in office and use streaming video to inspect as well as communicate with the production unit.”

VPNs replace leased lines

Internet access is one of the key drivers of bandwidth requirements among mid-sized enterprises K Krishna Senior Director Marketing Hughes Escorts Communications

While leased lines are currently the preferred option for inter-office connectivity, this is set to change. Today, 23 percent of respondents have gone in for leased lines and 19 percent for VPNs. However, although 17 percent will invest in leased lines this fiscal, 19 percent will invest in VPNs.

It is apparent that VPNs are becoming more popular than leased lines. For instance, Zandu Pharmaceuticals has 30 depots and seven factories. Despite having the option of connecting its offices through leased lines, the company is quite comfortable using a VPN for WAN connectivity as it believes that a VPN connection is secure enough.

Most medium-sized enterprises opine that the TCO of a VPN is low vis-à-vis other connectivity options. Another advantage is that as most service providers have invested in multiple links, VPN ensures redundancy. Says a Sify official, “If the entire bandwidth is outsourced the customer has a single point of interaction irrespective of the problem. Had the organisation been managing its own links there would be multiple points of failure and different people who would be responsible for them.” As a service provider buys multiple links from several telecom companies, the network is carrier-agnostic. Also, the scalability and flexibility of the network available with a service provider cannot be paralleled if a company manages everything itself. Clients can expect an increase in bandwidth and services in a short timeframe.

Currently, service providers offer value-added services such as application-based prioritisation so that the same amount of bandwidth can be optimally used. Also, if there is a particular time-bound period during which the company needs additional bandwidth, the service provider can offer connectivity for just that period of time.

Adoption of WLAN and Gigabit Ethernet is still low. The latter is not a priority as most mid-sized enterprises do not need such high-end infrastructure. A small portion of the respondent base has shown interest in RF Links and VSATs. Their reasons, however, are not a requirement for additional bandwidth—it’s just that they need more reliable links. A large number of medium enterprises are placed in B- & C-class cities. In most cases, a leased line is not available at these locations. Even for cities that have an option of leased lines, there is no guarantee of uptime. To meet these challenges, some medium enterprises are investing in VSATs.

For example, Cummins uses a VSAT to connect eight of its offices located in remote locations. The company uses a mix of ISDN, broadband and leased lines to stay connected with its remaining 26 offices. The company has a central Oracle database which every branch uses to update information. While the VSAT option is expensive, there is no other option for the company as some of the locations are so remote that last mile connectivity is not available. However, since broadband service providers are setting up fibre optic links throughout the country, the company is hopeful that there will be a cost-effective broadband option. Says Neelesh Bhave, Manager, IT, Cummins, “With prices of broadband connectivity dropping, we are considering it as an alternative to VSAT and leased lines. Eventually we will try to phase out all other connectivity options in favour of broadband.”

This shift to broadband could have a huge impact on the market because most telcos which have extensive coverage across the country are trying to use their reach to provide broadband services. Both BSNL and MTNL have already announced a 256 Kbps broadband connection at Rs 500 a month. Even private players such as Bharti Televentures have announced broadband initiatives with similar tariffs.

Some companies are opting for VSAT as a backup connectivity option. Rane Brake Linings backs up its leased line connection with a VSAT link. A number of smaller companies, even in metros, have invested in additional leased lines and VSATs as a backup should their links fail.

A few companies use RF links. For example, L G Balakrishnan has installed an RF Link so that the head office can communicate with its factory which is located 20 kilometres away. The 11 Mbps connection is being used solely to access corporate mail. Says K Vishwanathan, IT Manager, “We are in the process of implementing SAP and will need the connection once we centralise our operations.” For the remaining 15 remote offices, the organisation uses a VPN connection.

While there is a need, few medium-sized enterprises are adopting new technologies such as VoIP. Vendors need to educate users about the benefits of using such technologies since they offer an immediate ROI. As service providers continue to expand their broadband networks and ensure secure connectivity, the market for leased lines could take a hit. That said, it opens up new avenues of connectivity for mid-sized enterprises.

deepali@networkmagazineindia.com