Networking

They need connectivity to grow

Investments in basic LAN infrastructure remains a high priority among medium businesses, followed by leased lines and broadband. By Vinita Gupta

The difference between medium and large enterprises is that the former segment spends on current needs while the latter plans for the future. Also, most MBs are not swayed by technology, and decisions are made more to ensure minimum business continuance rather than to gain a competitive edge.

Having said that, WAN technology has become ubiquitous in the MB segment as these companies want to connect to their remote/branch offices. A majority of them have invested on leased lines as part of their WAN infrastructure.

Highest investment on LAN

Even if MBs do not have a WAN connection, they possess a LAN connection. Investment in basic LAN infrastructure remains a high priority among MBs. This segment owns personal computers; the survey indicates that in the medium segment 100% of the companies in every sector have deployed desktop PCs and more than 90% of the companies across sectors have deployed laptops to boot.

The technology for interconnecting these computers within the same building is almost always an Ethernet local-area network (LAN). This Ethernet LAN technology has been greatly cost-effective over time and its use has been drastically simplified to the point where it can be effectively setup and used by almost everyone who owns a PC, without the need for any specialized knowledge or training.

From the 194 respondents, professional/other services sector is planning to make the highest LAN investment—57% followed by manufacturing 52% and BFSI 47%.

If the MB is planning to make investments on LAN, that does not mean that it does not have an existing LAN network—many of the verticals are expanding and adding more manpower. The professional/other services sector has highest number of respondents with an existing LAN infrastructure (76%) followed by manufacturing (73%), wholesale /retail (67%) and BFSI (62%).

It is surprising that sectors like the IT/ITeS and Utilities/ Transportation/Real Estate/ Construction segment that have the lowest LAN deployment numbers, return low numbers for planned deployments (29% and 37% respectively).

Pavan Kumar, Manager-IT, Green Park (Green Park is a hotel classified under the professional/other services sector for the purpose of this survey) added, “We have around 360 employees and two branches and we have a small set-up of 60 LAN users.”

Velankani Infrastructure, another services sector company, has 250 plus employees and around 200 LAN users. Under Kotak Mahindra Bank there are different entities and one of them is Kotak Wealth Management. Nagraj Poojari, Manager-IT, Kotak Wealth Management revealed that they have around 200 PCs in Mumbai which are connected through a LAN.

“We are part of the Aditya Birla Group and hence we share the same networking solutions like the LAN and WAN,” said Rajiv Thampy, Manager-IT, Birla Sun Life.

The Pioneer group of companies has around 100 LAN users. T Sivakumar, System Administration, Style Spa mentioned that their 30 plus PCs are connected through a LAN.

Leased lines to connect offices

Across the board 45% of MBs have deployed leased lines for their WANs and 43% have taken advantage of broadband for the same purpose. These numbers include overlaps wherein companies may use both technologies.

MBs focus entirely on leased lines as their WAN network because of apprehensions regarding security and latency. Typically, leased lines are used by MBs to connect their offices in different cities.

According to the survey all the sectors have around 50% of leased lines deployment except for IT/ITeS (25%) as that vertical’s broadband usage is greater (57%) and even planning includes the highest investment on broadband (60%).

MBs are planning to make further investments in broadband. The choice of broadband over leased lines depends on an organization’s requirements. For instance, if there is a need to connect two or more locations to a central site to transfer data or to access an ERP server, and the locations are in a metropolitan area, leased lines are preferred. If the requirement is to have pure Internet connectivity, then broadband is preferred.

Jayesh Dubey, Head of Net-working, Velankani Infrastructure said, “We have three branches, two in Bangalore and one in Chennai. The two Bangalore offices are connected with 2 Mbps leased lines. We have not connected Chennai as of now but we are planning to connect it too.” He added, “We prefer leased lines as it is point-to-point connections, the throughput is good, and it is secure. People in remote areas like the quality of the data transferred through leased lines.”

The Pioneer group of companies has two branches, both in Delhi, Kapil Gupta, System Engineer, Pioneer group, revealed that they use leased lines to connect both these offices.

Green Park uses Airtel’s 512 Kbps leased lines to connect its two offices.

“We have branches all over India. Branches other than Mumbai, for instance in Pune, are connected with BSNL 2 Mbps leased lines. Our two Mumbai branches are connected with Reliance, Sify and MTNL’s 2 Mbps leased lines. Earlier we used to use VSAT, but now we only use leased lines,” stated Poojari of Kotak Wealth Management.

Some medium business are also willing to adopt VPN as this technology has proven to be secure, but it is important to note that VPN cannot to be considered as a replacement for point-to-point leased lines. For instance, if one has the need to connect only two offices, a VPN route can prove to be more expensive than connecting the same two locations using a leased line.

Some companies are even interested in RF (Radio Frequency) links and VSAT. It is not just the additional bandwidth but a need for more reliable links that made them opt for these and are also waking up to the need for technologies such as Gigabit Ethernet.

The percentage figures represent planned technology penetration /usage within MBs. These numbers may add up to more than 100% since a particular respondent may plan to invest on multiple technologies. Base = 189

Networking gear

The trend is to have gigabit switches, both managed and unmanaged. SMBs tend to go in for unmanaged gigabit switches whereas enterprises prefer managed ones but there are instances in MBs that have started looking at managed switches. Switching is also moving to integrated solutions with in-built features such as firewall and intrusion prevention systems.

Many organizations are waking up to the need for technologies such as Gigabit Ethernet switches, but there are many companies that continue to use hubs along with switches and are even looking at making investments in this product category. The BFSI vertical has the highest numbers of hub users with 76% of the respondents having deployed this technology. Further investments are planned by 43% of the companies in this vertical. This does not mean that the BFSI sector have not invested in switches rather this is the segment where the maximum number of respondents have invested in switching (76%), even in terms of planned investments the BFSI crowd has the highest percentage (48%). This shows that there are many companies in this sector who are using both switches and hubs as they expand their business operations.

Dubey revealed that they use Cisco’s switches (Cisco 4006) preferring them to hubs.

“We use gigabit switches as these devices have no bottlenecks,” stated Kumar from Green Park.

Thampy mentioned that they use both managed and unmanaged switches from different vendors like D-Link, Netgear, and Cisco, etc. Thampy added, “I feel that

D-Link’s unmanaged and Cisco’s managed switches are good. Managed switches are always better than unmanaged switches as there is no need to physically manage the former.”

Routers: Highest adoption by IT/ITeS

There is a lot of innovation taking place with regard to routers and switches in terms of features such as security and manageability. While vendors are launching products that promise better security, most MBs are not aware of their benefits. However, vendors are looking at this as a huge opportunity to convince the mid market in buying products that promise integrated security. Almost every vendor has launched integrated routers with in-built security.

Vendors expect features and not price to drive sales in this segment. As cost is not a major issue with MBs as it is with SBs. Features such as VPN and encryption, earlier available only in high-end routers, are present in entry-level products today. Vendors are also educating users about the benefits of using routers with wireless built-in but still the use of wireless routers remains low in the medium business segment.

According to the survey, the highest investment in routers have been made by the IT/ITeS sector—79%, followed by professional/other services with 68%. The BFSI and Utilities/Transportation/Real Estate/ Construction verticals have figures of 67% each. Manufacturing and wholesale/retail bring up the rear with only 61% and 46% of respondents respectively having deployed routers.

The survey indicates that in the IT/ITeS sector the requirement for routers is much more than in other sectors. They have the largest number of respondents with existing investments in routing and the highest percentage of companies making further investments. On the other hand, the Utilities/Transportation/ Real Estate/Construction segment has the lowest percentage of respondents planning to make further investments.

Velankani Infrastructure and Kotak Wealth Management use Cisco’s routers. Kumar from Green Park said, “We use Cisco’s 1700 routers as we believe that the quality of Cisco products is good.”

There are some companies, like Style Spa, who have no routers as they do not require it and are not planning any investments in this area as they do not perceive a need for the same.

Preference for Cat 6 cable

Cabling is a vital component of IT infrastructure. Well-organized cabling is the most important ingredient required to build a strong and future-proof communication network that facilitates and offers an organization continuous and uninterrupted data, voice and video traffic on its network.

In structured cabling, Cat 6 is the most preferred choice of MB. A key factor attracting MBs towards Cat 6 has been a cut in prices. Today, the difference between the prices of Cat 5e and Cat 6 cabling is marginal. As a result, MBs expanding existing Cat 5e cabling network or those setting up a new network will adopt Cat 6. Also, with the expansion of their operations, these companies have felt the need to upgrade their cabling network to Cat 6 chiefly because they wanted faster connectivity and quicker access to databases.

Cat 5e gives good throughput. However, for transferring data this segment prefers Cat 6. Gupta said, “At the Pioneer group of companies we prefer Cat 6 cables as it is of good quality.”

Green Park uses Cat 6 cables as it can carry higher bandwidth.

Thampy said, “We at Birla Sun Life have structured cabling and use both Cat 5 and Cat 6 cables; for small distance we prefer Cat 5 (for connecting desktops etc).”

Kotak Wealth Management prefers fiber optic cables. Style Spa prefers Cat 5, is happy using it, and has no plans to implement Cat 6.

According to the survey, MBs are making use of both fiber and copper cables, and are planning to invest in both these technologies—24% in copper and 20% in fiber. IT/ITES has the highest percentage of respondents citing plans to invest in fiber (57%).

Going wireless

Wireless networking seems to be the in-thing. Some of the hottest wireless technologies that will witness greater adoption are Wi-Fi and WiMax. Businesses are networking their offices across cities and therefore remote access, which hitherto was a domain of the large enterprises, is becoming a buzzword with the MBs too.

Wi-Fi is more useful among SOHOs, SMBs, and corporates because of high use of mobile devices like laptops. WiMax is yet to gain full acceptance. It is more useful for point-to-point connectivity like in the case of connecting one building with another. Wi-Fi is best suited for connectivity within the office.

When it comes to LAN, MBs prefer unmanaged or entry-level managed solutions with one or two Wi-Fi access points installed as wireless extensions to wired networks as wireless can co-exist with a fixed LAN. Wireless LANs are being used in conference rooms for the convenience that they offer.

The survey indicates that the percentage of wireless LAN (74%) and Web conferencing (54%) users is highest in the IT/ITeS vertical; the percentage of companies planning investments in these two technologies is again higher in this vertical with 56% and 38% of respondents showing interest in spending on these respective technologies in 2008-09. Interest in CDMA, GPRS and EDGE solutions is highest in the manufacturing vertical with 18%, 16% and 4% of respondents planning to invest in these technologies in 2008-09.

Apart from feature-rich routers and converged networks, the demand for wireless networking equipment and devices has soared because of the anywhere, anytime access that these provide. Market players see huge scope on the wireless front in the coming years and feel that routers offering wireless capabilities will be popular, replacing the need for separate wireless access points for small office networks.

“We have dedicated Internet connections. We have both Wi-Fi and WiMax connections for our 50 laptop users who need mobility at that location,” said Dubey.

Green Park, Pioneer group of companies and Birla Sun Life have mobile users that use laptops and have Wi-Fi connections for them.

One obvious reason for low penetration of Wi-Fi is security or the lack of it. Security is always an issue with wireless networks.

Poojari pointed out, “We don’t require wireless connections like wireless router and Wi-Fi and WiMax and hence we don’t use it.” Even Style Spa has no plans to deploy Wi-Fi and WiMax as it too does not feel the need for these technologies.

Planning for widespread deployment

The scenario with regard to IT investment among MBs has changed. These entrepreneurs like their big counterparts are looking at IT as an integral part of their business. There remains a lot more that they have to do in order to get the real benefits of IT.

The medium businesses have already invested on networking and other IT infrastructure, for instance last year Velankani Infrastructure invested around Rs 2 lakh on networking and storage application, hardware devices, etc.

Some companies are even planning to make huge investment on networking. But this segment invests only when they require it. For instance, Green Park is planning to invest around Rs 15 lakh on networking and storage depending on the requirement. Last year the company had invested Rs 12 lakh on hardware and networking. Either the IT manager or the CEO of the MB takes the technology investment decision.

The survey shows that when compared to small businesses the medium ones have more robust networking solutions in place.

varun.aggarwal@expressindia.com