Connectivity

Business applications push the connectivity envelope

MBs are quite aggressive about pushing the envelope when it comes to connectivity infrastructure because of their extensive use of bandwidth-hungry applications. This would further drive investments in connectivity as they expand. By Neeraj Gandhi

A tag line of a popular mobile handset advertisement says Connecting People. Another ad featuring Bollywood, talks about the better picture quality, better reception and video of a brand of satellite TV connection. Yet another service provider’s one-liner catchword said, ‘Wherever you go, our network follows’. Going by the popularity of these ads, all three are have a very high recall quotient.

Many would say that these ads rely heavily on the creativity aspect and connectivity. That said a little more deliberation on the concept helps create another facet in addition to the creativity factor. Besides relying on the creative thinking, these ads also rely on the good connectivity infrastructure in the country. This touches almost everyone and if you are in business, it becomes a necessity.

One can only connect to people with mobile handsets if the radio network is working properly. The clear reception of the satellite TV is due to good communication link between the dish antennae and the satellite. Finally, the service provider’s network would only follow if there were no disturbances in the radio waves.

Had this connectivity infrastructure not existed, forget the ads, even the services would not have existed in the first place. Therefore, connectivity forms the basis of this communication link, be it between people, or between dish antenna and satellite or the mobile phone and the signal tower.

From a business perspective, a good communication link or a well-built connectivity infrastructure is important to share data and voice information and get the business going. Let’s find out more about what kind of connectivity infrastructure is in place at the MBs in the country as per the survey.

The business of connectivity

According to the survey, a healthy 92% of 194 respondents said that they had some kind of connectivity infrastructure in place. Among the other categories of IT infrastructure that were included in the survey, connectivity ranks number four in terms of presence in the MB segment, after desktops/ laptops, printers and software. This also indicates that MBs are aware of the advantages of a good connectivity infrastructure for their business operations.

Looking at the kinds of connectivity mediums that have been employed by this business segment, the list includes, Leased Lines, Digital Subscriber Line (DSL), ISDN, Gigabit Ethernet LAN, VSAT, Cable Modem, Wi-Fi, T1/T3, and MPLS.

Like last year, leased lines emerged as the most preferred connectivity medium among MBs. Of the 194 respondents, 63% said that they trusted leased line connectivity. This is in contrast to the scenario in SBs where DSL dominates, since it is comparatively a cheaper medium. Leased lines however give the medium businesses that have to deal with larger amounts of data, the freedom to send and receive information much faster and in a secure manner. Additionally they are also expanding their businesses adding more ports to their networks.

Leased lines are also well suited for creating a communication link between branch offices. Since these form a dedicated link between two or more offices, with outside communication barred, the sharing of data is much faster and secure to boot. Besides the speed and security advantage (that drives the adoption of leased lines) another factor which is responsible for increased use of leased lines is the increase in the adoption of enterprise wide applications like ERP and CRM, and IP-based applications like VoIP and video conferencing etc.

With 52% respondents using it, DSL comes second. It acts as an efficient medium in terms of accessing the Internet. MB respondents said that DSL allows them to harness the untapped capacity of the telephone line, offers good bandwidth and helps them cut costs. Owing to these advantages, DSL retains its position at the second spot this year also.

That said ISDN came as a surprise this year. As per the survey, adoption of ISDN stands at 35%. On the contrary, last year the increased use of DSL connections had somewhat overshadowed the use of ISDN among the MBs. A year prior to that, i.e., in 2006, 38% of 157 respondents were using ISDN connections. In a way, ISDN resurfaced this year.

ISDN works similar to a DSL connection, in the sense that it transmits data over the telephone copper wire. The primary reason for its low adoption last year was the low data transfer rate that it offers when compared to a DSL connection. However, the use of the ISDN this year indicates that MBs are considering the cost factor involved (ISDN is comparatively cheaper that DSL), or are probably looking at ISDN as a backup medium in case the DSL connection goes down.

Additionally, the use of Gigabit Ethernet LAN surpassed the use of VSAT connections this year. The survey highlights that 29% of the respondents use Gigabit Ethernet LAN.

22% are using a VSAT network. Last year, the percentage adoption of VSAT clocked at 24%.

The use of Cable modems is only a percent less than VSAT and stands at 21%. The use of Wi-Fi, T1/T3 [high bandwidth connectivity mostly restricted to large businesses] and MPLS reflects a single digit figures with the adoption being 9% for Wi-Fi and 7% for T1/T3 and MPLS. Considering Wi-Fi in particular, it is astonishing to see that its adoption among MBs is less when compared to that among the SBs where 11% of same number of respondents had deployed this technology.

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

Vertical-wise findings

Among the different verticals surveyed, IT/ITES emerges at the top with 97% of the respondents in this vertical confirming the deployment of some kind of connectivity infrastructure. This vertical emerges as the largest adopter of leased lines (76% adoption), DSL (74%), Gigabit Ethernet LAN (56%), and T1/ T3 (16%). It also emerges as the second best in the use of cable modems with 23% adoption.

The BFSI vertical comes in next with an elaborate connectivity infrastructure. This vertical is the largest adopter of VSAT (33%) because most of the ATMs in urban and rural India use VSAT connectivity. Cable modems have next highest level of popularity with this sector with 29% adoption, MPLS also has 29% of the respondents and Wi-Fi 14%. It also scored high in terms of adoption of leased lines (73%), DSL (61%) and ISDN (33%). In addition to use of leased line, the use of MPLS and VSAT indicates the need for a medium, which offers a secured environment and a high data transfer rate.

At Kotak Wealth Management, connectivity scores high in importance. Its connectivity infrastructure included, Gigabit Ethernet LAN, a leased line that connects to 13 branches across the country offering a speed of 2 Mbps, three DSL connections from Sify, MTNL, and BSNL, each with a bandwidth of 1 Mbps. “Our connectivity infrastructure is really good and can meet all our needs. Of the three DSL connections, the one from MTNL acts as a backup during crisis or during peak load. We also use video conferencing heavily and the connectivity is well equipped to support it,” said Nagraj Poojari, Manager, IT, Kotak Wealth Management.

Pioneer Fincap Pvt Ltd is a division of the Pioneer Group and deals in insurance related products. Based of out Delhi, it also has three branch offices in the vicinity. The company has 100 workstations at its head office in Delhi. As regards the connectivity infrastructure, said Kapil Gupta, Linux System Engineer, Pioneer Fincap Pvt Ltd., “Connectivity is the most important aspect in out IT infrastructure. In fact, the nature of our business is such that it thrives on connectivity. Presently we are using a DSL broadband connection from Airtel having a speed of 1 Mbps. Additionally we are also using a Gigabit Ethernet LAN, and Wi-Fi.” He continued, “We are not using any other connectivity medium at the moment. However, as our business grows and if the need arises, we would leverage one according to our needs. However, we have plans to increase the bandwidth to 2 Mbps sometime soon.”

The Professional/ Other services vertical, which includes services like consultancy and hospitality, also has a well-distributed connectivity infrastructure. It is the second largest adopter of cable modems with 23%, and T1/T3 with 14% adoption. The scenario; however, is dominated by leased lines in this vertical also with 67% adoption, followed by DSL with 59%. ISDN also finds acceptance in this vertical, and has an adoption of 42%.

“We are using a leased line connection with a bandwidth of 2 Mbps, and a DSL connection offering a speed of 512 Kbps to connect to the Internet is kept as backup for connectivity. Airtel provides both the connections. In addition, we are also using Wi-Fi, and a Gigabit Ethernet LAN. We are using design applications and the bandwidth is sufficient for us,” said Gulshon Kumar Neveriya, Deputy General Manager, Intercontinental Consultants and Technocrats Pvt Ltd.

As regards the manufacturing vertical, it is the second largest adopter of ISDN (45%), Cable modem (23%), and Wi-Fi (13%). The bulk of the manufacturing sector rely on leased lines with 69% of respondents favoring this technology, followed by DSL with 52%. That said the IT infrastructure at manufacturing companies largely depends on the nature of work.

“Our work does not require much of IT and therefore we have only 15 workstations. As regards connectivity, we have a Gigabit Ethernet LAN in place. We are also using a DSL connection by Airtel offering a speed of 512 Kbps. Our basic requirement from the Internet link is communication through e-mail with our branches,” said Susheel Kumar Bachheti, Assistant Manager, EDP, Bihar Sponge Iron Ltd.

The vertical comprising of Transport/ Utilities and Real Estate emerges as a leader in the adoption of ISDN, with 48% of the respondents confirming the deployment. The scenario; however, is dominated by the use of leased lines with 61% adoption, and DSL with

41% adoption. In contrast, the Wholesale/Retail vertical has more adoption of DSL (71%) as compared to leased lines (58%). The adoption of ISDN stands at a fair 21% and Gigabit Ethernet LAN at 18%. The adoption of Wi-Fi and MPLS is the least among all verticals.

What could boost connectivity?

Firstly, there is a fair amount of adoption of enterprise-wide applications among MBs. ERP dominates the scene with 43% respondents leveraging it. Database applications and enterprise messaging are next with 28% and 22% adoption respectively. Other applications are also in use—CRM, middleware, supply chain management, and BI etc. As regards future adoption, 35% intend to invest in ERP, followed by 33% in database applications and 15% in CRM.

Secondly, there is a shift in this segment towards leveraging convergence-based applications like Web conferencing, VoIP and video conferencing. As per the survey, Web conferencing dominates with 20% adoption, followed by video conferencing with 19%. About future investment in these applications, 24% are willing to invest in video conferencing, followed by 21% for Web conferencing and 14% for VoIP.

Taking both there factors into consideration, including future investment, the connectivity infrastructure will expand further. What would drive this adoption is the bandwidth hungry characteristic of these applications. Consequently, the use of higher bandwidth would drive the adoption of these applications also.

In addition, the majority of the medium businesses have expansion plans in the pipeline This, in turn, would induce the need to improve the existing connectivity infrastructure to allow newly opened branch offices communicate with those already functioning. Finally, with the prices for bandwidth acquisition heading south, MBs would capitalize on it.

Going ahead

It is good to see that MBs are looking at progressing to the next level of competence to offer services, are giving due importance to connectivity. The reasons for the same are self-explanatory. A good connectivity infrastructure helps in making, maintaining, and running the business efficiently. The majority of medium businesses surveyed are gung ho about it, and are in the process of investing further in connectivity. In fact, for every vertical surveyed, connectivity figures in the top ten when it comes to future investment areas.

Developments in the connectivity infrastructure at a larger level and the introduction of newer and better mediums like WiMAX, present an opportunity for MBs. WiMAX as a connectivity medium is better suited for providing last mile access, and because of its far-reaching capabilities, it can offer high-speed connectivity across large distances. WiMAX enabled products like mobile devices are available today. With its ability to provide high-speed broadband access, WiMAX is sure to revolutionize the connectivity scenario.

It is now up to medium businesses to leverage existing connectivity mediums like leased lines, MPLS, Wi-Fi etc., and newer mediums like WiMAX to their advantage. This also presents a good opportunity for vendors to latch onto.

neeraj.gandhi@expressindia.com