IDC: Networking 'disruptions' will drive spending

An IDC analyst says disruptive technologies like Wi-Fi, VoIP and utility computing will drive network spending, but only in certain industries where business demands justify the investment.

BOSTON -- A handful of major trends will alter network architectures and dictate how enterprises spend on networking gear going forward, according to International Data Corp.

Citing information from a recent CIO survey, Lee Doyle, group vice president of network infrastructure for the Framingham, Mass.-based analysis firm, labeled these trends as "disruptions" that will make up the key network spending drivers over the next three to 10 years. Doyle's remarks came at IDC's recent Directions 2004 industry briefing.

Doyle said that the desire to improve network security will be the biggest driver of network spending. CIOs surveyed also indicated that improving network reliability will also be a significant driver, because the process of ensuring availability becomes more complex as enterprises switch to utility computing architectures.

"Almost every organization will suffer when their network is down," said Doyle. "Just throwing more IT personnel at it is not going to get it done."

The survey showed migrating from Ethernet to Wi-Fi will also become a major reason to spend money on the network.

"Now this doesn't mean that Ethernet is going away," Doyle said. Instead, spending will focus on getting LAN switches and wireless access points to work well together, and managing that process more effectively.

Wi-Fi is already beginning to take hold in what Doyle called "tiled" industries, such as hospitals, distribution and manufacturing, where workers are on their feet instead of sitting in cubicles. "They know they need a wireless LAN and can justify it immediately."

Wi-Fi may be slower to take hold in "carpeted" industries where most of the work is done in an office.

For small and large companies alike, the introduction of VoIP technology not only means that it will be cheaper to make calls, but it also means getting all the features PBXs -- the traditional telephone systems that switch calls between enterprise users on local lines while allowing all users to share a certain number of external phone lines.

In the coming years, more companies will switch to IP-PBX devices, creating a major challenge for incumbent PBX suppliers, and new opportunities for vendors looking to gain market share like 3Com Corp. and Cisco Systems Inc.

IDC reports that other big reasons for investment in the network will be to add bandwidth, applications and users.

Streaming media applications were not high on CIOs' wish list, but Doyle said interest was up significantly from a year ago. "We're going to start to see voice and video becoming an increased portion of the reason why people are going to upgrade the network," Doyle said.

Doyle said as a whole, IDC finds that these trends are being driven by the desire among companies to switch from proprietary architectures to utility-based computing infrastructures, where enterprises are connected to suppliers that provide IT computing muscle on an as needed basis.

Attendee Charles A. Coleman Jr. is chief operating officer of TheraSim Inc., a vendor of medical simulation software in Research Triangle Park, N.C., and a former director of IT at Linux vendor Red Hat Inc.

Coleman said that the economy is improving, and he agrees that overall IT spending will pick up as a result. But, he added, certain industries will be slower to increase their spending than others.

"I think it's going to be very much niche spending," he said. "I think that one of the areas that probably will have the biggest year-to-year IT spending growth is going to be in the life sciences."

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