Enterprise WAN network spending and planning will be challenging in 2009; that's for certain. But according to a CIMI Corporation survey of 277 enterprise users, there may be some bright spots in the otherwise dismal picture. Companies revealed that major areas of interest for next year were network security, WAN optimization and application acceleration, and data center switching. Considering these survey results may help enterprises focus their own networking and services spending for the year.
First, it's important to note that 218 of 277 companies said that they were "deferring" network spending and "studying" WAN costs but were not yet committed to making actual cuts. The problem for most enterprise planners is the uncertainty about the depth of the economic crisis and its duration. Most (201 of 277) believed that they would recover "most" of their 2009 budget if there were convincing signs of recovery by the end of the first half of the year.
1. Network security
The area where enterprises expect the least pressure on spending, and in fact propose that spending will increase by as much as 12%, is network security. Most companies believe that the growing threat of cyber-terrorism doesn't affect them directly, but nearly all believe that the techniques that are employed for cyber-terror will be honed for more traditional hacking and attacks. Not surprisingly, then, intrusion detection and protection are the top areas of security interest for 2009 and are where most spending will be focused.
A related trend is the substitution of network-based security for per-system security, something that 186 of 277 enterprises cited as a 2009 project. Traditional antivirus and software-based firewall applications are believed by most companies to be too dependent on the system user. "Everybody accepts every new application that the firewall warns about," complained one IT security specialist. The interesting thing about this second security trend is that it targets both internal and external access. Companies have long believed that most security breaches were committed by employees.
2. WAN optimization/application acceleration
The WAN optimization or application acceleration space also shows promise. Companies are all interested in getting more capacity for less money, and the premise of acceleration and optimization hardware is to provide just that. But despite the potential for benefit, only 102 of the 277 companies surveyed were considering an optimization/acceleration investment in 2009, and this would equate to a fairly small gain (less than 4% industry-wide) in this area. The reasons given for not looking into this technology were interesting:
- The companies plan to pressure their service providers for lower rates and better performance, and they expect that will give them the savings they need.
- Companies are uncomfortable with any new capital spending projects, even if they're supposed to lower monthly cost.
- Companies can't reduce their costs because they are not in a position to put their WAN services out for bid; their contracts are still in force.
- Companies are reluctant to bet on the performance of the new acceleration/optimization systems at a time when they need everything to be working with no glitches.
Among the enterprises that are planning acceleration/optimization investments, the most common driver was an expected increase in traffic that could not be accommodated without either more efficient WAN use or an increase in WAN spending. The goal of avoiding additional cost is a more powerful driver, or at least is more credible, than the goal of reducing existing costs.
3. Data center switching
The area of data center switching shows almost the same promise for a spending gain in 2009, despite the economy. A total of 89 of 277 users planned upgrades to data center switching, and this would generate about a 3.8% spending gain in 2009. The majority of this is linked to storage networks, but some is also earmarked for providing better headquarters or data center LAN connections. Interestingly, almost all of the companies that planned to upgrade were looking at this as an application performance improvement strategy; they believed their current data centers were a barrier.
At the industry level, WAN spending increases were seen as more likely in the healthcare, pharmaceutical, petrochemical, and construction management industries. They were least likely in financial and retail. The latter two industries were also the ones where enterprise budget cuts were already likely to be a reality, and the first group where buyers were more confident about getting most of what they requested.
The final point that may be helpful to enterprise planners is the way other enterprises view the budget challenge. The notion that costs had to be cut was the primary driver in only 84 of the enterprises in the survey. A larger group (120) said that their problem was more one of creating a better business case to obtain a higher project ROI. That suggests that getting involved with "benefit planning" might be a good thing for those who want their budget whole in 2009.
About the author: Tom Nolle is president of CIMI Corporation, a strategic consulting firm specializing in telecommunications and data communications since 1982. He is a member of the IEEE, ACM, Telemanagement Forum, and the IPsphere Forum, and he is the publisher of Netwatcher, a journal in advanced telecommunications strategy issues. Tom is actively involved in LAN, MAN and WAN issues for both enterprises and service providers and also provides technical consultation to equipment vendors on standards, markets and emerging technologies.