The Australian enterprise networking market has evolved massively from a technological and a business standpoint over the past five years. And in this evolution, two developments have served to fundamentally change the local landscape, bringing with them a wealth of opportunities in both products and service offerings.
Data and voice technologies are converging on one network and resultant security issues that have arisen around this convergence. The convergence phenomenon has gone along with increased adoption of wireless networks, greater uptake of broadband internet services and a need for greater bandwidth.
Meanwhile, the advent of services such as Cisco’s application-oriented networking has changed the dynamic between networking vendors, distributors and resellers with their customers.
Network reliability and security is more critical for business than ever before. Organisations rely on their networks to give them a competitive advantage, particularly as more organisations move down a path of voice and data convergence.
The move towards convergence has also seen another interesting dynamic emerge where new competitors into the networking space have sprouted. Companies that in the past only dealt with voice are now dealing with data, and vice versa. And some telco carriers that traditionally have not been in the networking game are looking at infi ltrating voice services, right through to the enterprise desktop.
The technology used to power traditional LANs and WANs and wireless networks has also undergone a technical overhaul in the past fi ve years. According to Nortel Networks chief architect for convergence Mick Regan, fi ve years ago the bandwidth that existed for wireless was 5 to 10Kb/s, the nomadic bandwidth was dialup at 30 to 56Kb/s or 128K ISDN and the wireline LAN was typically shared 10BaseT at about 1Mb/s.
"Today, wireless technology is delivering 100Kb/s through the current cellular network, nomadic bandwidth is about 1 to 2Mb/s for homes on DSL or cable modems, DSL connected 802.11 hot-spots or hotel rooms, and the typical wireline LAN is a 100BaseT with gig risers delivering 10Mb/s," Regan says.
"If we project forward, in another fi ve years, 3G/4G wireless will deliver 1Mb/s, VDSL, WiMax, and new cable technologies will up the nomadic access to 10Mb/s-plus and Gigabit desktops will enable speeds of up to 100Mb/s in the LAN," Regan added.
Also, wireline solutions have got more dependent on higher bandwidth staying available for applications such as CADCAM, imaging, HDTV conferencing -- reducing compression complexity to minimise latency -- and 3D displays.
Firewall Systems sales and marketing director Nick Verykios says the local market is lot more sophisticated than it was fi ve years ago, with end users reducing the number of trusted advisers and vendors they are working with.
"Technology decisions are highly considered for advanced and emerging technologies such as security, wireless, VoIP, mobility and web application infrastructure. The three quote rule may still exist as a formality, but the deal is fundamentally done by then.
"This is because users are investing in initiatives beyond technology and technology is purely an enabler of what is really being purchased," Verykios says.
Five years ago, major network upgrades were too expensive for many organisations. Upgrading a legacy system to an IP telephony system has since proven to be far more cost-efficient. The wireless networking market has also made great leaps, with the advent of wireless WAN or Wi-Fi and Unwired’s offering -- often known as Wireless Broadband or Fixed Wireless Access, a proprietary pre-802.16 or pre-WiMax offering.
Today, Gigabit Ethernet, as opposed to just fast Ethernet, is becoming pervasive, given the need for speed required to run internet fi lm or TV. This has led to PC vendors building Gigabit LAN on the motorboard, with no extra card needed to slot into the PC or laptop. Gigabit Ethernet adoption has remained at the low end, although wireless network uptake, allowing workers more mobility through using Wi-Fi hot spots or wireless access points through a wireless LAN infrastructure, is quickly becoming a commoditised market.
According to Cisco Systems consulting systems engineer Adam Radford, there has also been a major shift in focus in network technologies from one of pure speed to one of network control over the past five years, where applications such as security features are now embedded in network devices.
"Quality of service [QoS] has now become so essential to customers that network downtime is just not an option," Radford says.
IP revolution
Certainly, at the enterprise level the adoption of IP technology, with its possibilities for converged voice, video and data networks, represents an upheaval in the local market, and one ripe for the channel to take advantage of, Radford says. "For resellers, much technology now being deployed, wireless [or] voice, has a heritage and background in data networking. There has been a distinct transition of skill sets, moving from building data infrastructure to an IP telephony play," Radford says.
According to Frost & Sullivan analyst Foad Fadaghi, IP technology has made accessible a range of businesses technologies that may have only been affordable for large companies in the past. "It has also allowed for cost-effective integration of systems and been the primer for data and voice convergence on the network," he says.
As an indication of just how pervasive the technology is becoming, Frost & Sullivan says IP PBX units now signifi cantly outsell traditional PBXs.
Networking vendor NetStar Australia marketing director Oliver Descoeudres believes the impact of IP telephony on the networking landscape will become even more pervasive, driving a more homogeneous vendor environment to ensure end-to-end quality of service and greater acceptance of the need for network security and management.
Perhaps the most obvious impact network convergence has had is in the area of infrastructure investment. Given that, for many end users, WAN or internet bandwidth is the most expensive ongoing cost and many resellers have put in place solutions for their customers that control these costs and align expenditure with business priorities, converged network applications such as VoIP have driven the investments in infrastructure.
This has not removed the requirement for WAN optimisation, but on the contrary has made the allocation of bandwidth to missioncritical applications even more important in that VoIP deployment should not be at the expense of existing network applications.
Furthermore, the number of applications that networks need to support has gone from one or two to 10 or 20 and, in some organisations’ networks up to 100 or more. According to Descoeudres, converged networks have well and truly reached Main Street.
"We don’t see any customers even considering a PABX solution if they’re expanding or moving premises," he says.
As IDC networking analyst Shing Quah points out, IP telephony seems like a logical step for many organisations given that they already have an IP data network in place and it makes perfect sense to consolidate the network onto one platform. "Why would you need a traditional PABX system and an IP data network running over one lot of equipment," she says.
Moreover, IP is rapidly becoming the de facto ‘platform’ for all applications, including communications. Whereas in the past the technology had been held back by concerns about quality of service, product maturity and security, it has now been recognised as the communications technology of the future.
Most enterprises that need to change PABX or implement a greenfield site are deploying IP telephony and starting to show a demonstrable return on investment from moving to a converged environment.
According to statistics from Frost & Sullivan, the total enterprise IP telephony market in Australia was worth $57.5 million in the fi rst half of 2004. The market is tipped to grow strongly, contributing to 69 percent of all enterprise telephony equipment revenues by 2007. "Companies are increasingly realising convergence is an ongoing strategy, not a onetime event," Fadaghi says.
Channel opportunities
So what sorts of products and services should channel companies be looking at if they want to garner a slice of the network convergence pie? Juniper Networks senior systems engineer Brad Engstrom claims the standardisation on IP has simplifi ed the networks of lots of companies.
"As legacy protocols are eliminated or emulated over IP transport, it allows for a homogenous network infrastructure which can be both simpler and faster," he says.
According to Engstrom, VoIP is more than just another application, as it introduces a lot of requirements that simply were not previously present in the network. This, he says, opens the door for the provision of services in not only verifying that the network design and equipment is ready to meet the delay, jitter and drop requirements for voice, but also in integration with existing voice infrastructure.
This, Engstrom adds, requires experienced and trained engineers either within the integrators or with end users -- and, very often, both. "There is no magic solution, just training, training, training. Courses in VoIP design are provided by vendors, but should also be part of any networking technologies curriculum," he says.
While end users still need some education, the key issue is in the channel where integration experience is needed.
Most industry observers agree the margins in simple ‘box’ sales are increasingly threatened by ever cheaper offerings on the market.
Network channel players need to look at valueadded services such as managed telephony or managed routers as well as vertical industry and productivity-focused IP applications and mobility solution sales for emerging revenue opportunities, many believe.
Networking distributor Express Data managing director Ross Cochrane believes little real opportunity for sales growth exists from mere product without a solution-oriented offering. "Most customers these days are looking for an end-to-end solution. This will include implementation, training, documenting, support services and robust and reliable security systems in place. Customers on the whole would prefer to have just the one relationship with the one solution provider," Cochrane adds.
Yet, as Alcatel Enterprise Solutions national channel manager Vaughan Webster points out, the focus continues to be on VoIP as a technology in its own right. "In fact, VoIP is only a part of a larger solution which includes the network and telephony infrastructure as well as the applications deployed over that network. The channel must continue to propose solutions that are analogue, digital or VoIP, based on the solution that is required by the customer, and not based on the underlying technology," Webster argues.
Moreover, as 3Com Australia managing director Ralph Stadus points out, internet telephony is still encountering some resistance from areas of enterprise business and still has some way to go before it reaches the same levels of robustness, especially from a security perspective, as a traditional PABX system.
He therefore sees signifi cant growth opportunities in selling traditional and IP voice over one network. This, he says, may offer signifi cant advantages in fl exibility, function and cost to some organisations.
"Almost everyone we talk to has an eye on IP telephony, even if they’re not implementing it. As a result, there are large converged areas of the market opening up, with products like switches that power over Ethernet," Stadus says.
Most customers are at least asking the questions with regards to questions of network convergence, Stadus adds. With regards to their usual business needs, they may have changed their customer focus. "They may have installed a small call centre consolidated different business branches or moved premises and are looking to install new networking equipment now," Stadus says.
Mid-tier resellers therefore need to make themselves aware of what the converged voice space is all about, what the latest offerings are, and look at more than one vendor’s options. Salespeople, in particular, should remain current, he says.
"If vendors are prepared to put on seminars, channel partners would be well advised to send their salespeople. If you’re a mid-tier sized company, start with small to mid-size customers then expand your marketing plan," Stadus added.
ED’s Cochrane also says there should be no end of opportunities for services that revolve around the move to converged networks, given that existing LANs and WANs were put together over a considerable amount of time. "The reality is that very few organisations have designed their networks for a converged world. They are only now starting to realise the infrastructure is not consistent -- it doesn’t have the management functionality, the security is not compatible.
"Companies are therefore being forced to make an investment in capability for converged network activity, especially since many PABX systems are reaching the end of their lifespan, and migrating to an IP network infrastructure environment seems like the most logical course of action," Cochrane says.
One thing players agree on is that resellers really need to talk to their customers to ascertain their real needs, especially in the areas of product and services integration with their networks.
For example, if an organisation is after more mobility for its workforce, a wireless component may appeal.
Firewall’s Verykios, however, says there was a risk in overstating the technology for its own sake, adding that resellers who recognise that the technology trends are just another trend and focus on business needs such as reducing costs and expanding revenue opportunities for their customers’ businesses will establish a substantial and long-term stake in the market.
"Technology is no longer the feature. No matter what it is. People don’t buy VoIP technology no matter how much the vendors wish this was the case. They buy unified messaging systems that increase their employees’ productivity and reduce their operating costs.
"This requires a sophisticated blend of several technologies, professional consultation and application development. Everything their customers do, be it investment in IT application, IT infrastructure or IT systems, will always need two things -- they need to be secured and they need to be effi cient (bandwidth and application optimisation)," he says, adding that nothing exists in isolation and that no-one buys the technology feature.
By offering a customer a full end-to-end voice solution, encompassing power over Ethernet switches and upgrade routers, there is still an opportunity for a reseller to give a full IP telephony product and services solution. This may include switches, routers, firewalls and phones -- such as IP phones that can run off the PC.
The challenge is still to educate the market on VoIP. Clearly, resellers will have trouble selling a product they do not quite understand. And fi nding a niche and partnering is not always the best way to go, according to Verykios.
"For traditional infrastructure sales, finding a niche and partnering, perhaps, but their margins will be very thin. We have to think differently and redefine the thinking behind the word 'niche'. It’s damaging to think in terms of this phenomenon.
"What we really mean is advanced or emerging technology. And by their nature, they exist at the forefront of the technology adoption cycle. This means you have no choice, you have to partner. Resellers have to partner with channel service companies to augment skill sets that they could never profi tably do themselves," Verykios says.
"They have to do this so they can prime every deal they come across and accept the deal. Saying no to a deal with respect to advanced and emerging technologies means you have not bothered to partner, while your competitor who could do the deal did partner," he says.
Alcatel’s Webster says the vendor had observed a growing number of channel partners who had been analysing the needs of their own users, then making decisions about which applications and devices would be deployed.
This is driving decisions about networking requirements and which infrastructure will be deployed. In the past, end users have built their networks and then deployed applications, Webster says.
In particular, resellers need to develop their own ‘solution’ selling skills, as part of a broader offering to end users. This could include any product dependent on end user requirements, with voice, video and data products and services designed to cover the full spectrum from the residential user to the carrier.
As a result of the march from traditional to IP telephony, lots of opportunities have opened up. Once voice has been installed over an IP platform, mobility and other services can be applied such as mobile phones from home, laptop, connecting to hot spots, VPN to office and so on. Also, there are now opportunities to apply rich media collaboration -- video-conferencing via a web-based scheduling system.
Over the next six to 12 months, the complexity surrounding VoIP will start to disappear, once enough installs have been made. The technology is also likely to become considerably more robust, further diminishing end user resistance to its take-up.
Security, almost as hyped today as Y2K was at the end of the millennium, has moved from the edge of the network to an embedded part of it as IT managers attempt to manage a much broader set of threats from inside and outside the company, from direct attacks to spyware, worms and viruses.
The emergence of secure, converged, open networks, operating with dramatically increased loads, has brought a range of challenges for vendors, channel partners and end users. How do you provide true security for your network?
According to Express Data’s Cochrane, security, while always important, has become more vital, given the wealth of new applications customers are using to run their businesses.
"User expectation has evolved to the point where any network downtime, no matter how small, has become totally unacceptable and network security has been driven to the forefront of customers’ minds," Cochrane says.
Firewall’s Verykios agrees. But he reckons channel players need to secure everything they do for their customer -- and that means going beyond the infrastructure of the so called self-defending network.
"Resellers that stay away from security will at best rent their customers," he says. Those that are involved intimately in designing and validating security policies will get closer to the holy grail of ‘owning’ the customer, claims.
Yet when it comes to security and the current high adoption rate of products and services, Firewall’s Verykios says the buyer is not concerned with the technology whether it be firewall, anti-virus, anti-spam, intrusion prevention services, VPN or whatever.
"They are concerned with threat management issues, with risk mitigation, with compliance and with business continuity. They do not even think in terms of ROI, which is the traditional play in networking, when it comes to security.
"They work with their trusted advisers, which are now well and truly the channel partner -- reseller or prime contractor -- rather than the vendor, to work on policy issues that are validated by a Service Level Agreement.
"Once this is agreed to, technology is then added to fulfil these two initiatives. Price is then a budgetary issue and finance options are considered before traditional dog fights. The brand is less important, and the service level agreement with the prime contractor that backs the user requirement is key," Verykios adds.
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