Robert Cohen in Information Age, London (02/10/05)
The Business Challenge.
Modern enterprise networks are changing - and changing fast. Most
modern enterprises are now replacing their patchwork of often
incompatible networks with a faster, seamless and standardised one that
carries all data and voice.
At the same time, many are aiming to seamlessly integrate mobile
services, to use "presence" technologies to maintain persistent online
links with employees, to build secure services for remote workers, and
to invest in new tools, like collaborative working and e-learning to
They also plan to overhaul their data centre and applications.
Ultimately, they hope that web services will enable their applications
to interlink and communicate easily, enabling much more productive and
easy interworking and outsourcing. Emerging technologies, like
virtualised data centres and grid, should eventually enable more
flexible, cost-effective computing.
All this amounts to a major revolution in networked computing,
presenting huge business challenges to executives at user
organisations. With the waste and disappointment of the dot.com excess
still fresh in many minds, businesses will need to make huge
investments and make difficult architectural and supplier choices.
This time round, however, the business case is easier to make. Case
studies and return on investment analyses show Voice over IP providing
such a powerful return that the first stage of many investments can be
easily justified, even on a large scale.
Organisations such Lloyds TSB, Abbey, Lloyd's of London, Carphone
Warehouse, and dozens of government departments, have all committed to
large investments. But the IP revolution is about more than this.
Converged IP networks enable flexible applications and services to be
embedded in the wide area network, providing what Alcatel calls
"Business process productivity" - the ability to complete end-to-end
transactions and processes without interruptions, and sometimes, human
Such are the power of these IP services, that, combined with higher
bandwidth, many see a fundamental change taking place. George Gilder
forecast in his book Telecosm that the emergence and adoption of
powerful, flexible networks would herald the end of the computer.
Eventually, almost all intelligence would pass from the client device
into the so-called "telecosm".
His forecasts were perhaps a bit dramatic. Nevertheless, data
networking giant Cisco has laid down the gauntlet with a blueprint for
the future of the business networking - the Intelligent Information
Network. Its business strategy is modeled around the view that more and
more intelligence, applications and business processes will be handled
by the networking devices, such as routers and switches, through which
almost every transaction will pass.
"What was running at the computer layer will increasingly run at the
network layer," says Nick Earle, VP of marketing, planning and
operations for Cisco, EMEA. This means that rules,
policies, security and some business processes - along with a whole
array of network services - will be managed and run at the network
The business and architectural challenges of this approach are profound
for vendors and customers alike. Networks built in this way will take
on more systems management and middleware functions - a move that
potentially puts Cisco into competition with some of its partners.
While Cisco insists that it doesn't want to be become a "middleware"
vendor, it will increasingly encourage customers to put more power in
the middle, carrying out network management, business activity
Cisco's view is that customers building converged IP networks will want
to do so using componentised, standardised, network services. A good
comparison might be the way in which the application server has
revolutionised business systems development.
As Mario Mazzola, Cisco chief development officer, explains in a white
paper: "We are implementing an array of support functions common
throughout the infrastructure, ones needed by many applications,
whether that's a wireless point of sale device, an IP telephone, or a
These functions include network-embedded services such as security,
storage, voice and wireless, as well as packet layer services, such as
routing, content awareness, encryption and traffic shaping".
Most other network equipment vendors agree, to an extent, with Cisco's
view, seeing a business opportunity to take a pivotal role in corporate
computing. But there may be tension and incompatibilities between
suppliers, as some middleware systems and certain point solutions all
compete for a role in the converged network.
There are huge challenges involved. While the bedrock of converged IP
networks is largely based on open standards, the complexities involved
in building intelligent networks may be of a different order - enabling
the outsourcing of more critical functions.
Networks and productivity
Throughout the 1980s and 1990s, technologists, economists and thinkers
have put forward the argument that ubiquitous, low-cost, high-speed
connectivity would lead to huge leaps in productivity, not just for
businesses, but for society as a whole.
Among them, Robert Metcalfe (co-inventor of Ethernet and the inventor
of "Metcalfe's Law") forecast that productivity would leap as more
people connect to the network. George Gilder, the economist and
futurist, saw cheap bandwidth as an unstoppable, revolutionary force as
important as the power of the processor.
Robert Cohen, an economist and fellow of the US Economic Strategy
Institute, argued there is a direct link between bandwidth and
productivity, and influenced both European and the US governments to
invest in broadband.
Many organisations, among them BT and Cisco, have sponsored academic
research exploring the positive economic impact of greater
To date, all these arguments have been persuasive (and widely accepted)
but difficult to prove, for all kinds of reasons. But one of them has
been that there is simply too little real-world empirical evidence.
However this is starting to change.
Whole economies, such as Finland, Norway and Singapore, have
illustrated the economic benefits of advanced, high bandwidth networks.
There is mounting evidence that, while a good Internet infrastructure
benefits companies, there are still greater business benefits to be had
from building sophisticated, flexible networks.
The study Net Impact: United States Private Sector, for example, found
that US organisations using best practices and "a co-ordinated system
of sophisticated networks, re-engineered processes and Internet
business applications" achieved a four to five times greater
improvement in productivity than those just using Internet business
applications. This translated into a 20-25% advantage in operational