Enterprise networks to follow example ofutilities

It’s a good bet to suggest that the power of future enterprise networking will be leveraged through a utility.

The days of a business building its own networks appear to be numbered. Soon Canadian and other businesses around the world will look instead to leverage the network “utility” – infrastructures that are owned and operated by communications service providers such as carriers, ASPs, ISPs or CLECs. Many companies are determining that they don’t want to be in the business of building IT infrastructures, including networks, and will in the near future be able to buy enterprise LAN/WAN communications services in a way similar to how they currently purchase services like electricity and telephone service.

Communications companies are looking to extend their reach further into business, by evolving enterprise networks like electrical and telephone utilities, which were initially provided by a multitude of vendors during the late 19th and early 20th centuries, or as part of privately owned systems. Electrical and telephone services were eventually amalgamated, driven by a need to create economies of scale required to deliver these services at affordable rates and a requirement to build an infrastructure that was more reliable, manageable and which could support services across vast geographic boundaries.

Network utility providers will look to own enterprise infrastructures and will deliver, through some type of leasing, both WAN and LAN network communication services.

When that happens, businesses will no longer purchase switches, routers, cabling, management servers, firewalls or even NICs. Nor will they need a department of IT professionals to manage the network, since most of that will be done remotely by the service provider who owns and leases out the enterprise infrastructure and has its own professionals.

Communications networks evolving as utilities aren’t a new idea. The concept has, in fact, been the promise of network equipment makers for at least five years. The reality is poised to finally take hold and within a few years, leasing, rather than buying enterprise networks will be a much more attractive and cheaper alternative, certainly a better way of keeping up with technological advances.

The precedent for such an IT handoff has been set. Businesses have already shown strong acceptance of and comfort with offloading important IT elements to remote third-party providers, particularly in the areas of application service provision and Web hosting. The degree to which customers relinquish control of other LANs and WANs will depend heavily on how successful emerging services such as ASP and Web hosting are in the coming years.

Consider how voice communications has been core to businesses over the past century as part of the buy/sell relationship, yet businesses today leverages telecommunications industry services rather than looking to manage or build it themselves. Enterprise data communications started out and essentially remains a sea of disparate islands, where varying degrees of reliability, security, capacity and performance are as numerous as the number of networks created.

Yet data networks for many businesses are as important as voice communications services, but the infrastructure for data within most enterprise can’t hold a quality candle to voice. It’s reasonable to assume data networks will follow the voice network and electrical utility model.

With the advent of multiservice communications – voice, video and data enabled through a single infrastructure – a huge underlying complexity emerges, where much more planning, more complex implementation and much greater management will be required. Many businesses may not want to be network builders anymore and if the network as a utility unfolds as expected, then they’d probably prefer to lease rather than build their own grid.

The benefits of the network utility are compelling. In addition to the economy of scale, which should reduce enterprise network communications costs, service providers would be motivated to enhance both the performance and function of these networks in order to maximize utilization, which would in turn allow communications companies to reach a much broader set of customer markets.

The major disadvantage of the network utility, at least initially, is vulnerability to costly downtime. This vulnerability stems from the fact that any major single point of failure within the computing utility infrastructure could trigger a system-wide failure and then seriously disrupt services.

Combine this with an expected increase in dependency on the service by customers and the result could be extensive financial losses.

Such events should likely be expected in the early years of a network utility, since it’s happened in earlier utility creation. Witness the power industry, where the 1960s and 1970s saw major power outages across the Northeast, shutting down major cities like New York more than once. Over time, however, the power industry matured enough to develop a much more reliable utility delivery model.

A number of obstacles in the transference by business to the yet-to-be built network utility remain, not the least of which is a realistic exit strategy for organizations that have spent thousands or millions of dollars building their own internal IT infrastructures and hiring IT experts to manage it. The shift toward a network and ultimate total computing utility may be a long and slow one, but a migration that has a strong likelihood of occurring nonetheless.