IP VPNs: Making a case for

Last week I broke down IP VPNs into three types: Remote-access VPNs, which connect individual users to the corporate net; branch-office VPNs, in which the IP VPN serves as the corporate WAN; and extranet VPNs, which provide connectivity to business partners, suppliers and customers.

Each serves a different purpose: Remote-access VPNs save money over direct-dial; branch-office VPNs improve performance for certain applications; and extranet VPNs enable new revenue generation.

Most companies have already deployed remote-access VPNs, so we won’t cover them here. The real news is the groundswell of interest from large companies in justifying deployment of branch-office VPNs. For these companies, the hard part is creating a solid business case that justifies deployment – even though rolling out an IP VPN is most likely the right thing for them to do.

Why is the business case a challenge? Most companies recognize that the real driver for IP VPNs is the flexibility they provide.

Connectivity speeds can range from sub-T-1 to OC-192, unlike traditional frame or ATM services that are only specified at certain speeds. IP VPNs also allow for a highly flexible topology that lets a seamless mapping to the application flow. So applications with an any-to-any traffic flow are more effectively served by IP VPNs than by frame or ATM, which typically mandate modified hub-and-spoke topologies. Finally, IP VPNs lay the groundwork for true extranet services that will revolutionize supply chains and business processes.

So what’s not to like?

The problem is that these features are intangible – and on the only tangible metrics, cost and service-level agreements (SLAs), IP VPNs don’t fare so well. Our best estimate is that IP VPN services cost, on average, only about 10 per cent to 20 per cent less than equivalent frame relay services – not enough to justify a forklift upgrade. And while IP VPN SLAs are beginning to rival those of frame and ATM services, they’re only as good – not materially better than – those legacy services. So making a hard-core business case to your CIO is more difficult than it looks.

If this is an issue you’re wrestling with, here are a few tips: