VPN investment defies IT budget squeeze

Promising greater bandwidth to remote locations and speedy return on investment (ROI), one technology that has been immune from tight IT spending is Virtual Private Networks (VPN).

Installations of VPNs are booming in Australia with IDC surveys showing up to 70 per cent of medium to large enterprises planning to deploy an IP-VPN in the next 12 months.

Australian Kitchen Industries IT director Milton Kirkwood has just completed a VPN installation which has reduced data communication costs by 40 per cent.

The company, which owns such big-name brands as Nobby Kitchens and Wallspan, wanted to increase capacity and performance between its head office and 22 retail outlets without increasing costs.

Kirkwood said the capital cost was around A$45,000 (CDN$39,500) and the ROI is as short as three months.

“We have better service and greater bandwidth in remote locations which is good because we are rolling out online training to our 300 users,” he said.

The company has developed its own design application, which its 60 consultants carry with them in their laptops.

Kirkwood said the national VPN allows the consultants to connect to the central server to draw up the appropriate design and print it out at the customer site.

“This is our greatest selling tool today,” he said.

The biggest implementation challenge for Kirkwood was reconfiguring all IP addresses across the network.

“We acquired some companies with various IP addresses so this was the biggest job we had to tackle,” he said.

Wholesale broadband services provider, Request Broadband, has forecast broadband VPN revenues will overtake normal broadband sales by the end of 2003.

Request CEO Phil Sykes said the company has more than 100 individual VPNs ranging in size from three sites in a single city to 400 sites across Australia which are either installed or in the process of being provisioned.

He said vertical markets such as travel agencies, manufacturers, retail outlets and accountancy, are looking to invest in VPNs.

The Insight Research Corporation predicts a sharp jump in VPN deployment in 2003 pointing to a watershed year for the technology with sales worldwide reaching $US16 billion by 2005.