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Issue of August 2003 
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In Person: IP VPNs

VPNs in the enterprise

IP VPNs offer several advantages over traditional connectivity methods like leased lines and VSATs. P J Nath, Vice President - Sales & Marketing, Sify Enterprise Solutions illustrates how IP VPNs can help the enterprise. by Anil Patrick R

What are the advantages that IP VPNs offer over traditional means of connectivity like leased lines and VSATs?

IP VPNs essentially represent an outsourced network model, where corporates use a service provider's sophisticated managed IP network to build their own connectivity. IP VPNs present a number of advantages over building networks using leased lines or VSATs.

The complexity of building and managing a leased line network increases as the size of the enterprise network increases. VSATs require major infrastructure investments, time, and resources to install and manage them. It is here that IP VPNs prove to be the ideal solution. This is because the VPN service provider already has a sophisticated network infrastructure in place that a corporate can leverage to build their enterprise network quickly. The customer has to merely connect to the nearest Point of Presence (PoP) of the VPN service provider.

Managing an organizationís private network built on leased lines requires considerable amount of skilled resources. VPN service providers, on the other hand, have dedicated teams consisting of highly trained manpower, high-end network monitoring tools, and well-defined processes to ensure that the network offers the highest level of reliability.

In a nutshell

The major advantages of using IP VPNs over other conventional means of connectivity are in terms of:

  • Lesser complexity and better manageability
  • Higher levels of scalability and flexibility
  • Lesser chances of technology obsolescence
  • Lesser Quality of Service (QoS) issues
  • Lesser bandwidth limitations
  • Lesser limitations due to absence of proprietary technology
  • More cost of ownership benefits
Instances where VPNs are the perfect fit

A scenario where a VPN might be the perfect fit involves combination(s) of the business requirements listed below:

  • Where the number of locations is large (eg. Above 20) and growing.
  • There is the need for any-to-any connectivity between the various locations.
  • There are different types of applications running on the network and some (or all) of which are business/mission critical and hence requiring the network to be having uptimes greater than 99 percent.
  • There is a need to optimize the performance of the network by prioritizing some applications over others; need for traveling employees to connect to the Intranet while on the move.

Very often, there is a major need to augment the corporate network at very short notice due to changing business needs. Here again, VPNs prove to be very effective solutions. The network upgrade or change of topology can be done much more easily as compared to doing the same on a private leased line network.

Higher-end VPN service providers constantly upgrade their infrastructure with the latest developments in technology, thereby benefiting customers immediately. These customers get the advantage of such investments of the service providers.

In the case of VSATs, there is an issue of high latency (in excess of 500 milliseconds), which is a cause of concern for most CIOs as many applications do not work on such networks. Moreover, higher latency in the network makes the user experience poor. With a VPN, the basic backbone networks typically consist of high-capacity leased lines with high-end routing gear. This ensures that throughput is very high for networks which are built on such infrastructure.

There is a limitation in the bandwidth capacity that a VSAT network can offer. In case of VPNs, there is virtually no limitation to the size of the bandwidth that the end user can subscribe for.

Another disadvantage with VSAT networks is that enterprises tend to get stuck with one service provider because of investment in the proprietary technology of the service provider. Ideally, the reason for staying with a service provider should be dictated by the QoS being delivered. It should not be because of the proprietary nature of the technology invested in.

As the size of the network and the diversity of applications that need to be managed on the network grow, VPNs prove to be far more cost-effective as compared to leased line based or VSAT based networks.

Is there a methodology in terms of ROI and TCO to justify investing in VPNs?

Any network has various cost elements, both in terms of recurring charges as well as capital equipment costs.

Recurring charges are mainly on account of the leased line or VSAT usage charges, manpower costs, and AMC for the equipment. The capital cost is on account of the networking gear required to build the network. The larger the network, the more complex the networking gear becomes and hence, more expensive.

Our experience over time suggests that after taking all the above into account the TCO can typically come down by as much as 50 percent over three years, depending on the size and complexity of the network. The larger the network, the greater the scope for saving.

Are VPNs suitable for companies of all sizes and IT setups?

VPNs are definitely suitable for companies of all sizes. VPNs can be fine tuned depending on the size of the company, in terms of number of locations and their IT requirements. However, it is important to note that VPNs are not to be considered as a replacement of point-to-point leased lines.

For instance, if one has the need to connect only two offices, a VPN route can be much more expensive than connecting these two locations using a leased line. On the other hand, as the number of locations keep increasing, VPNs will become more and more suitable.

What are the latest trends in VPNs? How is the scenario in India changing?

Globally, IP VPNs have become the most accepted means of building enterprise networks. IP VPNs are spanning across enterprises as well as across the globe connecting all the value chain partners to the enterprise network. The concept of Intelligent IP Networks has caught on, where the same network is used to transfer data, voice, and video with QoS guarantees. A significant trend seen recently has been the merger of the Frame Relay and MPLS forums. This has enabled MPLS enabled networks to offer L2 MPLS or 'pseudo-wire services'. The significant feature of these services are the very high levels of security.

If you look at the Indian scenario, IP VPNs have come a long way with a strongly growing acceptance of this technology. In fact, many large enterprises have been using IP VPNs for the last four years, and have been very successful in running mission critical applications. Another trend seen in India is that enterprises are also increasingly looking at connecting their value chain partners and mobile workforce, particularly in industries like FMCG.

However, there are still some limitations for IP VPNs, especially with the manufacturing sector. Often, organizations build their manufacturing facilities in far flung areas for tax benefits. Some of these locations have very poor telecom infrastructure and as such VSATs become the only means of having reliable connections in these locations.

Another significant issue is that the current IP telephony guidelines allow the domestic IP voice communication only in a Closed User Group (CUG), thereby limiting the utility of VoIP applications. As such, IP VPNs in India may take some more time to become truly converged networks, a trend that has already caught on in global markets.

Anil Patrick can be reached at

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