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Issue of June 2006 

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Infrastructure Strategies '06

Optimising bandwidth usage

Data volumes generated by enterprise applications are bloating and so are bandwidth requirements. Prices may have fallen but the idea is to consolidate rather than acquire fatter pipes, says Kusum Makhija

Reduced access costs have improved Internet penetration and usage. As companies extend their enterprise wide applications to encompass their primary and secondary distribution chains, their needs for bandwidth are on the rise.

Stress on consolidation

Along with falling connectivity prices, enterprises have witnessed increasing demands for better connectivity among users. Organisations are moving away from just plain maintenance to actual consolidation and standardisation efforts. This is a positive sign showing better connectivity infrastructure for enterprises embarking on these ventures.

Says Satish Mahajan, Senior Manager, IT, Hinduja Group, “We started with dial-up, moved on to leased line and now optical fibre for our voice and video applications. I think our existing infrastructure is a judicious mix. We may go for wireless in future but as of now consolidating the existing setup and getting the maximum throughput is our priority.”

Leased line remains prevalent

Leased line remains the preferred medium for connectivity among enterprise users, followed by ISDN, Dial-up, DSL, Satellite and Cable

Leased line remains the preferred medium for connectivity among enterprise users, followed by ISDN, Dial-up, DSL, Satellite and Cable. 57 percent of the respondents are presently investing in leased lines followed by 34 percent investing in VPNs for interoffice and WAN connectivity. The planned investment for the next year in these areas is significantly low. This could be because most companies have established leased line and VPN connectivity as part of their basic connectivity infrastructure and are now looking at maintenance and consolidation.

RF links and VSATs remain at a constant 26 percent indicating a stable level of deployment. Most organisations use this as a backup medium or for remote connectivity where leased lines are not available. Frame relay and ATM have finally been phased out from the enterprise connectivity map with very little legacy infrastructure among companies. There is no fresh investment in these two technologies. There is also an increase in fibre and gigabit Ethernet for campus connectivity.

Take Eveready for example: the company is using a hybrid of various connectivity solutions at their premises. For the factory and regional branch offices the company is using a peer-to-peer leased line connection. They also have a backup ISDN connection and are using fixed wireless connection over a VPN client for connecting their warehouses. Eveready is also using VSAT and RF links for remote location connectivity.

Garware Polyester is another organisation using leased line rampantly for interoffice connectivity. The bandwidth requirements of the company have increased considerably; from a 64 kbps connection they have moved to a 2 mbps line.

CIO View
Satish Mahajan
Senior Manager, IT
Hinduja Group

A network infrastructure that is high on functionality and low on redundancy is what we all look for. The ever-increasing demand for bandwidth can be properly utilised with a well-designed network. In order to get the best uptime and reduce latency, it is important to do regular auditing of your systems and infrastructure.

VPN is catching up

Leased lines may be ubiquitous; however these have their own problems, mainly concerning last mile connectivity and latency. Organisations are increasingly looking at MPLS-based VPN as an alternative medium. MPLS may be a tad more costly but the high reliability and feasibility it provides compensate for this. As it is CIOs are not looking at cost as the sole deciding factor for IT investments any more.

Says Vivek Joshi, VP, IT, HDFC Bank, “We are looking to invest in MPLS-based VPN and will gradually replace leased lines. MPLS is quite scalable, easy to roll out and upgrade, and provides a good granularity for usage. We are running a pilot project for MPLS VPN and depending upon its success we shall soon begin phased roll out. As far as Wi-Max is concerned, we have not seen any major successful commercial rollouts so far. A lot has been said about it but not much has been seen.”

CIO View
Ajit Inamdar
VP, Finance & Accounts
Garware Polyester

We are not planning much investment this year except consolidating and maintaining our existing infrastructure. Annually we have roughly about 10 percent of our budgets slotted for bandwidth and connectivity. Cost, reliability and uptime are the top three priorities for us when it comes to choosing a connectivity medium. We are happy with our existing leased line infrastructure as it gives us enough robustness and are not looking to shift to any other connectivity medium as of now. My first concern is going to be cost as far as IT investment is concerned. There is a constant search for better and cost-effective solutions. The connectivity medium particularly has to be cost-effective and easy to use, rather than a complex hi-tech medium with its own set of complications.

Applications fuel bandwidth requirement

As far as Wi-Max is concerned, we have not seen any major successful commercial rollouts so far. A lot has been said about it, but not much has been seen

ERP leads the pack with more than 65 percent users claiming it to be the key factor driving the need for bandwidth increase. This is followed by messaging applications and centralising IT infrastructure. Enterprises are also increasingly using bandwidth for intranet video conferencing and VoIP applications. Online training however, is lowest on the list with only 6 percent of the users using bandwidth for such applications.

“ERP is the most bandwidth-hungry application with over 150 users in the organisation on ERP systems. We are looking to invest in a wireless broadband solution for WAN connectivity for factories and regional offices spread across 70 locations. We already have an IP-VPN for remote locations,” says Arup Chowdhury, GM IT, Eveready.

Ajit Inamdar, VP, Finance and Accounts, Garware Polyester agrees, “The ERP application is the most bandwidth-hungry of all, since it forms the core of the company’s enterprise application infrastructure. ERP is linked to our sales tracking, scheduling and related activities and hence consumes around 40 percent of bandwidth. The next on the list is the e-mail application, which consumes 20 percent of the total bandwidth. Both these applications require 99.9 percent uptime and hence are very crucial.”

There is a huge demand in bandwidth usage and the number of applications is very high. Whatever amount of bandwidth is supplied gets consumed. “Applications like video conferencing are a common thing today, widely used even by middle-level management and these are very bandwidth-hungry. The Oracle-based business applications at the client server level demand a lot of bandwidth followed by messaging and e-mail applications. The load on messaging applications is very unpredictable; as a result, it is difficult to estimate specific bandwidth requirement for these. More bandwidth is required for client server applications than the web-based applications,” explains Joshi.

CIO View
Vivek Joshi

Reliability, feasibility and cost are the important factors to be considered while choosing a medium for connectivity. Bandwidth consumption has grown fourfold within a couple of years’ time. Until the year before last, 64 kbps was enough per branch; now it has shot up to 256 kbps, but at almost the same cost. In the banking scenario, practically every application demands bandwidth, whether it is core banking or the surrounding applications.

Vertical Traction

A driver for bandwidth in the government sector is the plan to interlink all villages by Internet. This will be a tremendous market as far as connectivity is concerned

Bandwidth consumption across verticals has been humongous. Interlinking of branches is being done aggressively by all banks, particularly PSU banks. This is leading to high demand for bandwidth. ATM networks, inter-bank connectivity and e-banking are some areas fuelling bandwidth requirements in the BFSI vertical.

The investment in the manufacturing vertical is mainly driven by enterprise application software deployment like ERP, SCM and CRM to integrate the processes in the enterprise. The interconnectivity among widespread networks is leading the organisations towards investing in IP-VPN and VoIP. There is also a high growth in e-business, which will drive the organisations towards higher cost efficiencies and economies of scale. As a result of these factors, bandwidth consumption is on a rise.

The ILD traffic in telecom is growing, leading to increase in voice traffic. The NLD traffic is leading to more inter/intra circle traffic. More players are coming into the markets of cellular and basic telephony. Bandwidth demand is projected to rise exponentially.

The major area for growth in ITES segment is that of voice channels. Growth in the number of call centres is driving demand for more voice-application-ready channels. BPO/BackOffice operations are on the rise. This is primarily a data-hungry field and will lead to more data channels being required. This will lead to a substantial growth in IT spending and a higher consumption of bandwidth.

A driver for bandwidth in the government sector is the plan to interlink all villages by Internet. This will be a tremendous market as far as connectivity is concerned. E-governance will also demand higher connectivity. PSUs will be the major targets for bandwidth in this segment. Since they are driving government IT spending, there will be a need for more bandwidth to satisfy their connectivity requirements.

Survey Highlights
  • Leased line (75 percent) is the most preferred mode for Internet connectivity followed by ISDN (46 percent) and Dial-up (42 percent).
  • Penetration of leased line is as high as 86 percent in IT/ITES.
  • Leased line (57 percent) is the preferred mode of inter-office connectivity followed by Fibre (36 percent) and VPN (34 percent).
  • DSL has made steady inroads this year, no doubt due to BSNL and MTNL.
  • In terms of intra/WAN, VPNs are being increasingly used even though leased lines are most common.
  • Frame relay and ATM seem to be out.
  • Enterprise-wide applications (65 percent) followed by messaging server (38 percent) are the top two factors driving the need for increases in bandwidth.
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