VPNs

VPNs offer low-cost remote access

While leased lines remain the preferred option for WAN connectivity, VPNs have become a popular option for enterprises that need to offer access to their employees in far-flung areas where the telephone network is spotty and dedicated links are out of question. Gaurav Patra takes a close look

Companies that have recently deployed new WAN infrastructure are using VPNs for back-up or to handle overflow traffic on point-to-point circuits, says Arup Chakraborty

Enterprises have been using remote connectivity for quite some time. A virtual private network (VPN) is an attractive solution for connecting their branches in rural or semi-rural areas. The other area where VPN has taken off is in acting as a back-up to dedicated wide area network (WAN) links. That said, VPN cannot match leased lines for service quality or security though they have improved tremendously in these areas over the last few years. Their biggest advantage is that they can be set up over a wireless in local loop (WLL) link in areas where—forget leased lines—even fixed phone lines don’t exist. Another important plus point is that VPNs are mostly implemented over dial-up links, making them very cost-effective. Organisations like BPCL use VPNs to tie their far-flung offices to the enterprise WAN.

"The VPN market grew strongly last year, largely due to companies deploying new WAN infrastructure. A lot of these companies are using VPNs for back-up or to handle overflow traffic on point-to-point circuits," says Arup Chakraborty, HCL Comnet’s general manager for Network Services. According to IDC, revenue from VPN services will increase from Rs 980.5 million in 2001 to Rs 8,586 million in 2006, with a compounded annual growth rate of 63 percent.

Enterprise applications go online

To a certain extent, VPN deployments are being driven by the trend towards giving employees in branches access to the corporate WAN so that they can directly log into the enterprise resource planning (ERP) system from anywhere in the country. Companies are now moving more enterprise applications online, generating demand for real-time communication between sites or branches, as well as data replication and transfer. "Enterprises are looking at combining the effectiveness of information sharing via the network, with the need to ensure security, manageability, functionality and privacy, while always being focussed on cost control," says Shekhar Avasthy, who heads the Internet, Communications and Convergence Research division at IDC India.

Affordable remote access

VPNs offer an affordable means of providing remote access. The technology works over dial-up links which, though less reliable than leased lines, are much cheaper. A VPN can also be deployed over WLL, making it a popular option for integrating rural/semi-rural offices into the enterprise WAN. "The popularity of VPNs is on the rise largely because of the stability, reliability, interoperability, manageability, ease of deployment and cost savings involved in using the Internet as a transport mechanism. VPN solutions have seen high offtake since corporate customers realise that they offer a solution for secure connectivity for their mobile executives," notes Naresh Wadhwa, Cisco Systems’ vice president for India & SAARC.

Service providers

Indian ISPs, which have been looking for a means of bolstering their revenues, have latched on to the VPN market. Sify, for instance, offers VPN services to Indian companies using Cisco’s Multiprotocol Label Switching (MPLS) technology. MPLS gives network operators greater flexibility in diverting and routing traffic around link failures, congestion and bottlenecks.

Enterprise users

Today, applications are driving the industry. Critical components that customers are looking for are performance, reliability and availability. These factors are prompting them to start looking at appliance-based firewalls, IDS and VPN solutions that provide enhanced performance, ease of deployment and manageability.

Connecting the supply chain

Another driver is the need for a technology that lets a manufacturer connect the companies that form its extended supply chain to its own procurement systems. Experts believe that extranet e-business activities will be the prime driver for the Indian VPN market in the next few years. "SCM’s advent, and the basic need to get connected with suppliers, has fuelled the demand for VPNs, especially in distribution and logistics companies," says Ashok Kumar, HCL Infinet’s vice president for operations.

Workforce mobility

Workforce mobility and virtual organisations are popular concepts, particularly among MNCs. Marketing executives on the move can use VPN tunnels to access the corporate WAN from remote locations. All they need is a Net connection and VPN client software on their notebooks, and they are in business almost anywhere in the country.

Back-up for the WAN

VPNs are being used as a back-up network for those rare occasions when an enterprise WAN link goes down. It would be prohibitively costly to maintain redundant leased lines. VPN fits this role admirably since it is cheap, usable and convenient.

Enterprises are looking at combining the effectiveness of information sharing via the network, with the need to ensure security, manageability, functionality and privacy, while always being focused on cost control, says Shekhar Avasthy

Managed VPN services

These services are an additional source of revenue for service providers who supply, bill and monitor the performance of VPN services for their corporate customers. "A service provider can offer a managed VPN service based on MPLS technology or IPSEC technology or even both, depending on the customer’s requirements," informs Wadhwa.

Market drivers

Typically, in India, VPN networks are used to access applications such as ERP, messaging or custom database applications on Oracle or SQL Server that are being brought online. Supply chain applications are a logical candidate for VPN usage, particularly with Tier II suppliers who may not access the manufacturer’s WAN on a very frequent basis.

Manufacturing and the service industry are the biggest adopters of VPN technology in India. Sub-segments such as heavy engineering, consumer durables and fast moving consumer goods have pioneered the concept of using VPNs to access ERP applications from regional, branch and area offices. VPNs are used to link these offices to the head office for logging-in sales figures. Online bookings and order processing by major distributors can also be undertaken using a VPN connection.

The banking and finance sector is using managed VPN to shift processes online. VPNs offer scalability without any delay, and are being used by some banks for online transaction processing. The Bank of Rajasthan has migrated all its transactions online using HCL Infinet’s VPN.

Central and state governments could be big users of VPN, but this segment is mostly untapped. Diverse government departments can use VPNs for remote access in rural areas and for e-governance projects. Those already doing so include the department of biotechnology, which is migrating to public infrastructure for supporting research communities. The Airports Authority of India is also using VPNs, citing cost effectiveness, scalability and quality of service (QoS). C-DAC, under the ministry of IT, is providing VPN solutions. ISPs offering VPN connectivity can also play a major role here.

Supplementing WANs

VPNs, by their very nature, can’t match dedicated links in traditional WANs on reliability and QoS. But they can supplement WAN connectivity and act as a fallback mechanism. Industry experts see secondary activities being shifted to VPNs, accompanied by downsizing of traditional WANs. For example, HCL Infinet has done a project for LG Electronics wherein their complete VSAT network has been downsized and complemented by VPNs.

Single window management solution

Service providers are ready to offer a single window management solution to their existing VPN customers for tracking service levels, enhancing network performance, and providing the right bandwidth for the network, thus increasing return on investment. Basically, they are looking at providing a single point of contact for all network-related issues. For this to happen, they need to work along with the customer to design exact bandwidth for the network, provide bandwidth and network gear, and implement and manage the network for the entire life-cycle. In days to come, both service providers and solution providers will be focussing more on the security aspect of the VPN network.

According to Naresh Wadhwa, VPN solutions have seen high offtake since corporate customers realise that they offer a solution for secure connectivity for their mobile executives

Where VPNs fall short

"Although VPN as a technology option has been accepted well by bigger companies, its growth in certain segments like SMEs has not shown the expected results. SMEs have perceived VPNs to be the exclusive domain of large enterprises, which is a big misconception. SMEs can harness VPNs to enhance their productivity," comments Kumar. Clearly, vendors and service providers have to educate SMEs about the benefits of using VPNs.

VPN service providers have to depend on the basic telephony service providers for last mile provisioning. This stops VPN service providers from offering an end-to-end service level agreement, though redundancies are available for the last mile.

CIOs still have concerns about security of data and voice. "VPN security is still a major concern, though this is slowly changing with the new authentication and encryption technologies being deployed to ensure confidentiality and data integrity," says Chakraborty. Adds Wadhwa, "In India, enterprises have moved from ‘beyond firewall security’ to a more comprehensive perception of security solutions such as VPN, PKI, IDS and network management. Enterprises realise that network security is a matter of proactive strategy, and they need to invest in that."

The future of VPN

Initially, service providers were talking about VPNs for securing voice traffic. Then when IPsec-based security devices became popular, VPN became synonymous with tunnelling over the Internet for establishing data links. Now a new type of VPN is aimed at LAN interconnection. It is still early days for the technology, and network-based VPNs (NB-VPNs). New technologies like virtual routing, MPLS, IPsec in the cloud or GRE tunnels are being used here. They may be layered on top of an ATM network, or directly over optical fibre. Carriers offering LAN interconnection can save money by using VPNs instead of pure ATM or frame relay switching.

In the coming years, VPNs will gain popularity by tying Tier II suppliers into the manufacturer’s supply chain. Companies that want to slim down their WANs, whether leased line or VSAT-based, will also use them. VPN over cable or DSL is another interesting development. If the Indian broadband market takes off, it will provide further impetus to VPN services. Service providers are looking at offering value-added services such as managed security, managed NOC and even centralised contact centres. The question now is whether SMEs will accept VPNs as a useful business tool. Sooner or later the enterprise market will get saturated, as it happened with ERP, and vendors will rely on SMEs for growth.