Networking

Stopping at the LAN

For the greater part Small Businesses won’t look beyond a LAN. Wi-Fi and WANs are not a priority yet, finds Shivani Shinde

Networking requirements among small businesses end at acquiring a Local Area Network (LAN). Most of the companies prefer to have systems that are simple to deploy and easy to maintain. The survey points out that 68 percent of 180 respondents have already invested in some sort of networking equipment and 43 percent are planning to make further investments in 2006-07. The BFSI segment is the highest investor in networking with 81 percent companies having already invested in it and 56 percent planning to invest further.

Sanjay Jotshi, VP, Marketing, Nortel says that investment in networking among small businesses is governed by price, performance and ease in managing. “Small companies are looking for plug-and-play systems. Many prefer a single box multi-functional and multi-solution device,” says Jotshi.

He elaborates that simpler the product, higher the usability. “Give them a solution that is simple to deploy. For instance, the ability to download something from a Web site,” Jotshi adds.

"IT adoption in this segment has been low. The realisation of having an IT system came in with these companies becoming a part of the supply chain of global players" - Suprabhat Chatterjee National Business Development Manager, Cisco

The need for simple solutions arises out of the fact that these companies have never adopted IT for doing business. Suprabhat Chatterjee, National Business Development Manager, Cisco Systems, India & SAARC explains, “IT adoption in this segment has been either negligible or low. It has never been a priority. The realisation or the compulsion of having an IT system in place came in with these companies becoming a part of the supply chain of global players.”

The percentage of companies investing in networking is on the wane. For instance, of the 16 organisations surveyed in the BFSI segment, 43 percent would be investing in networking next year, whereas for 2005, 81 percent invested in this category. As for the services vertical, out of the 42 respondents, 69 percent have already invested and 43 percent are planning to invest more. Having spent considerably on networking the organisations feel that investments should be made in other areas.

Rakesh Singh, General Manager, Asia Operations, Application Networking Division, Citrix Systems, “Small organisations are looking for networking systems that are easy to administer, cost-effective and responsive. Today with the Indian small enterprises playing a crucial role in the global sourcing eco-system, it is important for these enterprises to be well connected, gain access to business applications, and provide data access to relevant parties.”

LAN is crucial

Networking is crucial for the small segment. Though they are not really looking at Wide Area Network (WAN) connectivity what matters is a robust LAN. 73.59 percent of respondents already have a LAN in place and 55.81 percent plan to invest in one.

The survey points out that the need for LAN is increasing as organisations are broadening their geographical reach and the first step towards networking is acquiring a LAN. In the FMCG/consumer durables segment, 84 percent have already invested in networking, and hence the investment in LAN is going down, with just 23 percent planning to invest further. Those planning to invest more in networking are the BFSI and manufacturing segments, as many of these companies are planning to open more branches.

Gerald Rodriguez, IT, Head, Tilak Nagar Industrial says, “We have a LAN. Though we have a branch office we have not gone in for WAN. But in future we plan to invest in VPN connectivity.”

Apna Sahakari Bank has 131 branches and each of them has a LAN with at least 15 to 20 users. Swati Mane, Senior Manager, IT, at the bank feels that once their core banking system rollout is completed, connectivity will be taken care of.

Jotshi agrees with the finding, “Small enterprises are typically single office/city organisations. Hence for them LAN suffices. Of course, there are instances of organisations with more than one office which go in for routers.”

"LAN will dominate spending vis-à-vis WAN in terms of ports deployment because any organisation will need to first interconnect all resources within the campus" - Rajesh Sahore Country Manager, India Allied Telesyn

Adds Rajesh Sahore, Country Manager, India, Allied Telesyn, “LAN will dominate networking spending vis-à-vis WAN in terms of ports deployment because any organisation will need to first interconnect all resources within the campus before connecting their offices with each other for information flow.”

However, Surendar K, Country Manager, Dax Network India points out that this trend was seen till last year. “According to forecasts, this segment is poised to invest 27 percent more than last year and a sizeable portion of it will go for WAN, connecting the new branches which have been created keeping in view multi-location competitiveness and new recruitments,” he explains.

Fast Ethernet to the fore

Fast Ethernet (100 Mbps) is the predominant LAN platform used by small enterprises. With 66 percent of the respondents across verticals having invested in it, the investment in 10Mbps has come down to just about 27 percent whereas Gigabit Ethernet is trailing at seven percent.

Sahore feels that while Gigabit Ethernet is becoming an attractive option it is still quite expensive when compared to Fast Ethernet. “Organisations use their networks for basic automation/workflow applications such as e-mailing, word-processing and ERP. These applications are not bandwidth-hungry and even a Fast Ethernet network suffices,” he says.

Small organisations will not be able to justify the additional cost of deploying a Gigabit Ethernet-based network. However, with the difference between the prices of Fast Ethernet and Gigabit Ethernet reducing it will be prudent to go for Gigabit Ethernet technology for future proofing.

Clearly the reason for high adoption of Fast Ethernet is the reduction in prices and need for faster connectivity. Brainwave Consultancy is into providing e-learning. They have 80 branches with the head office in Kolkata. Though WAN is not on their priority list they are using a Fast Ethernet 100Mbps network. Almost 10 percent of their IT budget is spent on networking.

Surendar agrees with Sahore, he says, “Fast Ethernet will be the choice of small businesses until they see any application needing more than 100 Mbps as a pre-requisite. At the same time, companies deploying applications like CAD, animation, medical imaging and Geographic Information Systems are using Gigabit Ethernet even today.” 

He also feels that most of the LAN uplinking is by default on Gigabit. There is hardly any price difference between a Fast Ethernet switch and an FE switch with a Gigabit-uplink. Hence this makes the SBs segment a default Gigabit user even today. “This is a healthy development and with Gigabit cabling already an entry level standard, Gigabit Ethernet is poised to grow in this segment.”

WAN needs to wait

WAN is still not prevalent among the small enterprises with most content with the existing LAN set ups. Sri Balaji Medical College and Hospital have a hospital LAN but plan to invest further so that they can connect the college to the hospital.

Chatterjee elaborates, “The type of networking set up depends on applications an organisation is running. Hence you will find manufacturing and IT/ITeS among the first to deploy IT.” He also points out that if an organisation has applications like SCM running on the network, they will seek the best offering from a technology vendor who can partner with them on their roadmap.

Wireless not yet a priority

Small enterprises are not keen on Wi-Fi. They prefer the LAN connectivity or Internet connectivity for connecting across a distance. Sahore says, “Though popular, Wi-Fi is more of a mobility tool which an organisation in its initial stages of networking will not consider a priority as it will have more number of desktop PCs vis-à-vis laptops.”

Jotshi adds, “Wi-Fi makes sense if you have a large campus or building where wiring is an issue. Considering that most of the companies in this segment are single location offices, Wi-Fi will be a low priority.”

There are however instances where organisations have gone for or planning to go in for Wi-Fi connectivity. Seadia Pharmaceutical is an instance; the pharma company has 15 locations (distributors). The company has LANs in place but also plans to go in for Wi-Fi connectivity for local branches. Girish Sharma, Manager, IT, Seadia says, “We plan to deploy VPN for our ERP, which is now used within the intranet.”

Surendar feels that Wi-Fi will be a major driver in this segment this year due to increase in projects that need temporary sites and training centres to be set up. “Though they were looking at IT as automation for financial accounting and word-processing in the past, with the availability of industry-specific applications they plan to use It more effectively. Hence, there will be huge growth for networking and mobile devices in this segment,” he adds.

Wireless is a good option for organisations which have a huge campus, say hospitals. The Hinduja hospital is planning to invest in Wi-Fi. Mahesh Shinde, Manager, IT says, “Presently we have a hybrid fibre network and 100 Mbps Ethernet connectivity. But we are undertaking major overhauling on our networking systems at a budget of a crore-and–half. Wi-Fi will be a key component of this.”

The other company looking for wireless connectivity is Sun Healthcare, manufacturer and supplier of capsules to pharmaceutical companies. Vinod Vincent, Executive Network Administrator, Sun Healthcare says, “We have LAN connectivity, but plan to go in for Wi-Fi for the benefit of laptop users.”

Jotshi sees a trend in higher adoption of networking by small enterprises. With the government gearing up its e-governance initiatives, B and C cities will be investing heavily in IT.

“Information flow has become a key aspect for any business and networking provides the medium to enable efficient information dissemination,” says Sahore.

—With inputs from Vinita Gupta