It is becoming clear that business networking is undergoing a transformation. Like all “transformations” it’s built on a combination of revolutionary but still emerging technologies, and problems that have been growing for decades. The mixture of these things creates unpredictable combinations, and results, so we can’t yet say for sure where we’re going to end up, other than that it won’t be where we are now.
The root issue for business networks is the challenges in cost-benefit that we’ve been seeing develop since the 1980s. For a time, computing-driven enhancements to productivity were limited by the network’s ability to connect the new information-intensive applications to workers. The golden age of networking came along because it was the limiting factor in applying new productivity options. That problem largely solved itself by 2013 according to users I’ve surveyed.
It solved itself for larger businesses, that is. Virtual LANs and virtual private networks (VPNs) came along to replace the private trunks and routers/switches, reducing both capex and opex for businesses big enough to consume them. At some point, though, you’ve reaped the incremental pent-up productivity benefits, and now buyers only want lower prices for the services. Lower prices and even less technical complexity are also the only pathway to getting small-to-midsized businesses on board. One path toward increasing network utility is to get everything connected, so these smaller sites are important not only as new potential service revenue sources, but also as a step toward getting network-driven productivity enhancement on a broader track.
SMBs may be the key to the future of business networking, and the reason is simple; business networking requires business sites. In the US, for example, there are about 5.8 million businesses and about 7.5 million sites, which says that about 1.7 million business sites are potential secondary-site multi-site network targets. Of that group, about 1.2 million are satellite sites of large businesses (about 180,000 businesses fit in this category), and half a million are sites of SMBs. The sites of large businesses are, according to my surveys, over 93% connected today, and those of SMBs are less than 25% connected. Less than half of those connected have a company-wide “virtual private network” of any sort, meaning that their sites, users, and resources appear on a common IP network.
Even large businesses often have small sites. Today, business VPNs connect only about a third of the connected large-business sites, while the rest use a variety of technologies to connect. Just short of 60% of these large-business satellite locations are part of a unified company IP network. Sites outside the US are a third as likely to have a business VPN connection as a US site, and less than 30% are on a company IP network.
Network operators worldwide agree that further growth in business VPN services based on Ethernet access is unlikely without price reductions that would lower net revenues for operators, because the business case for those connections quickly becomes untenable as the sites get smaller. Remember that in general, the benefit of networking to a site is proportional to the number of workers there. The smaller sites, whether from SMBs or enterprises, have less than 20 workers per site on the average (there are about 800,000 sites of this size in the US).
The big problem with business networking is the cost and availability of a common access technology. Business broadband connections cost several thousand dollars per month for less bandwidth than a consumer could obtain for less than a hundred. It’s been possible to get “business forms of residential broadband” for a decade or more, usually at between a 50% and 100% premium over residential bandwidth, which would still make it an order of magnitude cheaper. However, since it’s currently not possible to get MPLS VPN technology extended to these sites (and because the operations costs would be high even if you had it), we’ve not been able to provide a VPN strategy that covered everyone, everywhere.
All of this demonstrates that growth in business networking, which is obviously directly linked to growth in the number of business sites being networked, means having lower connection costs for at least one option for small-site connectivity. Operators have jumped on SD-WAN technology because it can make business site connectivity a viable option for sites with as few as four or five workers. And, of course, because MSPs can offer that extension of the VPN if the operators don’t.
SD-WAN is just the best-known of what are probably a half-dozen different approaches to building a universal company VPN where a single business service can’t provide it at tolerable price points. The majority of these either don’t extend the company VPN or use a more complex technology that requires more expensive equipment and a higher level of technical support. What SD-WAN does could be done, in some way, by many SDN and tunneling technologies too, providing that these were absorbed into a managed service so the support of the remote sites was easier. However, SD-WAN is an architected solution to a problem previously solved by custom integration, and that’s a very big step.
Today’s applications expect to run on an IP network, meaning that they expect all the features of an IP network to be available. If you build company connectivity on a mixture of technologies that don’t add up to being a unified IP network, stuff isn’t going to work as users want. It’s deadly to expose differences in connection technology at the application level. Given that, the number one mission of any business networking strategy has to be create a company IP network as your VPN.
The fact that the Internet is IP and is also ubiquitous may be whe Internet has already emerged as the logical way to extend VPNs to more sites. Where traditional wireline Internet technology doesn’t reach, you could in theory ride on Internet-over-cellular, Internet-over-satellite, or whatever. The Internet is indeed what some people said it would be, which was the dial-tone of the data age. There is a significant support cost advantage to having everything harmonized on Internet delivery except where true business access is justified, and of course the point where Internet delivery becomes the preferred option is changing in the Internet’s favor as consumer and consumer-like broadband improves.
Whatever the technology used, all of this combines to create a shift of business networks toward a more “abstraction-friendly” model, treating a VPN as an abstraction that rides on top of various transport/connection options. Services need to be agile at a time when transport networks are still stuck in place by long depreciation cycles, and often by longer standards processes. Whatever the network of the future is, it has to be more independent of the services of the future, or we’ll miss a lot of opportunity.
It can be that, whatever technology happens to take the critical steps. My talk about “logical networking” is an attempt to predict that that service layer of the future will be, based on how needs are evolving. I happen to think that SD-WAN is the closest thing to an architected approach to that logical-network-based service layer, but I admit that most SD-WAN implementations haven’t made that same jump. We could still see other paths to the future emerging.
We also need to address the reality that eventually the “easy” (relatively speaking) task of connecting all the business sites into a unified network model will be completed. My model says that by 2023, we’ll have connected three-quarters of qualified sites in the US, for example. At that point, we’ll need to find new ways for networking to enhance productivity, new benefits to drive future network growth, if we want to prevent network services from commoditizing.