META Trend Update: The 2004 Campus LAN

In 2004, IT organizations will renew investment in networking projects that had previously been put on hold, with an emphasis on voice and data convergence, wireless LANs, network security, and high availability. The network is becoming increasingly rich in services, and capacity is no longer a key buying consideration when evaluating a next-generation enterprise network.

META Trend: Enterprises will renew spending on campus LAN initiatives in 2004, with new allocations to voice and data convergence, wireless LANs, network security, and high availability. Large enterprises will further consolidate spending with one or two strategic providers. By YE05, Gigabit Ethernet to the desktop will become the preferred choice as pricing nears that of Fast Ethernet. Wireless LAN security and quality-of-service standards will be ratified, shifting the emphasis to management across wired and wireless domains.

META Group data on infrastructure spending shows signs of renewed investment in 2004. Most enterprises had put network infrastructure projects on hold during the past several years while the business rationalized expenses with revenues. The days of “carte blanche” approvals for network expenditures will not return anytime soon, and IT organizations (ITOs) are more likely to evaluate networking expenditures in the context of total cost of ownership and return on investment (ROI), with the business often requiring a solid business case before signing off on new capital expenditures. The network is evolving to incorporate additional services that extend its functionality - beyond that of simply providing contention-free connectivity between two points - toward being an enabler of advanced services such as security, mobility, user policy, integrated management, and application optimization.

To offset the commodity curve, networking vendors continue to innovate and increase the functionality of networking infrastructure. Boundaries between discrete technologies are blurring. Traditional routers have evolved into multipurpose devices capable of a plethora of connectivity options, along with enhanced security, telephony, and wireless intelligence. The wiring closet, formerly the domain of Layer 2 switching and hubs, is delivering greater intelligence from Layer 3+ functionality. Traditional boundaries between voice, data, and video are dissolving, as enterprises ramp up adoption of convergence solutions. Wireless LANs are on the radar screen of every major ITO.

During the next 6-12 months, ITOs will procure tactically to patch any holes in the current network architecture (e.g., software upgrades, sparing, interface migration). By 2005, tactical procurement will give way to a more strategic procurement process, with ITOs evolving the corporate network to be a robust multiservice platform capable of supporting the breadth of converged communications and mission-critical applications. By 2009, successful enterprise networking vendors will have developed expertise across infrastructure disciplines and be skilled at delivering integrated yet partitioned management.

A Vendor Update
In North America, META Group customers continue to give greatest consideration to Cisco, Nortel, and Extreme:

• Cisco: In 2003, Cisco increased its dominance in the enterprise networking space. The market continues to search for a strong secondary supplier, yet none has the breadth of product, service, customers, and commitment to R&D to compare with Cisco. Cisco hopes to continue growth by expanding into additional markets (e.g., IP telephony, storage, security, optical, wireless). In addition, Cisco is placing emphasis on increasing the value of a single-source network through integrated management and cross-platform services, such as security and user policy. How well Cisco executes on its management strategy is an open question; it has yet to deliver a comprehensive suite of management software in earlier efforts.
• Nortel: Nortel remains committed to its enterprise networking portfolio and is one of the few vendors that can provide a single source for voice, data, security, and wireless solutions.
• Extreme Networks: Despite its stagnant revenue growth, Extreme Networks refreshed its entire product portfolio in 2003, entering the wireless LAN market and proving its technical strengths. Extreme must grow revenues or risk being marginalized by other leading vendors.
• Other vendors: Foundry Networks remains very strong in specific verticals, especially in government and high-performance networking environments (e.g., research, bio-tech, media/entertainment). HP, with its ProCurve line, has made substantial headway in the medium business market, with some META Group customers taking a greater interest in the lower capital cost and lifetime warranty of its edge switches. Alcatel continues to enhance its data networking portfolio (recently in management) and has created a dedicated data networking sales team to focus on increasing its penetration in North America. We continue to see few new wins for 3Com and Enterasys in the large enterprise, in spite of each vendor’s continued focus on product development. Finally, Avaya has announced a strategic relationship with Extreme Networks, and its services arm offers multivendor support, effectively signaling the end of the Cajun line of data networking gear.

Where Is Wireless?
The explosion of vendors targeting the enterprise wireless LAN buyer continues unabated into 2004, despite the relative overfinancing of this market. Enterprises have taken a cautious approach to Wi-Fi adoption for both remote access and in-building uses, preferring trial use before deploying en masse. In 2H04, we expect at least 30% of enterprises to move beyond trials into full production deployment as standards solidify, architectures mature, and users are more able to determine vendor viability. Enterprises considering Wi-Fi adoption must evaluate solutions on their ability to integrate into the overall campus network. The degree to which the intelligence is distributed in the access point or centralized in a switch or appliance is less important than the software capabilities of the wireless system (see Delta 2399). Users should evaluate wireless LAN systems and vendors on: 1) centralized, system-level configuration and management; 2) RF monitoring and operational reporting; 3) rogue wireless network detection and reporting; 4) standards-based security; 5) seamless roaming and persistence for voice and data applications; and 6) site survey and interference mitigation.

Due to the high likelihood of consolidation in the enterprise wireless LAN market during the next 12-18 months, users must be especially diligent in evaluating leading vendors. These vendors include 3Com, Airespace, Aruba, Cisco, Extreme Networks, Nortel, Proxim, and Trapeze Networks. Symbol Technologies failed in its first attempt to deliver a credible enterprise-class product, but a new product is slated for release in 1H04.

Services Integration
Declines in component prices will have users procuring Gigabit Ethernet in wiring closet switches by YE05, due to price parity with 10/100 switches. However, this procurement will remain driven by investment protection goals rather than a true need for Gigabit switching at the edge of the network. A more significant driver for new investment will be the provisioning of advanced services. The business focus on security is broadening from mere perimeter security to comprehensively integrated network security. The hardening of the internal network will allow security administrators greater control to respond to malicious attacks and potential threats by isolating specific parts of the network. Furthermore, through the use of isolation technologies (e.g., VLANs), applications can be logically separated, creating a more modular approach to protection of resources across the network.

As previously separate technology domains are integrated into a single common network, the ability to maintain independent management views and allow distinct levels of access for administration becomes more important, as do improvements for changing ITO control processes. Networking vendors’ attempts to present a system-level view of management have been insufficient. Furthermore, vendors such as Cisco have struggled to present a single, partitioned interface across the breadth of their product portfolio, thereby allowing disparate operational teams to access the same hardware using the most appropriate method for their function. Without simplification of software (e.g., Cisco IOS) and system-level management capability, networking vendors will struggle to fulfill the promise of service consolidation and integration into the thread of the network.

Bottom Line: In 2004, enterprise customers will renew networking infrastructure investments. Users should place priority on enhanced features to enable voice and data convergence, wireless integration, and additional security and management.

Business Impact: Smooth business operations are inextricably tied to the availability of information resources. A robust and highly available network is key to guaranteeing timely delivery of critical business information.

META Group originally published this article on 11 March 2004.