Virtual Reality

If you follow the computer and information business long enough, you’ll soon start to add up the number of can’t miss technologies that light up the skies like a supernova, only to fade into obscurity just as quickly.

Pen computing was so big once that it commanded a massive pavilion at one of the big Comdex shows. "Pen what," you now ask? Voice recognition as a mainstream technology is anything but. And haven’t those network computers just proliferated! No, as a matter of fact, they have not.

There is one technology, however, that burst onto the IT scene about 18 months ago, gathered significant interest at companies of every size, and is poised for growth that will rival or exceed any other information technology available. I’m talking about the communications phenom called the virtual private network, or VPN.

Simply stated, a VPN is private communications network carried over a shared IP-based network backbone. What VPNs come down to is this: Users can have the bandwidth and reliability of T3 or T1 type networks but at a fraction of the cost.

Think of VPNs as private little tunnels -- for your network traffic only -- bored into the non-private communications network we call the Internet. With VPNs you have a secure gateway going into the tunnel and another secure gateway coming out the other end.

Companies maintain the security of VPNs by restricting use to authenticated users. This is accomplished through a security policy server that maintains a list of who is an authenticated user. For small companies, this server can be nothing more elegant than an NT server. For beefier operations, authentication comes from a policy-based management server.

The bottom line is this: VPN providers are getting better each week at delivering secure corporate network connections by using the Internet while the user gets the functionality and reliability of a leased private line.

If it sounds too good to be true, check out the growth numbers, which by themselves, no matter what the source, are compelling.

The CIMI Corp. predicts that last year’s $3 billion in worldwide revenue from VPN-related services will balloon to nearly $14 billion by 2002.

In a study of nearly 200 network IT managers, the trade publication NetworkWorld found that of the companies without a VPN, a staggering 90 percent say they will install a VPN within 18 months.

Network consultant TeleChoice Inc. polled early adopters of VPNs. The survey found 92 percent of respondents to be either satisfied -- 42 percent -- or very satisfied -- 50 percent -- with VPNs and the service providers that deliver them. Can you recall any other technology that met with such approval by the early adopters?

VPN interest is already driving some markets. In a just-released report, International Data Corp. (IDC, found that the dramatic 106 percent annual growth in encryption software was "driven by virtual private networks."

Consider the experience of Boston-based Forum Corp., an international training consultant. Forum turned to VPNs to slash international communications costs, which for its leased ISDN line were running as high as $10,000 per month for its Far East connection alone.

With VPN services provided by its Internet service provider (ISP), Forum was able to reduce its bills by 70 percent, to about $3,000 per month. Forum also gained the ability to quickly and easily add new nodes to its network when needed.

Hitachi Metals America Ltd. turned to VPNs for several reasons, including the ability to do videoconferencing without paying for idle bandwidth when videoconferencing is not in use. Hitachi’s VPN ISP built a customized, bandwidth-on-demand network Hitachi could afford. Another satisfied VPN users.

More to the point, TeleChoice estimates that first-year costs of a sample 15-node network based on leased T1 lines today is about $295,000, compared with $146,000 for a managed VPN.

But, it is far more than just cost savings that is driving users to VPNs. IT managers are feverishly trying to meet the business demands for extranets that link the company with suppliers and customers, while maintaining security and without breaking the bank. --Bill Laberis is president of Bill Laberis Associates Inc. (Holliston, Mass.) and former editor-in-chief of Computerworld. Contact him at

Must Read Articles