Connectivity is the pipeline that drives today’s businesses. With firms increasingly moving to digital business models and relying heavily on data flow, ensuring unhindered flow of information is vital.
The advantages are obvious. Strong connectivity allows firms to become more agile, make better decisions, prepare for upcoming challenges, and respond better to market demands. However, for traditional firms that were formed before the digital era, getting such connectivity anywhere and at any time can be a huge challenge. With margins getting thinner and operating costs slimmer, many IT teams do not have the luxury to replace or constantly upgrade their exiting networking infrastructure.
At a recent Talktech executive round table on "Future-proofing your digital business connection" organized by Computerworld Hong Kong together with China Telecom Global, senior IT representatives from various traditional industries highlighted the challenges that they face, and solutions they are looking for. Below are some key insights.
Hybrid will be norm
All traditional businesses face a huge challenge—on premise legacy technology. It can be a huge hurdle when transitioning to an online, always on digital business model.
The simple truth is that these solutions were not designed for the digital era. Customizing them to be connected can be difficult. But replacing them with more modern solutions can be equally expensive.
So many firms choose the path in between. “We are hybrid. From what I see, especially in the financial services industry, we are trying to take out the human from the backend processes, and enabling more human interactions in the front end, giving more opportunities for our clients and agents to work together,” Andy Wong, head of information technology, FTLife Insurance said.
Patrick Tam, head of Group IT, China Merchants Loscam noted that his company is already “95%” virtualized using private cloud. “On the infrastructure side, we are in the midst of becoming hybrid. We are now moving more and more to the cloud,” he said.
Shipping firm ZIM Integrated Shipping Services Ltd is also taking a hybrid approach to modernizing its systems. “Shipping is still conventional. We need to modernize our fundamentals. We have the legacy systems that are working and we need these to co-exist. So, we are doing a lean modernization with digital plugins on top of it, and slowly moving to digitalization and the cloud,” Nusky Syed Abuthahir, IT director, ZIM Integrated Shipping Services said.
Manuel Restrepo-De Los Rios, regional head, Asia IT at AXA Asia, noted that IT & business teams need to segregate inefficiencies gained from legacy systems before going digital. “You need to go with a lamp into the gutters, and look at the business and operation process flows. To go digital: put aside all the buzz words and be pragmatic. You need to have clearly defined business processes and metrics, be able to articulate how to do straight through processing (STP) which does not touch humans, and be able to understand the customers’ demographics and market segments so your design and user experience reflects your strategy & brand values,” he added.
SD-WAN offers benefits
All participants noted that connectivity is vital for digital success. Without the right pipes, they will not be able to gain the benefits that digital transformation promises.
Nemo Lin, director, Cloud Operations Center, China Telecom Global Limited, observed that many enterprises are looking at SD-WAN. Standing for software defined wide area networking, and part of software-defined networking (SDN) approach to computer networking. It proposes the use of software to connect and enable enterprise connectivity for branch offices and data centers across large swaths of land.
It typically creates an encrypted overlay network on top of the actual network, which can be broadband and MPLS, and performs various optimization technologies in the data layer. It is usually application aware, and performs application prioritization assures delivery of data, packet reordering, FEQ and data optimization.
One key advantage of SD-WAN is automation. “Automation is a big one. A lot of people are moving away from traditional ways of building the network, and finding ways to use less people to build networks,” Shashank Bindal, IT director - Infrastructure and Technology Services, GE said.
Another motivator for many representatives, like Francis Fung, chief technology officer of Midland Realty, Billy Shum, head of MIS for LT Commercial Real Estate Limited, and China Merchants Loscam’s Tam, is optimization. SD-WAN builds on current WAN optimization techniques that look at traditional traffic patterns.
Flexibility is yet another key advantage. With SD-WAN, firms can go a step further by looking beyond MPLS and consider inexpensive internet services. Essentially, firms can choose the protocol based on their requirements. In some cases, the broadband internet may not only be cheaper but just as reliable and fast as MPLS.
China Telecom Global’s Lin noted that in China, for example, the local loop is fast and stable. Firms can take advantage of Dedicate Internet Access (DIA) to gain broadband internet connectivity within China and save costs. They can use MPLS or dedicated leased lines to connect to their headquarters overseas.
Design for diversified environments
According to Lin, SD-WAN is the ideal connectivity solution for today’s businesses who are managing various connectivity environments.
“Through our experience with the One Belt One Road policy, we found that internet access in developing countries may not be as good. SD-WAN still offers our customers more flexibility, and elastic connectivity to the cloud beyond on-premise data centers,” he said.
Another advantage of SD-WAN is that you are not tied to specific equipment. In fact, SD-WAN can be enabled over any equipment with the right specifications. “You are separating the software pieces from the hardware piece. Traditionally, you will have private and public networks. Now you can do it all on the same box, based on policies,” GE’s Bindal said.
China Merchants Loscam’s Tam agreed. He noted that his firm is now using centralized networking policies to manage remote sites across the Asia Pacific region. “It makes our life a lot easier,” he added.
SD-WAN will take time
While the advantages of SD-WAN are clear, participants noted that adoption will take time. Justifying to a board that has poured money into previous technologies will not be easy.
“It is a question of what you want me to do with the previous investment. Should I throw it away? it is not possible,” Bindal said.
However, SD-WAN’s ability to be cost efficient and elastic may drive its popularity. “Our primary drivers will be cost and elasticity, without compromising security—which is a given,” said ZIM Integrated Shipping Services Ltd’s Abuthahir.
In the near future, an emerging driver will be Internet of Things (IoT). “When you are talking about connectivity, having a clear picture of available capabilities is key as there is digital to human and then with digital to digital, we have IoT. That will have a profound transformational and disruptive impact in the way we do our lives,” AXA Asia’s Restrepo-De Los Rios said.
IDC estimates that in 2015, sale of SD-WAN gear stood at US$225 million. By 2017, the figure stands at US$1.19 billion reflecting the interest among enterprises to resolve challenges created by increasing cloud, mobile, big data and analytics traffic.
Gartner estimates that there are over 6,000 paying SD-WAN customers with more than 4,000 production implementations worldwide. The analyst recommends enterprises to consider the technology when refreshing WAN edge equipment, renegotiating a carrier contract, building out new branches, or aggressively moving apps to the cloud.