With IP networks taking on more and more responsibilities by supporting more services, it is only natural that these networks be recognized as strategic resources. This characteristic of today’s IP network is independent of its scope or purpose as it has edged into all aspects of our lives. Let’s look at “what-if” scenarios for a dramatic assessment of our dependence on the Internet:
• Home: What if your home loses IP connectivity to the Internet? Your
VoIP telephones will not operate, you will not be able to check your e-mail through your PC, you will not be able to pay your bills online or order a product that just went on sale, and your child will not be able to complete research on a report due tomorrow.
• Business: What if your company’s intranet becomes impaired or is no
longer operational? The consequences depend on the type of business and can range anywhere from an employee being unable to do his job because he cannot access necessary data, to entire batches of products being lost due to lack of industrial process monitoring, to millions being lost every minute because the stock market is not functioning. The loss of online customers or of customer confidence is damaging to business. The implications are not only financial, but they can be life threatening.
NOTE A study by Infonetics Research shows that network outages cost large U.S. enterprises an average 3.6 percent of their revenue per year; medium-sized businesses lose 1 percent of their yearly revenue due to network outages. The vertical market analysis shows the following losses in percentage of yearly revenue due to network outages: finance, 16 percent; healthcare, 4 percent; transportation/ logistics, 2 percent; manufacturing, 9 percent; and retail, 5 percent. For more information on this study, read “The Costs of Enterprise Downtime: North American Vertical Markets 2005,” by Rob Dearborn, Rick Napolitan, Laura Whitcomb, and Jeff Wilson. [http://www.calltower.com/pdfbin/42.pdf]
• Internet: What if Internet connectivity is impaired or lost? The branches
of a retail store may be unable to process credit cards. You would not have connectivity for your PDA. Businesses such as Cisco and Dell that depend on the Internet for order processing will lose revenue. Businesses that depend exclusively on the Internet, such as eBay, Amazon, and Vonage, will be completely incapacitated.
NOTE On June 9, 2005, Amazon’s website was down for 41 minutes. Based on its March 31 earnings report, this time indicates an $8.8 million per hour revenue loss; the outage cost Amazon $6 million and at least 1 million upset customers.
• National: What if the IP infrastructure of a country is not operating or it
is isolated from the rest of the world? A piece of each of the previous scenarios would be instantiated in this case. The losses to the national economy would be significant, particularly in the context of a global market. Public service would be significantly affected.
NOTE In the study “Costs to the U.S. Economy of Information Infrastruc- ture Failure” [http://www.usnews.com/usnews/biztech/articles/ 060828/28internet.htm?s_cid=rss:site1], authors M. Eric Johnson, Scott Dynes, and Eva Andrijcic estimate that the impact of a ten-day Internet outage on the automobile industry would be losses of $65.6 million, whereas a similar outage impacting the Supervisory Control and Data Acquisition (SCADA) system in oil refineries would gen- erate losses in the range $404.76 million. The cost of one hour of stock exchange downtime is estimated to be in the $6–7 million range.
The strategic importance of the IP environments is reflected in the effort and investments put into protecting them. Home users prefer broadband access not only for its higher bandwidth but also for its “always on” characteristic. Businesses build highly redundant, highly reliable intranets. As an example, the New York Stock Exchange has parallel networks to protect against failures.
Many companies have moved from private line and Frame Relay wide-area network (WAN) services to Internet-based Virtual Private Networks (VPN). In the process, they have realized significant economic savings, have been able to increase network capacity, and have experienced improved network performance. A significant contribution to business comes from the contracts that cover the maintenance of those companies’ global infrastructure. The United States continues to maintain control of the Domain Name System (DNS) infrastructure, which, in effect, implies administrative control over the global Internet. Some governments manage all gateways to the Internet in order to have full control over the information that enters or leaves the country. All these examples highlight the value placed on IP infrastructures in homes and businesses and at the national level.
If the minor service interruptions that might only annoy us temporarily are not sufficient to remind us of how critical IP infrastructures and IP devices are to us, we get from time to time more sobering reminders in the form of security threats or incidents. Such events place a clear price tag on the importance of IP in today’s economy. The Infonetics Research study “The Costs of Network Security Attacks: North America 2007” [http://www.infonetics.com/cgp/login.asp?ID=27] indicates that large U.S. companies will lose 2.2 percent of their annual revenue due to IP infrastructure downtime caused by security attacks. Small and medium- sized businesses stand to lose 1 percent of their annual revenue due to the same causes.
Security threats also highlight the importance of IP networks to the well being of people. On May 3, 2004, an extortionist hacker compromised the life support systems of the National Science Foundation’s Amundsen-Scott South Pole Station, threatening the lives of its residents. A possibly tragic turn of events was averted by a rapid and successful effort by the law enforcement agencies of several countries. It is not surprising that in many countries, crimes against the IP infrastructure and IP services are prosecuted by dedicated national and international law enforcement resources and are severely punished.
There is, however, much more to the strategic characteristic of the IP networks than these defensive aspects. The IP infrastructures are an essential part of all long-term plans. They support and facilitate the implementation of organizational- and national-level strategies. Businesses build IP infrastructures that enable them to
• Converge and consolidate services: Enterprises converge voice, video,
and data services on the same infrastructure, while service providers pursue the convergence of fixed and mobile services.
• Integrate new services: Flexible environments enable businesses to turn
on new services quickly, easily, and in a cost-effective way.
• Expand: Well-built networks enable businesses to easily acquire other
businesses, to enter new markets, and to increase their customer base nationally and globally.
• Acquire data: Acquisition of plant, process, and building information
facilitates the automation of industrial processes. The acquisition of medical data facilitates real-time remote diagnostics and medical services.
Governments support the development of IP infrastructures because they lead to
• A more productive population: Under inclement weather conditions
(icy or heavy snow conditions) or under bad health conditions (epidem- ics), people can work from home and thus reduce the number of traffic accidents or hospital visits. Special messages can be sent to specific groups of people in quarantined areas, providing for a better response to an incident.
• Support for environmental policies: High-speed Internet access
enables people to work from home, reducing pollution caused by commuting. IP-enabled and instrumented environments such as facilities, manufacturing plants, and transportation operate more efficiently and with lower energy consumption and pollution. • A better-educated population: Schools can have better access to
educational information and local or international specialists, enabling individuals to further their education through remote courses.
• Improved health services: Remote villages and small cities with limited
resources can benefit from better medical assistance through remote consultations and rapid analysis of tests.
• Local economic growth: A good national IP infrastructure enables
businesses to communicate better and to develop new services and business models to support them. For example, local tourism industry can grow by leveraging the Internet to advertise its offering.
• Increased global economic presence: National businesses get access to
foreign markets to sell their products and to leverage local labor and natural resources.
Individual governments recognize the value and importance of the Internet. With this recognition comes the realization that there are challenges in managing this global and strategic resource. Nations are now working under the United Nations auspices on the future governing framework for the Internet. As described in Chapter 3,” The Economy of an IP Evolution” the social, legal, and political aspects of the Internet make its governance a unique and complex task, yet its perceived importance seems to justify the resources invested in it.
Whether we look at protecting existing operational models or long-term growth, the strategic importance of IP communications and the infrastructures supporting them is undeniable. This understanding must go in all expansion, consolidation, and security plans related to this asset. In fact, one of the common trends in the IT world today is the planning and deployment of Next Generation Networks (NGN). The networks of many organizations grew in an ad hoc nature over several years, resulting in a fragmented infrastructure with unnecessary complexities. Businesses are now enabling integrated services by transitioning their IP infrastructures to reliable, high-bandwidth networks that consolidate next generation services and provide for a converged backbone. These transitions provide tremendous flexibility by virtualizing services throughout the network and providing access to IP-enabled devices that will interact with the network to extend services to consumers and businesses.