It is this complete reliance on networking that is ironically putting the squeeze on networking companies. Most instances of the technology have become commoditised. Even Dell is getting into the game – a sure sign if ever there was one that buying a network is on the same level as buying a new PC. The only decisions left to the consumer should be how fast it needs to be, and which vendor to choose. The vendor choice is the less important of those two factors, and can be made through brand loyalty or flipping a coin, with equal results.

Sure, there are still arguments about whether so-and-so`s switch offers a slightly higher throughput, or if the management software requires a certified engineer to operate (this is positioned as a positive or negative sales point, depending on the vendor`s immediate availability of certified engineers), but the kit is all the same. If one vendor is offering 802.11g wireless, they all are.

It`s true that a commoditised market typically puts a great deal of pressure on vendors, often leading to price wars, technology one-upmanship and industry-wide consolidation. Yet the networking vendors all still seem upbeat about the coming year.

While revenue per port has certainly dropped since 1999, eating into those fat profit margins of yesteryear, 2004 is being touted as the upswing year, with number of ports sold in South Africa expected to grow well – perhaps even dramatically well. But the bigger driver for a renewed interest in networking, from enterprises through to SMEs, is expected to come from a different vendor tack. Don`t buy a network, they`re saying. Buy a service.

Networking chefs

It`s the difference between buying a stove and pot or going out to a restaurant every night. The stove and pot solution – buying a router here, a switch there – doesn`t necessarily make a good meal. Businesses have had to create and purchase their own services to run over their infrastructure, making the market particularly products-based. A restaurant, by comparison, is a solution. You never see the pot or stove, or even the chef, but gastronomic delights nevertheless miraculously appear before you.

“I believe there is a revolution coming in 2004, on a similar standard of Microsoft moving from Windows 3.1 to Windows 95,” says Rob Sussman, MD of Intergr8 IT. “I believe the industry is going to see that change – specifically the outsourcing and managed servicing industries. You`re no longer going to have managed networking, but instead managed services. You`ll have pro-active remote management of remote software.”

The three big sellers for networking in 2004 are expected to be voice, security and wireless. Voice technology has matured substantially, making it both affordable and reliable for enterprises wanting to shave costs from inter-branch communications. While the legality of voice still remains uncertain, vendors and customers alike are now much more open about using voice over the network internally, and even government is getting on the bandwagon.

Unisys has just closed a R12 million deal with Ekurhuleni, the amalgamation of nine Gauteng metropolitan councils, for a Cisco-based voice network between the branches of the network.

A total of 500 IP phones and an additional 1 000 analogue devices will be deployed across all nine regions as part of the implementation, and the Ekurhuleni WAN will be voice over IP-enabled (VoIP) so that voice calls can be routed across the infrastructure. Apart from the cost cutting implications of this move, Ekurhuleni customers should benefit since their calls can be routed to the correct person regardless of which branch the contact might be in at the time.

“At present, these nine separate administrations make it difficult to report on the systems, and accountability cannot be properly assigned in the event of problems,” says Shadrack Ngwenya, Ekurhuleni operations director. “The new system will cure both issues, and give us a boost in productivity at the same time.”

Get moving

Wireless is a definite bet for 2004, with the technology improving in leaps and bounds. 802.11g – the wireless protocol operating at speeds of up to 54 megabits per second (mbps) – was vetted by the Independent Communications Authority of South Africa (Icasa) late last year as a legal communications medium, finally offering reasonable speed over WiFi.

Research house Gartner reckons that by 2005, 50 percent of companies will have some form of wireless local area network (WLAN) up and running. Vendors are falling over themselves to cater to this growing market, with everyone from D-Link through to HP offering WiFi devices. Many of the devices support 802.11a, b and g, making interoperability – and hence mobility – fairly simple despite the fast pace of emerging wireless standards.

The ever-growing number of “hotspots”, where users can plug into the Internet through third-party infrastructures, is making wireless even more attractive. The argument by Telkom that hotspots are illegal was quashed October last year by Icasa, paving the way for a potential mass roll out of easy Internet access throughout malls, hotels and airports in South Africa.

Wireless networking is a risk, however. Insecure wireless networks are easily located and hacked through a technique called “war driving”. Simply take a laptop, a boosted WiFi antenna, and a car, and drive around Sandton or Midrand to find wireless networks that are “leaking” beyond a company`s premises. From here, browse the Internet for free, break into the company`s network, or even hack other companies – the source of the attack will appear to be the company whose bandwidth you are stealing for the attack.

As a result, wireless networking and security should go hand-in-hand. Anyone foolish enough not to put a firewall between a wireless device and the network is courting disaster. It`s the equivalent of leaving your company secrets in boxes on the street and hoping that no-one picks them up.

No entry

Unlike voice and wireless, security isn`t being driven by technology, but rather customer demand. The Absa saga last year certainly lit a fire among users not wanting to lose money or reputation to online hoodlums.

“Security is a big requirement – specifically after what happened to Absa Bank,” says Chris van Niekerk, country manager, 3Com. “I honestly believe security is very important to our customer base, particularly in the financial and government sectors, and among the larger corporates.”

3Com`s agreement with security company Crossbeam has resulted in specific security products in the 6000 range, and all vendors are following suite. HP has released its ProCurve Access Controllers, and Cisco is pushing its virtual private network (VPN) products for their security capabilities, along with a concept it calls the “Cisco self-defending network initiative”, designed to “identify, prevent and adapt to a range of security threats”, according to the networking leader.

Security is certainly where the money is: According to the Meta Group`s 2004 Worldwide IT Benchmark Report, ”66 percent of surveyed companies made room in their 2003 IT budgets to dedicate more financial resources to security programs and little else.” The report found companies spent an average of 8.2 percent of their total IT budgets on security in 2003, up from 7.6 percent in 2002 and only 3.2 percent in 2001.

More than access alone

The call for security could have a knock-on effect for the ISP market, which is facing a similar problem to network vendors – commoditisation. UUNet`s Jeff Fletcher believes that VPNs over the Internet (often referred to as “tunnelling”) will become increasingly popular this year, as it provides almost as much security as a wide area network (WAN), without the associated high costs.

Fletcher is also betting on services to continue to drive his market, as lower-end players start to compete seriously on price. “Bandwidth and access has become commoditised. The second-tier ISPs are coming in and cutting the costs significantly. Telkom, Sentech and the SNO are doing this as well, which means that we`ve either got to fight over price or move up the value chain.”

UUNet has decided to go up the value chain by providing applications, ASP-style. These include a hosted mail service based on Exchange 2003, a scanning and digitisation service, and video conferencing over IP. The recent availability of broadband in the country, through ADSL and similar technologies, means the bandwidth is finally available for hosted applications.

Fletcher predicts a “renewed surge” in Internet access, both in South Africa and globally. “It`s a global thing – this year is the year for the re-growth of the Internet. Property values are going up in Silicon Valley.”

World Wide Worx`s annual study of the South African Internet access industry, The Goldstuck Report: Internet Access in South Africa 2004, echoed these optimistic sentiments by declaring an expected “kick-start in 2004”. The upswing will be due to more access options, according to Goldstuck, such as the expected SNO offering and Sentech`s MyWireless. “From having no choice at all, the South African market will suddenly be faced with two new players who are both eager to supply Internet access needs,” says Goldstuck.

“From the point of view of ISPs, the landscape is changing drastically, which means that it`s levelling the playing field,” believes Fletcher. “The size of the infrastructure is not as important as how we market it. We need to be able to change to face the challenge – it`s interesting times if nothing else.”

The ISP market may change so much that we hardly recognise it in the future. “It may eventually get to the point where we don`t sell access, we sell services. For instance, with our hosted Exchange offering, we sell connectivity ‘included`,” says Fletcher.

Complexity

With the increased security, more physical layers, and a host of new services now demanded of the network, networking complexity is increasing by orders of magnitude. Figuring out what is mature enough for a live environment, and what is just hype, is a tricky job for CIOs.

“Organisations need to be aware of the potential drawbacks of convergence,” says Gerhard Gouws, divisional director, Datacentrix. “Prior to the maturation of convergence technologies, many organisations have had to invest heavily in separate telephone, data, video and video conferencing networks and are now finding that these networks are not evolved enough to provide the bandwidth necessary for convergence.”

Despite this, he says, it`s still an easy boardroom sell. “For most IT managers, trying to convince management to invest in new technology in these economic times is near impossible, with IT projects having to business processes strategies, but also provide quick returns. Network convergence can deliver both. Once implemented, a multi-service network can offer remarkable benefits to a business.”

While a converged network does offer some exciting possibilities in terms of cost reduction and centralised administration, it also brings with it a new way of thinking about the network. Fortunately, many of the pieces required for multiple services to operate on the same pipe are already in place, mostly under the broad term “quality of service”, or QoS. Managing all of these services, however, could be a little more complex in the real world than it is on paper.

Once again we get back to the restaurant argument. Services companies are betting that most companies will rely on a third party to remotely administer the network – a Mr Delivery, if you like.

UUNet is looking at how to change its network for the demands that extra services will place on it – primarily how to get content out to the nodes effectively. “It`s not only correct routing anymore,” says Fletcher.

Intergr8 IT is extending its service level agreement model to a point where it doesn`t only offer uptime guarantees, but also looks down to the infrastructure layer and up to the services for its customers.

Whether corporates will let go of their precious networks – often seen as business advantages – to services providers remains to be seen. But the SMMEs will certainly see the benefits of all these great network services on offer by third parties. As a major growth area for IT, the SMMEs have been identified as a definite target for the service providers, and with the ASP-type model, they can now afford to run financial and security applications just like the big boys.

“If you look at the IT giants, they used to focus only on the small top percentage of the market – the big spenders. But today the SME market itself is able to take advantage of the large systems that previously only the large enterprise could afford. From an opportunity point of view, the SME market is wide open. The large guys are finding it difficult to focus on that market,” says Sussman.

The shift in the networking world seems to be benefiting everyone. Buying services over equipment has been preached for quite some time, but only now are we starting to see the technology catch up with the hype.

The GSSC`s operations centre in the heart of downtown Johannesburg certainly looks more like a private than a public concern. The airy Imbumba House building on Fox Street eschews government beige, the obligatory queues and intimidating architecture in favour of light and space. There is a distinct lack of paper-carrying lackeys and confused clients, and it`s all quite tasteful.

Heading up the centre is CEO Mike Roussos, another breath of fresh air. Unlike the typical browbeaten government employee, he has the confidence and intelligence of a private CEO, carefully balancing government`s commands with the practicalities of running a billion-rand, 1 000-plus employee company.

The GSSC is responsible for the Gauteng Provincial Government`s contact centre; its document management centre; financial management services; HR management; procurement; auditing, and technology. When one considers the size of Gauteng`s infrastructure, that`s no mean feat. Serving South Africa`s highest-earning province with eight million inhabitants, 110 000 government employees, over 200 government buildings, 43 hospitals and 2 300 schools from a central hub is an intimidating prospect for any large organisation. For a governmental concern, it seems almost impossible.

Roussos has moved away from many tried-and-untrusted governmental methods of doing business. The grading system for employees is gone, replaced with a three-tier structure for management, team leaders and practitioners. Service level agreements are also in effect between the GSSC and its clients, forcing the organisation to take service pretty seriously.

Spreading risk

Roussos is also keen on the shared risk/shared reward concept of partnership with private partners.

Speaking at a recent GSSC/ITWeb seminar entitled "Transforming public sector service delivery through IT", EDS Middle East and Africa president Michael Minassian commented that "the structure of a public-private partnership (PPP) should be based on the pure spirit of partnership". Minassian also spoke of outcomes-based initiatives as being the most effective in EDS`s experience with other government projects, which include Jordan`s five-year blueprint for e-government and the UK Employment Service`s kiosk job centre project.

Three years since its inception and with just over one year of operations, the GSSC has solved quite a few of the province`s operational nightmares.

According to its CIO and GM of the technology support services (TSS) division, Livingstone Chilwane, the province is maintaining between 15 000 and 20 000 PCs with only 140 IT professionals - way out of line with best practice guidelines. "The bottom line is that a huge gap existed in regards to people. We needed to provide the right IT skills in the province."

With a budget of R220 million which is "likely to be increased substantially", according to Chilwane, the GSSC is hoping to beat the province`s IT infrastructure into some sort of shape by partnering with the State Information Technology Agency (SITA) and private organisations.

One of the first projects realised by the GSSC - and probably the most important - is the creation of a wide area network (WAN) that reaches over 270 government buildings in the province. This WAN has opened up the possibilities of offering shared IT services - such as e-procurement and ERP - throughout the client base.

Of Chilwane`s 114-strong staff, most are concentrated in the operations division, which manages the WAN, and also takes care of the data centre located on GSSC`s premises. Other divisions, or "centres of excellence" as Chilwane calls them, include information security, application management, programme management, service level management and architecture (see Delivering IT services).

The e-government wants you

The GSSC could be a major player in the e-governance drive the South African government is so keen on. The concept is that technology can help deliver services to the population, as well as streamline government-to-government interactions.

"The government wants to move to integrated service delivery," says Chilwane. "It`s very important that we simplify and increase the channels between government and the population."

While e-government has been kicked around for some time, the reality of being able to apply for and pick up your ID book from the local library remains conceptual. Some changes are visible, however. The South African Post Office has deployed 15 citizen`s post offices - a combination of a post office and an Internet café, connected to the WAN. The Post Office also offers a variety of services that are available to government departments, including its trust centre for the creation of digital certificates and its e-filing system for capturing paper-based forms and transmitting them electronically.

"E-government is getting political endorsement," says Chilwane. "The Premier of Gauteng has established a political committee for e-governance, and there is an e-governance agenda to take it into the community."

According to Chilwane, e-governance is a lot more than IT. "IT alone can`t do integrated service delivery. You need workflow and document management. Electronic forms and the like need to be on our time horizon."

Gauteng considers itself a "smart province", and as such is keen to be on the leading (and perhaps bleeding) edge of e-government initiatives. Having a resource like the GSSC to call on will certainly boost the probability of success of such an initiative in Gauteng.

Building a centralised hub for Gauteng not only brings customer-facing practices to government (the customers, in this case, being the Gauteng population and governmental workers). Standardisation and purchasing power are two other key benefits for provincial government.

The GSSC has already laid out standards for technology and business processes that any vendors planning on providing services to the GSSC will have to follow.

In terms of purchasing power, the GSSC is keen to barter better deals than the individual offices were able to negotiate. Service and product vendors seem more than interested in the GSSC, smelling the R4 billion-odd of discretionary spend like blood in the water. For vendors, having a single source for tenders is also a boon.

"There are economies of scale that can be pulled into the equation - with more volume, there`s more discount," says e.com institute MD Cassim Parak. "There are huge inefficiencies that exist under government. You have all these departments, each one doing its own thing, negotiating its own technologies. You don`t get your economies of scale in a decentralised system."

Small players miss out

But a single government department could mean fewer opportunities for all. One concern raised by some independent local IT vendors is the threat of the GSSC favouring international players over local vendors.

"We want to get value for money and meet government imperatives," says Roussos. "We want to make the public purse stretch as far as possible. But we still encourage new players, new suppliers. When buying from bigger companies, we will make sure that there`s a knock-on effect."

Roussos is quite open about the fact that government finds it easier to deal with larger, established vendors over SMEs. On the other hand, government has committed itself to uplifting local IT suppliers, which generally offer better black economic empowerment programmes in terms of equity sharing than their international competitors. It`s a classic case of being stuck between a rock and a hard place.

"How does a business organisation put its future into the hands of small companies? We`ve been trying to find ways to help those companies to grow - to sustain their development over time. In the PPP environment, it`s an accepted form of doing business, although the Treasury does have some rules."

iLab Enterprise Open Source director Stephen Owens appreciates Roussos`s view that government can`t be tied to small companies when the long-term survival of those companies can`t be ensured.

"Any smaller company like ourselves is going to find it very difficult doing business with the GSSC unless we can give some kind of assurance that we`re not a fly-by-night," says Owens. "I understand his stance, but I would like to see the GSSC including small vendors through creative relationships." One such "creative relationship" possibility, says Owens, could be the use of "gatekeepers" - larger organisations like the CSIR that take responsibility for smaller vendors when tendering.

Parak agrees. "What we`ve seen - and this is what upsets me - is government announcing plans to foster the local economy and ensure there`s growth locally. Then you see foreigners making direct or colluded representation through local partners and inhibiting local growth. They may employ 600 people locally, but that`s only salaries - the balance sheet is offshore," he says.

"There are good intentions at a high level, but there`s a huge gap between the high levels and the follow-through on the ground. Is the GSSC addressing that? It remains to be seen what Mr Roussos`s plans are."

The local players could also end up playing second fiddle to the likes of SITA and arivia.kom - government`s own IT service companies. As one editor described arivia.kom, it`s a tax to doing business with government. As both state-owned IT houses increase their skills, it will be less tax and more competition without the need for partners.

"I think there is certainly that sense in the industry," says Parak. "SITA is coming into its own, and opportunities are starting to shrink for other local players. There certainly has been a take-up from departments and provinces. SITA - if they don`t possess the skill themselves - tend to partner with the established players. arivia.kom and SITA are muscling out smaller players, although not by intention."

Owens, who is pushing for the take-up of open-source software by government, notes: "I have a very high opinion of Mike and Livingstone. On the surface the GSSC seems well organised, but the proof of the pudding is going to be in the eating, although I think they`ve had a very good start."

Parak says it`s very pleasing to note that the principles of the e-government project are looking good. "It`s bringing the government closer to the people by being customer-orientated," he adds.