December 04, 2008, 3:41 PM — The beginning of a new year normally is a time to reflect; it's all the more so when the network industry is facing (along with the rest of the economy) a major financial crisis. We are of a generation that has taken network growth for granted, that has seen the Internet reshape culture and that has come to believe that "more bits" paves the road to the future. It just might be that this comfortable view is the greatest threat we face, because networking is going to change one way or the other.
If you look at how enterprises have spent on networks during the last couple of decades relative to their total spending on IT, you see a clear behavior shift. For most of the 1990s, networking got a larger-than-average share of investment. There was a sharp reversal in 2000, however, and since then, computer systems and software have gotten the lion's share. In the last four years, networking has steadily lost influence as a driving factor in enterprise productivity planning, my surveys of enterprises have shown.
The long timelines of this data show we're not dealing here with a cyclical modernization process. The fact is that software, servers and other computing tools are getting more attention, more budget money, more respect than networking. The fact that the point where the shift occurs corresponds to the last major economic downturn raises some legitimate questions about whether networking might not take a further hit in the current slump, as well as questions of what might be done to prevent that.
To start off, I do not believe that because networking collapsed in the post-bubble period, it has to collapse again. The major IT spending cycles of the '60s and the '80s were driven by changes in computing, and it was the latter (a distributed-computing cycle driven by the growth of PCs in business applications) that created the network boom of the '90s. It makes sense to say that distributed computing means distributing computers, which then means networking to keep them connected. Networking was catching up, and it's not surprising that IT then took the lead again.
No, but it was disappointing for sure. The question we might ask is why networking couldn't capitalize on the attention it received. The answer, I think, lies in the stuff that binds networks to applications. The pivotal point in that critical issue came in the early 1990s, when IBM's Systems Network Architecture was supplanted by TCP/IP. SNA network equipment was just too expensive, and enterprises went to the lower cost of TCP/IP instead. The critical thing was that SNA was an application architecture as well as a network architecture, and TCP/IP vendors didn't present application tools. I remember early router applications transporting SNA traffic because that's what the applications generated. Even today, the trend to service-oriented architecture (SOA) is a trend not specifically to TCP/IP but to different application-layer tools -- tools, I might add, that IBM and Microsoft and Oracle and SAP and the like are the ones providing.
Networking won hearts and minds in the '90s, then lost them again because it didn't offer the whole solution. The application connection to the network was never made by the network vendors, and so IBM and other system and software players continued to control that critical linkage -- and still do today. The decade of the '90s, when networking's influence was strong, was the time when network vendors needed to present an application story. Had they done that, they'd at least be more engaged at the application level today -- and applications are what boost productivity.
That brings us to the current crisis. My latest enterprise surveys show that in a downturn like this one, enterprises still want productivity gains and still are willing to bet that technology can provide them. They're looking for new solutions in worker communications and collaboration, new strategies for customer support, new ways to optimize information flow and customize how users see the data they use. Which technology companies will they look to? Any company with confident, credible, insightful answers. The question is which ones those might be in the current market period. In the last one, it was the computing and software players. Might it be the network players today?
Some network vendors like Cisco would like to think so, but they've all been slow to articulate an application story. Sure, Cisco offers telepresence, but that's networking. It has collaboration as a hosted service, but not collaboration as a set of enterprise software tools. It still doesn't have application middleware, either. Network services could be promoted more effectively by having those services made directly visible to software developers and integrated with software products. The Web, the most significant technology development of the boom decade of the '90s, laid the groundwork for a vision of applications as a cooperation between network and IT resources. So, why not have network vendors provide the framework?
IBM lost the network equipment war when SNA was supplanted by TCP/IP, but it didn't lose the networking war: IBM as a provider of network applications is still a giant today. WebSphere, the IBM SOA strategy, is an enterprise household word. If networking is to profit in the current crisis, a network-centric strategy has to become a household word as well. Who will provide it, and what happens if nobody does?
Enterprises tell me that in the last recession, network budgets were the first to be hit and the last to recover. It just might be that this effect was created by the fact that the systems and software vendors did a better job of getting ownership of the critical productivity issues. The technologies with the clearest benefit got the most dependable funding. If the network and the computing/software spaces are hit by the current crisis, then the role of networks in the future may depend on how well network vendors can make the application connection today.