Trouble in SLA monitoring paradise

Many users have made the acquaintance of Visual Networks, a Maryland company that embeds specialized protocol analyzers in its DSU/CSUs to collect information on network availability, throughput and delay. The idea is to give network managers a picture of how well carriers are living up to service-level agreements, and to help determine optimum port and circuit sizes. Other vendors provide similar tools, but Visual Networks has been a standout for two reasons.

One is that its Visual UpTime system is highly respected, judged "timely and incredibly accurate" by our reviewer. The other is that several carriers base their value-added frame relay services - such as AT&T's Frame Relay Plus and WorldCom's Circuit View - on placing Visual boxes on customer premises to feed traffic information into database servers and produce custom reports on network performance.

So it's stunning to see what a horrible year Visual Networks is having. In February it bought Avesta Technologies, the latest of several acquisitions to move Visual into service-level measurement for IP networks and the applications layer. Visual knew integrating Avesta was a challenge, but things got so bad that in June, CEO Scott Stouffer had to lower his revenue projections to Wall Street through year-end 2001. Visual's stock promptly collapsed to $11 per share, down from a high of $87.50 in March.

Then Visual was hit with a shareholder lawsuit charging Stouffer sold nearly half of his personal holdings while failing to disclose Visual's integration problems soon enough.

But this is an acquisition-gone-wrong story with a twist. It turns out the problem isn't really in lack of focus in the acquired firms' products. It's with the legacy offering Visual UpTime. Although several frame relay carriers sell Visual UpTime, Stouffer says Visual has always had to engage in its own "demand creation" with users. That's a fancy way of saying it takes some doing to convince people to pay extra to the carriers just to verify they're doing their job right.

Training sales representatives on Avesta distracted them from Visual UpTime "demand creation," Stouffer told analysts. Later he told me the carriers still retain a voice heritage, forcing Visual to stay ahead of their moves toward specialized data sales.

Stouffer claims Visual isn't suddenly losing sales it should be winning, but there's no denying competition from Paradyne's FrameSaver DSU/CSUs and NetReality's WiseWAN probe. Lucent's acquisition of International Network Services gave it an acclaimed package called VitalSuite with transport- and applications-based monitoring tools.

As for the shareholder lawsuit, Stouffer says his personal stock sales were part of a normal long-term pattern of portfolio diversification, and Visual says the suit lacks merit. Finding a company with disgruntled shareholders may be no surprise today. But I remember seeing projections that half of all corporate WANs would include value-added managed elements from the carriers by now. It appears that day has yet to come.

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