Complete survey results Word for Windows 6.0 document. Methodology How we conducted the survey. We've got trouble 1997 Network World management survey shows network and systems management products are merely plugging holes while integration and automation problems loom large. Salaries are on the rise 1996 Network World salary survey shows strong demand for networking skills means you can make more dough, but also need to put a premium on keeping your staff happy. O'Connell is a freelance writer in Framingham, Mass. He can be reached at bwrite111 @aol.com.

By Brian O'Connell
Network World, 6/16/97

One of the most notorious half-truths of the networking industry is that it moves at a lightning pace. Some observers would have you think that no sooner are loading docks stocked with the next great cyberpanacea than an updated version of the same product is rolled out later that afternoon.

While network product developers rightfully take pride in their ability to create, package, distribute and maintain high-tech tools and services in ever-shortening production cycles, network managers are more methodical and deliberate than ever - especially when it comes to managing their budgets.

For proof, look no further than the 1997 Network World/Deloitte & Touche Consulting Group 1997 Budget Survey. The survey amounts to an annual reality check, a gauge to see whether industry hype translates into budget dollars. As in past years, the results this time around indicate a resounding "not really.''

Network managers continue to move at a deliberate pace in actually cutting checks for glitzy new technologies such as ATM, video and even Internet/intranet wares. External factors such as mergers and acquisitions and market conditions contribute to that stance, carrying significantly more weight in determining budget levels than the lure of glamorous new technologies. For network managers, more than ever it is substance over sizzle when it comes to managing their budget dollars.

The survey, sponsored by Deloitte & Touche Consulting Group, is based on telephone interviews with 200 Network World readers. All respondents were responsible for specifying or approving expenditures, while 198 said they owned that responsibility on a corporate, as opposed to departmental, level. In fact, 25% said they were responsible for 20 to 100 networked sites within their organization. Another 16% said they were responsible for more than 100 such sites. Target companies had annual revenue of $100 million or more.

"We're acquiring companies left and right,'' says Allen Hoffman, network manager at Edina, Minn.-based US Filter Distribution group, a subsidiary of US Filter Corp. in Palm Desert, Calif. "It's all we can do to collect the basic networking tools like e-mail to hook everybody up and get them up and running.''

Hoffman says US Filter is using frame relay to link network users over the company's WAN, but is not in any rush to add new features, especially since the company's buying spree may continue. "At this point, we haven't had the time to look at ATM or Gigabit Ethernet because we're just trying to keep up.'' Indeed, the company has to tackle less glamorous chores such as upgrading its e-mail systems before it moves on to projects aimed at increasing bandwidth.

That is a recurring theme among survey respondents. Many noted that in today's chaotic workplace environment, where internal organizational changes are as commonplace as Seinfeld reruns, staying focused on one or two projects can help squeeze the most out of network budget dollars. That philosophy may be slowing the growth of grand-scale infrastructure installations within networked organizations.

"We're not really cutting back on anything,'' says Barry Tarbet, network administrator at NAL Acceptance Corp., a Fort Lauderdale, Fla.-based financial services company. "But I wouldn't say that we're not putting too much on our plate either.''

Tarbet is in the midst of a major AS/400 and Novell, Inc. NetWare Directory Services (NDS) installation at NAL - with full videoconferencing and Internet capabilities - and is reluctant to take his eye off that ball by getting into other projects.

"Right now, I don't want to be juggling too many apples in the air. It's taking us so long to convert everything to NDS that I don't have time to think about anything else,'' he says. Tarbet acknowledges that he would like to take his company's network to frame relay but cannot justify the expense right now. "It's a little more cost efficient, but the service and support aren't there yet,'' he says. "We'll wait a little while on that one.''

Some say a deliberate, methodical approach to network budgeting has caused many network managers to hold off on Internet/intranet installations, at least until the technology's security can pass muster. In fact, only 4% of the respondents said Internet/intranet funding represents their "most significant'' budget increase in 1997, compared to 8.4% in 1996. Perhaps the pioneers have already played their cards and now we are seeing a more measured approach.

"Nobody wants to trust the overall business process to the Internet,'' says Robert Mills, director of information technologies at Grand Rapids, Mich.-based Smith Technologies. "But the amount of data that is on the 'Net is beyond comprehension. So we'll plan for it accordingly, but it won't happen overnight.''

Bulking up on client/server tools

That said, respondents indicated the areas that will see the most significant budget increases next year include switching equipment (5.6%), WAN equipment and services (5%), voice applications (4.5%), ATM (4.0%) and Internet/intranet tools (4.0%).

"We're really looking for switching technologies and Internet gateways to mainframe applications,'' says Ken Rigsby, systems programmer at County of Charleston, S.C. "I think it's easier to get budgeting for projects if you adopt a long-term network strategy like we did this year, where everyone signs off on it.''

The migration from mainframes to client/server continues unabated and is fueling the move toward switching technologies.

Bruce Hilditch, lead networking specialist at Allina Health Systems, a Minneapolis-based health care systems provider, is in the middle of a five-year mainframe-to-client/server migration. He estimates that 60% of his organization's network traffic is from 3270 terminal emulation-based systems. "But that's continuing to change,'' he says. "I would expect that our mainframe volume rates will decline significantly this year as we're disconnecting our 3090 and pushing it out the door in June.''

That will make more room for the two IBM SP symmetrical chassis machines that each will hold as many as 10 Unix processors. "We're purchasing 20 to 30 stand-alone Unix systems, as well,'' he notes. As with so many users, all this is driving him straight to switching. "We need more switched ports and 10Base-T lines, especially since we have new groupware coming in that could use the extra boost.''

Indeed, more than 40% of survey respondents said they will require more network capacity by the end of 1997. Foremost among the technologies they are considering to meet that demand is switching - Fast Ethernet and, to a lesser extent, ATM.

Mark Hendrix, network manager and acting director of corporate network engineering services at Washington, D.C.-based Federal National Mortgage Association (FNMA), says his company's move to switched Ethernet gives it a better launchpad to future bandwidth options. "We're trying to convert off of older topologies, like token ring, that are harder to manage and service," he says. "Moving to switched Ethernet also gives us a nice migration path to faster technologies like Gigabit Ethernet.''

ATM, on the other hand, still seems to be a source of user uncertainty. As noted, it shows up as one item for which users are planning significant budget increases, but it is also one that 6% of users said they had to back away from for lack of funding. In general, the story appears to be the same as it has been for the past couple of years: Users are still kicking the tires more than buying in droves. "ATM is still risky right now,'' explains James Shipman, manager of the network engineering group at Amp, Inc., a Harrisburg, Pa.-based electronics manufacturer, "but only because of the cost of the [ATM] ports.'' Shipman is opting for Ethernet switching and 10Base-T cards because of the productive andaffordable dedicated bandwidth he can get for his money. But that doesn't mean he isn't thinking ATM down the road.

"Look, [Ethernet switching] was just a less expensive way of adding bandwidth to the network,'' he says. "I don't think that ATM is overhyped, it's just too expensive right now and Ethernet is easier to troubleshoot. Our staff is Ethernet-trained and ATM support people are in short supply. It just doesn't make sense for us right now, but it might later on.''

On the way out

It is clear that NetWare is fast losing ground to Windows NT. "I think that Novell has a pretty serious marketing problem,'' says Rigsby, whose organization is one of many looking to rely more heavily on Windows NT. "Their chief problem is that [Novell] has spent too much time waffling with WordPerfect and Unix and has never delivered a consistent message to its customers.''

Comments like that must make Novell smart, given that it has spent much of the past year trying to get out its Internet/ intranet message. But the NT juggernaut is having a snowball effect that sometimes takes the decision out of users' hands.

Consider Donald Palmer, a systems engineer at manufacturing parts supply company Dimensions International, who says he is swapping out his Novell 3.12 net for Windows NT because of external factors. "We have a big contract with the Department of Defense,'' he says. "Since they're using NT, then we will, too.''

Pace of approval

Unfortunately, corporate financial executives continue to toss nickels around like manhole covers and senior management continues to grapple with the issue of quantifying technology's contributions to the corporate bottom line.

"Getting approval is taking longer than I can remember,'' says Hoffman. "I think network managers have more influence on our budgets these days. But in our case anyway, the final decision is made by our CIO.''

Hoffman's experience is a bit out of the ordinary in at least one respect: the pace of decision making. Survey results show that 67% of respondents now get major network expenditures approved in three months or less; only 55% said they got things rolling that fast two years ago.

On the other hand, more than 29% said they were forced to hold off on IS purchases two or three times in 1996, while 15% had between four and 20 instances when spending for large networking tools was unceremoniously cut off.

"A lot of that was indecision on what to throw our money at,'' says one computer specialist at the U.S. Bureau of Labor Statistics, who requested anonymity. "Some areas like ISDN and remote communications deserve more funding, but it's getting hard to build a consensus within the organization.''

Of those projects that were delayed or slashed outright, most fell into the realm of network infrastructure upgrades. Nearly 20% of respondents cited network upgrades - in the form of Internet/intranet installations or routing and switching add-ons - as capital expenditures that had to be shelved. As noted above, 6% said they had to hold off on ATM projects, while 5% cited 100M bit/sec Ethernet. Other technologies that felt the budget knife were frame relay (3.4%) and imaging (2.6%).

The numbers and follow-up interviews indicate it is virtually impossible to seed major new projects such as infrastructure and Internet ventures at the same time. Something usually gives.

"We're adding $6.25 million worth of new network infrastructure upgrades,'' says Joe Drees, network engineer at the University of Toledo. "We're completely rebuilding our network by putting millions of dollars into fiber cabling and Cisco [Systems, Inc.] products. That's replacing our old broadband network whose time had come and gone.''

That expenditure left little room for Drees to beef up his network's Internet capabilities, also a top priority at the university. "We are looking to upgrade our T-1 feed to the Internet to T-3,'' he says. "But we're finding it hard to budget for that. The network upgrade is one factor, and another is that budgeting for the Internet is not a one-time capital event.''

To hurdle that barrier and get his organization the Internet add-on it needs, Drees has had to be creative financially. "What we're doing is putting the expense in as a recurring item, which is still difficult, but at least helps us build a better case for adding T-3 for the campus.''

Still, 44% of respondents said they did not have to hold off on any budgeted projects, which indicates there are plenty of folks who did not run into complications. "I think people are finally getting smarter in planning their IT budgets,'' says Smith Technology's Mills. "You've got to lead the target so that you're a year ahead of where you want to be. That's why there are fewer delays.''

In fact, a study completed by the META Group, Inc. consultancy in December 1996 says 65% of IT budgets will rise in the next 18 months, compared to 53% six months earlier. Service-related industries should benefit the most, according to META, with financial services leading the pack. Of the companies in this area, 70% said they will see increased budgets. Manufacturing will take the biggest outlay hit, with only 20% of companies saying their IT budgets will rise in the next year-and-a-half, compared to 54% six months earlier.

Dialing for dollars

Only 16.4% of study participants categorized themselves as having network operating budgets of $10 million or more in 1997. But optimism reigns supreme: For 1998, 25.2% estimate their budgets will rise to $10 million or more, with 2.5% anticipating that their budgets will skyrocket to more than $100 million.

"When some of these newer technologies mature, they'll likely fit better into our budget plans and we can target more funding to them,'' explains the source at the U.S. Bureau of Labor Statistics. "Things like remote computing and ISDN aren't something you'd want to throw money at now, but are things that we are looking to fund more heavily in the future.''

Nobody is thumping their chests and crowing that network budgeting in the hurly-burly world of corporate telecommunications is easy. Now more than ever, creating a formula for budget forecasting is a collaborative process comprising users, MIS staffers and senior managers. The key to that formula is spending enough on network tools and services to ensure that operating costs remain low and organizational productivity remains high.

"The money that we're spending today is going toward places like hubs, routers and switches, that may not require that kind of capital expenditure tomorrow. In technology, everything changes hourly. So everything we purchase is designed to fit into our network for years to come without significant additional outlays down the road,'' explains James Freuck, network engineering supervisor at Milwaukee-based Aurora Systems.

Down the road may just mean more high-profile technologies such as ATM, voice and video, and full-blown Internet and intranet installations. But until then, the thinking on the part of some network managers is that these technologies represent more of a luxury than a necessity. Until the pendulum begins to swing the other way - and most think it will - corporate pocketbooks will be restrained accordingly.