Managed LAN services growing up

The LAN is the new WAN.

With the increasing popularity of applications such as VoIP and mobility, LANs are getting so complex and so critical that companies are increasingly handing them over to an expert to run.

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Sales of LAN management services by carriers such as Verizon Business and AT&T as well as systems integrators such as IBM and EDS are rising at a fast clip. Managed LAN services are growing hand in hand with LAN design and implementation services and managed WAN services.

``Clients are increasingly looking at their networks as enablers of global transformation,’’ says Warren Hart, vice president for Integrated Communications Services, Strategic Outsourcing at IBM. ``We’re seeing clients really shifting their view of the network. The network is now like electricity. You turn on the switch, and it’s on.’’

Insight Research estimates that the U.S. market for managed LAN services will more than quadruple from $2.6 billion in 2006 to $11.3 billion in 2011.

``Metropolitan Ethernet services, IP telephony, IP PBXs and management of campus wireless access points will drive new traffic into managed service providers' networks,’’ says Robert Rosenberg, president of Insight Research Corp.

Managed LAN services represent a sliver of the overall managed services market, but it is now the fastest-growing segment of the market.

``The growth rate [for managed LANs] is 50% higher than the aggregate managed services market rate,’’ Rosenberg adds. Managed LAN services are growing at a compound annual growth rate of 34%, while the overall managed services market is growing at 22%.

Indeed, 2007 could shape up to be the year of the LAN. A September 2006 study by Forrester Research found that more than half of North American and European enterprises plan to refresh their LAN infrastructures in the next two years. The Forrester study found that more companies are investing in LAN technologies such as virtual LANs, application acceleration and port-based authentication.

As companies start to tackle LAN infrastructure upgrades, more of them are deciding to outsource LAN management. Among the companies that use managed LAN services are Lexmark, ABN Amro Bank, Cigna and Kraft Foods.

A network upgrade is what prompted National American University (NAU) of Rapid City, S.D. to outsource management of the LANs at its 14 locations. In 2005, NAU migrated from an aging frame-relay WAN with a hodgepodge of LAN technologies to an all-IP MPLS network with a standard LAN configuration.

NAU hired Verizon Business to upgrade and manage its entire network, including WAN and LANs. Verizon Business provides network monitoring, maintenance, repairs, traffic analysis and reporting.

``Verizon already was going to be managing the routers and the WAN. We thought it made sense to extend that and have them manage the entire WAN/LAN infrastructure,’’ says John Buxton, director of system information technology at NAU.

NAU spent around $35,000 per site for the upgrades and an additional $2,500 per site in ongoing monthly fees.

NAU has 1,000 users on its network, including employees and students. The network’s key applications are student records, online courses, e-mail, Web and VoIP.

Moving to VoIP was a big driver of NAU’s decision to outsource LAN management.

``When we started this upgrade, every campus had a different network and every campus had a different phone system,’’ Buxton says. ``Now we have a consistent VoIP structure throughout the entire organization. I can four-digit dial anyone at any location.’’

By outsourcing LAN management, the fast-growing university has been able to hold down the size of its central IT staff to eight people.

``Cutting people was never part of our goal,’’ Buxton says. ``It was more of our goal that if we offload LAN management, then we can take our IT resources and reassign them to other projects. What we were doing was never about reducing employees but about providing better service and better utilizing the resources we have.’’

With Verizon handling LAN management, NAU has been able to cut down the time it takes to fix problems at its campuses in South Dakota, Minnesota, Kansas, Missouri, Colorado and New Mexico.

``The issue was that when we had problems with the LAN equipment at a remote location, the time to diagnose and fix it was so high,’’ Buxton says. ``Before it could take a day or two to fix it. Now when something happens, it’s resolved within an hour.’’