Save real dollars with a virtual network – the increasing use of virtual private networks for the transmission of business data

Save real dollars with a virtual network – the increasing use of virtual private networks for the transmission of business data – Brief Article

Rebecca Frances Rohan

Using the Internet for secure transmission of your company data

In today’s business environment, timely access to information is paramount. Whether it’s sharing accounting information between branch offices or enabling a roving sales force to log on to the company network to check on product availability, connectivity can have a significant impact on the bottom line.

Until recently, the main connectivity options were direct dial-in via remote access server or wide area networks over leased lines–both options that could potentially cost a company tens of thousands of dollars. Fortunately, the alternatives for managing a far-flung enterprise are growing. The rise of virtual private networks (VPNs) has added a relatively low-cost option for companies that currently have high connectivity charges.

A VPN is usually a part of the public Internet that uses software and/or hardware encryption solutions to carve out a private “tunnel” for your company’s communications. Businesses that incur long distance or 800-number charges when employees dial into the network can potentially save thousands of dollars with a VPN–since the Internet is essentially toll-free.

A VPN can help establish a wide area network at a much lower cost than using leased lines, says Dennis Fowler, author of Virtual Private Networks: Making the Right Connection (Morgan Kaufmann Publishing, 800-745-7323). He estimates cost savings of up to 60% for remote access, and 40% for network and extranet applications.

Fowler outlines the three scenarios for which businesses should consider a VPN:

* Remote access to your company’s network. This allows your sales force to dial into the network from anywhere in the country to get leads, check product availability and prices, and start orders.

Concentric Network Corp. (

Offers high-speed dedicated connections as an alternative to dial-ups. These range from $895 to $2,295, depending on the bandwidth and usage level.

GTE’s Remote Access Service

Includes VPN client, management and digital certification, starts at $11.95 per user (not including connectivity charges).

* Connecting branch offices to headquarters. A VPN will allow all branches to have access to the same data.

GTE Internet Working (

Offers VPN Advantage Service, which includes the hardware gateway, 24-hour-a-day/seven-day-a-week management and digital certification for $1,995 per month (includes connectivity charges).

* Giving business partners limited access to your network (also known as establishing an extranet). Allows vendors to check inventory and take responsibility for delivering products Just In Time, without effort on the customer’s part.


Offers high-end certified security hardware. RAD-guard’s Gateway hardware costs about $6,400 for each location and will protect an entire enterprise, regardless of size.

While a VPN can lower the cost of connecting over phone lines, the connections aren’t good enough for business voice calls, says Alan Zeichick, principal analyst with Camden Associates (www. “The performance of the Internet cannot be guaranteed, thus packets are subject to unpredictable loss or delay,” he explains. “VPNs are ideal for applications that are tolerant of this behavior, such as least-cost fax routing or data replication or backup.”

The technologies that create VPNs can be based on software, hardware or a combination of the two. Software is often cheaper, and hardware more secure, but a VPN is not a complete security solution. “There are two reasons to buy a VPN: flexibility and cost,” says Zeichick. “If you want security, buy a leased line.”

The sheer variety of VPN technologies can detract from their charm when two or more companies want tunnels to each other, since many VPN technologies are incompatible. To allow a vendor or customer access to your internal network via the Internet, you’ll have to establish technical standards and conform to them strictly. Otherwise your systems may not work together.

Currently the Internet Engineering Task Force is working on a security standard for VPNs. “That will eventually provide the standardization and interoperability that’s needed,” says Fowler, although “it’s going to take a bit more time. It will probably be fairly well sorted out by the end of 1999 or early 2000.

“Business should be aware of the spectrum of ways you can go about implementing a VPN,” he adds. Your company can do it in-house if you have the expert manpower. But vendors will provide all-in-one solutions, sometimes including their ISP partners. Others find total solutions provided by ISPs who install the necessary hardware and software at your site. It all depends on the specifics of your business and your budget.

If you’re spending a fortune on toll and long distance dial-ins, do a careful cost analysis of what you’re spending now, everything your VPN solution would cost and what you would save. Ask vendors to put the numbers in writing, including any and all charges from end to end. Also consider a service-level guarantee that spells out financial penalties if there is any loss in your connection or disruption in your service. For example, the company promises there will be no more than a 2% disruption in your connection. If you experience anything higher, there’ll be a reduction in your bill. Whether a VPN is right for your company depends on your circumstances. If you can save a fortune now, then go ahead. Otherwise, it may pay to wait and watch while standards are established and prices fall.

COPYRIGHT 1999 Earl G. Graves Publishing Co., Inc.

COPYRIGHT 2000 Gale Group