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VPNs Bring Interactivity to E-Commerce

Written by: Andy Marken

Article Overview: Understand the pros and cons...and the benefits...of VPNs (virtual private networks).

VPNs Bring Interactivity to E-Commerce

Electronic commerce is quickly becoming a reality, according to Forrester Research. Their analysts predict that the value of goods and services traded between companies will grow to $130 billion this year, up 1,000 percent from 1998. In 2002, they increased to $327 billion. This year volumes will rise to nearly $750 billion.
Industry analysts are optimistic about electronic commerce for two reasons. First, it is delivering on its promise to lower costs, reduce order processing time and improve information flow. Business can be conducted around the globe, 7x24, for a fraction of the cost of conventional methods--and in a fraction of the time. Second, the tremendous growth in Internet trading last year reflects an increased confidence in the security and reliability that can now be built into Internet access.
E-commerce is actually an umbrella term that is used to describe a wide range of activities such as electronic data interchange (EDI), electronic payment systems and order management. Other E-commerce activities, which include linking solutions in both business-to-business and business-to-consumer applications as well as information delivery and product support/service, have spawned the development of new delivery technologies.
Interactive Data Sharing
While Internet EDI is limited to data sharing, the new delivery technologies, called virtual private networks (VPNs), enable interactive information exchange.
Studies carried out by Infonetics Research, of San Jose, CA, show that the savings potential for companies that implement a VPN is tremendous. Site-to-site network costs can be reduced as much as 20 to 40 percent in the U.S., and even more internationally. With an Internet-based VPN, the savings in supporting telecommuters and road warriors can be as much as 60 to 80 percent because they can access the corporate WAN for the price of a local phone call. According to a recent study by IDC,
businesses that invested in intranet solutions had an average ROI of over 1000 percent and average pay-back periods or 6 to 12 weeks.

Increased Flexibility, Lower Cost
With the Internet as the backbone, sharing information and documents across the country or around the world is not only less expensive, it's easier to deploy and manage. VPNs permit organizations to add and subtract business partners, remote offices and members of workgroups in real-time. Telecommuters and mobile employees, branch offices, vendors and customers can be provided with full or selective access to corporate data bases and inventory/sales management systems for electronic collaboration, information content distribution and business-to-business interactions.
Organizations that implement VPNs are finding that they help them improve the quality and timeliness of information exchange, improve productivity, enhance document/data accuracy, promote trading partner loyalty and improve inventory management. They also reduce their use of paper as well as their paper storage requirements.

Intranet VPNs
An Intranet VPN streamlines activities such as distribution of sales materials and collaboration. Data sheets that previously took weeks to develop, print and ship can now be posted for immediate access, shortening time-to-market schedules which can give any organization a competitive edge.
With an Intranet VPN, the organization can post the company's benefits information, stock information and the organizational chart, as well as new-product/services updates, promotions, a product catalog, messages from the president, etc. All of the information can be quickly modified, expanded and enhanced so that it is always current and readily available.

Remote Access VPNs
The Gartner Group Inc., of Stamford, CT, estimates that there will be 100 million mobile and remote workers worldwide by the year 2002, up from 50 million today. Among larger companies, 25 percent reported having more than 1,000 remote access users; nearly 50 percent expect to have more than 1,000 remote users a year from now.
With a Remote Access VPN solution, authorized remote users can dial in to the organization's intranet to check everything from pricing to availability and shipping information, eliminating delays that can make a customer lose interest. They don't have to worry about what time zone they're in. They can get the information they need, when they need it.

Extranet VPNs
Unlike intranets, which are relatively isolated, extranets are intended to reach business partners, customers, and suppliers.
With an extranet VPN, organizations can quadruple the efficiency of their customer service department, improve the staff's productivity and enhance customer satisfaction. By extending their extranets to key suppliers and distributors, organizations can quickly and accurately communicate bill-to/ship-to information at virtually no increase in cost. They can also facilitate just-in-time inventory management.

Outsourcing Enhances Flexibility, Scalability
To minimize their investment in equipment and software, a growing number of companies are outsourcing the configuration and management of their VPNs with ISPs that offer complete, turnkey solutions. This gives them the flexibility to upgrade as their needs change without sacrificing their investments in hardware and software.
Security, reliability, staffing costs and timeliness are the other key reasons businesses decide to outsource the management of their VPN.
Increasingly, firms have business objectives for their VPN that demand secure 24-hour-per-day, seven-day-per-week uptime and consistently high performance. A facilities-based first-tier provider is the best solution because they control their own infrastructure and have the network reliability ratings of 99.5 to 99.8%, including scheduled and unscheduled downtime.
When a company considers implementing a VPN, they should be aware of the many outsourcing options that are available. They can have the ISP provide the basic Internet access while they buy, design and manage the network. To protect themselves from having to purchase and replace equipment as their needs change, they can have the ISP provide equipment and QoS assurance while the company provides ongoing application and configuration management. Another option is to have the ISP provide the complete VPN solution, including service, training and support, while the company administers the security server. Or, they can select a variation of the three approaches that best meets their needs.
It is this kind of flexibility and the tremendous savings over leased-line connections that are driving the demand for ISP business-quality VPN services. Today, VPNs are a competitive differentiator, but as the applications for VPNs and e-commerce continue to expand, companies will find it difficult to compete without them.
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