Success in a Time
of Constant Network
Equipment Churn

The rapid rate of technological change drives enterprises to acquire the latest networking equipment in order to remain competitive and improve network efficiency, capacity and performance.

Here are three IT networking trends that are influencing the market and tips for how enterprises can respond.

1. Device Proliferation

Many businesses allow employees to use the device of their choice for work-related tasks. As a result, we’re seeing greater network usage specifically related to smartphones, tablets and other mobile devices. This increased usage places a burden on the network’s infrastructure, such as edge switches, which helps maintain activity. It also can impact storage since more capacity is needed to handle powerful, big data-driven applications accessed through these devices.

To keep pace with this trend, enterprise networks need to match the mobility and data demands placed on them. And those demands will only grow with the continued rollout of the Internet of Things (IoT) where millions, or tens of millions, of endpoints will connect to a corporate network§.

2. Hardware Component Decrease

The desire for greater capability and simplicity in networking equipment influences another enterprise network trend: a decrease in the number of hardware components necessary to power them.

Two instances where we see this happening in enterprises today:

  • WLAN controllers, whose responsibilities are now processed virtually because of advancements in access point hardware development.
  • Independent chips used in a traditional computer system—such as the CPU, GPU, and RAM—are now combined into a single chip, called System on a Chip (SoC)#.

This trend promises companies the flexibility and speed to advance their operations and increase productivity, but they must deploy such solutions effectively and as swiftly as the market requires.

3. Rise of Virtualization

Reliance on the virtualization of network and software functions is a trend that will continue to grow. This growth places an increasing burden on bandwidth requirements that already handle VOIP, video conferencing, online backup, and more††.

Cisco’s Visual Networking Index (VNI) foresees an increase in business Internet traffic from approximately 26 exabytes (EB) in 2019 to almost 49EB in 2022‡‡. Looking ahead, enterprises will need to evaluate their current network structure and components to determine if meeting future demand requires a network replacement or expansion.

Additionally, the rising use of software-defined WANs (SD-WAN) illustrates concerns of bandwidth capacity and hardware components. Due to limited movement in the WAN space for many yearsҰ, companies are looking to refresh their hardware equipment and SD-WAN is a viable virtual alternative. But where SD-WAN alleviates some hardware issues, it heightens others.

Traffic within data centers, the growth in mobility, and security around obsolete devices are some of the hardware-related concerns enterprises must address in this burgeoning virtualized environment.

For assets whose replacement or refresh cycles are difficult to determine due to uncertainty about the future direction of the technology, leasing may offer the flexibility to change or return devices early in the event that technological innovations render them obsolete.

Advantages of Lease Financing

Leveraging a leasing strategy to manage networking churn in the face of such frequent changes can benefit enterprises in the following areas:

  • Budget: Enterprises that lease network components can allocate the costs to the operating expenses budget rather than the capital expenses budget, potentially preserving cash for other business and strategic objectives.
  • Focus: Leasing provides the opportunity to finance individual components (i.e. routers and switches) and upgrade them on an as-needed basis when technological advances dictate, avoiding the need for a full network infrastructure refresh.
  • Costs: Keeping network equipment beyond its useful life may result in high maintenance costs for the equipment itself as well as the skilled labor required to manage the upkeep. Favoring the shorter end of a 3-5-year refresh cycle can help ensure IT costs contribute to developing capabilities rather than maintaining obsolete software and devices¥.

Huntington is Here to Help

At Huntington Technology Finance, we can help your organization implement financing and refresh strategies that can enable you to keep pace with new technology developments and maintain a competitive advantage in the market.


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SOURCES:

† “Minimize BYOD’s impact on network capacity with IT management.” Cisco, November 20, 2018.

 “Is demand for data storage or supply driving increased storage?” Tech Target. March 2018.

§ “Six ways CEOs can promote cybersecurity in the IoT age.” McKinsey, August 2017.

“Controller vs. Controllerless Wifi: What's the Difference?” SecurEdge, January 16, 2013.

# “System on a Chip (SoC).” Technopedia.

††“Main Causes of Bandwidth Issues in Businesses.” Founders Technology Group, LLC, January 15, 2018.

‡‡ “Cisco Visual Networking Index: Forecast and Trends, 2017–2022” White Paper, Appendix G. Cisco, February 27, 2019.

Ұ “SD-WAN Buyers Should Think Application Performance as well as Resiliency”. WANSpeak™, April 3, 2019.

¥ “Building the future of global commerce.” Ingram Micro, August 8, 2018.

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