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iQ MAGAZINE

Fourth Quarter 2004

What You Need to Know about Networking
Routing and switching are crucial to your company's success.
By Fred Sandsmark
Illustration by Steven Lyons
Article Contents:
Article Summary:
Understanding networking at a foundation level can help you ask better questions, make informed decisions, and more effectively understand the impact and value of networking on your business as a whole. In this way, understanding these technologies is another element of strategic planning, especially as routing and switching become the foundation for all business communication— not just data, but voice and video too.
Because networking is a relatively young science, it borrows language from other disciplines. Many networking terms come from the realm of physical transportation—terms such as bridge, hub, port, routing, and switching.

That borrowing is apt. Just as the transportation revolution—especially the advent of the railroad—was an economic catalyst of the Industrial Age, networks are the economic catalysts of the information age. And just as railroads need a solid infrastructure, so do networks. The foundation technologies of networks are routing and switching.

The Basics
Inits most basic form, a network consists of two pieces of electronic equipment that communicate data back and forth, connected by a third piece of equipment that enables that communication. A printer attached directly to a computer via a parallel or USB cable does not comprise a network; it becomes a network if that printer and computer are both attached to a switch or router.

The Internet provided the impetus for most companies to adopt a network infrastructure. Even the smallest businesses need network-enabled Internet connections to send and receive e-mail, advertise and sell products and services online, interact with customers, and connect with suppliers. Moving to a networked environment opens new possibilities, including online business applications and collaboration opportunities. Data security also becomes a central consideration with a network.

Two decades ago, engineers at the International Organization for Standardization (ISO) developed a theoretical seven-layer model for networking, known as the Open Systems Interconnection (OSI) Reference Model. For general purposes, it's enough to know that the lower you go in the seven layers, the larger proportion of functionality lies in hardware. As you go up the layers, more software (and thus computing power) is needed. Processes at lower layers happen faster, because they require less computing power.

Conventionally, switches were considered Layer 2 devices and routers were Layer 3 devices. Switches were used to connect two devices on the same network, and routers were used to connect multiple networks to each other. A switch used hardware addresses, or MAC addresses, to identify devices connected to it, while routers used other means to identify devices and created and maintained software-based ìrouting tables' that kept track of the best path from one network or device to another.

In the last few years, networking equipment manufacturers have put more router-like functionality into switches: These are known as Layer 3 switches or multilayer switches.

Meanwhile, routers are taking on more features, especially relating to network security and quality of service QoS). These features are often modules that plug into multiservice platforms. Also, some routers today have specific purposes—for example, an access router connects a local office into a corporate network backbone, while an Internet service provider (ISP) uses a core router to operate that backbone. In short, there's a wide range of devices that can be called routers.

While switches and routers have evolved and the lines between them may seem blurred, one simple distinction remains: Switches reside within a local-area network (LAN), while routers are needed in a wide-area network (WAN) environment. It's analogous to an old-fashioned office phone: Switching is like dialing a four digit extension to reach someone in your building, while routing is like dialing 9 to get an outside line, and then dialing a seven- or ten-digit phone number.

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Solutions
Growing companies, especially those opening new offices, can opt for integrated foundation solutions that are secure, solid, and compatible with future technologies. Rather than purchasing separate products for individual functions such as routing, switching, security, and Internet gateways, companies can choose a "systems-based" solution that provides everything a business unit needs to fully and securely connect to the Internet and the company as a whole.

"More and more features are making their way directly into routers and switches," says Robert Whiteley, associate analyst with Forrester Research.

"There are some great solutions that are all-in-one, all-you-can-eat in one cool box," agrees Kneko Burney, chief market strategist with research firm In-Stat/MDR. These solutions can enable an Internet or WAN connection, printand file-server capabilities (putting printers and document storage on the network for everyone to use), and security, according to Burney.

The systems-based approach has several goals: to transfer responsibility for security and reliability from individual computers and users to the network itself; to create a network that adapts to changing needs; and to look at the network as an orderly, organized system rather than a collection of disparate, individually managed boxes. Under a systems approach (sometimes called "intelligent networking"), the network moves from being a passive means of connectivity to an active, integrated part of the company's business process.

A systems-based approach to routing and switching lets all workers—even those at different sites—have the same access to business applications, Internet Protocol (IP) Communications, and videoconferencing as their colleagues at headquarters. Networking solutions for satellite offices tend to be modular in nature, allowing you to install just the features you need for a particular office. Modularity also enables you to upgrade equipment (rather than replace it altogether) when needs change or an office expands.

An added benefit of this systems-based approach is that technical staff at headquarters can centrally manage the network, which keeps staffing counts low while providing reliable service to employees in all locations.

Security is a critical consideration to most small to medium-sized businesses (SMBs) when choosing a networking solution: 75% of North American SMB decision makers planned to purchase network security technologies in the next 12 months, according to an April 2004 report from Forrester Research.

"Security is definitely top-of-mind for a lot of IT executives, regardless of whether a company is large or small," Whiteley says.

By installing a complete solution and managing it centrally, companies can protect valuable corporate data and guard against viruses, spyware, Internet attacks, and other security concerns.

Security solutions include firewalls—essentially, specialized routers running software that examines incoming data and protects against attacks—and virtual private networks (VPNs), which use encryption technology to securely connect two networks (the headquarters and a satellite office, for instance) over a public network, such as the Internet or a carrier network.

"Enterprise-grade security features are being built into smaller switches" aimed at the SMB market, according to Whiteley.

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What To Watch For
Several trends in routing and switching are of particular interest to SMBs. First and foremost is the increasing need for Internet connections. Fully 70% of North American SMBs were looking to increase Internet connectivity and bandwidth during the next year, according to an April 2004 Forrester report. Adding connectivity will likely entail upgrading or adding router horsepower in these companies.

Many improvements in routing and switching gear will find their way to the SMB market in the near future. Switches with in-line power are coming on strong. These allow placement of wireless LAN access points and IP phones anywhere there's a network jack, without requiring electrical outlets or extra wires to power the devices. Businesses often install wireless access points in ceilings or high on walls, where standard electrical outlets aren't often readily available, and where using electricians to add circuits can increase installation costs dramatically.

Many SMBs struggle to decide between using managed and unmanaged networking technologies, especially switches. An unmanaged switch—the type typically available from an office-supply or computer store—works out of the box with no configuration. On the other hand, the benefit of a managed switch is that a user or administrator can access it—usually via the network itself—to adjust or monitor its operation. Most managed switches will also work out of the box without configuration, but they give the purchaser the option of using other capabilities.

"If you want any kind of IP telephony, or any type of serious [software] applications on a particular network, then you're going to have to have manageability," Whiteley advises.

Bottom-Line Impact
Foundation technologies can have a positive impact on a company's financial outlook. The clearest evidence for this fact can be found in the Net Impact Study 2003, sponsored by Cisco Systems and conducted by Momentum Research Group. The study found that companies that combined sophisticated network infrastructures with network-based business applications—and were willing to reengineer their business practices to take best advantage of the technology and actively measure the results—reduced their annual operating costs by more than 20%. What's more, they measured a 20% to 25% increase in customer satisfaction.

Making informed purchase decisions about networking technologies can also save money in the long term. For example, the price difference between Layer 2 switches and multilayer switches is negligible, but the capabilities of multilayer switches are considerabley greater. For example, if a company decides in the future that it wants to save on telecommunications costs by implementing IP Communications, a multilayer switch requires only a simple software upgrade to handle the increased demand. A Layer 2 switch, on the other hand, may need to be replaced.

Having a network foundation that can support advanced technologies such as IP Communications can deliver savings to SMBs in several areas: You can install a single network to handle both voice and data communications, you only need to purchase and maintain one set of equipment, and you can reduce or eliminate toll charges between network- connected sites.

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In The Real World
GST Corporation provides transportation and logistics solutions to customers large and small. Its hallmark is the service GST's knowledgeable local agents can provide. In 2000, the company was spending $52,000 per month to provide data over a frame-relay network to 19 offices. (Frame-relay is a type of WAN, usually leased from a telecommunications carrier.) The company unplugged its frame-relay connection, installed Cisco multiservice access routers at remote offices, and securely connected everyone to headquarters over the public Internet using VPN. Since then, GST has expanded to 380 employees in 34 branch offices and 30 home offices—and spends just $57,000 per month to connect them. When GST hires local transportation experts, it simply ships them a VPN-enabled laptop and an IP phone, and they can completely and securely connect to headquarters over a home Internet connection.

Hitchcock Automotive Resources is a group of five auto dealerships and a body shop, all located in Southern California. Until recently, each dealership ran its own server and LAN, independent of Hitchcock's headquarters. Now, each dealership uses a Cisco switch for its LAN and a Cisco multiservice router to connect to the company's WAN, which has allowed the company to migrate its various business applications to a single highperformance server. "This centralized server allows us to run the organization efficiently without duplication of personnel or equipment at each location," says Rich Morris, Hitchcock's vice president of information systems. For example, two people now generate payroll for the almost 800 company employees instead of staff at each location.

Routing and switching are even reaching truckers on the road, thanks to Knoxville, Tennessee-based IdleAire Technologies Corporation. Through a ìservice moduleî on a long, flexible hose, IdleAire has delivered electric power, heating, and air conditioning to big rigs parked at truck stops since 2000. Soon after it began its service, IdleAire realized that the network it was building to provide customer support could also deliver new services for it s trucker customers. Now IdleAire service modules provide high-speed Internet access and IP-based phone service to 2,000 truck-parking spaces in the United States. The company (which has less than 200 employees but is growing rapidly) plans to deploy its services to 270,000 parking spaces nationwide and add video-ondemand service.

What To Do Next
Chances are good that you already have some networking technologies in place. The next step, then, is to determine whether you have the right foundation for your company's needs, both today and in the future.

For many SMBs, identifying the capabilities of their current network requires the help of a trusted third party.

"Companies that are really looking to leverage technology in their business generally work with an outside source like a value-added reseller or an integrator," says In-Stat/MDR's Burney. These third parties are often local small businesses themselves, she notes.

"It's important for SMBs to feel that they're getting support at the local level," agrees Whiteley. Trusted resellers provide a local face for larger vendors, and allow SMBs to take advantage of big-company products and expertise.

But many small businesses, especially those on tight budgets, build their initial networks with home-networking products such as routers, switches, and wireless access points purchased from office-supply stores, computer retailers, or online. As commodity packages, these can deliver unbeatable value. Home-office networking products, such as those made by Linksys (a Cisco Systems company), are very good for their intended purposes.

But as companies grow, the limit ations of homenetworking products often can't keep pace with the challenges posed by that growth. Many lower-end products can't handle IP Communications or video well, if at all. Additionally, they can be a challenge to manage: Users may need to manage each box individually, preventing a company from gaining an overall picture of its network environment. This leads to network failures or, worse, security breaches.

What you plan to do with your network should drive your equipment purchase decisions. "It comes down to what applications you intend to run," advises Whiteley. "If you intend to run IP telephony, you need to buy routing and switching equipment that can support it, not just a typical run-of-the-mill data switch."

Burney agrees. "When you start looking at IP telephony, [you want] application-level routing," she says. "You get into higher layers of network management, where you're actually prioritizing traffic for specific applications."

With this level of network equipment, a business can also prioritize data for applications such as customer relationship management or enterprise resource planning, or give higher priority to specific mission-critical computers.

As more of your company's business processes move online, security needs increase significantly. Computer security is the single most critical attribute of corporate networks for 78% of the 254 senior executives surveyed worldwide in 2004 by AT&T and the Economist Intelligence Unit. Sixty-one percent of the companies surveyed had annual revenues of $500 million or less.

If you're not sure whether your network foundation can take you where you need to go, start by assessing your current equipment. Find out if your existing switches are multilayer switches, and if they're capable of providing in-line power. Make sure your network provides the security that your business requires. Additionally, find out if your setup is flexible, reliable, and scalable enough to handle your growth needs. "The majority of questions SMBs are asking about routing and switching are around reliability and scalability," says Whiteley.

Indeed, "reliability/availability" is the top purchasing decision criterion among businesses with revenues less than $100 million, according to Forrester. "Because typically [they replace] their technology less often, they often want equipment to last five years instead of three. And if they plan to grow, they want to make sure it can scale to 1,000 users instead of the 500 they've got on it now."

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20 Years Of Cisco Innovation

1984
Stanford University computer scientists Len Bosack and Sandy Lerner found Cisco Systems, named for San Francisco.
William Gibson coins the term "cyberspace" in his novel Neuromancer.
1985
Cisco ships its first product, the MEIS Subsystem.
The first .com and .edu domains are assigned.
In October, there are a total of 1,961 Internet hosts.
1986
Cisco Systems hires its first employee.
Cisco ships its first routing innovation, the AGS (Advanced Gateway Server), to the University of Utah.
1987
Cisco receives $2 million in funding from venture-capital firm Sequoia Capital.
Cisco develops the Interior Gateway Routing Protocol, the first protocol to permit the building of large public networks.
UUNET sells the first-ever commercial Internet connection.
1988
John Morgridge joins Cisco as President and CEO.
Cisco ships the Multiport Communications Interface (MCI), the highest speed network interface at the time.
1989
With three products and 111 employees, Cisco reports revenues of $27 million.
Number of Internet hosts breaks 100,000.
1990
Cisco goes public on February 16.
Cisco introduces the first remote access router—the Cisco IGS Router.
The ARPANET is decommissioned, leaving behind a vast network of networks called the Internet.
Tim Berners-Lee coins the phrase "World Wide Web."
1991
Cisco opens its first international offices in France and the United Kingdom.
John Chambers joins Cisco as senior vice president of Worldwide Sales and Operations.
Cisco's market capitalization reaches $1 billion.
The National Science Foundation lifts restrictions on the commercial use of its network backbone, clearing the way for electronic commerce.
1992
Cisco earns its first patent.
Jean Armour Polly coins the term "surfing the Internet."
1993
Cisco ships its 100,000th router.
The White House and the United Nations launch Web sites.
Internet traffic expands at a growth rate of 341,634%.
1994
Cisco surpasses the $1 billion revenue mark.
Cisco introduces the Catalyst Switch as the first intelligent switch for client/server workgroups.
Pizza Hut begins taking orders over the Internet.
1995
John Chambers is appointed Cisco's president and CEO.
Cisco launches the Cisco 7500 Series Router, simplifying how network and IP traffic is carried over long distances.
1996
Cisco enters the telecommunications service provider market.
Cisco ships its 1 millionth access-routing product.
More e-mail is sent than regular mail worldwide.
There are 14,352,000 Internet hosts and 100,000 Web sites.
1997
Cisco launches its Networking Academy Program in 64 locations.
Cisco makes its first appearance in the Fortune 500 at number 332.
Cisco announces the industry's first enterprisewide security initiative.
Cisco introduces its first products for the voice-over-IP market.
1998
Cisco becomes the first company in history to achieve a market capitalization of $100 billion in just 14 years.
There are 29,670,000 Internet hosts and 1,834,710 Web sites.
1999
Fortune magazine recognizes Cisco as one of the top 25 best places in the United States to work, and the eighth most admired company in the world.
Cisco's market capitalization reaches $300 billion.
Cisco helps to organize the NetAid effort to eradicate extreme poverty in the world's poorest nations; Nelson Mandela and other dignitaries make first visits to the NetAid Web site.
Cisco demonstrates an IP telephony link between Taiwan and the United States.
Cisco ships first complete enterprise convergence solution, including its first IP telephone set.
The Internet turns 30.
2000
Cisco introduces the Cisco Aironet wireless solution.
There are 72,398,092 Internet hosts and 9,950,491 Web sites.
2001
Cisco helps the Nobel Foundation harness the Internet to connect scientists and students to a century's worth of its history.
Along with Internet and nonprofit leaders, Cisco launches "Network for Good" to support local and national charities.
2002
Cisco ships its 1 millionth IP telephone.
2003
Cisco has more than 34,000 employees and fiscal-year revenue of $18,878 million.
Cisco earns 327 patents this year alone.
Cisco Networking Academy Program celebrates its fifth anniversary with more than 10,000 locations worldwide.
Cisco enters home-networking market with acquisition of The Linksys Group.
Cisco receives Presidential Award for Corporate Leadership.
Cisco ships its 2 millionth IP telephone.
There are 171,638,297 Internet hosts and 46,067,743 Web sites.

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iQ Magazine, Fourth Quarter 2004

About the Author
Regular iQ Magazine contributor Fred Sandsmark is based in the San Francisco Bay Area.
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What You Need to Know about Networking [197 KB]

Further Reading
From Cisco
Big Solutions for Smaller Businesses
Defined
Next Steps

From Cisco: Trade Up From Linksys to Cisco's Next-Generation Routers
Cisco Systems created the Linksys to Cisco Trade-Up Program for organizations that want to upgrade from their small-business Linksys equipment because they've outgrown its capacity or features.

Cisco is providing an upgrade path for these customers by giving rebates of up to 100% of the cost of their qualifying Linksys equipment when they purchase qualifying Cisco SMB solutions.

To be eligible for the program, customers must purchase their Cisco products through a certified Cisco reseller. Rebates are granted on a one-for-one basis and Linksys customers must own their Linksys equipment for a minimum of 90 days and purchase their new Cisco product(s) within three years of their Linksys product purchase date.

The Trade-Up Program comes at a good time, coinciding with the release of Cisco's Integrated Services Routers. These platforms, available through the program, are specifically designed to deliver the concurrent services (such as IP Communications and integrated security) and wide-area network connectivity that SMBs need.

"With embedded and integrated security, as well as enhanced voice and video services, the Integrated Services Routers provide customers of all sizes increased modularity and adaptability," says Mike Volpi, senior vice president and general manager of Cisco's Routing Technology Group. "Customers now have more flexibility in the type and number of services they deploy both today and in the future."


Big Solutions for Smaller Businesses
SMBs today want it all—and they deserve it. They want the cost benefits and competitive advantages from data, voice, video, mobile, and other services and applications running on their IP networks. They want high availability, security to protect against attacks, and virtual private networks for secure external access. They want their solutions to be affordable to buy and maintain. And with smaller staffs responsible for their networks, SMBs are looking for equipment that doesn't require an advanced engineering degree or extensive study to operate.

Shopping for it all can be a challenging experience, and getting all of the pieces to work together, managing and maintaining technologies in converged IP networks, and adapting quickly as new priorities arise are tasks that can keep SMB information managers awake at night.

The Cisco Systems SMB Class portfolio of networking solutions emphasizes a network foundation with the security, availability, and quality of service designed specifically for smaller companies. The Cisco 1800, 2800, and 3800 Series of Integrated Services Routers (ISRs) represent a new architecture designed specifically to fit the needs of SMBs. The ISRs are complemented by the Cisco Catalyst 4503 switch, which Cisco designed to be more modular and expandable. This switch has more userfriendly security and network management tools (such as a graphic user interface) and scaled pricing.

"The Cisco ISRs, the Catalyst 4503, and free management tools together deliver features and functions that you would otherwise have to buy in many separate appliances for a lot more money," says Kevin DeCato, marketing manager in Cisco Commercial Solutions. "These products emphasize ease of use and affordability while delivering the technologies to offer converged, multiservice networking at wire speed and the security, high availability, and management that any serious business requires."—Gene Knauer

A partner publication to iQ Magazine, Packet is the Cisco technical users' magazine. Read the full article.


Defined
IP Address: An Internet Protocol address is a unique set of numbers that identify a device on a network. IP addresses are often assigned by routers and used by them when sending information from one device or LAN to another.

LAN: A local-area network is a networked collection of computers, printers, and other devices, typically in a single physical space.

MAC Address: A Media Access Control address is a preassigned number on a network interface device. Switches use MAC addresses to connect two devices. The MAC address is like the vehicle identification number on your caróitís assigned by the manufacturer and stays constant for the life of the product.

QoS: Quality of Service is a measure and guarantee of the amount of information a network can handle in a given time. (This is called throughput.) High QoS is required in both the LAN and the WAN for using many advanced technology applications such as IP Communications.

WAN: A wide-area network typically spans a larger geographic area than a LAN, and usually connects multiple LANs. A multisite business might maintain a WAN to connect the LANs in its individual offices.


Next Steps
Read about Cisco SMB Class Solutions and Integrated Services Routers.

Find a Cisco-certified reseller in your area that specializes in working with SMBs using the Additional Partner Programs option in the Cisco Partner Locator.