Economic crisis threatens networking growth

If you look at how enterprises have spent on networks during the last couple of decades relative to their total spending on IT, you see a clear behavior shift.

The beginning of a new year normally is a time to reflect; it's all the more so when the network industry is facing (along with the rest of the economy) a major financial crisis. We are of a generation that has taken network growth for granted, that has seen the Internet reshape culture and that has come to believe that "more bits" paves the road to the future. It just might be that this comfortable view is the greatest threat we face, because networking is going to change one way or the other.

If you look at how enterprises have spent on networks during the last couple of decades relative to their total spending on IT, you see a clear behavior shift. For most of the 1990s, networking got a larger-than-average share of investment. There was a sharp reversal in 2000, however, and since then, computer systems and software have gotten the lion's share. In the last four years, networking has steadily lost influence as a driving factor in enterprise productivity planning, my surveys of enterprises have shown.

The long timelines of this data show we're not dealing here with a cyclical modernization process. The fact is that software, servers and other computing tools are getting more attention, more budget money, more respect than networking. The fact that the point where the shift occurs corresponds to the last major economic downturn raises some legitimate questions about whether networking might not take a further hit in the current slump, as well as questions of what might be done to prevent that.

To start off, I do not believe that because networking collapsed in the post-bubble period, it has to collapse again. The major IT spending cycles of the '60s and the '80s were driven by changes in computing, and it was the latter (a distributed-computing cycle driven by the growth of PCs in business applications) that created the network boom of the '90s. It makes sense to say that distributed computing means distributing computers, which then means networking to keep them connected. Networking was catching up, and it's not surprising that IT then took the lead again.

No, but it was disappointing for sure. The question we might ask is why networking couldn't capitalize on the attention it received. The answer, I think, lies in the stuff that binds networks to applications. The pivotal point in that critical issue came in the early 1990s, when IBM's Systems Network Architecture was supplanted by TCP/IP. SNA network equipment was just too expensive, and enterprises went to the lower cost of TCP/IP instead. The critical thing was that SNA was an application architecture as well as a network architecture, and TCP/IP vendors didn't present application tools. I remember early router applications transporting SNA traffic because that's what the applications generated. Even today, the trend to service-oriented architecture (SOA) is a trend not specifically to TCP/IP but to different application-layer tools -- tools, I might add, that IBM and Microsoft and Oracle and SAP and the like are the ones providing.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags Networkingglobal recession

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Thomas Nolle

Network World
Show Comments



Sansai 6-Outlet Power Board + 4-Port USB Charging Station

Learn more >



Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?