Remote computing: Plug and work - II Magazine Platinum: [1]

Remote computing: Plug and work

For corporations with far-flung workforces, virtual private networks are one of the great boons of Internet technology.

May 2003

Institutional Investor

Magazine

Thanks to VPNs, branch employees, traveling salespeople and even customers with the proper authorization can communicate and share data as if they were all on terminals at headquarters.

VPNs, which are sections of the public network that are walled off for private use, exploded in the 1990s as companies sought a faster, more secure alternative to dial-up computer connections. But VPNs may soon look as clunky and costly as the systems they replaced.

The latest advance, emerging over the past year from upstart companies like Neoteris and SafeWeb, as well as established players like Check Point Software Technologies and Nortel Networks, is the virtual VPN. It offers all the functionality and security of a customized VPN but is no more difficult to connect to than, say, an AOL account. In technical jargon it's an SSL VPN -- SSL stands for secure sockets layer, the security protocol embedded in basic Web browsers.

That easy accessibility through browsing software, which is ubiquitous and free because it's preloaded in client computing devices, explains the appeal. The price of the hardware for managing an SSL VPN starts at about $10,000, one fourth the cost of equipping 50 to 100 workers for ordinary VPN access, which requires special client-loaded software -- and that doesn't include ongoing support and maintenance. Says Ranjini Chandirakanthan, business development manager of Sunnyvale, California-based Neoteris, "Our solution requires zero support."

The technology has spawned a new field that John Pescatore, vice president of information security at Stamford, Connecticut-based consulting firm Gartner, dubs extranet access management. "We see very rapid growth for companies in the space, including Aventail Corp., Neoteris and Netilla Networks," says Pescatore.

Meta Group, a research firm also in Stamford, expects that SSL VPNs will be installed in one out of three major companies within a year and in 80 percent by 2006. The nascent industry's revenues, a mere $4 million last year, will soar to $986 million in 2005, projects San Jose, California's Infonetics Research.

Neoteris generated much of the SSL VPN buzz thanks to the high profile of its chairman and principal early financial backer, James Clark, co-founder of Silicon Graphics. Clark-financed Internet startups like Web-browser pioneer Netscape Communications and financial advisory service MyCFO had more mixed success, but he appears to have found a winner in Neoteris, which has 125 employees and says revenues grew 15-fold last year. Clark stays out of the public eye, leaving day-to-day management to CEO Krishna Kolluri, a former Silicon Graphics executive.

Neoteris has signed more than 250 customers since putting its Instant Virtual Extranet on the market in November 2001. Financial companies, such as Merrill Lynch & Co. and Deutsche Bank, make up 10 percent; other big users are in the legal and health care sectors.

"It delivers a full desktop suite on the browser," notes George Young, director of global product engineering at Deutsche Bank in New York, which began a global rollout of IVE in May 2002 for employees' out-of-office needs. "It's been fully vetted for security, it's not cost prohibitive, and it doesn't crash."

This is not to say that old-style VPNs and their security standard, known as IPsec, or Internet protocol security, will go the way of rotary-dial telephones.

"If you're just connecting, say, headquarters with a field office and maintaining an open connection, IPsec works beautifully," says Morris Abell, sales director of Emeryville, California-based SafeWeb, which markets the Tsunami extranet appliance. "But for people on the road, and if you want to connect to clients, SSL is much more flexible and cost-effective."

SSL VPN buyers tend to be large organizations with thousands of employees, "because they have the biggest pain points," says Jason Matlof, Neoteris's marketing director. "It may take two to three years before this scales for the small and medium-size enterprise."

(C)Copyright 2003 Institutional Investor, Inc.

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