Cisco looks inside the packet in search for new growth

Enterprises spend billions each year on business software applications such as enterprise resource planning (ERP) and business process management (BPM) solutions. About one- third of this investment goes to system integrators such as IBM and EDS to shoehorn off-the-shelf products into real-world corporate IT systems.

Now Cisco Systems, the network infrastructure vendor, is going after a big slice of this growing business with a technology called application oriented networking (AON).

“We want to move beyond just managing packets. AON will allow Cisco to edge into business value, not just infrastructure,” says Bill Ruh, AON services director at the California-based group. Essentially, AON will enable Cisco switches and routers to look deeper into the data that crosses networks, giving them insight into what is being transported, rather than just deciding where to deliver the traffic. “We can now insert business policies that determine how messages such as purchase orders or securities transactions are routed,” says Mr Ruh.

This message sensing capability means that rather than simply moving packet traffic from application A to application B, the network can understand that it is routing traffic from Siebel to SAP, and can therefore apply business rules to the message content.

The IT world’s solution to this problem has been to develop “middleware” – software that sits between individual applications and allows them to exchange data automatically. This is a mature technology that has been on the market for the past decade from firms such as IBM, Tibco and SeeBeyond.

But Cisco’s solution differs in that the management of application data happens in the routers and switches, rather than in separate middleware servers that sit one level up from the network infrastructure. Collapsing these separate IT layers reduces the need for custom software engineering as well as accelerating existing applications by processing them in the hardware.

Cisco claims that AON can process 1,000 to 5,000 messages per second, or 10 times the rate of competing solutions, as well as give certain messages priority over other traffic.

But AON’s greatest value may lie in the cost savings that it can offer enterprises. Because the technology is application aware, it eliminates the need for most middleware. And this means less spending on integration.

“For every dollar of middleware software, $5 to $7 is spent on customisation services,” says Massimo Pezzini, an analyst at Gartner. And anything that reduces this overhead is likely to appeal to IT executives. “When you look at external surveys of CIOs over the past five years, the cost of integration is number one, two or three on their minds,” says Mr Ruh.

Even the off-the-shelf price of middleware can be high, costing some $500,000 for the software alone. By contrast, AON cards that slip into standard Cisco kit will cost between $25,000 and $40,000, say analysts. AON can save additional money by eliminating the operational expense of managing fragmented network and application infrastructures.

But the proprietary nature of Cisco’s solution could end up eating into this cost advantage, warn some.

“The hidden costs of deploying this technology are likely to be high. Implementers won’t be able to turn to their existing vendors for support. Instead, they will be required to look for new sources of installation and maintenance expertise in what is likely to be a very expensive place: Cisco certified personnel,” says Joel Conover at Current Analysis.

At the launch of AON last month, Cisco also announced a number of integration partnerships with leading middleware vendors and system integrators such as Tibco, IBM, EDS and SAP.

This will help Cisco gain traction in a new market. But managing these relationships may prove delicate as the new entrant goes for market share while not stepping on the wrong toes.

“AON is a direct threat to the integration market, particularly to those who earn the dollars for professional services. The sales and integration approach needed in this market almost requires Cisco to compete with some of its partners,” says Mr Conover.

Nonetheless, analysts agree that Cisco has entered a promising market. “These technologies are still very much at early stages of adoption in the industry as a whole, and demand for acceleration technologies like AON will only grow,” confirms Mr Conover.

And the vendor is bulking up for the fight, creating a dedicated business unit with over 500 employees and an experienced management team that includes many Cisco outsiders.

“They clearly intend to generate revenues of several hundreds of millions of dollars per year,” adds Mr Pezzini.

But lack of experience may be Cisco’s primary challenge. The vendor has traditionally sold to network managers, not business application users and this will require a radical rethink of how Cisco goes to market.