According to market intelligence and consulting specialists BMI-TechKnowledge`s report, The South African VPN and Data Services Market, increasing competition in the VPN market and the potential for using the Internet to provide VPN services fuelled interest in the VPN market.
The report found the lack of qualified and experienced human resources in the networking environment and increased business focus on mission-critical business areas also added to growth.
Value-added network service providers (VANs) dominate the more mature QOS VPN market, while public Internet-based services are predominantly provided by ISPs. However, BMI-T notes that VANs are becoming significant competitors in the latter segment of the market.
According to BMI-T analyst Rudie Cornelius: "The SA VPN services market as a whole is in the growth stage of its development. BMI-T forecasts the market as a whole to grow at a compounded annual growth rate (CAGR) of 44% a year to 2003."
In more than 200 interviews with key executives of VANs and ISPs, as well as telecommunications managers or IT specialists at local companies with the highest telecommunications budgets, Cornelius found that almost 60% perceived themselves as having a fair to extremely good knowledge of the VPN concept.
"The awareness level within the business market appears to have increased slightly, as fewer respondents indicated they have no idea about the concept, compared to 1998."
For the existing users, the strongest cases for VPNs were the desire to share information resources across a network, security and cost. Non-users opted against VPNs because they had an existing private network, they saw no need and they preferred to use public data services.
At the moment, 52% of VPN customers use a QOS VPN service only, 19% an Internet-based VPN service only and 24% use a combination of the two. Apart from using their VPN service for intranet and extranet activities, respondents foresee a considerable increase in remote access usage within the next year.
Existing VPN users appear to be less than satisfied with VPN service providers` reporting on network management, billing processes and value-added services offered. Satisfaction levels were higher with respect to security and scalability of solutions.
BMI-T believes the VPN services market is set for considerable growth within the next two to three years, as more businesses identify their increased need to focus on their mission-critical activities and experience an increased lack of qualified human resources. This growth will, however, only be experienced once the current standoff between the VANs and Telkom is resolved.
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