Study on Adoption of Wireless Solutions

Among Enterprise Users

in India & Emerging Trends

Location: Mumbai
Date: 11th October 2004
Size of Survey: 50 respondents
Objective of the survey:
CXOtoday.com is the country’s first national e-news daily, offering tech-centric
deployment news to those who think, invest and manage IT. Going one step ahead in
providing value-added content to technology managers, we have formulated our first
research report to gauge the impact of wireless Internet in the Indian enterprise space.

The objective of this study was to understand the state of adoption of wireless among
enterprise users in our country and to provide glimpses of the emerging trends in this
space.

Respondents Contacted:
The respondents contacted for this survey belonged to the level of the CIOs, CTOs and
the respective heads of IT, spanning diverse industry verticals, such as banking,
manufacturing, media, to education, chemicals, etc.

CXOtoday thanks all the respondents who have participated and helped us in
successfully conducting this survey. We are glad to share the results of this study with
our audience.

Results of the Survey:

Coming on to the results of the survey, they have taken us by surprise too! While
adoption of wireless is currently low among enterprise users, what is intriguing is the
optimism shown by companies in investing in wireless in the coming financial year. The
Indian wireless market may well be on its growth path, not without first addressing
gnawing concerns of security and cost.

The results of the survey have been presented in a step-by-step synopsis categorized below:

Low Adoption of Wireless Among Enterprises in India

Of the total respondents contacted, wireless adoption among enterprise customers is

surprisingly low at 32%, while a significant 68% have not deployed any wireless
solutions. Despite the fact that the technology debuted several years back, why is that it
that it has failed to penetrate as much as
its wired predecessor? Current Adoption of Wireless Among
Enterprises in India

Answers Ishwar Jha, vice president -

80%
business technology, Essel Group, 68%
“The culprits for this poor response to 70%

wireless are two pronged: First is the low 60%

%age of usage

penetration of laptops and other mobility 50%

devices. 40% 32%
30%
20%
10%
0%
2 yes no
Most enterprise users still continue to have (98%) desktop PCs for which wireless makes
no sense.”

The second reason according to Jha is the failure on the part of vendors in positioning
the technology as supplementary to office LAN. In this context, a CIO has difficulty in
proving the ROI and justifying the benefits for buying and deploying the wireless
devices even though the costs are miniscule.

Defends Chidambara, senior manager - business development, Convergent

Communications (India) Pvt Ltd, which offers networking solutions, “WLANs are not
alternatives to Wired LANs. They should be viewed as supplementary or
complementary to wired LAN to provide mobility and flexibility especially to those
organizations which have a fairly good laptop density and mobile users within its
premises.”

However, admitted Upender Singh- RSM, North and East, Bangladesh and Nepal,
3Com- a networking solution provider, said, “The concept is growing in India though it
is not as momentous. Companies are shying away from adopting wireless in a really big
way.”

But the big question is why?

Speaking about the ground realities, S Thiagaraja Manikandan, head-information

technology, Agro Tech Foods Limited, stated, “The reality staring at our face is that in
order to become really big in India, wireless infrastructure must be able to replace the
existing Ethernet infrastructure.”

According to Manikandan, every enterprise today has already wired their building
through concealed fast Ethernet cables (with few select cases on fibre too) along with
extra provision for future growth. “Remember, this fast Ethernet infrastructure is doing
its job well so far. So, where is the large-scale need for disruption immediately?”
questions Manikandan.

“Fast Ethernet technology is much faster compared to current wireless technologies.

Hence, the question of replacing Ethernet is very tough, at least in the short term,”
wondered Manikandan.

He continued, “I agree on the advantages such

Level of Importance of Wireless
as mobility of wireless technologies - but
practically most of the corporate staff still use
PCs and even the laptop users do not roam
around in their premises with laptops in their
hands. 32% 34%
Low
Moderate
High

3 34%
This just about explains why wireless penetration is largely limited to few spots like
conference rooms, the campus backbone, etc.,” asserted Manikandan.

Corroborating his views are the statistics. In terms of importance, 32% rated it as
important, while 34% rated it as low and another 34% rated is as moderate on their IT
agendas. According to Singh, several factors are preventing enterprises from deploying
wireless solutions in a large scale. Wireless has failed to get its due level of importance
due to the presence of these factors, the ace factor being the security aspect.

We now review each concern raised by the respondents beginning with the prime concern-
security

Security Is An Ace Concern

Security without doubt tops the list of Is Security A Key Area?

concerns, as evident by the numbers. 76%
of the respondents rated security as the 80% 76%
top concern, while for a meagre 24%
70%
security was not high priority.
60%

According to Singh, in order to 50%

understand the security aspect one needs 40%
to be familiar with the nature of
30% 24%
deployments. Says Singh, “WLAN is
deployed on two different environments; 20%

one is a huge deployment on hotspots, 10%

where security is not looked upon as a key 0%
issue and the second among enterprises yes no
for providing mobility among users,
where security is looked upon as a prime factor.”

However, does opening up of network signals over the airwaves place a company’s
network in a very vulnerable position to intrusion and hacking attempts?

“Not necessary,” argues Chidambara, “if adequate security mechanisms like MAC
address filtering and encryption are put in place, coupled with secure authentication,
intrusion is not easy.”

“No,” counter argues Ranajoy Punja, vice president, sales and marketing, Cisco Systems,
India, “Security options such as Service Set Identifiers (SSIDs), open or shared key
authentication and static WEP key offer a rudimentary level of access control and
privacy, and at any time each of these can be compromised.”

4
Outlining the key components of network security, Punja continued, “Elements such as
secure connectivity, threat defense, trust and identity with the capability of infection
containment and rouge device isolation should be in a single solution.”

But is security limited to technology alone?

“No,” says Manikandan, “There are cultural and discipline angles too. Indian
enterprises by and large address security from the external threats perspective. Internal
threats are largely ignored and are not monitored closely. And this could be attributed
to the "trust based" Indian culture per se. Wireless needs far more internal security
discipline too. For e.g., a visitor with a laptop can gain access from internal network
inside your premises.”

“This would call for additional resources, in terms of manpower, hardware and
software. With the extreme cost pressures that CIOs face today, this is a tough call,”
admits Manikandan.

This leads us to the second concern - cost, which also figures prominently in the CIOs concern
list

Cost Worries- Are they Real or Imaginary?

While most of the respondents we

contacted (70%) did mention that the Is Cost A Key Concern?
cost factor served as a deterrent to
deployment of wireless solutions,
30% however, contented that cost 70%
did not matter as such. 60%
50%
In fact, some respondents who have 40%
deployed wireless solutions termed 30%
it as extremely cost effective as 20%
compared to its wired counterpart. 10%
Affirms Sundaram Appan, advisor 0%
information technology and CIO of yes no
Power Products Division of Series1 70% 30%
Hindustan Motors (HM-PPD), “With
better housekeeping, wireless is relatively easy to maintain. And contrary to general
perception, it has proved to be very cost-effective for us.”

Agrees Dinesh Mundhra, system incharge, Pathways World School who has deployed
wireless solutions across its academic campus, “We have saved approximately 50% of
the cabling costs.”

5
So, what does the actual picture look like?

According to Singh, prices have fallen by 80% in the last two years; today even small to
medium enterprises can deploy wireless solutions. Agrees Chidambara, “Cost has
drastically reduced by five to six times.”

Narrating an example Singh stated, “Recently, a very big steel company in India with a
huge campus network evaluated both fiber and wireless connectivity and after careful
evaluation of both the methods, decided to go wireless due to the cost advantages.”

However, apart from costs, respondents cited other pesky wireless-specific constraints
such as speed, radio-signal, traffic management, etc. Dhawal Thakker, deputy manager,
PwC, bemoans the fact that apart from the above mentioned concerns, technical
expertise among solution providers is severely lacking. Says Thakker, “We could even
overlook the cost factor, provided adequate and competent technical skill is available.”

After addressing the key concerns, we now take a detour and address issues faced by current
patrons of wireless solutions

Can Mission-Critical Applications Run On WLAN?

In terms of the nature of applications

Nature of Apps Deployed on WLAN
deployed, from the 32% who have
deployed wireless, surprisingly 44%
56%
have deployed mission critical
44%
applications such as ERP, CRM, etc.
60%
Paradoxically, despite security being a
50%
key issue, companies have not 40%
hesitated from deploying mission 30%
critical applications. 20%
10%
Meanwhile, 56% -- to be on the safer 0%
side -- have chosen non-mission critical mission critical Non-mission
applications such as mailing solutions. apps critical apps

Explains Singh, “The reason that

mission critical applications are not
deployed on wireless connections is because the data throughput is intense and
bandwidth limitations prevents companies from deploying such applications.”

Punja however feels that WLANs are capable of running all enterprise applications such
as ERP, SCM, Billing and Operations applications, provided the network is well-planned
and designed.

We now briefly compare the various existing protocols used in wireless solutions

6
Current Standards In Force

802.11 is a family of specification for wireless local area networks (WLANs) developed
by a working group of the Institute of Electrical and Electronics Engineers (IEEE).

There are currently four specifications in

Wireless Protocol In Force
the family: 802.11, 802.11a, 802.11b and

802.11g. All four use the Ethernet protocol

and CSMA/CA (carrier sense multiple 802.11g
19%
access with collision avoidance) for path unspecified
31%
sharing.

31% of the respondents we contacted are 802.11a

using the 802.11b standard (11Mbps). This 19%
standard, which supports fewer
simultaneous users, uses the same radio 802.11b
signaling frequency- 2.4 GHz as the 31%
original 802.11b.

Says Chidambara, “While the 802.llb standard for indoor applications have been made
license free, other standards need a license.”

Meanwhile, the 802.11a and 802.11g both command 19% share equally. While 802.11a,
which offers bandwidth up to 54Mbps, in a regulated 5 GHz band has the maximum
speed, 802.11g is the latest to arrive on the wireless scene.

Says Singh, “The 802.11g, supporting 54 Mbps, offers the best of both a and b. i.e. high
bandwidth and Wi-Fi (interoperability between vendors).

Finally we now take a peek across the emerging trends in wireless spending

Allocation of Wireless in the IT budget

Despite the inherent issues and concerns, which are yet to be ironed out, corporates are
gradually waking up to the benefits of going wireless, though the change may not be as
apparent.
Allocation of Wireless in IT budget
The numbers speak for themselves.
While 68% were unwilling to
<5%
disclose, 8% of the respondents
plan to allocate less than 5% to 8%
5% to 10%
wireless. 20%

4% > 10%
68%
7 Not willing to
disclose
On the upside, 20% of the respondents plan to allocate 5% to 10% of their IT budget to
wireless, while 4% plan to allocate more than 10%.

According to Singh, huge deployments are occurring in the hospitality industry. Sectors
such as hospitals, education, and many media companies too are going wireless.

Says Chidambara, “One of the most important aspect of implementing WLAN is good
skill sets such as site survey, design engineering, etc. Those vendors who can only trade
the boxes may be wrongly positioning the technology.”

Approximate Spending next FY

In terms of actual spending, while 19% is expected to spend very less on wireless, 6%
plan to spend Rs 10-20 lakh.

Accounts Jha, “Most of the vendors

Appx Spending next FY
are promising new version releases
with high bandwidth capacity
which is holding back CIOs to 50%
invest now and compromise later
40%
for speed and quality.”
30%
Meanwhile, 25% plan to shell out
20%
Rs 20-30 lakh, while a slim 6% plan
to fork out Rs 50 lakh. The 10%
remaining 44% shied away from
disclosing the budget spend. 0%
Very 10-20 20-30 50 Undis
less lak hs lak hs lak hs closed
Justifies Jha, “CIOs are waiting for
Series1 19% 6% 25% 6% 44%
high speed, best of the breed
wireless solution to justify the ROI
and business benefit.”

Agrees Manikandan, “The future scenario looks encouraging - highly secure, faster and
cheaper wireless products are emerging. Due to this, wireless will pick up pace in the
future.”

”We are already seeing few wireless deployment in India. With the user computing
devices shrinking in sizes, yet becoming more powerful through PDAs, sleek laptops,
smart phones, etc., which are capable of handling data, internal and external voice, etc.,
the wireless adoption will see new heights in the future,” predicted Manikandan.

8
According to Manikandan, however, this will take at least a couple of years. Though in
the future CIOs will surely have wireless as part of their IT strategy in the near future -
in some cases they could even be modifying their existing IT strategy to accommodate
wireless. "I have no doubt wireless is the future and is here to stay,” claimed
Manikandan.

So what do today’s CIOs want from providers of wireless solutions?

Says Manikandan, “We expect robust, easy to deploy, much more secured, cost-effective
and converged/integrated technology from the vendor. Solution providers are expected
to clearly define the benefits and the limitations of their product. In other words, they
should be transparent.”

“Vendors are expected to handhold, educate and provide proactive support to the user
community - even after post-implementation. Through this they can mitigate most of
our concerns and enable wide-scale wireless adoption,” hopes Manikandan.