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Sovereign Debt Crisis: A Catalyst for IPv6 and Virtualized Network Services

Virtualization of core network services such as DDI has created a lot of controversy over the last couple of years. Perhaps most notably, Infoblox and Gartner have been both claiming that virtualized network services are not on the agenda of larger organizations, nor will they ever be. I’m not sure I have ever seen a convincing technological reasoning for this position. Rather, the logic has always been circular: it’s not going to happen because we’re not seeing it happening.

That reminds me about the sovereign debt crisis that has been all rage for the last couple of months. Everyone reading the news knew that the budget deficits and the government debt levels were ballooned to unforeseen levels in the Western world during the financial crisis of 2008-2009. Yet most governments and mainstream economists didn’t see that as a big deal. After all, if there really was a problem, they surely would have seen it. Inertia aside, I think there is a rather interesting connect between the sovereign debt crisis and the next generation of network implementations.

When looking at which organizations are spending the most money on information technology, Western governments come pretty high up on the rankings. For example, the US government has an annual IT budget of roughly 80 billion US dollars, which is an extremely high number when you compare it to for example Microsoft’s annual sales of roughly 70 billion US dollars per year. Once Western governments start looking at ways to cut costs, there is a very good chance information technology budgets will go under scrutiny.

In fact, there is already an ample body of evidence of this happening. Governments around the world are embracing cloud computing initiatives in order to reduce the inflated expense in information technology. The Cloud First Mandate issued by the US Federal Government about a year ago is a prime example of this trend, with the goal of reducing the IT budget by 25% through consolidation. And while the US Federal Government is obviously the eight hundred-pound gorilla as far as IT expenditure is concerned, also the smaller monkeys in the sovereign zoo are looking for ways to shed the extra fat they have accumulated during their debt-financed banana extravaganza. And in this particular diet, the savings will be realized by doing more with less, a proposition that is at the core of virtualized and cloud-based computing.

Due to inertia, it will of course take a while before the consolidation train is charging ahead at full steam. But once we get beyond the tipping point, I think two things will happen. First, organizations will not stop their virtualization and clouding initiatives at applications, but rather continue all the way to core network services such as DDI as well as software-based routing. Second, the new consolidated computing environments will include IPv6 support as a standard feature in order to protect the investments that have been made. Given the spending power most Western governments still do enjoy, I would expect this trend to have a spillover affect across the IT industry, from government to enterprises to service provisioning, because ultimately everyone is in the seek of better value.

As to when exactly we will reach the tipping point, it’s hard to say. But in the interim, every penny that is borrowed to finance public spending, will stretch out the consolidation rubberband aimed at more efficient use of computing resources. After all, governments like any other organizations these days depend on information technology, so jumping off the train in an attempt to maintain the status quo will not be an option.

By Juha Holkkola, Co-Founder and Chief Executive at FusionLayer Inc.

Juha Holkkola is the Co-Founder and Chief Technologist at FusionLayer Inc. An inventor with several patents in the US and Europe, he is an advocate of technology concepts with tangible operational impact. Juha is an active proponent of emerging technology trends such as cloud computing, hybrid IT and network functions virtualization, and a regular speaker at various industry events.

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