Networking Budgets are Leveling Off. Where is the Money Going?

Enterprises are still spending money on networking equipment in 2012, though the amount that they are spending isn’t growing as fast as it did in previous years.

That’s one of the key findings from the latest Networking Reference Report from analyst firm The 451 Group’s TheInfoPro service. According to the report, only 38 percent of respondents expect to see a budget increase for networking expenditures in 2012, down from 48 percent in 2011.

“I’m a little surprised that budgets are increasing as much as they are, with the 38 percent spending more,” Daniel Kennedy, Research Director, Information Security & Networking at 451 Research, told Enterprise Networking Planet .

The budget increases are going towards several key items. At the top of the list is hardware refresh to deal with aging hardware. Kennedy noted that there is a lot of older hardware that has been stuck in place since enterprises were impacted by budget freezes in 2008. There is also growth in 802.11n wireless adoption and deployment, mobile device management and WAN Optimization technologies.

From a refresh cycle perspective, Kennedy said that the typical refresh cycle for enterprise networking gear is three to five years, with many organizations pushing five years at this point.

“Anecdotally people attach hardware refreshes to projects and things that are going on in their environment,” Kennedy commented. “It’s a direct relationship between current networking business projects and the fact that the network core hasn’t been upgraded because of the economic conditions.”

For example, one survey respondent said that his environment was rolling out Unified Communications (UC) and as a result had to refresh the network for 10 GbE connectivity.

Heat Index

One of the key elements of the 451 Group’s report is the Heat Rank index that ranks various networking related technologies by interest and adoption rates.

Kennedy explained that the heat score is a weighted index that takes into account the interest and activity level in a specific technology. The heat score is complemented by the adoption score that is also weighted.

At the top of the list with a Heat Score of 100 is Unified Communications. That is followed by Mobile Device Management at 97, 802.11n Wireless at 96, IPv6 at 71 and 10 Gigabit Ethernet at 60.

While IPv6 ranks highly on the Heat Score, adoption is near the bottom of the list coming in at a score of 27.

“Although IPv6 always retains a position on the index and it is in people’s plans, we never see the conversion to it being in use,” Kennedy said.

IPv6 adoption stands in contrast to other technologies rated by Kennedy. He noted that from one study period to the next there will be some type of adoption growth for technology that is ranked highly in terms of planning and Heat Score, but that’s not the case with IPv6.

“IPv6 is a great example of a technology that always seems to be in the plan but it never gets to the in-use stage,” Kennedy said. “I predict the same thing will occur next year and IPv6 will stay as a project people have penciled in, but there won’t be a whole lot more adoption.”

Sean Michael Kerner is a senior editor a, the news service of the IT Business Edge Network, the network for technology professionals Follow him on Twitter @TechJournalist.

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