Sandal, shoe, and bookmaker Deckers Outdoor Corporation recently
switched to an Internet networking technology called virtual private
networks to interconnect their global company.
Virtual private networks (VPNs) use the power of the Internet instead of
using private telecommunications lines or other network links. A virtual
private network is a secure and encrypted connection between two points
across the Internet. It transfers information by encrypting and
encapsulating telecommunications traffic into packets and sending the
packets over the Internet. Most VPNs are built and run by Internet service
providers. Companies that go with a VPN from an Internet service provider
essentially outsource their networks to save money on having to acquire
and manage their own wide area network equipment and bandwidth
Deckers is a $100 million company whose 20-person office in Hoek Van
Holland, the Netherlands, collaborates on product development with its
staff in Goleta, California. The VPN cost roughly $31,000 to implement and
saves Deckers $10,000 per month compared with leasing their previous
high-speed network connections.
?We needed a network that would serve as the foundation for our
international expansion,? says Steve Miley, MIS director at Deckers. ?It will
be critical ... because our offices will use it to make sure projects are done
Employees at the two sites use the VPN to update the status of product
development projects through Lotus Notes groupware databases. The VPN
supports Notes? ability to replicate databases of project information at each
work site, which is crucial to groupware support of project team
VPN performance ?is slow but workable for interactive Notes database
access?, Miley says. And as the quality of Internet service improves, VPN
performance can only improve, be adds.
Security, a reported shortcoming of virtual private networks, is improved
with NetFortress software from Fortress Technologies. It automatically
changes encryption keys every 24 hours. ?We feel, very secure with their
products on our network?, he says.
Offices for production management in Hong Kong, Mexico, and Macao will
be added to the VPN this year, Miley says. Those sites currently use
expensive international telephone calls to access servers in Goleta. Desktop
videoconferencing over the VPN, to cut international travel costs, is also
Decker doesn?t mind being among the first to implement a virtual private
network. ?VPNs are here to stay?, Miley says. ?And we?re on the leading
edge, not the bleeding edge?.
(a) What are the business benefits of Deckers? switch to a virtual private
(b) What can be done to overcome several limitations of virtual private
(c) Does it make business sense for any company to use the Internet as
their private telecommunications network? Why or why not?