NEWS ARTICLE
Why decentralized digital enterprises require modern networks
7-MINUTE READ
April 1, 2024
Originally published in Ivey Business Journal in March / April 2024
The needs of modern businesses, along with advancements in digital technologies, are forcing a more decentralized digital operating model on many of today’s companies. The monolithic applications of the past are giving way to purpose-built applications and services that can be easily scaled using cloud, APIs, and microservices. While centralized models offered greater control and visibility over network data, decentralized digital services are becoming essential for adoption of new technologies and faster decision-making, while increasing resilience and security at the edge.
The drivers of this change are clear. Cloud-based tools and applications have become fundamental to achieving strategic business goals, with 86 percent of companies reporting an increase in the scope and volume of their cloud initiatives since 2020. Recent research studies have confirmed that companies that effectively democratize cloud usage, ensuring accessibility and usability for all members, tend to achieve significantly enhanced results from their investments in cloud technology. The rise of remote and hybrid work has also led to a significant transformation in IT systems and policies to facilitate remote collaboration and communication, enabling more geographically dispersed teams.
The transition to the cloud and the emergence of innovative technology tools in AI and blockchain allow companies to meet changing consumer preferences and tap into new markets faster. These advancements have the potential to level the playing field for businesses beyond the G2000 (an Accenture-developed list of the largest 2000 public and private companies in the world by revenue), allowing them to compete on a global scale and create value for their customers and employees.
The confluence of these trends with rapidly expanding companies is creating the need for a decentralized digital enterprise. One where information, decision-making, and computing resources are distributed across locations and connected by a modern network, instead of being centralized within a single entity or location. In this set-up, different components of the enterprise, such as databases, services, and computing power, are distributed across nodes in the network.
Simply put, the expanded, decentralized enterprise that comes with higher storage and computational requirements has put a strain on current legacy networks, which haven’t kept pace with evolving business needs. In our global survey of 1,000 business and IT executives, 87 percent of respondents said that their legacy network is a bottleneck to advancing on cloud, data and AI, and digital transformation.
Moreover, technologies such as generative AI and large language models (LLMs) are putting new and heavier demands on networks. For instance, LLMs require massive amounts of data to learn the patterns and structures of natural language, and training them calls for congestion-free, high-capacity networks that are available, efficient, reliable, and secure and can keep up with the speed of business.
Simply put, the expanded, decentralized enterprise that comes with higher storage and computational requirements has put a strain on current legacy networks.
As a result, modernizing enterprise networks is a crucial step towards transforming businesses, enabling better outcomes for companies’ workforces, customers, and partners. A modern network seamlessly connects and enables various layers of the digital core, including cloud, data and AI, platforms and security, and other new technologies. Some of the benefits of investing in a modern network include:
Continuing with outdated legacy network architectures often leads to a downward spiral of technology debt, limited innovation, escalating costs, and added security holes. Our survey revealed that three out of every four companies are still spending 40 percent or more of their overall network budget on maintenance activities. Current legacy global networks face issues with reliability, resilience, and performance, as they are ill-equipped to adapt to network conditions and optimize traffic flow for the best quality of service.
Modernizing network infrastructure with virtualization and a programmatic approach, leveraging APIs, empowers businesses to deliver exceptional customer experiences while accelerating time-to-market and enabling low-latency applications through multi-access edge computing. Adopting this approach offers several compelling benefits, including enhanced performance, seamless expansion into new markets without the need for physical infrastructure buildouts, and automated bandwidth optimization to eliminate bottlenecks, making pre-provisioning unnecessary. Our clients who adopt modern network architectures consistently achieve network performance improvements, often exceeding ten times.
Traditional network architectures have a major drawback: An incident in one region can affect the entire network, jeopardizing its integrity and exposing sensitive data. These architectures rely on perimeter-based network access solutions, which were designed for a different era and a different challenge. However, in today’s world, most data, applications, and devices are outside the enterprise’s boundaries, making it hard for security teams to maintain control.
In our executive survey, over 83 percent acknowledged elevated security standards as crucial for modern enterprise networks. Unlike traditional set-ups, modern networks focus on packet-level authentication instead of sessions, strengthening security. Intelligent distribution of network traffic across multiple paths with robust encryption, along with network segmentation, serves as a defense against potential attacks.
The new approach to security separates it from infrastructure and relies on identity and zero trust. This means that user activities are constantly validated to ensure they are authorized to access systems and points of access. Modern networks can adapt to changing conditions in real time, including potential threats like DoS, DDoS, and man-in-the-middle attacks.
More than 80 percent of enterprises expect a modern network to provide superior user experience in the cloud, be easy to deploy or consume, and enable critical applications. And about 84 percent of respondents cited increasing customer value, improving productivity, and lowering costs as the top three business impacts expected from network transformation.
The shift towards a modern network design brings with it a focus on consumption-based models that significantly lower the total cost of ownership. A pay-for-what-you-use model enables better cost predictability and flexibility. For example, Accenture’s enterprise network transformation is estimated to generate annual cost savings ranging from US$15 million to US$20 million owing to a highly optimized consumption model. Similarly, our efforts to implement a modern network architecture for a client resulted in improvements ranging from 25 to 40 percent in total cost of ownership, driven by hardware avoidance.
By leveraging automation and analytics, modern networks optimize resource allocation, ensuring that bandwidth is dynamically adjusted according to demand. Modern networks offer the flexibility to effortlessly expand and incorporate new regions, all without the need for substantial investments in hardware. This allows businesses to seamlessly align their network capabilities with the evolving demands of their operations.
Building a modern network architecture
Network infrastructure became needlessly complex, as it was not designed with the cloud in mind. Today, most modern application development is taking place on cloud platforms using microservices and cloud functions. That’s why enterprise infrastructure and networks must be built to encompass data and endpoints that exist within and outside of the business.
Drawing from Accenture’s experience in transforming both its own enterprise network and those of clients, we have developed a modern network architecture designed to empower companies to optimize network performance, fortify security measures, and minimize costs. Simplified, the network architecture (see Figure 1) that facilitates decentralized operations comprises these essential components:
- Branch offices that leverage cloud-based technology for network infrastructure and services to enable decentralized operations.
- A Secure Access Service Edge (SASE) solution that combines both networking and security into a single cloud-based service model with consistent security policies, which can be applied globally for a seamless experience no matter where users, applications, or devices are located.
- A centralized platform for managing hybrid multi-cloud network connectivity defined by fabric routers.
- Cloud-native backbone services for providing enterprises with a modern and agile network infrastructure specifically designed to handle the demands of cloud-based operations.
Figure 1: A modern decentralized network architecture
A network for the future
The evolution of the network from a mere conduit to the cornerstone of decentralized digital enterprises marks a profound shift in the business landscape. As the arteries carrying the lifeblood of information and decision-making, the network enables seamless data flow across diverse locations and devices, fostering enhanced performance, security, and cost efficiency.
Imagine a future where your network isn’t just keeping up but is propelling your enterprise to new opportunities. The future is not monolithic, but distributed. It’s not static, but agile. It’s not hierarchical, but empowered. Embracing this distributed, agile, and empowered vision of the future warrants a strategic transition to modern decentralized network architecture.
To kickstart this journey, companies must take three decisive steps:
- Allocate more funds to new and modern networks rather than fixing outdated ones.
- Ensure the current network is stable, then upgrade it with cutting-edge technologies and features to boost innovation.
- Improve network practices to enhance overall business resilience and adaptability.
A modern network is a competitive differentiator, a catalyst for growth and innovation, empowering enterprises to seize new opportunities and thrive in an ever-evolving digital landscape.
Acknowledgement
The authors would like to thank Ramani Moses and Subhransu Sahoo for their contribution to this article.
The original version of this article appeared in Ivey Business Journal, an online hub for management-related thought leadership supported by Ivey Publishing. To obtain permission for teaching or commercial use or to order a print version of published articles, please contact Ivey Publishing at IBJpermissions@ivey.ca.