Dealing with Network Equipment Shortages

Tuesday March 22, 2022

One of the widest-reaching effects of the COVID-19 pandemic has been various supply chain disruptions. This has hurt industries in all sectors of the economy and all parts of the globe. In effect, the pandemic has created a situation where long delivery lead times have become commonplace.

Recent events in Eastern Europe have been escalating these supply chain woes, as the flow of key exports from Ukraine and the Russian Federation have dried up as a direct result of the conflict, or as a knock-on effect from the imposition of economic sanctions.

The current situation has direct relevance to the technology sector, as Ukraine produces about 70% of Neon gas, which is critical to chip manufacturing. Experts now believe that disruptions in the Neon gas supplies may extend the delivery times of network devices to up to 400 days over the course of 2022 and 2023. In practice, this means that telecom companies and enterprises will have to start looking into alternate ways of organizing their network infrastructure.

Gartner’s Advice on Network Equipment Shortage

Gartner outlined five key strategies for dealing with long lead times on network equipment in a recent analysis. They are as follows:

1. Making the Most of Existing Assets

Organizations can free up network equipment capacity by taking advantage of the fact that most enterprise network devices operate at below 75% port capacity. Reducing excess capacity by consolidating connectivity can enable organizations to free up anywhere from 10% to 15% of switches while making some provision for future growth.

Positive: Higher utilization of existing resources

Downside: Only works as a temporary solution

2. Re-platforming

Organizations can eliminate the need to buy data-center switches and other network hardware by moving workloads to hosting or public cloud providers.

Positive: Does not involve infrastructure investments (CAPEX)

Downside: Running network services at a service provider on a 24x7x365 basis may be prohibitively expensive, as the pricing models offered by most service providers are not designed for this use case (OPEX).

3. Use Strategic Procurement

Gartner highlights that in the current market, vendors prioritize customers who represent larger revenue opportunities and/or create a risk of revenue loss. Organizations hoping to have VIP treatment are therefore advised to advertise how much their business can contribute to the vendor’s revenue stream, or give the impression that they are willing to take their business elsewhere.

Positive: Involves minimal change to the existing operational models.

Downside: Lower discounts than previously. May cease to be effective if the majority of customers adopt the same strategy.

4. Use Certified Refurbished Equipment

In line with the circular economy, some vendors now offer official refurbished equipment programs, which can cut lead times down to a matter of days or weeks.

Positive: Lower costs, environmentally friendly.

Downside: Refurbished equipment may not provide the necessary features and functionalities for various next-generation initiatives. Shortened life-cycles.

5. Extend the Life of Existing Assets

Organizations can negotiate with vendors for extended service contracts on equipment that still has some life in it.

Positive: Likely the most cost-efficient approach, only requires contractual work with the existing suppliers.

Downside: This May require customers to push out their digital transformation plans as the existing network infrastructure may not provide the functionality required by them. Scalability challenges.

FusionLayer’s Recommendation

While Gartner points out public cloud and hosted services as possible options for re-platforming, many organizations also have virtualization and/or container infrastructure in place that can be used to host the network services. In many situations, leveraging that infrastructure for network services that do not benefit from special silicon will be the quickest and the most economic way forward.

By starting to virtualize network services, the network teams will also be able to build up new competences required for designing and operating next-generation technologies such as the cloud edge. When combined with the first steps towards network automation, this strategy will also allow organizations to become more agile while eliminating network downtime caused by manual configuration errors.

An excellent starting point for network virtualization involves network services such as Domain Name System (DNS), Dynamic Host Configuration Protocol (DHCP), Network Time Protocol (NTP), IP Address Management (IPAM), Microsoft Active Directory (AD), and other functions whose service performance rarely goes above hundred thousand transactions per second. In distributed architectures designed for the high level of redundancy, these services can safely be either virtualized or containerized because the performance requirements for individual server instances can easily be met with virtualization and/or container platforms leveraging x86-based general-purpose servers.

Considering that Gartner estimates the average cost of network downtime at 5,600 US dollars per minute, investments in network automation and virtualization provide a quick Return on Investment (ROI) leading to a payback time that is typically calculated in months.