Virtual private networks (VPNs) are systems that use public networks to carry private information. Some of the earliest examples of virtual private networks were developed in the 1980s by phone companies and included business voice services. The voice VPNs provided a multitude of features, such as teleconferencing, toll-free numbers, private numbering plans, and call management. With the growth of the Internet, the definition of virtual private networks has started to expand. The emergence of information sharing technologies like local area networks (LANs) has allowed Internet service providers (ISPs) and information technology (IT) managers to get in on the action. Equipment and software manufacturers also have a hand in reshaping the future of virtual private networks.

Now, many companies are using the Internet and turning to virtual private networks to cut down on costs and increase performance and security. VPNs can connect remote users and other off-site users (such as vendors or customers) to a larger centralized network. In previous years, this was an expensive venture that required large equipment and maintenance costs for the extra servers and private lines that virtual private networks required. Mounting phone charges were also a financial concern. This is no longer an issue because ISPs are a lot more affordable (usually a flat monthly fee) than long-distance and toll-free services. This fact, along with the universal appeal of the Internet, has revolutionized thinking and made VPN technology more accessible and financially viable for large corporations and small businesses alike. The result is remote access that is quicker, more secure, and wider in scope.


When a company decides to transfer from a remote access server to a virtual private network, it should first and foremost consider the financial impact of the decision. If there is an opportunity to save money, then VPNs should definitely be considered an option.

One of the main cost concerns hinges on whether the virtual private network will be housed on site or outsourced to an independent service provider. When a business decides to use an outside provider, it is immediately eliminating any costs for purchasing and maintaining the necessary equipment. The most the business will have to do is maintain security measures (usually a firewall) as well as provide the servers that will help authenticate users. Of course, this too can be done by an outside provider for an additional price. Outsourcing also cuts down on the number of employees that would be required to manage and maintain the virtual private network.

Today, there are a greater number of providers who help companies service their virtual private networks than ever before. This has forced many of the providers to be more competitive and therefore develop the communication and management skills necessary to keep their customers happy. This in turn has led to better all around service for the companies who decide to outsource their VPNs.

There are several disadvantages to outsourcing virtual private networks. There is an obvious loss of control when an outside provider is running things. Remote users that are in different cities, states, or even countries may also experience difficulty dialing in to the VPN. Several roaming services are available to help eliminate this problem, but they can often be costly solutions.

If a business decides to run a virtual private network in house, it is looking at larger startup costs upfront because the proper equipment must be purchased and a trained staff must be hired to maintain it. The advantage is that once this is done, the company has more control over features like authentication and access. A large corporation may find this more beneficial than a small business because it may already have the staff in place to take on such a project. Still, the potential for retraining the staff to properly operate the VPN exists, and this is another cost that should be considered.


Virtual private network systems are constantly evolving and becoming more secure through four main features: tunneling, authentication, encryption, and access control. These features work separately, but combine to deliver a higher level of security while at the same time allowing all users (including those from remote locations) to access the VPN more easily.

Tunneling is what creates the connection between a user (either from a remote location or separate office) to the main LAN. This connection is called a tunnel and is essentially the circuit-like path that transfers private information through the Internet (which is a public forum). This requires a corporate address to be programmed into the dial-up network to ensure privacy.

To avoid crowded connections, a tunneling feature called "switching" was developed. This feature helps differentiate between direct and remote users to determine which connections should receive the highest priority. The switching can either be programmed directly into the virtual private network or upgraded so that the hardware recognizes each connection on an individual basis.

Incoming callers to the virtual private network are identified and approved for access through features called authentication and access control. These features are usually set up by the IT manager who enters a user's individual identification code or password into the main server, which cuts down on the chances that the network can manipulated from outside the company. Authentication also offers the chance to regulate access to the material on the LAN so that select users can only view certain information.

Encryption is the security measure that allows information on a virtual private network to be scrambled so that it becomes meaningless to unauthorized users. Encrypted data is eventually unscrambled at the end of the tunnel by a user with the proper authorization. This process is usually done via a private IP address that encrypts the information before it leaves the LAN or a remote location.

Despite these precautions, some companies are still hesitant to transfer highly sensitive and private information over the Internet via a virtual private network and still resort to tried and true methods of communication for such data.


The latest wave of virtual private networks feature self-contained hardware solutions (whereas previously they were little more than software solutions and upgrades to existing LAN equipment). Since they are now self-contained, this VPN hardware does not require an additional connection to a network and therefore cuts down on the use of a file server and LAN, which makes everything run a bit more smoothly. These new VPNs are small and easy to set up and use, but still contain all of the necessary security and performance features.

In order for a virtual private network to perform properly, the server must have enough bandwidth to accommodate the number of users (which usually grows over time). The number of remote users can also affect a VPN's performance. In addition, new technology that requires more bandwidth is bound to come out from time to time, and this should be planned for in advance to avoid a potential disruption in performance. Many virtual private network service providers are able to relegate more bandwidth as it is needed to keep up with their customers' needs.

High volumes of traffic are also known to adversely affect the performance of a virtual private network, as is encrypted data. Since encryption technology is often added on via software, this often causes the network to slow down, therefore hindering performance. A more desirable solution is to incorporate encryption technology that uses hardware solutions to keep the network running at the proper speed. New technologies are also constantly emerging that help to decide just how sensitive certain material is (and therefore how intensive the encryption needs to be).


As virtual private networks continue to evolve, so do the number of outlets that can host them. Several providers have experimented with running VPNs over cable television networks. This solution offers high bandwidth and low costs, but less security. Other experts see wireless technology as the future of virtual private networks. While bandwidth is the critical issue here, the evolution of the mobile work force could create significant changes in the VPN market. Users who wish to take advantage of the added convenience that would likely be provided by wireless VPNs could increase the demand in this area. Still, wireless virtual private networks will probably not take off until technology is developed that is both convenient and reliable.


The growing number of options as well as solutions that are more affordable make virtual private network technology that much more attractive to small business owners. Some VPN software is even available on a trial basis so that businesses can find the solution that works best for them. Another option would be ISPs and NSPs (network service providers), which are also starting to provide more VPN services at better rates.

Still, virtual private networks do not always eliminate the need to maintain a company's remote access system. Toll-free-number services should be kept as backups to an ISP in case it is determined that they a better fit either financially or performance-wise for the company and its users.


Binsacca, Rich. "Virtual Private Networks." Builder. June 2000.

Hayes, Jim. "Managed Data Services." Communicate. July 2000.

Kosiur, Dave. "VPN Buyers Need to Make the Right Call." PC Week. December 14, 1998.

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