Healthcare Cloud Security Concerns Not Impediment to Usage

Original Story: healthitsecurity.com

A recent study found that 77 percent of healthcare organizations plan to increase the use of public cloud services despite significant healthcare cloud security concerns.
Public and private cloud solutions are gaining popularity in the healthcare industry, especially for data storage and network usage, despite issues surrounding healthcare cloud security and PHI data breaches. Secant Healthcare is looking into these options.

Researchers at HyTrust recently published a study that revealed 77 percent of healthcare organizations plan to move more workloads onto a public cloud service even though healthcare data security was a major concern with cloud usage.

“Without much fanfare, this critical technology advance has become woven into the basic fabric of businesses large and small,” said HyTrust President Eric Chiu. “The potential of virtualization and the cloud was always undeniable, but there was genuine concern over security and skepticism regarding the processes required.”

While organizations across all industries reported security challenges with cloud services, many companies are still migrating additional workloads to private and public clouds, added Chui.

The study found that the healthcare industry is no exception to increased cloud usage and virtualization. Approximately 55 percent of healthcare organizations stated that they have already moved mission critical workloads, such as sensitive patient information, to a cloud or software-defined data center.

Healthcare organizations are also virtualizing other aspects of their infrastructure, reported the study. Fifty-two percent of healthcare organizations have migrated test and development server workloads to a cloud service and 61 percent use a cloud product for storage.

Despite increased cloud usage, healthcare-related participants still said that their organization faced significant healthcare cloud security challenges. About 58 percent of respondents admitted that data security and breach concerns were the biggest worry once migration began.

In addition to data breach concerns, other security challenges across all industries included infrastructure-wide security and control as well as effective monitoring and visibility into cloud infrastructure. Secant Health is watching their IT closely for data breaches.

Additionally, previous healthcare data breaches have not discouraged organizations from implementing cloud services. An estimated 29 percent of respondents from healthcare organizations said that they have experienced a personal data breach.

“The large-scale migrations are particularly interesting in light of the many obstacles that have previously impeded planned moves to virtualized infrastructures,” explained the press release. “In fact, the survey reveals that not all concerns have been eliminated.”

To discover more about implementing healthcare cloud security, researchers asked participants in the industry what types of information needed to be secured in public and private clouds.

For public cloud security requirements, healthcare organizations said that all production data should be encrypted (32 percent), the entire workload should be encrypted (16 percent), and only personally identifiable information should be encrypted (13 percent).

In terms of private cloud services, about one-third of healthcare respondents favored encrypting all production data in a workload.

Software defined-data centers and cloud services are becoming staples in the healthcare industry as more providers transition to value-based care models. These models rely on large volumes of data and meaningful health IT use to increase quality of care and reduce healthcare costs.

While cloud products allow healthcare providers are useful to value-based care delivery, HIPAA rules still apply to data in the cloud.

“Cloud computing outsources technical infrastructure to another entity that essentially focuses all its time on maintaining software, platforms, or infrastructure,” The Center for Democracy and Technology (CDT) stated in a paper. “But a covered entity… still remains responsible for protecting PHI in accordance with the HIPAA Privacy and Security Rules, even in circumstances where the entity has outsourced the performance of core PHI functions.”

However, healthcare organizations have struggled to maintain comprehensive healthcare cloud security. According to the Fall 2015 Netskope Cloud Report, healthcare cloud data loss prevention violations were the most common data loss prevention offenses across all industries studied, accounting for 76.2 percent of all cloud violations.

The report also discussed how healthcare and life sciences averaged 1,017 cloud applications per organization, which was the second highest number of apps behind the technology and IT sector. Yet, PHI was involved in 68.5 percent of violations in cloud applications.

Securing patient and production data can be more difficult when it is managed up in a cloud, but healthcare providers should be aware of several healthcare cloud security measures.

Healthcare organizations should partner with cloud vendors that design healthcare-specific products and can anticipate unique data security requirements, such as HIPAA and HITECH rules.

Regardless of vendor selection, providers should also develop contextual visibility and auditing capabilities. Healthcare cloud security policies should include monitoring alerts, lock-down capabilities, and geo-fencing of users. Intelligent security tools can be helpful for implementing these policies. Secant Healthcare plans on being careful of their vendor selection.

Technology and healthcare are both evolving quickly, but healthcare cloud security concerns could hold back providers from advancing care if they can’t also secure PHI and production data. While the HyTrust study showed healthcare organizations pushing ahead with cloud services despite security challenges, many of these providers may need to review healthcare cloud security measures.

For companies cutting IT costs, the cloud is the place to be

Story first appeared on USA Today -

Data storage shift helps companies' bottom line

Cloud computing is exploding and growing faster than a swirling funnel crossing the Oklahoma plains. The next generation of computing lowers information technology costs while increasing corporate profits at the same time. And what's not to like about that?

That one-two punch was revealed in a study obtained by USA TODAY conducted by England's Manchester Business School. The study, which was commissioned by San Antonio-based hosting company Rackspace, is expected to be released Wednesday.

The Manchester study indicates that cloud computing allows U.S. businesses to slash information technology costs by about 26%. What's more, 62% of those same American companies say that deploying in the cloud improved their bottom lines.

"The results are finally showing what we've known all along," says Rackspace Chief Technology Officer John Engates. "It's not just about moving workloads from your data center to our data center."

The rise of cloud computing has much bigger ramifications. It's a tectonic shift in how we work, live and play. iTunes is in the cloud. Ford's cars are connected to the cloud. Google's Gmail is based in the cloud. But those are largely consumer examples; now corporate computing is also shifting to the cloud.

"The move to the cloud can't happen fast enough for some companies," says Engates, who has been on the ground floor of the cloud-computing movement.

Cloud computing has myriad definitions, but in the most general sense it means devices linked to data centers located just about anywhere over a combination of wireless and wired networks. There are "private clouds," where companies own and control the data centers, which are usually centrally located in lower-cost geographies. And then there are "public clouds," in which companies use computing power delivered from servers they don't own, which are usually shared with other corporate customers.

Big companies tend to use a combination of private and public clouds, reserving their high-security functions and digital record keeping for the data centers they control. But the growing acceptance of public clouds foreshadows a trend in which computing power will be delivered similarly to the way electricity is distributed by utility companies. In fact, tech geeks refer to the long-term public cloud concept as "utility computing."

We are a long way from when most companies no longer own servers, or operate so-called on-premise data centers, and rely solely on public clouds. There are a number of reasons, including security concerns, control and reliability. But the Manchester survey suggests that enterprise computer customers are embracing the shift enthusiastically.

In addition to the cost-efficiency of cloud computing, the study found that 68% of U.S. firms are plowing the cash they saved back into their businesses. They are using the cost savings to improve and expand product lines, services and other offerings. More than 60% of the companies surveyed say they are using the money to hire new employees, give raises and offer bonuses. Employment at the American companies surveyed increased 28%.

While existing companies are transitioning to cloud computing at their own pace, start-ups unsurprisingly are totally embracing the change -- especially software and social-media concerns and online retail outfits.

More than half of the start-ups surveyed said they wouldn't have been able to afford on-premise data centers at the time of their launch.

Of course, it is self-serving for a cloud-service provider to hire a study that supports its case, but the numbers are the numbers, and Manchester interviewed some 1,300 companies in both the U.S. and the United Kingdom.

Intel's general manager of cloud computing, Jason Waxman, isn't surprised by the findings. Server, storage and networking sales have been booming at the chip giant in recent years. Intel pegs the compounded growth rate for servers at about 25% to 30% a year based largely on expansion of private and public clouds.

"The more companies can save on computer infrastructure, the more they can spend on infrastructure," Waxman says. "All of these new opportunities represent a huge build-out."

Waxman thinks that public cloud providers, including Rackspace, Seattle-based Amazon.com (yes, that Amazon) and San Francisco-based GoGrid, could grow as much as 70% a year.

Gartner, the industry research consultant, predicts that the total public cloud market could swell to more than $206 billion in 2016, roughly double what it is now.

Says Intel's Waxman, "It's an astronomical opportunity."

Black Ops IT Gains Attention

Story first appeared in The Wall Street Journal.

Since the early days of Silicon Valley, rogue engineers and software developers have engaged in "black-ops IT," a tradition of sneaking new technology into their companies to amuse themselves and thumb their noses at corporate protocol.

Now tech companies are increasingly trying to redirect black-ops information technology into officially approved channels to harness the creative energies of developers for new products.

Atlassian, a software-tools maker with offices in San Francisco, runs a quarterly programming contest giving employees 24 hours to produce an innovative feature that customers could use. The contest was inspired by Google Inc.'s policy of allowing its engineers to spend 20% of their time on projects they feel passionate about, says the Atlassian President.

So far, it has produced 47 significant product features, the company says. Winners are awarded with trophies and limited-edition T-shirts. Every contestant gets pizza and beer.

This year, after some of Atlassian's customers took notice of the event, the company decided it would send three "seasoned engineers" to help one of its customers run its own contest. Atlassian invited its customers to apply and subsequently picked Nintendo of America Inc. On Thursday, Atlassian will make good on its offer and send the three-person engineering team to Nintendo of America's headquarters in Redmond, Wash. Nintendo declined to comment.

Spiceworks Inc., an Austin, Texas, social network that helps IT professionals buy and manage technology, this year held its first annual "Spice Wars," a programming contest that gives developers a week to build and present a technical innovation. Winners were awarded $2,000 cash prizes in each of six categories named after Star Wars characters—Anakin, Chewbacca, C-3PO, R2D2 and two for Yoda.

Spice Wars is the one side chance to come up with breakout ideas that you wouldn't get in the normal course of business, and a chance to show the team that I'm willing to invest in them being creative.

Overall, Spiceworks's contest produced seven or eight usable innovations, including a way to run simultaneous tests to determine the best user experience, such as whether a button should be blue or green.

One of the contest's winners, a Spiceworks Technical Program Manager, says the event was a chance to think about your user and decide for yourself what's cool and build it rather than having a project manager telling you what to do.

A founder of Palo Alto investment firm Floodgate, learned about black-ops IT techniques from his father, a former Microsoft Corp. executive. He says it is important to keep developers engaged and feeling that innovation is valued.

When people take initiative, lots of management teams try to stamp that out. But the reality is, when people no longer want to take initiative, that's when a company is really in trouble, because there are not serendipitous breakthroughs.


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Network Effects

The Economist

How a new communications technology disrupted America’s newspaper industry—in 1845

CHANGE is in the air. A new communications technology threatens a dramatic upheaval in America’s newspaper industry, overturning the status quo and disrupting the business model that has served the industry for years. This “great revolution”, warns one editor, will mean that some publications “must submit to destiny, and go out of existence.” With many American papers declaring bankruptcy in the past few months, their readers and advertisers lured away by cheaper alternatives on the internet, this doom-laden prediction sounds familiar. But it was in fact made in May 1845, when the revolutionary technology of the day was not the internet—but the electric telegraph.

It was only a year earlier, in May 1844, that Samuel Morse had connected Washington, DC, and Baltimore by wire and sent the first official message, in dots and dashes: “WHAT HATH GOD WROUGHT”. The second message sent down Morse’s line was of more practical value, however: “HAVE YOU ANY NEWS”. (There was no question-mark in Morse’s original alphabet.) As a network of wires spread across the country, referred to as “the great highway of thought” by one contemporary observer, it was obvious that this new technology was going to have a huge impact on the newspaper industry. But would the telegraph be friend or foe?

James Gordon Bennett, the editor of the New York Herald and author of the gloomy prediction of May 1845, concluded that the telegraph would put many newspapers out of business. “In regard to the newspaper press, it will experience to a degree, that must in a vast number of cases be fatal, the effects of the new mode of circulating intelligence,” he wrote. He returned to his theme in another editorial in July. “All those papers which serve merely as vehicles of intelligence will be destroyed,” he declared. “The scissors-and-paste journalism of the country will be annihilated.”

The telegraph posed a threat to the newspapers’ hard-won control of the news, itself a relatively recent development. In the early 1800s newspapers were astonishingly slow. They received news by post, some as reports from correspondents but mostly by copying old stories from other newspapers as part of an exchange system. The Weekly Herald, recalling the 1820s, noted that “the newspapers of that day relied altogether upon their exchanges for news, and, of course, the intelligence which they gave the readers was meagre, stale and unsatisfactory.” Foreign news, if any, was usually several weeks old. Some local papers even varied publication schedules to suit the editor’s social life.

The most avid collectors of news were businessmen, some of whom acted as correspondents to papers. But merchants who passed on news in this way would already have made use of it, and they kept anything that was still commercially valuable to themselves. Some merchants exchanged information with each other in special clubs, called newsrooms, in which items of interest (the arrival of particular ships, say, or reports from abroad) were recorded in shared books to be accessed by paying subscribers only. Journalists would sometimes frequent such newsrooms to pick up stories. But they rarely sought out news themselves.

Things began to change in the late 1820s as two New York papers, the Journal of Commerce and the Courier and Enquirer, began to compete for business readers. Both started to use pony expresses to deliver news from other cities, and fast boats to meet incoming vessels and get foreign news a few hours early. In the 1830s competition intensified with the establishment of the “penny press” papers, which were cheaper than the business ones and catered to a much wider audience. Bennett, the founder of the New York Herald, agreed to pay one of his sources $500 for every hour by which he beat other papers in getting news from Europe.

Elaborate ruses involving fast boats, carrier pigeons, express trains and even semaphore systems meant that papers, not businessmen, started getting the news first. Editors boasted about the timeliness of their news, and how they had beaten other papers to it. When the Journal of Commerce arrived in Boston by mail, merchants would fight to see it: one eyewitness reported seeing “crowds, in Topliff’s News-room in Boston, disagreeably elbowing each other around the file of the Journal of Commerce, on the arrival of the New York mail.” Newspapers were democratising information. Bennett once declared that “speculators should not have the advantage of earlier news than the public at large.”

The telegraph, it seemed, would put an end to this productive rivalry. Raw news and market information would now arrive first at the telegraph office; papers, along with merchants and everyone else, would have to queue for it. Telegraph firms would establish a new monopoly over news delivery, and would sell early access to the news to the highest bidder. Papers would be unable to compete. Circulation would decline and advertisers would flee. The democratisation of news would be undone.

There was hope, however. Bennett believed that a few papers which provided commentary and analysis (including the Herald) would survive. “The telegraph may not affect magazine literature, nor those newspapers that have some peculiar characteristic,” he predicted. But he warned that “mere newspapers”, which simply reported the news, were doomed. He was not alone in this view. The Alexandria Gazette opined that the telegraph would henceforth deliver the raw news, leaving newspapers to “examining causes, tracing effects, enlightening the judgments, and directing the reflections of men.” It seemed that the only way to survive was to offer analysis and opinion, or to focus on events in a narrow field, too obscure to merit coverage by telegraphic news services. A reshaping of the entire industry appeared to be imminent.

Not such bad news after all

The telegraph did indeed reshape the newspaper industry, but not in the way that Bennett and others had predicted. For although telegraph wires could deliver news more rapidly than ever, they had a “last mile” problem: they could not disseminate news quickly to thousands of people. Only printed newspapers could do that. Far from putting papers out of business, the telegraph actually made them more attractive and increased their sales.

For the first time it became possible to read up-to-date business and political news within hours of its occurrence. “We live in a transition period of society,” declared the New York Herald on May 7th 1846. “In yesterday’s paper we published the intelligence of the proceedings of Congress of the preceding day, simultaneously with the newspapers which are published in Washington city itself—220 miles distant.” For fast-moving stories, papers would print “extra” editions with updates sent by telegraph.

Predictions that newspapers would henceforth favour analysis and opinion over news also got things exactly backwards. Instead, the balance tipped towards the latest news. In 1851 Horace Greeley, the editor of the New York Tribune, told a British parliamentary committee that “the quickest news is the one looked to.” Did that mean, he was asked, that “the leading article has not then so much influence as it has in England?” No, said Greeley. “The telegraphic dispatch is the great point.”

When the first transatlantic telegraph link was established in 1858, one of the first messages sent from America was “PRAY GIVE US SOME NEWS FOR NEW YORK, THEY ARE MAD FOR NEWS.” The quicker the news could be delivered, and the more distant the events it described, the better. “To the press the electric telegraph is an invention of immense value,” one journalist observed in 1868. “It gives you the news before the circumstances have had time to alter. The press is enabled to lay it fresh before the reader like a steak hot from the gridiron, instead of being cooled and rendered flavourless by a slow journey from a distant kitchen.”

But some felt the obsession with speed went too far; there were concerns that the freshness of news, often from far away, was taking precedence over relevance. The Alpena Echo, a small newspaper in Michigan, cut off its telegraph service because “it could not tell why the telegraph company caused it to be sent a full account of a flood in Shanghai, a massacre in Calcutta, a sailor fight in Bombay, hard frosts in Siberia, a missionary banquet in Madagascar, the price of kangaroo leather from Borneo, and a lot of nice cheerful news from the Archipelagoes—and not a single line about the Muskegon fire.”

Writing in the Atlantic Monthly in 1891, W.J. Stillman, a journalist and critic, decried the effects of the telegraph on his profession. “America has in fact transformed journalism from what it once was, the periodical expression of the thought of the time, the opportune record of the questions and answers of contemporary life, into an agency for collecting, condensing and assimilating the trivialities of the entire human existence,” he moaned. “The frantic haste with which we bolt everything we take, seconded by the eager wish of the journalist not to be a day behind his competitor, abolishes deliberation from judgment and sound digestion from our mental constitutions. We have no time to go below surfaces, and as a general thing no disposition.”

What of the fears that telegraph companies would establish a monopoly over news? These too proved to be unfounded: there were one or two attempts by telegraph companies to set up news services, but telegraph operators made pretty hopeless journalists, and stringing up wires and operating networks turned out to be a very different business from collecting news. Instead, the newspapers themselves took control of delivering news over the wires, with the formation of the Associated Press. It grew out of a scheme, established in 1846, to share the costs of reporting on the Mexican war between several New York papers. Those papers also agreed to co-operate in the gathering of news from approaching ships, in order to reduce their costs. All this had the effect of reducing the degree of competition between newspapers.

At the same time, the delivery of news by telegraph, and the need for reports that could be shared and printed in any newspaper, whatever its political position, gave rise to a new writing style: brief, to the point and neutral in tone (or what is now called “telegraphic”). The high cost of sending telegrams, at least in the early days of the technology, led to starker, simpler prose. The main points of a story were summarised, followed by layers of additional detail, in declining order of importance, in an “inverted pyramid”. Whether wire reports were truly more neutral than the more partisan reporting of the pre-telegraphic era is still the subject of academic debate, but they did give the semblance of neutrality. In the mid-19th century America’s papers were, in any case, shifting towards being less political, in order to appeal to more readers, rather than just those of a particular political persuasion.

This new, telegraphic writing style also influenced public speaking: short sound bites became popular because they were easier for stenographers to transcribe, and cheaper and quicker for reporters to transmit. Horatio Seymour, the governor of New York and Democratic nominee for president in 1868, was fond of saying that the art of reporting had killed the art of oratory. “And we have to agree that it has at least very much modified the style of public speaking,” noted the New York Times in 1901, in an article considering how journalism had changed in the previous century.

An end to speculation?

Moreover, the advent of the telegraph did away with much of the speculation that had previously been a staple of American newspapers. The transition was not always smooth. President James Polk’s declaration of war on Mexico, reported “by Electric Telegraph”, appeared on the front page of the New York Herald on May 12th 1846, for example. But on the next page was a letter from Washington, already overtaken by events, speculating about what the president might do. In the edition of June 7th, a telegraphic report told of the American victory at Matamoros; but in the same issue there were reports ruminating about the Americans’ difficult position in the battle.

The telegraph “may help speculation in commercial affairs, but it will interfere very often with the speculations of the newspapers”, observed the Public Ledger in 1858. “This being brought into contact, daily, with facts, will upset a great many fancies, and give a pre-eminence of the factual over the imaginative.” Speculation about the course of the second opium war between Britain and China, based on reports several months old, was rendered obsolete overnight by the completion of the transatlantic cable, which had delivered the news that the war was over. “Some of the comments, compared with the actual facts, were found not to be so sagacious as they were supposed to be.” This would, said the Public Ledger, make journalism “more cautious in its comments upon public events abroad”.

Politicians also had to be watchful once their words were circulated by telegraph. Offhand comments could not be disclaimed and they could no longer alter speeches for local consumption. “By the power of the telegraph…the public utterances of public men in the furthest sections of the Union are…subjected to the criticism of the great centres of population and political activity in all their details,” noted the New York Times in September 1859. “The telegraph gives the speaker in the furthest East or West an audience as wide as the Union. He is talking to all America…immediately, and literally with the emphasis of lightning.”

What lessons does the telegraph hold for newspapers now grappling with the internet? The telegraph was first seen as a threat to papers, but was then co-opted and turned to their advantage. “The telegraph helped contribute to the emergence of the modern newspaper,” says Ford Risley, head of the journalism department at Penn State University. “People began to expect the latest news, and a newspaper could not succeed if it was not timely.”

Today, papers are doing their best to co-opt the internet. They have launched online editions, set up blogs and encouraged dialogue with readers. Like the telegraph, the internet has changed the style of reporting and forced papers to be more timely and accurate, and politicians to be more consistent. Again there is talk of news being commoditised and of the need to focus on analysis and opinion, or on a narrow subject area. And again there are predictions of the death of the newspaper, with hand-wringing about the implications for democracy if fewer publications exist to challenge those in authority or expose wrongdoing.

The internet may kill newspapers; but it is not clear if that matters. For society, what matters is that people should have access to news, not that it should be delivered through any particular medium; and, for the consumer, the faster it travels, the better. The telegraph hastened the speed at which news was disseminated. So does the internet. Those in the news business use the new technology at every stage of newsgathering and distribution. A move to electronic distribution—through PCs, mobile phones and e-readers—has started. It seems likely only to accelerate.

The trouble is that nobody knows how to make money in the new environment. That raises questions about how much news will be gathered. But there is no sign of falling demand for news, and technology has cut the cost of collecting and distributing it, so the supply is likely to increase. The internet is shaking up the news business, as the telegraph did; in the same way, mankind will be better informed about his fellow humans than before. If paper editions die, then Bennett’s prediction that communications technology would be the death of newspapers will be belatedly proved right. But that is not the same as the death of news.

New Routers Catch the Eyes of IT Departments

Multifunctional Boxes Keep Business Networks Humming, Curbs Sprawl

Information-technology professionals like Jeff Young want to cut down on the sprawl of networking equipment in their company's computer rooms. In the process, they are being drawn to a new type of product coming out of the technology-networking industry.

Mr. Young, chief technology officer at financial data company FactSet Inc., used to buy a different piece of networking equipment to handle each different technology task. That meant he purchased one piece of gear to deal with email spam, another piece for Internet-traffic filtering, and yet other equipment for firewalls. Overall, his Norwalk, Conn., company had more than 300 "routers," the back-office networking gear that helps to direct and shape Internet traffic.

Having so many routers was expensive and took up space. So late last year, Mr. Young began testing a new type of router from networking company Cisco Systems Inc. Called the ASR 1000, the router crams multiple functions -- including speeding data through computer networks and filtering out unwanted Internet traffic -- into one box. Cisco officially launched the product this month.

"The consolidation component of this gear is compelling," says Mr. Young. He adds that for every five of FactSet's old routers, he plans to replace them with one of Cisco's new routers. Mr. Young expects the rollout to be finished in a year, but declines to comment on how much the deployment will cost.

As IT pros like Mr. Young clamor to deal with "box sprawl," networking companies from Cisco to Juniper Networks Inc. to Telefon AB L.M. Ericsson's Redback Networks are introducing new routers that can stuff more services into their boxes. Apart from its new ASR router, Cisco unveiled a multifunction router known as the ISR in 2004. In 2005, Redback Networks introduced a multifunction router called the SmartEdge, which can facilitate Internet telephone calls and filter Internet traffic. That same year, Juniper launched new routers dubbed the M-series, which boast Internet-telephone features and can block unwanted Internet traffic.

These new multifunction routers are intended to appeal to IT departments that want to minimize the space devoted to networking equipment, replacing older gear with more efficient products that consume less energy. Unlike typical routers, which may perform just one function, the new gear can be customized to carry out a variety of tasks, such as securing a network and ensuring important files have the proper bandwidth to reach their destinations. Prices of the new routers vary according to the different mix of services that companies add to them.

For companies that adopt these multifunction routers, there are cost savings to be had. Most of the savings will come in a company's data center, the huge back-office computer warehouses where Internet and communications companies and businesses link to each other's computer networks. Companies typically lease space in data-center facilities based on the amount of square feet that their equipment occupies. A spokesman for Cisco, San Jose, Calif., says its ASR router uses between two to four feet less in a datacenter than a bundle of networking gear delivering the same features, saving customers $4,000 to $20,000 in data-center-setup fees.

Some data centers also lease space based on the amount of power that computer equipment consumes. A Redback spokesman says its SmartEdge router consumes 61% less energy than a competitor's single-function box that is used to deliver Internet-telephone and data services. That translates into savings of about $3,000 a year in energy bills, says the spokesman.

Companies need to weigh such potential cost savings against the front-end expense of these new routers, however. Because the multifunction gear packs in more services than typical routers, they can be four times as expensive at the outset as typical routers that cost about $20,000 apiece. Cisco has said its new ASR router costs between $35,000 and $400,000, depending on what functions a customer decides to add to the box.

Still, "while clearly the equipment is more expensive, in some cases the cost savings and reduction in energy can offset the pricing," says Ray Mota, an analyst with Synergy Research Group Inc., a Reno, Nev., market research firm.

Some corporate customers may not like the multifunction routers for other reasons. Mr. Mota says some IT managers feel safer having a dedicated router performing a single task, thereby ensuring service for that one task is optimal.

Manoj Leelanivas, a senior vice president at Juniper who oversees the unit that mainly produces routers for cable and telephone companies, adds that some corporate customers may avoid the new routers because of the way their companies' IT is structured. He notes, for instance, that some corporate IT departments have separate groups managing communications, networking and security and don't want to introduce equipment that would overlap.

This isn't the first time networking companies have offered multifunction routers. Early this decade, networking concerns such as Crescent Networks Inc. and CoSine Communications Inc. introduced routers that could perform several tasks, but those boxes were often faulty. Equipment manufacturers have since developed specialized processors and software to improve the performance of such routers. Redback Networks, for instance, has spent about $250 million since 2005 on developing special processors. Cisco says it spent $100 million and obtained 42 patents for the semiconductor it is now using in its new ASR router.

Mark D. Krupinski, who oversees networking for WesBanco Bank Inc., turned to multifunction routers to control the box sprawl at his Wheeling, W.Va., bank. In 2006, after several acquisitions, WesBanco had 80 different phone systems spread across 82 bank locations. The extensive network included dozens of specialized call-routing boxes and other equipment.

So Mr. Krupinski decided to consolidate all the confusing systems into a single network. By early last year, the massive array of routers serving the different phone systems had been replaced with a single server and an ISR multi-function router from Cisco. Mr. Krupinski declines to say what the bank spent on the conversion, but says the move saves it $1 million a year in maintenance and telecommunication costs.

"It's a headache to have to worry about maintenance and power consumption for loads of equipment if you don't have to," he says. "The costs savings we saw more than justified our consolidating."

By Bobby White
Wall Street Journal; March 25, 2008