Computer networks are now widely recognized as an ideal means for companies to conduct communications and business transactions, whether it be within the local office, linking regional offices, or with subsidiary companies and global partners. However, establishing a private corporate network has traditionally been expensive, primarily because of the need for security and the cost of secure connections. But now there’s a very affordable option: virtual private networks (VPNs) are affordable, secure and easy to establish. They allow small and medium enterprises (SMEs) to run secure networks over the Internet.

What is a VPN?

A VPN is a private connection between two or more computers that are linked via the Internet.

Establishing a secure private network within a public network crawling with viruses, hackers, spyware and numerous other threats may sound high-risk, but it isn’t.

But first, let’s look at the basic problem of Internet security. The Internet uses an Internet Protocol (IP), a combination of an electronic language and instructions that allow millions of computers on a network to talk to each other. This shared communication system is what makes the Internet possible, but it also means that anyone with the right tools can easily access most of the information flowing through cyberspace.

To overcome this problem, a VPN uses a technique that is called “tunnelling”. Instead of sending regular IP messages, the electronic information that makes up the message is first encrypted for security by the VPN software, then it’s encapsulated into the IP format and sent, or “tunnelled” through the Internet. This means anyone trying to decipher a company’s communications will only see gibberish. Breaking the encryption can be a huge challenge for even the most skilful hackers, and is very rarely successful.

VPNs now offer the same security as conventional leased line-based networks but at a fraction of the cost, and are much easier to set up. It’s not surprising they’re becoming popular.

Hong Kong’s VPN love affair

Hong Kong businesses are starting to embrace VPNs with a passion, for four very good reasons:

• They are affordable because they leverage the inexpensive and ubiquitous Internet to connect machines or networks.
• Hong Kong is one of the most networked economies in the world, and has easy access to the Internet.
• Cheap, fast broadband connections mean local VPNs can rely on the fast network speeds required to send complex encrypted messages.
• VPNs allow Hong Kong’s increasingly mobile workforce to access their corporate networks quickly, easily and securely while on the road.

The rapid growth of VPNs has had a knock-on effect on productivity, says Richard Stagg, director and managing consultant at Hong Kong-based network security specialists, Handshake Networking.

“Employee productivity increases with VPN," says Mr Stagg, “especially for those telecommuters who can now access the corporate network remotely and securely.”

Which VPN is right for you?

There are several types of VPN, each with its own pros and cons. Any businessman considering a VPN should consider all the options carefully.

IPsec VPN: The most popular form is IPsec VPN. IPsec (IP Security) “... takes the [Internet] data, encrypts and encapsulates it into slightly larger ... packets with extra information on how the data needs to be reassembled at the other end,” says Mr Stagg.

However, IPsec VPN demands that every device that is going to access it -like a laptop or remote computer in another office -has to have its own specialised software to decode the encrypted messages.

Some companies, such as Nortel Networks, offer this software for free, but generally it increases administrative burdens and adds maintenance costs with this requirement for the deployment of special client software.

SSL VPN: Secure Socket Layer (SSL) VPN eliminates the need for client software, thus providing companies with a huge mobile workforce, huge savings.

PCCW, which has just launched the service on May 27, points out that it "will run well using standard web browsers" like Microsoft Internet Explorer. PCCW also says that SSL and IPsec VPNs can complement each other.

PCCW’s commercial group managing director, Marisa Kwok, says: “We believe that wise networkers must balance IPsec and SSL [advantages], and deal only with trustworthy service providers.”

MPLS VPN: Multi Protocol Label Switching (MPLS) VPNs have recently been making headway by providing faster network speeds, better management of encrypted traffic and huge savings because the Internet service provider hosts the required VPN equipment.

However, MPLS VPN is not for all. According to Chris Leung, product marketing manager at Nortel Networks, “The ‘last mile’ connection - that is from the service provider to the customer - is not encrypted. MPLS is ideal for corporations looking for cost-effectiveness, and who do not have the in-house expertise to manage VPNs.”

So which VPN is best for Hong Kong businesses? The answer depends on the role that security plays in the company’s business. One thing’s for sure: without VPNs, businesses using the Internet and e-mail for communication and doing business are sitting ducks for viruses, worms and hackers who roam today’s networks.