Insight Matters:
Global Network
Considerations
for eProcurement
and Extranets
Prepared by
James E. deMin
Infonet Services Corporation
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Vo lum e 1
w w w . i n f o n e t . c o m
I n t r o d u c t i o n
eProcurement is another name for B2B (Business-to-Business) purchasing of goods and
services through extranet trading exchanges, direct ERP-to-ERP and internet connections
with suppliers. According to Fortune magazine, manufacturers spend an average of 55
percent of their revenues on goods and services, and service companies spend more
than 15 percent. The Boston Consulting Group (BCG) predicts that one-fourth of all
B2B purchases will take place online by the end of 2003. MNCs (Multinational
Corporations) are cutting costs and increasing profits by exploiting the power of
eProcurement techniques. Already a well established technique for optimising an
enterprise’s supply chain and reducing procurement expenses, eProcurement necessi-
tates three fundamental requirements; (1) re-thinking organisational assumptions
regarding procurement processes, (2) re-engineering MRO (Materials, Repairs and
Operations) business processes, and (3) optimising enterprise applications and the
supporting IT infrastructure to ensure the systems deliver unimpeded around-the-clock
availability and optimum performance.
For suppliers, eProcurement provides functions that include electronic workflow to track
orders through fulfillment and billing, methods for collecting payment (e.g. electronic
invoicing, credit cards, electronic data interchange and electronic funds transfer), etc.
As with buyers, suppliers seeking to undertake an eProcurement initiative must overhaul
their business processes and adopt common procedures that cross industry, geographic
and other boundaries, as well as be able to accommodate security and multi-language
challenges. While the technologies offered by specialised e-Procurement software
vendors (e.g. Ariba, Commerce One, etc.) and more traditional ERP vendors (e.g. SAP,
Oracle and PeopleSoft, etc.) provide a vast array of functional capabilities, these must
now be extended globally to accommodate the demands of integrated logistics chains,
supplier hubs, extended supply chains, etc.
However, for all the importance of eProcurement and the supporting infrastructure, all
too often insufficient attention is paid to the wide area network (WAN). For example,
if pre-deployment and/or upgrade testing of the supporting software is limited to only
the campus LAN environment, the software’s true WAN performance only comes to light
as the application begins to be promoted into production and users are being added to a
live system. Also, leading up to production rollout, network managers are often
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provided with very limited requirements (e.g. number of users and "go-live" date) from
which they must size the required network. They are also often not made aware of
software’s interfaces with other applications, which drive application-to-application or
"A2A" transactional traffic. When users complain about disconnects or slow response
times, all focus is upon the network. In fact, Gartner, Inc. estimates that more than
80% of application availability and performance problems are being blamed upon the
network. Precious time, valuable resources, and scarce IT funding are then spent
on trial-and-error quick-fixes (e.g. server upgrades, database tuning, etc.) until
performance is improved.
This unfortunate situation can be avoided by understanding more about the network
profiles of enterprise-class applications and what choices are available for optimising
performance over WANs. Most software vendors are now touting their new browser-
based "n-tier designs" where little or no software is resident on the client workstations.
Despite the desktop support advantages of such architectures, remote presentation can
add traffic to the network while making end-user performance more vulnerable to
network delay. Web access, underlying both the HTML and network computing approaches,
rely upon HTTP, as well as XML, which have performance issues over the WAN.
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Figure 1 - Market Places, Hubs and Extended Supply Chains
Fragmented logistics
chain
Market Place
Integrated logistics
chain
Collaborative
Strategies
e p r o c u r e m e nt o v e r v i e w
eProcurement is all about cost savings and efficiency,
spanning the entire vertical spectrum of industries, from
chemicals to manufacturing and airlines to agriculture.
The reach of an enterprise’s eProcurement processes must
extend as far as its suppliers, customers, and internal
operational lines of business and administrative organisa-
tions. For MNCs this then means even greater levels of
dependency upon their global network and service
providers, if the potential opportunities of eProcurement
are to be realised (refer to Figure 2).
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Figure 2 – Advantages of eProcurement
Source: AMR, 2001
Advantages for the distributor
Store management
Stock management
Increase in sales
Reduction in logistics costs
Average expected savings
10 to 40%
12 to 30%
2 to 10%
5 to 10%
Advantages for the producer
Reduction in stock
Acceleration of restocking cycles
Increase in sales
Better customer service
Average expected savings
2 to 8%
10 to 40%
5 to 20%
3 to 4%
The objectives of eProcurement include the following:
>>
To improve service levels to buyers, suppliers and users.
>>
To develop a more integrated approach to procurement
across the enterprise’s supply chain.
>>
To minimise the transaction costs associated with
procurement through standardisation, streamlining and
automation of the procurement processes within, and
where appropriate across agencies and sectors.
>>
To promote competition among suppliers while
maintaining reliable sources of supply.
>>
To optimise inventory levels through the adoption of
efficient procurement practices.
>>
To make effective use of human resources in the
procurement process.
>>
To reduce off-contract spending by using technology to
increase user awareness of existing contract facilities
and by making it easier to order against them.
>>
To leverage buying power by using technology to support
identification of opportunities for aggregation and by
facilitating the aggregation of user requirements within
and across lines of business.
>>
Reduce transaction costs by using technology to auto-
mate processes, which are currently paper-based, and to
streamline and standardise processes and documentation.
Interenterprise Data Warehouse - Workflow Mgmt. - Data Transmission - Business Messaging
Discussion - News - Reference Library - Employment - Advertising
Product Catalog - Performance Scorecard - Benchmarking - Management Alerts
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The organisational assumptions and business processes
involve internal alignment of control over procurement poli-
cies, procedures, and supplier relationships. To achieve fully
leveraged buying volume, an enterprise must put into place:
>>
Centralised control of supplier relationships, including a
reduction in the supplier-base, the establishment of corpo-
rate preferred suppliers, and negotiated agreements based
upon volume.
>>
Predominantly standardised procedures and policies.
>>
Supporting software applications linked internally with
operational lines of business and administrative depart-
ments, and externally with suppliers, trading exchanges
(e.g. TradeRanger, Elemica, etc.) and extranet partners.
In a highly integrated end-to-end eProcurement process
(refer to Figure 3), the applications of suppliers not only
receive orders without re-entering them, but also respond
with availability, delivery dates, and status reports.
This requires integrated order-fulfillment and supply
chain systems, with robust and properly sized networks.
Suppliers must also find the best means of creating and
maintaining electronic catalogues that suit the buyers’
needs. This may include catalogues customised for the
buyers’ eProcurement applications, the marketplaces they
use, and the supplier’s website catalogues. Consequently
the transactions that must traverse the networkbetween
these geographically disperse parties are extremely complex
and the amount of data moved can vary significantly from
one application to another. To illustrate this point, consider
the data categories involved in the procurement process
(Refer to Figure 4 on page 6).
Figure 3 - End-to-end eProcurement Process
Procurement
Supply Chain Management
Customer Relations
Direct-
Spot Purchase
Direct-
Replenishment
MRO /
Shared
Auction /
Reverse Auction
VMI / Co-managed Inventory
CPFR
Promotions /
Deal Mgmt.
Market Data
Collection
Buyer
Aggregation
Returns
Allocation
Demand
Forecasting
Asset / Excess
Inventory
Sales
Due
Diligence
Market
Making
Contract
Management
Transpor-
tation
Shipment
Tracking
Supplier
Aggregation
Risk
Management
POs /
Releases
Auction /
Reverse Auction
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Contract Management
>>
Customer Records
>>
Price Lists
>>
Sales Quotes/Sales Orders
>>
Project Estimating
>>
Sales/Project Invoicing
>>
Credit Notes
>>
Integrated Reporting
>>
Capacity Forecasting
>>
Contract Management
>>
SPEC 2000/ANSI X12 Customer EDI
Materials Management
>>
Supplier Records
>>
Quote/Purchase Order Processing
>>
Material Planning
>>
Stock Status by Stock Type/Warehouse
>>
Allocations Control
>>
Consumable Kits
>>
GRN Generation
>>
Returns Picking/Packing List
>>
Part Master Control (ATA configuration)
>>
Multi-Warehouse/Stock Locations
>>
Serialized/Life Control
>>
Bar Coded Stock Control/DCS
>>
Lot Control
>>
Warranty Generation and Tracking
>>
SPEC 2000/ANSIx12 Supplier EDI
Personnel
>>
Employee Records
>>
Labor Collection
>>
Integrated Reporting
>>
Time and Attendance Module
>>
Training and Certifications
Scheduling & Planning
>>
Work Center Setup
>>
View/Update WIP
>>
Capacity Planning/Forecasting
>>
Repetitive Schedules
Finance Management
>>
A/P Invoicing
>>
Financial Holds
>>
Applied Costing
>>
WIP Journal to Cost of Sale
>>
Period Details/Period End Control
>>
Asset Depreciation
>>
Fixed Assets
>>
Project Costing
>>
Job Cost Analysis
>>
Detailed and Summary G/L
>>
SPEC 2000/ANSIx12 Customer
MRO
>>
Quotations
>>
Planned Arrivals
>>
Work Scope Details
>>
Life Control/Full Process Package
>>
Project Inspection
>>
Maintenance Planning
>>
Components
>>
Tooling
>>
Material Kitting
>>
Project Control
>>
Non-Routine Task Cards
>>
WIP
>>
Complex Assemblies
>>
Rework
>>
ATA Chapter – Section
>>
Loaner Exchange
>>
Repair Survey
Quality
>>
Receipt Inspection Control
>>
Technical Manual Control
>>
Authorized Release Certificates
>>
Tooling Calibration Tracking
>>
Tooling Reporting
Administration
>>
User Profiles
>>
Permissions
>>
Company Setup
>>
Security
Figure 4 - eProcurement Data Categories
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As noted in Figure 4, the data categories involved in
eProcurement are not only voluminous, but also represent
complex processes, relationships, interdependencies,
potential inconsistencies in definitions, units of measure,
language differences, etc. These then result in the need for
the supporting applications software to provide sophisticated
edits/validations, pick-lists, and other system-level func-
tions, which contribute to extremely large and highly-complex
transaction sets. Consequently, eProcurement applications
and their associated transactions are among the most com-
plex and challenging from a networkdesign perspective.
N a t u r e o f
e p r o c u r e m e nt Tr a n s a c t i o n
eProcurement transactions also have highly complex network
traffic patterns and size characteristics, influenced by such
factors as the complexity of the client’s business processes,
geographic locations of buyers/suppliers, languages, edits,
validations, security, etc.
Typically, these transactions fit into one of the
following categories:
>> Ping-Pong Transactions:
numerous small packets
exchanged between servers in the enterprise
application’s n-tier architecture
>> Unidirectional Data Transfers:
consisting of a large
number of packets sent between servers or from
the server to the client, and a small number of
acknowledgement packets sent from the client or
server to another server
>> Hybrid Transactions:
hybrids consisting of ping-pong and
unidirectional bulkdata transfer transactions
Similarly, the characteristics of these transactions can
vary widely between the individual levels in the enterprise
application’s n-tier architectures.
Under most circumstances, these servers (refer to Figure 5)
will be co-located geographically on a clients’ local Ethernet
LAN, which greatly enhances performance and simplifies the
networkrequirements. One possible exception could be
locating a Web server closer to remote users. The complex
eProcurement processes for which the enterprise application
software is deployed, requires communications with suppli-
ers’ applications almost always located outside of clients’
campus LAN environments.
Figure 5 - Example of Transactions Between Servers in n-Tier Architecture
Order-Entry
Application
Server
Data Server
Storage
Requests
Responses
Web Server
0.8 KBS
0.2 KBS
Up to 105 KBS
Up to 6.1 Meg
Up to 112 KBS
Up to 191 Turns
Up to 1,017 Turns
Up to 112 Turns
.6
KBS
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To illustrate this point, consider the following example
showcasing step-by-step, the completion of an order-entry
transaction initiated in the UK:
>>
The UK-based buyer’s software application must commu-
nicate with a supplier’s inventory application based in
the U.S. in order to validate product availability.
>>
The transaction is completed by receipt of a shipping
confirmation from a logistics provider based in the U.S.
Hence, the eProcurement process necessitates numerous
transactions between several software applications locat-
ed in different geographies, which must be transacted over
the WAN infrastructure. The physical location of the initi-
ating users has a minimal impact on the overall number of
transactions traversing the WAN in this example. It is the
geographic location of the other application’s servers that
will control the overall performance of the transactions
supporting the placement of the order.
Applications are typically interfaced with other applica-
tions using an Enterprise Application Integration (EAI)
technology such as those offered by Tibco, SeeBeyond
and others. Also, enterprise-class applications are inter-
faced to each other via application servers (refer to Figure
6). As a result, transactions that were designed and
optimised to interface with each application’s own Web
server (connected via a LAN) are now being executed over
the WAN between their respective application servers.
These transactions are referred to as A2A transactions.
Figure 6 - Application-to-Application (A2A) Transactions
Buy
er's
Order-Entry
Data Server
Storage
Requests
Responses
.6
KBS
Web Server
0.8 KBS
0.2 KBS
Up to 105 KBS
Up to 6.1 Meg
Up to 112 KBS
Up to 191 Turns
Up to 1,017 Turns
Up to 112 Turns
Supplier s
Inventory
Application
Server
Data Server
Storage
Requests
Responses
Web Server
1.2 KBS
0.4 KBS
Up to 1.9 Meg
Up to 7.1 Meg
Up to 61 KBS
Up to 291 Turns
Up to 1,113 Turns
Up to 211 Turns
1.8
KBS
In this simple example, a number of dramatic observations
should be made:
>> Request and Response Transactions Can Vary
Widely in Size
— Enterprise-class application software
request transactions can be sub-kilobyte, whereas the
response transactions can be multiple megabytes in size.
This is a result of the great functional richness of the soft-
ware’s transactions, which is achieved by returning large
amounts of data and content. Moving this data back
upstream to the user’s client workstation is achieved by
numerous round-trips or "turns." These characteristics
create some very challenging demands upon the network,
which must accommodate the associated bandwidth and
latency effects.
>> Total Number of Transactions is Largely Independent of the
Number of Users
— The total number of transactions to
complete an eProcurement process is entirely a function of
process-complexity and not the number of actual system
users. Complex processes such as eProcurement can gen-
erate literally hundreds of transactions initiated by only a
single order-entry transaction, with the majority of transac-
tions being between applications to applications (A2A).
>> Co-location of Servers is Not Always Possible
— Since the
eProcurement process requires the software applications
to exchange data with other applications (often using EAI
technology) that are not on the campus LAN, A2A
transactions will generate WAN traffic between the
geographies where the servers are domiciled. This may
seem obvious, but the physical location of application
servers for interfaced applications is often overlooked
during system design activities.
>> Inter-Applications Transactional Characteristics
—
Finally, applications exchange transactions with other
applications by executing each other’s transaction sets,
which were designed and optimised by vendors for
communicating with their own Web server (co-located on
the campus LAN), not other vendors’ application servers
accessed over the WAN. As a result, A2A transactional
traffic may have characteristics that represent a vexing
challenge to the network group (refer to Figure 7).
Therefore, the first step in sizing and optimising a network
on behalf of an eProcurement process is to recognise that
the network is not only influenced by the direct users
accessing the procurement application, but also by the
complexity of the business processes, interfacing applica-
tions and the location of their servers. Additionally, as
previously noted, the transaction characteristics of software
vendor’s n-tier applications can vary widely in terms of sen-
sitivity to latency and bandwidth, depending upon the
specific vendor’s software modules and the data intensity
of the transactions being executed.
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Figure 7 - Profile of a Single Enterprise Application Transaction (Application Server Layer)
Transaction Profile
834 Bytes
Up to 6,431,215 Bytes
Up to 1,041 Turns
Request
Response
1-to-7,711 Ratio
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L a t e n c y S e n s i t i v e V e r s u s
B a n d w i d t h - S e n s i t i v e
Individual transactions may be latency-sensitive, band-
width-sensitive, or a combination of both. This means that
the WAN design must exhibit the performance characteris-
tics that best matches the individual transaction’s unique
needs. With latency-sensitive transactions, small varia-
tions in network latency, such as an alternate route that
adds up to 25 milliseconds (ms) of incremental latency,
will increase transaction total response time. Transactions
sensitive to latency are almost always challenging to tune
over the WAN because traditional tuning methods, such
as bandwidth upgrades and router prioritisation, will not
typically improve performance. The root-cause of such
latency often lies within the coding of the application’s
internal logic, as well as the information intensity of the
transactions’ edits, validations and other complex
business processes that are transparent to all but the
system architect. Finally, applications vendors design
and optimise their software for a local environment
where all servers in the n-tier architecture are co-located,
versus diverse locations connected via a WAN.
Ping-pong transactions are always latency sensitive as a
result of hundreds of data packets passing across the
WAN, with user response time slowed while the user waits
for all these packets to be exchanged. To illustrate this
point, consider a billing transaction that requires 500
ping-pong transactions across the WAN to execute.
A 25ms increase in latency (due to network issues,
client and server delays, or router delays) will result
in an additional 6-second delay (i.e. 250 transactions x
25ms/transaction). Therefore, if in the previous example
the order-to-bill process requires an interface transaction
to the billing application, this latency must be considered
in the network design and expectation for end-to-end
performance for the intended business process.
By contrast, bulk data transfer transactions are almost
always bandwidth-sensitive, since they involve a very large
number of data packets. Additional WAN bandwidth will
usually enable these packets to traverse the WAN more
quickly and improve response time. Therefore, transac-
tions containing large amounts of data such as photos,
billing history, detail product specifications, etc. can be
optimised by allocating greater bandwidth.
Infonet has extensive experience with eProcurement
implementations using SAP, Oracle and other applications
with which these are likely to be interfaced, and having
performed in-depth network profiles of numerous
off-the-shelf and custom applications can design
network solutions that are optimised to satisfy client’s
eProcurement business requirements. Infonet’s
Application-Defined Networking (ADN) approach and solu-
tions portfolio can be used to minimise the complex
impacts of latency and bandwidth through solutions
such as Asymmetric Committed Information Rate (CIR).
Infonet also offers Class of Service (CoS) features on three
separate global network platforms: Global Frame Relay,
IP VPN Secure and Global ATM. MNCs are increasingly
implementing CoS features in order to maximise the
performance of their enterprise applications. By working
closely with the client, the ADN methodology enables
Infonet to determine which VPN service (Global Frame
Relay, IP VPN Secure or Global ATM) is the right
solution for their operational environment.
E s t i m a t i n g B a n d w i d t h
The bandwidth requirements associated with deployments
of eProcurement applications can be reliably planned as
long as basic information is available regarding the appli-
cation’s transaction characteristics and the estimated
number of users. Infonet’s patent-pending Network
Analysis Program (NAP) methodology is used to measure
and profile enterprise applications, such as Oracle and SAP
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with the voluminous data captures resulting in very precise
transaction characterisations. These can then be used to
model expected performance prior to implementing or
upgrading the supporting application software.
In estimating bandwidth requirements for ping-pong trans-
actions, there are several key variables:
N
= the number of expected concurrently
active users at a location
T
= user think-time (the amount of time a user needs
between successive transaction executions)
K
= the number of packets per transaction in any one
direction
M
= the number of bytes per packet in any
one direction
P
= one-way network latency
Using these data points the calculation of estimated band-
width in any one direction is as follows:
Estimated Bandwidth=
(8 bits/byte) x (N) x (K) x (M) ÷ (K x P + T) bits/sec
The estimated bandwidth requirements for such a transac-
tion between two geographic locations is then derived by
calculating the maximum of the estimated bandwidth in
both directions. That is, the time between successive
transactions generated by a single active user is
(K) x (P) + T, because (K) x (P) is the total network latency
for the K packets (assuming a one-to-one ping-pong
exchange), and T is the time between transactions. During
this time (i.e. K x P + T), the user will have submitted, in
the specified direction, K x M x 8 bits of data. Finally, the
number of active users (N) is applied to derive the total
estimated bandwidth for the intended user population.
Expanding upon the original example, assume that the
buyer physically located in the UK initiates order-entry
transactions (server domiciled in the UK), which exchange
transactions with the supplier’s SAP inventory application
domiciled in the U.S.). Such an example would result in a
ping-pong effect for both application’s transactions, with
the variables being as follows:
N
= 25 active users
T
= 120,000 milliseconds
(2 minutes, which is common)
K
= 100 packets inbound, 120 packets outbound
M
= 60 bytes per inbound packet, 200 bytes
per outbound packet
(plus 48 bytes for the WAN overhead)
P
= 150ms (one-way latency)
Therefore, 43Kbits/sec would be the peak bandwidth
usage between the UK and the U.S. for the SAP inventory
validation. Furthermore, if a 70 percent maximum planned
utilisation threshold were to be assumed in engineering
this circuit, the bandwidth required would be 43Kbits/sec
divided by 0.7, or approximately 64Kbits/sec.
Hence, the end-to-end performance of the eProcurement
process is a function of not only the initiating request tran-
sition, but also all of the other transactions included in the
business process workflow rules, such as the validation of
inventory. The network design must adequately address
all of these factors in order to yield a predictable and
reliable user-experienced response time.
The bottom line is that in order to accurately estimate the
bandwidth requirements for eProcurement these interface
transactions must also be taken into consideration, as
well as the network profile or application characteristics
(e.g. latency) of the applications with which SAP, Oracle,
etc. is interfaced. The geographic locations of buyers/
suppliers and the servers on which their interfaced
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applications are running must be clearly identified and
the business processes understood. Infonet’s ADN
methodology incorporates these factors into the design of
clients’ networks and further refines bandwidth require-
ments, based upon unique insights into the performance
characteristics of the supporting technologies.
(8 bits/byte) x (25 users) x (100 packets) x (108 bytes/packet)
(100 packets) x (150 milliseconds) + 120,000 milliseconds
= 16 Kbits/second
The estimated inbound bandwidth required to support the user-initiated order-entry transactions, then, is approximately
16Kbits/sec, calculated as follows:
Similarly, the estimated outbound bandwidth is approximately 43Kbits/sec, calculated as follows:
(8 bits/byte) x (25 users) x (120 packets) x (248 bytes/packet)
(120 packets) x (150 milliseconds) + 120,000 milliseconds
= 43 Kbits/second
Figure 8 - A2A WAN Transaction
Order-Entry User
SAP Order-Entry
Supplier
Inventory
A2A
Transaction
13
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S U M M A R Y
eProcurement initiatives make tremendous demands of an IT organisation’s network
infrastructure. In order to ensure the success of these business-critical processes, it’s
crucial that the networking group is involved at an early enough stage, so that they may
plan the deployment of a reliable, scalable, resilient and intelligent infrastructure. This
will help ensure that the eProcurement initiative meets the highest expectations of busi-
ness managers, users, extranet partners, interfaced applications, etc. Infonet Services
Corporation has unique insights into the network performance characteristics of enter-
prise-class software, gained through years of profiling these applications in clients’
real-world environments, and designing network solutions to optimise performance.
Networks designed using Infonet’s ADN approach represent the best value to multi-
nationals seeking to optimise their eProcurement processes and yield ROI from their
technology investments.
A b o u t I n f o n e t
Infonet Services Corporation, known for its quality of service, is a leading provider of
managed network communications services for nearly 3,000 multinational enterprises.
Employing a unique consultative approach, Infonet offers integrated solutions
optimising the complex relationship between enterprise applications and the global
network. Extensive project management capabilities are the foundation for the services
and solution offerings (broadband, Internet, intranet, multimedia, remote and local
access, provisioning, application and consulting services) positioning Infonet as the
ideal single-source partner for multinationals. In particular, Infonet IP VPN solutions
offer multinationals a unique combination of Private and Public IP services as well as
a full set of Managed Security Services.
Rated "Best in Class" overall in Telemark’s survey of Global Managed Data Network
Services, Infonet has also won "Best Customer Care" and "Best Carrier" at the World
Communication Awards. Founded in 1970, Infonet owns and operates The World
Network
®
, accessible from more than 180 countries, and provides local service
support in over 70 countries and territories.
Infonet's stock is traded on the New York and Frankfurt Stock Exchanges under the
symbol IN. Additional information about the company is available at www.infonet.com.