What is Network Segmentation? A Complete Guide

Network segmentation is a popular topic that has gained more attention in the recent past. Why is this important? It’s because network segmentation can limit the movement of potential cyber attackers within the network.

So, if a security breach happens segmentation restricts unauthorized users from freely accessing critical areas of the network. This helps to reduce the risk of widespread damage. The use of segmentation tools (e.g.: routers, switches, and firewalls) guarantees that each segment is properly isolated while maintaining secure communication between the subnets.

Let’s dig deeper into this concept in this article.

What is network segmentation?

Network segmentation is an important component of network architecture. It divides a larger network into smaller, isolated segments or subnets. This division helps control the flow of traffic between various segments and limits the movement of potential cyber attackers within the network. Additionally, segmentation improves network efficiency by reducing congestion and enabling targeted monitoring and troubleshooting within each segment.

The goal of network segmentation

The goal of network segmentation is to improve the security, organization, and performance of your network. Due to network segmentation, it's easy for users to experience more effective monitoring and management over their networks.

By segmenting a network, administrators can apply unique security measures to each subnetwork. All these measures make sure that only authorized users and devices can access sensitive data and resources.

This is essential for businesses that need to protect valuable assets across hybrid and multi-cloud environments including:

• Customer information
• Financial data
• Intellectual property

Who needs network segmentation?

If you’re running physical or virtual internal systems, network security should be a priority. When your setup is more complex than the need for network segmentation too increases. The only exception might be fully remote businesses that rely entirely on SaaS security.

Using a flat network (where all devices are connected to a single network segment or broadcast domain) may seem easier and cheaper. But it can make you an easy target for attackers. When you are not using network segmentation it is very easy for the hackers to move across your network. Therefore, investing in network segmentation is always beneficial to businesses. It strengthens security and helps safeguard critical assets from potential threats.

Organizations that need to comply with security and regulatory standards—healthcare sector organizations, financial sector organizations, etc.—are prime candidates for network segmentation. For example, healthcare organizations must protect sensitive patient health information and adhere to cybersecurity compliance standards.

Segmentation helps isolate critical systems and make sure that only authorized users can access sensitive data. Similar to the above, businesses that handle credit card information must meet PCI compliance standards. Network segmentation plays a key role in isolating Cardholder Data Environments reducing the risk of data breaches. It also helps companies meet these compliance mandates.

How does network segmentation work?

Network segmentation operates by dividing a larger network into multiple isolated zones. Each zone will work with its own security policies and traffic controls. These segments can be designed to group devices or applications with similar trust levels.

By setting clear traffic rules for each segment, network administrators can regulate how data moves between segments and what types of interactions are allowed within each one. This method limits exposure to potential threats and helps make your system comply with security standards and protocols.

There are several methods to implement network segmentation. Two common approaches are perimeter-based segmentation and network virtualization.

Perimeter-based segmentation

Perimeter-based segmentation uses tools like Virtual Local Area Networks and firewalls to divide networks based on internal and external trust levels. It creates a boundary by allowing unrestricted communication within a segment while filtering external traffic.

However, with the increasing use of mobile devices and cloud environments, traditional perimeter segmentation may no longer be sufficient. This is where network virtualization steps in.

Network virtualization

Network virtualization allows segmentation across the entire network, independent of physical infrastructure, providing more flexibility, finer security controls, and better performance for modern network architectures.

(Related reading: What is virtualization?)

Benefits of network segmentation

• Increase security. Network segmentation helps to prevent the spread of cyberattacks across your organization's network. It limits cyber attackers' lateral movements and protects critical systems from cyber threats.
• Improves network performance. Segmentation reduces network congestion by limiting traffic to specific segments. This results in better performance for resource-heavy activities like video conferencing or media streaming.
• Makes easy to comply with security standards. Segmentation reduces the number of in-scope systems for regulatory audits. It lowers the cost and complexity of compliance with industry-level security standards (e.g.: PCI DSS, GDPR)
• Provides better monitoring and response. Makes it easier to monitor and detect suspicious activities. This improves incident response and reduces the chances of a security breach going unnoticed.
• Controls access from unauthorized parties. Network segmentation allows for tighter access control. Due to this, only authorized users can reach sensitive areas, minimizing insider threats and external risks.
• Reduce network complexity. With network segmentation traffic is contained within specific areas only. It prevents unnecessary data from flooding the entire system. Therefore, bandwidth can be used more efficiently with improved performance reducing congestion.

Drawbacks of traditional approaches

Most of the traditional segmentation methods are now facing various struggles due to environmental complexities. Below are a few such drawbacks.

• Traditional firewall-based segmentation often focuses on external threats. These threats can leave networks vulnerable to insider threats and attacks due to over-trusting internal users.
• VLANs and other segmentation methods are prone to misconfigurations, especially in complex environments or when using third-party cloud providers where control is limited.
• Traditional segmentation techniques often struggle to provide detailed access control, making it difficult to manage remote workers, partners, and customers effectively.

Types of network segmentation

Network segmentation can be achieved through either physical segmentation or logical segmentation. Let’s look at each of them.

Physical segmentation

Physical segmentation divides a network into separate physical subnets using hardware (eg:- switches, routers, and firewalls). Each segment operates independently, with restricted access between them.

While highly secure, this method can be costly and complex due to the need for additional infrastructure and physical resources. It is most effective when strict separation of devices and data is required.

Logical segmentation (virtual segmentation)

Logical segmentation divides a network into smaller segments without using additional hardware. This method relies on Virtual Local Area Networks and network addressing schemes to virtually separate network traffic. When we consider flexibility, logical segmentation is more flexible and cost-effective than the 1st type.

Use cases of network segmentation

In this section let's look at a few real-world use cases where network segmentation can be applied.

PCI DSS compliance

Network segmentation helps isolate credit card data into secure zones. This helps to allow only essential traffic while blocking everything else. This is vital for meeting PCI DSS standards and protecting sensitive financial information.

User group access

Enterprises can segment internal departments into separate subnets. This helps to restrict access to authorized group members. It also helps to prevent insider breaches by controlling access between subnets and triggering alerts if unauthorized users attempt to enter restricted areas.

Guest wireless network

Network segmentation allows companies to offer secure Wi-Fi to visitors by placing them in a microsegment that only provides internet access (without any access to internal systems).

How to implement network segmentation

Implementing a proper network segmentation solution can be broken into 6 major steps.

1. Identify valuable assets. Identify the most critical assets and data within your network. Assign labels to each asset based on its sensitivity and importance.
2. Map the network and data flows. Create a detailed map of your entire network. Include data flows, to understand how information moves between different areas.
3. Determine segmentation strategy. Based on the network map and organizational needs, decide on the best approach to segment your network.
4. Implement traffic segmentation gateway. Deploy a network traffic segmentation gateway to control data flow between segments, for secure communication.
5. Establish access control policies. Create a company-wide access control policy to manage permissions for each network segment.
6. Conduct regular audits and reviews. Regularly audit and review your network segmentation. Consider automating network processes for better security and efficiency.

Best practices of network segmentation

For effective and secure network segmentation it's highly recommended to follow best practices such as below.

Avoid over-segmenting

Creating too many segments can reduce visibility and complicate management. So always try to keep the right balance between security and simplicity.

Conduct regular audits

Conducting periodic audits is important to ensure that your network segments remain secure. Regularly check for vulnerabilities. Try to update permissions when required and fine-tune your segmentation policies to stay ahead of potential threats and avoid exploitable gaps in the network.

Implement least-privilege access

Least privilege access makes sure that users only have access to the network segments mandatory for their roles. This minimizes the risk of unauthorized access. This is fundamental to implementing a zero-trust security model.

Limit third-party access

Granting access to third parties can expose your network to additional risks. Make sure that access is granted only to the necessary segments, and carefully review and monitor any new permissions to maintain security.

Automate segmentation processes

Automation can help simplify and streamline network segmentation by quickly identifying new assets and classifying them accordingly. Automated tools also improve visibility and response times. It reduces the burden on network administrators and enhances overall security.

Network segmentation vs. Microsegmentation

Microsegmentation takes network segmentation a step further. This method applies security policies to individual workloads/devices in the network. It uses software-based solutions and native firewall capabilities in operating systems. This approach tightly controls communication between devices and provides increased security for cloud and data center environments.

The below table illustrates the major difference between network segmentation and micro segmentation.