Everything Depends on Network Transformation

Today’s enterprises are working feverishly to design interactive digital customer and employee experiences. Whether it is through connected devices, new applications, automation technologies, enhanced security controls or moving to the cloud, every enterprise is embarking on a digital transformation journey of some kind.

The problem is, as enterprises embark on digital transformation, their need for improved performance, monitoring and security grows significantly – and, all the while, they also must maintain cost efficiency. Critical business applications that enable digital transformations like SAP and Salesforce require massive amounts of bandwidth. In short, companies need to transform their networks to support the new requirements of digital transformation.

Network sourcing strategies are evolving rapidly and forward-thinking enterprises are adopting multiple approaches as they transform their networks. While most global enterprises are adopting an overlay/underlay model with a preferred integration partner to help them on the transformation journey, the transformed network itself can take on different flavors. ISG has seen three predominant models emerge:   

• Fully outsourced network managed services (MNS) and services integration (SI) supported by a regional carrier transport model, which is as close to network-as-a-service (NaaS) as is operationally possible
• Hybrid WAN networking using a combination of MPLS and DIA
• Broadband access aggregation for smaller sites, augmented by a combination of hybrid WAN for corporate networks.

One thing seems certain: the legacy “one carrier fits all” model is largely dead.

And the technology and network provider market is in flux as it responds, with the emergence of “born in the cloud” firms that specialize in communication platforms-as-a-service (CPaaS), unified communications-as-a-service (UCaaS), contact center-as-a-service (CCaaS) and security-as-a-service (SecaaS). There is no question that network centralization and virtualization in the cloud is dramatically changing enterprise network designs and purchasing models. For many organizations, cloud services are considered a differentiator. And, as network services increase in complexity, buyers are looking to shift to managed services. Global carriers are adapting to this changing landscape as we speak.

Ninety percent of large enterprises are using the internet for direct WAN connectivity and 70 percent are in the process of using or testing software-defined WAN (SD-WAN). But emerging SD-WAN offerings from carriers and software providers with little standardization are confusing – and buyers are increasingly reaching toward service aggregators who promise reduced costs, comfort with plain internet service and multiple broadband providers.

Meanwhile, ongoing merger and acquisition activity in the telecom industry is fuelling global competition and rate compression, which is creating significant pricing gaps in the middle of contract terms. This means the opportunity for enterprises to optimize their networks has never been better than it is today. The ingredients are all there: growing demand for digital transformation, greater market options, lower rates and better contract terms.

If next-generation networks are business enablers and catalysts for digital transformation, what do next-generation networks look like? They offer:

• Greater visibility and control with standardized and harmonized services
• Faster deployment cycles and site connectivity to aid agile digital business
• Customer-centric focus for improving the user experience
• Increased operational efficiency
• Financially optimized right-first-time delivery
• Enhanced security controls, encryption and network segmentation to meet evolving threats and satisfy regulatory compliance
• Access to regional providers and secure internet connectivity and SDWAN overlay
• Increased cloud adoption via cloud exchanges and direct SaaS connectivity via internet
• Greater stability via automated tooling and leading best practices

Now is the time to make your network digital-ready, leverage significant cost optimization strategies in the near-term to enable your digital network transformation and provide the best possible return for the enterprise. The implications are clear. A stronger, digital-ready network drives stronger growth potential across revenue, profit, customer retention and productivity. Gone are the days of issuing an RFP with a list of questions and requirements, pricing, terms and conditions. The sourcing market is no longer a like-for-like market in sourcing. ISG can help your enterprise through a collaborative process to ensure you end up with outcome-based solutions and a network infrastructure customized to your environment.

About the authors

Phil Hugus serves as Partner, leading ISG’s Research consulting and benchmarking practice for Europe. For the past thirteen years with the firm, Phil and his teams have led hundreds of client procurement, contract negotiation, benchmarking and market guidance engagements. Phil leads a team of industry provider experts providing global market intelligence, benchmarking support and sales enablement strategies for ISG’s provider and network carrier clients. Most recently Phil was assigned to oversee ISG’s Research practice in Europe. Phil’s vast experience in the telecommunications industry includes merger-related operations and restructuring, strategic development, market development and launch, strategic contract negotiations, and international management.

Margot Wall is a Principal Consultant with ISG since 2007, directly responsible for production and development of ISG Provider Services Carrier Deliverables, including Market Trends, Win/Loss Reports and additional ISG Research. With more than 25 years of experience in Telecom, she brings considerable depth and breadth in network technologies and solutions, having represented all facets of both the client and carrier side of the equation.