ISG Provider Lens™ Network - Software Defined Solutions and Services Partners - Nordics 2020 - Managed SD-WAN Services
The SDN market in the Nordics is typically driven by agility and being able to be flexible in terms of set-ups. Service providers and system integrators operating in the Nordics have realized that several customers are opting for a pure cloud strategy, which will imply a significant impact on the architecture of the networks. As a part of the cloud strategy, the Internet has also become extremely important as a carrier, with the heightened need for connectivity with more links than the stable, traditional Multiprotocol Label Switching (MPLS) link. While most enterprises look at software-defined wide area network (SD-WAN) and other software-defined technologies as a one-stop-shop for such requirements, along with economic viability in the long run, it may not be true for all customers. With softwaredefined everything (SDx) implementation, enterprises will have a more dynamic network architecture, which will enable them to meet business requirements effectually in the future.
The Nordic region has been mature in terms of transformation. Most enterprises in the region have a clear vision of their transformational journey and, thus, want to engage early in the related consulting odyssey. System integrators are finding significant traction in consulting practice, particularly in the request for information (RFI) or request for proposal (RFP) discussions. Furthermore, Nordics-based enterprises are increasingly showing an inclination toward the improvement of user experience measurements, application delivery, including service level agreements (SLAs), and key performance indicators (KPI) measurements. Enterprises already have ingrained processes, which are helping them to implement these consulting-led best practices into their IT systems.
In any SD-WAN deal, the underlying re-engineering accounts for a significant portion of cost (around 45 percent to 60 percent depending on geography). Therefore, based on site categories, and to realize cost savings as well as a rapid move to the cloud, the customers are moving away from MPLS to business Internet.
SD-WAN has become a mature solution and a de facto option for all the aspects of SD networking. Most service providers are ready with an SD solution, which includes a single data plane and a control plane that not only cuts across the enterprise private data center but also the public data center or public cloud. In essence, if there is a workload that can fit into a public cloud, private cloud or a hybrid model, it would typically be managed by a network administrator or a cloud administrator. Now, the SDN solution can be connected with a single orchestrator through which the policies across the different domains of the data center can be managed. Therefore, SDN stretches across public cloud and private cloud, creating a hybrid cloud SDN solution. Gradually, service providers are delivering this kind of solution with strategic partners such as VMware and Cisco. Added to this, the providers are creating accelerators such as SDN toolkits that simplify the deployment and automate some configuration tasks.
SDN uptake in the Nordics started three to four years ago when the service providers and system integrators were determining the dimensions of the network; they were considering the volume of data that would hit the data centers and campus networks but not the variety and velocity of data. Thus, the service providers were surprised when the edge network was flooded with innovations and enterprises demanded vertical specific use-cases in the form of location analytics mapped to consumer behavior analytics, creating heat maps across retail stores and so on. Among verticals, computational and network requirements are changing for the manufacturing industry, and enterprises are witnessing traffic they have never experienced before in an IT environment. Similarly, for the mining and construction industries, use cases for the use of Internet of things (IoT) in zero-latency architecture to enable remote control machines (particularly for operating in hazardous environments) are required.
Enterprise customers are looking toward restructuring their networks to align them with their cloud journeys. As a result, the workloads are getting distributed, enabling the workforce to access them from anywhere and with zero-touch security. At the same time, customers are demanding agility to launch new sites and solutions to reduce total cost of ownership (TCO). To address these, service providers are being pushed toward providing network-as-a-service (NaaS), which spans transport, asset ownership, transformation and managed services. Some of the key attributes of the changing network paradigm have been described below:
Crafting distinctive approaches for two kinds of emerging customers with different requirements: With changing market dynamics, two kinds of customers are emerging: one that has been engaging traditional third-party managed environment for network and the second that wants to take day two operations in-house since it is more softwaredriven and requires different skillsets than the traditional Cisco Certified Internetwork Expert (CCIE) skills. Originally, the first type did not see network as something to invest in, and outsourced it as a part of broader IT optimization. These customers, however, are realizing the lack of elasticity and agility being delivered to them by legacy providers. The second type of customer is looking at moving away from the legacy traditional approach; they are looking at the network as an asset that would enable them to move quicker toward their business objectives. However, they have, in the past, kept network in-house, struggled with it, and, in the course of time, developed strong IT teams. These IT teams are now being driven to outsource and get the financial benefit since they realize that they do not have the skills to implement a true software-defined environment. Therefore, they are looking at transformation and day two operations going to a third party, engaging resources with the required skills and planning for the transformation to be completed within a short period of 18 to 24 months. A provider should be comfortable in handling both kinds of customers.
Prioritization of network abstraction: In order to make the network more programable and agile, tasks such as proactive automation and mitigation, orchestration of network automation technologies, construing business impact into SDx requirements and, hence, network abstraction should be undertaken. As the network progresses toward this next-gen model, applications are defining the hypervisor strategy. Furthermore, due to the programmability required in networks, a change in the hiring pattern is also being witnessed. ISG find that prowess in command line interface (CLI) is being de-emphasized in favor of skills in network scripting, programming languages (such as python, .NETetc.) and network abstraction. Enterprises are no longer considering the network as a collection of hardware elements and are undertaking network monitoring not only for the purpose of identifying outages that could result in performance degradation, but also with the goal of optimizing business initiatives by better analyzing and improving in network performance.
Embracing open shift to manage and get the containers running on the edge: Several service providers undertake performance management of network devices with cloud-native solutions; updating a single container or modifying a single function can accommodate without the need for a rollout of the entire system. At present, such container network functions (CNFs) do not have the traction as virtual network functions (VNFs). However, ISG expects the market to grow in this direction due to the requirement for more flexibility. Until then, market participants are trying to move other functions to the edge, such as circuit monitoring systems, which are used to enter the transport that is provided to meet SLAs, the Prometheus collectors that are used to gather data from various systems (a critical process) and putting them in containers to manage them with open shift operators at the edge. This makes it convenient for managing the network functionalities.
Engaging multiple carriers to ease network operations: The trend of engaging multiple carriers is expected to continue, primarily because of the consequent flexibility of dynamically reallocating bandwidth and acquiring additional bandwidth from different providers. This trend will not be driven as much by cost like SD-WAN, but instead by the variations in bandwidth required by enterprises so that they are prepared for the current environment. Hence, the skills that are needed in the network space, at present, are to support cloud, management, automation and orchestration and business development. Enterprises are looking for support in the traditional enterprise colocation and identifying the roadmap where the network is going with SD-WAN together with the telco stack and the core telco network.
Enabling the creation of a software-defined layer 2 backbone: Historically, data centers would have classic two-tier and three-tier architectures, which are gradually changing to a leaf and spine architecture and changing even further to a hybrid-cloud network orchestrated by an overlay controller or a controller residing in a public cloud network. A lot of traffic has been moving to the cloud and majority of the business applications are being written for the cloud. Enterprises currently recognize that the interconnects between cloud and enterprises are becoming increasingly important, and that necessitates a large amount of bandwidth planning. Once businesses are contemplating moving their applications to the cloud, there is a requirement to plan the interconnects between the cloud and the co-location facilities (like Equinix), the best way to utilize the Megaport, which, in turn, reiterates the need to create a software-defined layer 2 backbone.
Combating the Covid19 pandemic from a technical and process standpoint: Because of the virtual workforce and social distancing norms due to the Covid19 pandemic, a number of providers have enforced stringent organizational policies for disabling non-emergency remote access for virtual demonstrations of new network capabilities. Furthermore, they have also curtailed real-time demonstrations at labs/centers of excellence (COEs). Also, some of the regional players have adopted an end-to-end data driven approach to track and analyze the trends and seasonality of network traffic. These approaches effectually identify peak consumption periods and the period of the day that sees more or less stable consumption (evident from the global trend of working from home). These data models are executed by feeding the data into a traffic demand modelling process and using commercial, in-house software as well as open-source projects (such as Facebook Prophet and pmacct) for capacity planning for increased demands. The outputs provide actionable insights for the engineer to upgrade network capacity and avoid outage. From an end-user perspective, service providers are prioritizing the demands from healthcare services, such as mission-critical applications in hospitals, to keep the technological tools running round-the-clock. Lastly, a number of enterprises have been conducting a face-lift of their existing manufacturing facilities, particularly in industries such as consumer goods and healthcare products, and service providers and system integrators are actively driving this remodeling process.
Many service providers that are reviewed in this study are involved in pilot projects and are often converting them into production-level deployments. Some have already completed such activities or have many demonstrated instances of doing so on behalf of their clients. This progression, coupled with the relative newness of SDN as a whole, leads ISG to expect that many of the companies which are currently categorized as either product challengers or market challengers in this study will be able to improve their positioning over the course of the year to enter leadership positions in their respective segments.
It must be noted that significant volatility exists in the constellation of market providers, partly due to the multitude of mergers and acquisitions that occurred during the last 18 months. This is set to continue and may even increase during the remainder of 2019 as software-defined networking becomes mainstream.
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