Gartner: Magic Quadrant for Global Network Services has Orange Business #1
Driven by cloud IT service adoption, the market for global enterprise network services is undergoing a generational shift in both technologies and the provider landscape. Infrastructure and operations leaders must adapt their network sourcing approaches to reflect this transformation.
The market for global network services continues its rapid evolution. In response to enterprise demand for WANs that can support cloud IT delivery and achieve much higher levels of agility, network service providers (NSPs) have been deploying a range of new software-based networking services. They are also changing their business models to allow for more flexible sourcing. This Magic Quadrant focuses on these transformational technologies and/or approaches that deliver on the future needs of the enterprise, rather than simply concentrating on legacy services. However, delivering a consistent set of service features and user experiences across all these elements on a global basis remains a challenge that requires scale and operational maturity.
Gartner defines the network service global market as the delivery of fixed corporate networking services with worldwide coverage. Services that are evaluated in this Magic Quadrant include both established and emerging global network service categories, such as:
WAN transport services, used to form hybrid WANs and underpin managed software-defined WAN (SD-WAN) services — These include MPLS, Ethernet services and internet services, including dedicated internet access (DIA), broadband and cellular.
Carrier-based cloud interconnect — This refers to direct MPLS, internet and/or Ethernet connections to leading providers of cloud services, including infrastructure as a service (IaaS), platform as a service (PaaS) and software as a Service (SaaS). These services improve the performance, availability and security of connectivity to critical cloud services, compared with generic public internet access. The option to insert network functions, such as firewalling and WAN optimization (which are often virtualized), into these connections is increasingly common.
Managed software-defined WAN (SD-WAN) services — While some enterprises are renewing their existing MPLS or hybrid WANs, virtually all new managed global network deployments seen by Gartner in 2018 were managed SD-WAN networks, a trend we expect to see continue through 2019 and beyond. These services are based on edge devices with zero-touch configuration, able to dynamically route traffic over different links based on policies under central policy management control (see “Technology Insight for Software-Defined WAN [SD-WAN]”). SD-WAN improves WAN agility by allowing easier and faster deployment of new sites, flexibility in the link types used, and simplified addition of new applications to the network. In addition, SD-WAN services typically provide significantly enhanced levels of application visibility compared to traditional managed router services.
Network on-demand services — Network on-demand services from NSPs enable enterprises to make real-time changes to access/port bandwidth, change the WAN service types delivered over a network port and, in some cases, even add and remove endpoints, such as connections to cloud providers all under software control. They are controlled by the enterprise, via the provider’s web portal or APIs. Many providers are using software-defined networking (SDN) to deliver this functionality.
Network function virtualization (NFV) services — This functionality is the replacement for purpose-built hardware devices, such as routers, security devices or WAN optimizers, with software running on industry-standard hardware equipment (see “Network Function Virtualization Will Enable Greater WAN Agility and Flexibility”). It can be run in virtual customer premises equipment (vCPE), which consists of on-site x86-based servers, supporting multiple virtualized network functions. Alternatively, some functions can run NFV service nodes, located in the provider’s network; although, in this case, some form of on-premises device will still be needed. NFV allows network functions to be activated on demand and consumed on an “as a service” basis, seeking to improve both the agility and cost-effectiveness of the enterprise WAN.
vCPE — vCPE is the use of industry-standard, x86-based servers, rather than function-specific appliances, at enterprise premises to deliver enterprise network edge functions, such as WAN edge routers, including SD-WAN, WAN optimization controllers (WOCs), and security functions such as firewalls. (See “Innovation Insight for Virtual CPE.”)
In the past 12 months, Gartner has observed continued evolution of enterprise requirements and buying criteria for global networks. Enterprises are focusing on increasing the agility of their networks and on services that can enable their adoption of cloud IT delivery and eventual adoption of the Internet of Things (IoT). This is leading to most new global networks being based on SD-WAN and making greater use of the internet as a primary WAN transport.
Additionally, enterprises are more willing to utilize smaller providers and innovative services consumed on an as-a-service basis. This places less emphasis on larger providers, network scale and the availability of large numbers of provider staff to deliver customized capabilities to address site- or application-specific requirements.
Both enterprises and network service providers are taking advantage of the marketplace created by colocation hubs, such as Equinix and Digital Realty, to allow them to source access that is distance-insensitive at the national or even regional level. This simplifies the overall design and reduces the need for the deployment of large numbers of network points of presence (POPs; see “Five Key Factors to Prepare Your WAN for Multicloud Connectivity”). However, coverage for at least the country level is still important, both to reduce costs and to improve performance when accessing cloud services and network-based virtual functions. The trend of moving away from customized solutions toward standard off-the-shelf managed services continues, with more and more services consumed on an as-a-service basis. Although uptake of NFV and vCPE has been slower than expected due to relatively high prices and technological limitations of some early implementations, the momentum behind these services is increasing, as enterprises see the value of the increased agility they can bring. (For example, in the 2018 iteration of this Magic Quadrant, less than 50% of providers offered these services. In this 2019 edition, that number is almost 90%.)
Network on-demand services are gaining in popularity, not to reduce costs by varying WAN bandwidth over the course of the day or week, but rather to dynamically adjust the capacity of different network services (e.g., Shrink MPLS and grow internet access as SD-WAN is rolled out). This allows enterprises to accommodate new applications and even create connections to new destinations, such as additional cloud providers, on demand, potentially allowing for dynamic load balancing of cloud providers and cloud performance optimization. However, these offerings are in their infancy in terms of functionality and coverage.
While delivering against a strong technological roadmap is important, it must be combined with good operational performance to deliver and sustain these services. Some service providers have been struggling to deliver the new capabilities they are offering with the levels of quality enterprises require.
To strengthen the focus of this research on these key trends and capabilities, Gartner is no longer evaluating SIP trunk services, managed LANs or wireless LANs (WLANs). SIP trunk services will be covered in a separate Market Guide.
The inclusion and exclusion criteria for this year’s Magic Quadrant, although similar to prior years, have been adjusted to reflect these trends.
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Gartner forecasts that the market for enterprise data networking services in 2019 will be $156 billion, broadly unchanged from 2018 (see “Forecast: Enterprise Communications Services, Worldwide, 2016-2022, 4Q18 Update”). The number of global network service providers included in this research has shrunk slightly due to the acquisition of Interoute by GTT Communications. However, competitive intensity remains high as enterprises are increasingly willing to consider smaller providers, including managed service providers who have little or no network infrastructure of their own (such as those featured in the “Market Guide for Managed SD-WAN Services”). Alternatively, enterprises may choose a combination of multiple regional providers — such as those featured in the regional use cases in Gartner’s Critical Capabilities for Network Services, and the “Market Guide for Network Services, Fixed and Mobile, Pan-African” and “Market Guide for Network Services, Fixed and Mobile, Pan-Latin American.”
The global network service market continues to move toward a more software-driven, as-a-service model, with increasing levels of visibility and self-service via portals and APIs available to enterprise customers. However, this means that providers are increasingly reluctant to allow any deviation from the standard offering, as it will require the deployment of a fully custom solution at a much higher cost. In addition, such solutions will be in danger of rapidly becoming obsolete in this fast-moving market.
Providers are however increasingly focused on providing the managed service platform (e.g., SD-WAN and NFV/vCPE) and are increasingly open to “bring your own access” and other sourcing approaches for the network transport components.
The adoption of SD-WANs is moving the network buying discussion away from technologies toward outcomes and service levels. Providers continue to improve their SLAs with more realistic objectives and more meaningful penalties for failing to meet those objectives, increasingly including the right to cancel the service in the event of chronic breach. Installation lead times — a pain point for many enterprises with global networks — are now starting to be covered by standard SLAs, and providers are making considerable efforts to improve delivery times, although, they remain frustrated by third-party/local access providers. The ever-increasing speeds of cellular services are making this technology more useful as a rapid deployment (interim) solution, as well as providing a truly diverse backup option.
Electronic quoting and ordering are increasingly widespread, with electronic bonding between the global providers and their local access providers. Self-service provisioning and increased visibility of the service being delivered via portals continue to gain momentum.
However, global networks are also becoming more complex because transport becomes a hybrid of MPLS, internet and Ethernet, cloud endpoints are added, and SD-WAN and NFV technology are added. In addition, internet, especially using broadband or cellular access, is an inherently less predictable service than MPLS. Enterprise networking organizations face continual pressure to improve the agility with which they can respond to the needs of the business.
As a result, despite the continual investment in improving the customer experience, the majority of providers have struggled to achieve high levels of customer satisfaction.
Enterprises’ adoption of cloud IT service delivery remains key to driving transformation of their WAN architectures. Fortunately for the enterprise, the global network service providers have deployed a range of capabilities to address enterprises’ cloud connectivity needs (see “Five Key Factors to Prepare Your WAN for Multicloud Connectivity”). All providers offer carrier-based cloud interconnect from their MPLS and Ethernet networks to leading cloud service providers such as Amazon and Microsoft — with the key differentiators being the specific cloud providers and cities connected. Additionally, leading providers have enabled virtualized security and WAN optimization services to be added to these connections, backed by standard SLAs. Provider-managed SD-WAN services also offer the option of direct internet access from every site, with options for security either on-site or as a cloud-based service. Enhanced internet backbone services may be available to improve the performance of cloud service access over the internet.
New global network proposals are predominantly for managed SD-WAN services based on a hybrid mix of internet and MPLS transport, with different applications using the most appropriate link type, and typically with direct internet access from every site, including corresponding security solutions.
Ethernet WAN services (virtual private line and virtual private LAN services) remain more niche in use and are principally used for data center interconnection or for geographically restricted scenarios (i.e., Metro Ethernet) as a cost-efficient solution for high-bandwidth scenarios. Different combinations of each of these services can be used to obtain different service levels appropriate to each enterprise location.
WAN access is evolving, with traditional leased-line access, such as T1 or E1 lines, no longer proposed in new deals, except when no other form of access is available, such as in rural locations, some emerging markets or where fiber is extremely limited. These traditional access lines have been replaced by optical Ethernet access at 10 Mbps, 100 Mbps, 1 Gbps or even 10 Gbps. The scale economics of Ethernet access are very good with each tenfold increase in speed, typically only increasing cost by two to three times. As a result, in developed markets, enterprises now tend to purchase access lines with much higher speeds than they currently require, with the port capacity limited to their current needs. This allows them to easily and quickly upgrade capacity in response to changing requirements.
Some providers are delivering network-on-demand services allowing self-service alteration of bandwidth (up to the access speed) via a portal or APIs. In some cases, it is possible to change the service types delivered over the access line (e.g., adding internet services to a line that initially delivered MPLS) and to add additional endpoints, such as cloud services.
For smaller, less critical or remote locations, broadband (increasingly, “superfast broadband” such as VDSL, cable modem or passive optical network [PON]) is the access technology of choice, despite having either no SLAs or poorer SLAs than Ethernet or traditional leased-line access. When enterprises require large numbers of broadband connections, they can find that they are able to get better pricing than that offered by global service providers by looking to aggregators as an alternative. In response to this, in addition to their own access aggregation services, many providers now support “bring your own broadband.” This refers to where the service provider delivers managed services over broadband sourced by the enterprise, which purchases its broadband either directly or from a broadband service aggregator.
Finally, cellular connectivity, including 4G where available, is increasingly being used for backup, rapid deployment or temporary locations, although it does not include SLAs. As with broadband, enterprises may be able to get attractive deals for data-only mobile services themselves, which will then be managed by their global provider.
Managed and Virtualized Services
The vast majority of global WANs are delivered on a managed service basis, with the on-site devices, such as routers, security appliances and WAN optimizers, provided and managed by the service provider. Although, U.S.-headquartered multinationals are more likely to manage their networks in-house. Providers are now offering alternative ways to deliver this functionality. In particular, this applies to NFV, where these capabilities are delivered as software on x86-based servers, either on-site vCPE or for some functions in the provider’s POPs (although in this some form of on-premises device will still be needed). NFV can be delivered either on top of existing transport networks, such as MPLS or hybrid WANs, or as a feature of a software-defined network. These offerings promise to greatly improve the agility of enterprise networks, with the potential for the rapid deployment of new sites, as well as on-demand capacity upgrades and the addition of incremental services. Although Gartner expects significant uptake of these services over the next 12 to 18 months, they are still at the early stages of their deployment and no two providers have the same roadmap, let alone rollout timetable.
An increasing number of global WANs incorporate managed application visibility and/or WAN optimization, with some providers now offering application-level visibility by default. SD-WAN services, which operate based on application-level policies, also typically offer inherently higher levels of application visibility.
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