B2B Takes Center Stage at Huawei s Ultra-Broadband Forum

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1 B2B Takes Center Stage at Huawei s Ultra-Broadband Forum

2 Ovum view Summary Ovum recently attended Huawei s Ultra-Broadband Forum, an event aimed at its top customers, partners and other key players in the wider broadband and cloud ecosystems. Taking place in Hangzhou, China, in late October 2017, the event had a distinct B2B flavor, with both Huawei and service providers emphasizing the importance of the business market for both driving market growth and delivering more sustainable and balanced revenue streams. At the end of Day One, Ovum hosted a panel discussion on the plenary stage with Didier Duriez, Executive Vice President, Global Solutions for Orange Business Services; Javier Emicuri, CEO of Antel; André Beijen, Head of Network Innovation at KPN; and David Thorne, Chief Researcher at BT s Technology, Services and Operations division. The focus of the discussion was the role communications service providers (CSPs) are playing as network providers and cloud enablers to support enterprise customers with digital transformation. Respect legacy, but migrate and manage the new Most enterprises have complex legacy network services, and with service providers as their partners, have invested significantly over the years to obtain robust leased-line and MPLS services which effectively support business operations. How is the adoption of cloud services and the arrival of new networking technologies such as SD-WAN affecting enterprises and the role of service providers as enterprise partners? There was broad consensus in the value of legacy investment. Service providers and enterprises in some countries, such as Emicuri s Uruguay, have only just completed migrations from TDM-based networking to MPLS, so to ask them to modernize further and adopt SD-WAN features in one go would match neither service provider nor enterprise requirements. In more mature and developed markets such as those served by Orange Business Services, however, customers have already deployed SDN in their data centers and are actively pushing service provider partners to help them achieve the benefits of network virtualization as well. Didier Duriez pointed out that cloud workload migration is spurring this desire for transition. But it was recognized that the goal should be a smooth migration with no loss of quality of service (QoS). Indeed, quality aside, most enterprises simply cannot afford an immediate switch to a new environment, which would render much perfectly serviceable customer premises equipment redundant. Hybrid networks, and network virtualization, have the potential to disrupt the telco s role. Will telcos be sidelined? The panelists agreed this is not likely to be the case. Dave Thorne of BT noted that, if anything, the telco is more relevant than ever. An enterprise may choose to self-manage in this new environment, but reliability, QoS and security are even more important in a world of virtualized, cloudoriented services. Most enterprises are not capable of supporting themselves in this regard, and this is where the telco comes in: providing a clear migration path and support for every step of the journey.

3 Evolving towards a more complex relationship between service providers and enterprise As we move towards a world in which enterprises procure network-as-a-service (NaaS), the impact on the relationship between telcos and enterprise customers will be profound. There was significant debate about the future relevance of service level agreements (SLAs) and commercial models: SLAs must evolve in an environment characterized by cloud, where network performance drives user experience. NaaS offers the promise to scale up and down on demand, but more application and business-outcome centric SLAs are required. In some respects, a new model is required for SLAs which is sensitive to industry and customer requirements. Adhering to an SLA is not enough: customers require business guarantees, and SLAs must evolve to include these. Therefore, SLAs must be expressed differently in the future. Charging and billing models should reflect these new requirements. In fact, fieldwork from Ovum s annual user research indicates early users of next-generation WAN services are flexing networks and security perimeters to get maximum benefit from applications; these users do not want to be inhibited by inflexible charging structures. Along with SLAs, cloud networking is driving a change in engagement models. For the most part, RFPs remain the same as decades ago, but there is a need for service providers to pre-empt the process, and engage earlier in discussions with enterprise clients before RFPs are formalized. In short, telcos need to help shape the client requirement. Duriez, of Orange Business Services, observed that we are not far off the era when customers move from expressing only network performance requirements in an RFP to delineating application performance requirements also. The buyer is changing as well, with stakeholders outside of IT and from lines of business (LoB) beginning to ask service providers for insight and guidance. Telcos must engage with these new corporate influencers, even for network services, which are more cloud and application dependent than in the past. Procurement still plays a central role in issuing the RFP and in selecting suppliers, but LoBs have a greater influence than ever; it is essential to influence them and help them shape their requirements. Cloud networking: creating opportunities in new segments and countries The evolution of WAN services is not only changing the relationship between service providers and enterprises, but also offers the promise of enabling telcos to address new segments and even new geographies. Leased line, MPLS and SD-WAN services have traditionally been the preserve of larger businesses, but network virtualization may democratize network services, enabling more SMEs to gain access to such services. Javier Emicuri of Antel stated that one of his company s goals was to bring MPLS services to smaller businesses, giving them access to advanced networking capabilities. Building on this, Dave Thorne of BT noted that the key to unlocking opportunities in the SME segment is to customize network services for SMEs, and to do this cost-effectively. While this democratization of network services does open the door to more competition, in Orange s view it also allows providers to address new segments and new geographies. For example, because of network virtualization, and cloud-based functions, Orange can roll out, support and sell digital services for SMEs in new markets such as Italy, where it does not have an operating company. In

4 short, this virtualized, cloud-based architecture is creating further opportunities to test new services in new markets, and to disrupt competition in previously inaccessible markets. From an enterprise customer s point of view, more supplier options are always welcome. Conclusion: cloud drives the enterprise WAN Ovum s own research into CIO priorities among large enterprises indicates that one top driver for network investment is the desire to provide enterprise users with better application experiences. As more enterprise workloads move to the cloud, so too will the link between the WAN and the cloud in the head of the enterprise buyer. Huawei s Ultra-Broadband Forum underlined the role that B2B requirements have in shaping the network of the future: in short, the future network will be cloudarchitected, with more network features and functions virtualized. This presents opportunities for service providers to assist enterprise customers with migration and management; to support enterprises in shaping new application and cloud-oriented network requirements; and even to address new segments and new geographies. Appendix Author Evan Kirchheimer, Research Director, Enterprise Services evan.kirchheimer@ovum.com Ovum Consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Ovum's consulting team may be able to help you. For more information about Ovum's consulting capabilities, please contact us directly at consulting@ovum.com. Copyright notice and disclaimer The contents of this product are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa Telecoms and Media Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this product are the trademarks, service marks or trading names of their respective owners, including Informa Telecoms and Media Limited. This product may not be copied, reproduced, distributed or transmitted in any form or by any means without the prior permission of Informa Telecoms and Media Limited. Whilst reasonable efforts have been made to ensure that the information and content of this product was correct as at the date of first publication, neither Informa Telecoms and Media Limited nor any person engaged or employed by Informa Telecoms and Media Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard - readers assume full responsibility and risk accordingly for their use of such information and content.

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