Some Considerations For Buying Enterprise Network Services

Under the current circumstances, and with acquisitions activities moving to the right, there is a bit of time to actually do a bit of thinking about how to meet enterprise network needs.  Maybe  some of our government organizations will take this additional time to consider how they could structure to improve their network acquisition and services performance.

If you get anything out of this post, I want you to ask yourself and your organization two simple questions:

• "Are we buying our enterprise network service the best way possible?"
• "Is my organization structured for effective enterprise network services acquisitions and operations?"

These simple but direct questions should lead you down a journey that will probably end with the conclusion that, no, you are not buying our network services the best way, and it's time for a change.

So, what I am going on about here?  Aren't there telecommunication leaders in the enterprise networking space that solve networking services for large enterprises?  Don't they provide the capabilities and options are critical to success?  Well, the real answer is not really a yes or a no.  This is because the answer is not just about them, it is also the business model that your organization selects to specify, acquire, and operate services.

First, here is a quick review of the major trends in telecommunications solutions for enterprise networks.

As I wrote previously, as far back as 2009, the expanding use of Internet-based services to meet Enterprise networking requirements continues.  The traditional dependency on a single service provider's MPLS/VPN network exclusively for bandwidth and to ensure quality of service is rapidly changing to a blend of services with Broadband Internet (i.e., the Cable company) and wireless (i.e., 4G and now 5G).  There are several factors driving this change: 

• The cost of Broadband Internet services have a capacity per price ratio that depending on location ranges from two to as much as 100 times better than MPLS/VPN services (that is more bang for the network buck).
• The quality of these services has improved dramatically (as proven today by millions of people working at home due to COVID-19 with the use of Internet access-based Software as a Service and high-quality video teleconferencing services).
• The cost effective use of multiple services to improve effective network availability at a site due to a service failure (in most cases the share risk of failure between, for example, 4G/5G and Cable provided Internet is small).
• SD-WAN technology is enabling policy-based use of  these services to improve the network performance experience of users and their applications.

Of course you say, my enterprise network service provider can do all this for me.  As a buying organization, we can pick a blend of my selected services provider's MPLS/VPN service as well as wireless and even Broadband Internet and I am good to do.  In addition, my selected provider offers SD-WAN service.   My organization is all set.

Well, you are, sort of.  As I have found in many areas of Information Technology delivery, it is more about the business model than technology.  If you are large commercial or government enterprise, these are some of the business areas and questions you should consider:

• Are you a "one-and-done" organization?  That is do you perform a competitive acquisition activity once, set pricing, and then ride the solution for five to 10 years?
• Are you an "outsourcing" organization?  That is, except for service requests, status, and trouble management you let your selected service provider to it all.
• Are you an "engineering" organization?  That is, you have network engineers that want to design and engineer the network?

Each of these business processes lead to a different set of principles for buying network services.   Here are some to consider:

• Do you want to avoid the complexity and effort required to perform a transition from the periodic "one and done" network service provider?
• Are you concerned maintaining cost competitiveness during a "one and done" contract?  Global network services pricing, including U.S. domestic services, decreases every year.
• Are you concerned that your organization's engineering staff can not keep up with a combination of technology and working with multiple vendors to pull a solution together and as important sustain the system?
• Did you develop an operations architecture on how to integrate your total Information Technology (IT)environment?  For that matter do you have an IT architecture?
• And most important, is the organization getting the network performance and availability needed to get the mission done with clear incentives for all parties to ensure continued performance.

The place to start is to create a set of objective outcomes for the organization as part of building a strategy:

• Stop the need doing network acquisitions every several years (when you actually get around to putting together the acquisition documents, make an award, and perform a potentially costly and disruptive provider transition).
• Enable the ability to continually shop for price and take advantage of reducing costs without complete redesign of the network.
• Build an engineering staff that is fully integrated into a comprehensive business process that both leverages and builds their skills, and addresses the need to keep the organization's technology current.
• Build a comprehensive network (and really IT) architecture that leverages a full range of network implementation and operations options tailored the various network services required.
• Build and provide network services that meet and continue the organization's evolving needs.

This is a bunch to consider, and in future articles, I will focus on potential government organization structures and approaches to meet the above outcomes.

Bandwidth use increases, revenue not so much...

I have been tracking my home’s bandwidth usage for over the past two years. My original concerns were twofold. First, usage seems to relentlessly increase, and second, many Internet Services Providers (ISPs) had a bandwidth cap of around 50 GBytes. per month.

I estimated that the “Bandwidth Bomb” for me would go off sometime in 2013 and it did, with some troughs, but I clearly would have exceeded my ISP’s acceptable use policy of no more than 250 GBytes transferred per month. Comcast’s Website assured me that the cap was generous enough and that only an exceedingly small percentage of users would ever have to worry about the Comcast bandwidth police.

As an amazing coincidence, just as I predicted I would exceed the cap, Comcast changed its policy and “Note:enforcement of the 250GB data consumption threshold is currently suspended”. So, at least for the time being, I can enjoy 2013 without a home bandwidth worry in the world.
So what about the first issue above, how did my home’s traffic change over the past couple of years? First let’s see what changes happened at the Kaplow home. We are now the owners of three iPhones and an Android Pad. When in the home, these connect to my home WiFi network. My own phone, also an Android-based phone stays happily on Verizon’s wireless LTE network as I have still have a grandfathered unlimited bandwidth plan.

The Xbox also go smarter with an upgrade that includes Kinect. The youngest son discovered its use not only as an game console and Netflix player, but also as a party-line (if you know what that is) for a couple of hours every day playing cooperative games (of course after all his homework is done and done well). There were no significant changes to the laptop inventory.

Let’s look at the bandwidth trends at my house. The first set of bars represent the four month average from September through December in each year. The data shows a 77% increase from 2010 and an additional 83% into 2012. So from 2010 to 2012 the last third of the year’s usage increased 325%!

Looking at the total year 2011 and 2012, this represents an average that went from 111 to 182 Gbytes per month or a 65% increase. If this trend continues, to continue the same business margins, my ISP has to wring costs from their infrastructure or raise prices. Alternatively, they could find a way to make money on other services. Currently, some of the infrastructure is covered via the bundle of TV and voice services. With streaming content from providers other than the cable company itself, will we see a trend that mimicked that the traditional telephone company saw people turning off their telephone for “naked” DSL Internet service, with people turning off or significantly reducing their TV content?

There are also additional pressures on cable (or even services provided by the traditional local phone service provider) revenues:

• Verizon is offering home phone service delivered over their mobile network. This takes away one of the “bundle” revenue elements. 
• Satellite services. This takes away the broadcast channel elements, putting even more pressure on access on-demand material over the Internet.
• Wireless providers in general. With the continued build-out of 4G LTE services, there will likely be a growing number people that just use a wireless provider for their home service. Much of this is just a pricing plan away (with of course, within the limits of the available spectrum, etc.).

So, the potential trend of reduced services revenue combined with increased Internet use means that it is likely that Internet service costs will increase if only to enable cable and other wire provider companies to maintain their revenue - with an unknown hit to margins. On the other hand, they may have to hold the line on pricing, if only to keep their customer base in the face of competition.