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.

The Changing Landscape of Global Network Services

The landscape for World-wide network connectivity has been dominated by traditional carriers. Names like AT&T, Verizon, and BT. Although some of of the names may be relatively new (e.g., TATA, Orange) based on mergers, acquisitions, and business model expansions (e.g., moving from a regional to global model), the approach to providing services has generally followed a similar pattern. These are the traditional “telecoms”.

Driven initially by voice communications, the World was slowly, and then more rapidly connected by a series of every more capable Submarine Cable systems. The next phase was driven by multinational companies’ (including so called Enterprise customers) demand for data transport to meet their corporate needs and connect to their supply chain. With more demand, carriers responded by expanding their Points of Presence (PoPs) to new cities and creating consortia to build new Cable systems to increase network capacity and diversity.

The penultimate stage (at last from the perspective of where we are today), is the incredible impact of the Internet. With corporate data centers holding the family jewels located at private and commercial colocation facilities around the World, Internet traffic increased at unprecedented rates of growth driving facilities investment for colocation and hosting space as well as new consortium cable systems (as well as system upgrades based on advancements such as coherent optical technology). These networks, were (and are) provided by the appropriately named “Internet Service Providers” or ISPs.

The underlying business of the typical ISPs can been roughly seen by putting them into two groups. The first are relative “pure play” ISPs. These are companies that derive the majority of their revenue based on terrestrial communications, and therefore global expansion is part of their revenue expansion plans. The second group has more complicated revenue models, where the vast percentage of their revenue is based on their mobile wireless services in their home country (or region of countries). The reason this is important is the emphasis that these companies place on different aspects of their business.

The first group must expand their network services to attract commercial customers to their network. They have to show value and provide the customer expected high-touch support. The second group is at a crossroads. A large multi-country network may provide several millions of dollars a year in revenue, however it comes with associated high-cost to provide service. On the other hand, generating another 50,000 wireless customers (or wireless Internet of Things - IoT devices) will have the same effect, without the high-touch customer required, and it provides additional revenue for wireless services evolution (e.g., 5G upgrades).

While the scenario between ISPs plays out, a new set of companies with unprecedented growth is changing the landscape - these are the Cloud Service Providers (CSPs) - Amazon, Google, Microsoft, etc. It is now time for large global network consumers to evaluate new options for enterprise network services.

The typical customer understanding and use of CSPs is for their processing, storage, value added services, and Internet access. Thousands of companies have either moved part or all of their processing and storage (a.k.a., hosting) needs to CSPs. The major CSPs are seeing 40% revenue growth per quarter and revenue now runs billions of dollars a month. This vastly outstrips the growth of traditional corporate enterprise network growth and total revenue of the ISPs. This reality has created two effects:

• CSPs have created their own network infrastructure, building nationwide networks, consuming huge amounts of existing, and now building their own, Submarine Cable systems (more on this later) - all of this to handle something on the order of 50-70% of all Internet traffic with extraordinary network diversity and robustness
• World-wide and regional ISPs have responded to their Enterprise customer’s need to use CSP resources by extending their ISP networks, bringing Internet peering and MPLS/VPN services directly into CSP facilities

The result of this is that CSPs are becoming the most capable global network infrastructures by far. As they expand in scale (more capabilities at existing CSP locations) and scope (more CSP locations), this capability will only increase. Feeding this monster, that is getting customer access into place, will be an ever expanding set of capabilities from local, regional, and national wireline and wireless networks.

So, what does this mean to the large global company that needs robust and cost effective communications around the World? It means that there are new technical and business approach options that need to be considered.

On the technical side, these companies need to:

• Map their geographic network requirements against the major CSP data centers (regions)
• Understand the CSPs inter-region services and their cost structure
• Understand the global and regional network providers that have a PoP in the CSP regions
• Develop and approach to leverage the CSP’s virtual services to develop an Enterprise network backbone that can use the network services at the CSP’s location (including Internet access)
• Develop an approach to securely leverage multiple local access providers by using Software Defined Wide Area Networking - SD-WAN. This includes regional MPLS/VPN providers (e.g., MPLS/VPN), 4G and emerging 5G wireless, Internet services, and satellite services and integrate into the developed Enterprise network backbone
• Understand each Enterprise site’s service needs and cost trades:

1. How much bandwidth?
2. What service resiliency is required?
3. How long a service interruption can be tolerated?
4. Make the trade between expensive MPLS/VPN and cheaper Internet bandwidth (see Yikes, Internet for Enterprise Services)

• Map out the regional networks that could support each site’s service needs

On the business side:

• Understand the opportunity of leveraging the CSP for the Enterprise network backbone combined with the traditional Cloud services to meet the Enterprise’s needs
• Understand the complexity of performing as your own multi-vendor integrator, buying network services from multiple carriers to provide Internet and MPLS/VPN services needed to connect to the CSP-based Enterprise backbone

In summary, this is a time of significant change all every level of the Information Technology “Stack”. From how to operate and build a network (using Software Defined Network - SDN orchestration and SD-WAN), virtualization of devices (using Network Function Virtualization - NFV), and network resources, to how to balance Enterprise on-premises hosting with CSP-based services.

Understanding these new capabilities and navigating the complexity to create the high-performance and cost-effective network services for an Enterprise to be globally competitive is the challenge.