All the Right Moves? Making Sense of the Digital Opportunity

Making the right moves in the Service Provider (SP) Infrastructure market right now is a tricky business. On one side of the market sits the consumer living their best digital life with high-end devices and a constellation of apps that require bandwidth and availability. In the words of a great Scottish comedian they “want it all, and they want it now”. But we know they are not willing to pay extra for it.

On the other side of the market is the “enterprise” be that a small building firm with a need to set up and take down site offices quickly or a huge multinational who is moving to the cloud and needs to drive productivity and agility in its workforce. Both cases share the same basic principle “I need secure, reliable access to my application and customers from any device, anywhere.”

It is generally accepted that consumers are not prepared to pay more for the additional bandwidth offered by 5G, but woe betides the carrier who doesn’t deliver. Yet the infrastructure and marketing costs of competing in what is essentially an arms race cannot be off-set by price rises alone.

In the enterprise space there may lie some relief, as the world embraces SaaS solutions available from anywhere on any device, is there a position for the service provider to deliver added value through the combination of its fixed and mobile capabilities into a bundle?

I think yes, as discussed in my previous blog the modern enterprise is looking for more than just a new and cheaper WAN. They should be looking to ensure all the components of their digital transformation are aligned.

So, how can we help the Service Provider solve the conundrum described above?

Move one – Cisco develops the right hardware and software

It starts in the development of faster more efficient hardware. At Cisco we are focussing not only on high-density superfast hardware but also power efficiency. What gets hot must be cooled down, and as a result, a large incumbent telco can be responsible for the order of 1% of the countries power consumption. That’s a big bill!

The way we are engineering our next generation products is focussed on a dramatic reduction in power consumption through collapsing the optical and IP layers into a single platform. Additionally, developing platforms that are more centrally controlled means we need less onboard processing and thus less silicon to power and cool down.

Leveraging SDN techniques means we can centralize common functions and gain the efficiencies and economies of scale of web-scale telco cloud architectures.

We are providing streaming telemetry across the network fabric. This delivers huge levels of analytics data that are current and actionable. That means we can run the network more efficiently and plan with foresight, not hindsight. Run things closer to the limit and react quickly if we see an issue building.

Combine these analytics with a suite of AI and ML-based automation tools and now you have an efficient network to meet the modern market demand.

Move two – tidying house

There is a however the need to be ruthless as we make the transition. The new services the customer wants are predicated on a cloud-first, over the top model. Just like the consumer consumption of Netflix and Spotify the new suite of enterprise apps run over the top of the network with little or no interaction with the underlying infrastructure.

The old network had lots of features embedded into it to support the levels of QoS and experience required by traditional telephony or legacy data center-based applications.
We need to clean the house, be ruthless, and identify the bare minimum set of features we need to embed in the network and find a way to migrate away from the legacy. Not an easy task but one that is critical if we are to reap the benefits of a simpler more agile network.

If we get that done we have essentially driven savings into the bottom line- how about the top line? The mission-critical applications our customers are using are in the cloud, they access them from devices in the office, the coffee shop and anywhere else they may find themselves.

Move three – review the architecture

Now, consider the location of those critical apps. They are in the cloud (or the internet as we used to know it). Therefore as well as simplifying the network we can look to optimize the traffic profile. If the lion share of customers is using SaaS services then we need to deliver the best connectivity from our network to those SaaS providers. This can be achieved through direct peering to the SaaS providers and the use of SD-WAN technology to measure and steer traffic across the optimum path based on application performance.

Deliver this securely leveraging the latest in cloud-based and end-point security and the SP can retain its position as a strategic provider to the customer

Move four – make it sticky, bundles

Firstly, we can seek to package products based on the outcome they deliver. A knowledge worker needs devices, security LAN and WAN connectivity to a broad church of applications. A desk-based worker requires LAN and WAN connectivity to access a limited subset of services. Clever packaging can make the customer’s IT buying journey a lot easier and of course by bundling we gain stickiness.

All the right moves? – I think so

Putting it all together, I think there is an opportunity for the SP to not only reduce costs to meet the consumer expectation profitably but also to deliver richer margin services to the enterprise markets by changing the value proposition from that of a high-value pipe provider to the provider of secure and reliable access to the cloud regardless of device or location.

Jointly we can develop the strategy to make this transition. It won’t happen overnight but it will happen and those who make the right moves will be successful.