Service Provider Digital Transformation and Security

For many service providers, the digital transformation journey may not be the smoothest.

Many service providers (SP) are going through a phase where they are either trying to understand the new technologies or in the process of early adoption and implementation–with a majority just beginning to understand and adopt. New technologies like internet of things (IoT), cloud, software defined networking (SDN), network function virtualization (NFV), and others are predicted to have a tremendous implication on an SP’s core business model and their journey toward cost reduction and new service offerings.

Mergers and acquisitions are going to be the norm in the SP space. A broad spectrum of services under one umbrella, with consolidated customer bases, will increase customer stickiness and will be a differentiating factor for many SPs.

Ensuring Security is Built-in

As SPs introduce new technologies and pursue increased mergers and acquisitions, numerous security challenges arise. In many cases security is typically an afterthought and can quickly become a minefield if not considered early enough or done correctly during these acquisitions and mergers.

The other side of the SP journey is focused on their business strategy: they are working to make sure that their average revenue per user (ARPU) keeps increasing with the changing revenue models. One big opportunity in revenue generation is how SPs can monetize security and offer it to their customers.

Currently, majority of the SPs, as part of securing their digital transformation, are trying to think about how to proactively secure their network architectures. At the same time, they are working to make sure they have reactive capabilities and teams are in place — be it an incident response capability or employing strong forensic expertise within their teams or by working with a partner.

As SPs begin to realize how important security is to their business, they are correspondingly assigning increased budget to security initiatives.   IDC recently published an InfoBrief titled “A Pulse on the Service Provider Industry: Digital Transformation and Security Services” that indicates SPs have allocated up to 20% more for security products and services over the last two years.

Figure 1: Increasing security budgets: Year-Over-Year. Source IDC

In the process of moving toward a more secure infrastructure, the customers of SP are also in the same boat and want to better secure their infrastructure. This presents an opportunity for the SP to add security as a value-added play that can help a SP move the needle in revenue generation. According to IDC, 56% of SPs say they will expand their security services offering in the coming year due to customer demand. SPs are actively moving toward providing security advisory services like penetration testing, network architecture assessments, and breach response services, either through internal capabilities or in partnership with a 3rdparty provider.

According to IDC, the demand for security services are driven in large part by enterprises who are seeking assistance to deploy security appropriately in their digital transformation, secure cloud and data center migrations.

Figure 2: Security assistance needed during Digital Transformation. Source: IDC

By offering security advisory services, SPs can assure their customers they are in this journey together. They can demonstrate they want to help their customers scale up and improve their security posture, versus being a traditional SP, with limited offers. In addition, SPs can differentiate themselves against competitors by offering security services to their enterprise customers. Such services improve customer retention, revenue growth and can lead to higher customer satisfaction.

In summary: service providers have an opportunity to become their enterprise customers’ go-to team for ensuring that enterprises are securely moving toward the adoption of new technology.  SPs who do not have security as a core skillset should proactively seek 3rdparty partnerships to develop new security capabilities or to enhance existing security capabilities.

To view the full IDC InfoBrief, click here.

If you are interested in partnering with security experts, consider Cisco Security Services. We offer a broad portfolio that includes incident response, penetration testing, secure SDN/NFV, and cloud security that are designed to help SPs secure their infrastructure. In addition, Cisco and the service provider can partner together to build and deploy security capabilities that the SP can offer to their customers.