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Managed IP Services
Bernt Ostergaard March 2007
Summary
Market Definition
The managed IP services solution assessment grades the ability of leading
global carriers to provide comprehensive managed IP services with the global
deployment and support required by MNC customers. Outsourced management
of a global IP network running business-critical applications requires telcos to
expand their skills in IP migration strategies, application management, desktop
and data centre management and LAN optimization and monitoring. A
consultative business approach to enterprise communication requirements is
essential as agile IP infrastructures become increasingly fundamental to
business transformation. MNCs are looking beyond the size of the global network
to what the carrier can actually support, from network-centric applications over
VoIP/VPN to IP contact centres and collaborative working, mobile office
applications and end-to-end security. With more critical business applications
running over WAN IP networks, application performance is the prominent issue –
and one with which global service providers are only just coming to grips. The
new wave of application-aware networking services goes beyond bandwidth and
classes of service to offer companies dynamically managed applications across
the whole network in line with their business objectives.
Carriers recognize the importance of managed services, but most still lack the
overarching vision behind the individual managed IP service rollouts. With a
clearer picture of their managed services roadmap and capabilities, carriers need
to align these with their NGN infrastructure strategy as well as how they extend
this strategy globally. The carrier upside from launching application-aware
network services is better margins and more service stickiness, but it requires
new skills as well as alliance partners. It also requires demonstrably better FMC
abilities.
Market Review
• MNCs Selecting Their Global Carrier in Their HQ Country: Large incumbents
with insufficient global reach are losing MNC business to carriers that can
provide global coverage. This has hit those large national incumbents that lack
global capabilities and moved MNC carrier contracts to the US, UK and France.
Both Deutsche Telekom and Telefonica are busy beefing up their international
networks to stem contract losses.
• Integrated Performance Becomes Competitive Differentiator: The breadth of the
IP service portfolio becomes more critical to business processes as convergence
takes hold and business continuity pervades in all areas of corporate life. MNCs
are looking for help in their efforts to migrate legacy communication platforms to
IP, and the approach emphasizing business value over technology requires
carriers to understand and relate to the business value of the corporate
applications.
• High-Speed Edge Connectivity Required: High-speed managed local access
with QoS using DSL or Ethernet and improved carrier interconnections are
redefining branch office performance levels. Global operations depend on how
well an operator can connect long-haul capabilities with local coverage either
directly through in-country network assets (e.g., MANs, national networks) or
indirectly via L2 or L3 interconnects with third-party operators (e.g., PTTs).
Ethernet tail-ends are opening the bandwidth-on-demand option to the high-end
market.
• Managing Service Complexity Increases the Importance of Carrier Support
Capability: Reliability and responsiveness become critical in a converged global
round-the-clock environment. To support this, a service provider must be able to
identify quickly and fix performance problems within any particular country where
it offers services. This can be either directly or via certified partners, and it
includes both on-site and off-site 24/7/365 support.
• Shrinking Corporate IT Increases Importance of Easy Performance Monitoring:
Unified network and applications performance management becomes critical as
more and more services run over the same infrastructure. Service providers are
working to offer customers a comprehensive online management tool that can
measure, monitor and manage the performance of the corporate network and
applications on an end-to-end basis and in a real-time environment.
• Agile Infrastructure for Faster Carrier Service Deployment: The ongoing
investments in NGN infrastructure will allow fast service deployment. However,
many carriers’ managed IP services strategies (driven by customer demand) are
only loosely aligned with their NGN build-out strategy (driven by investment
capability and the state of technology). Therefore, investment profitability remains
nebulous.
Drivers
Near-Term Market Drivers
• Customers Looking for IP Convergence: The fundamental IP transmission
technology combines LAN and WAN systems and increases interdependence of
applications and geographically dispersed groups. When contracting for global
services, customers look for carriers’ integration and convergence capabilities.
• Fixed-Mobile Convergence to Create Any-Device-to-Any-Application
Environments: Major carriers still have a hard time integrating their fixed and
mobile services and providing corporate customers with meaningful FMC
solutions. In the carrier core network, this ultimately requires an IMS control
plane. At present, the carriers address FMC requirements with bundled service
offerings and an internal realignment of their business units to improve planning
and decision processes.
• The Enterprise Globalization Agenda Is Driving Carrier Service Expansion:
Enterprises are leading their global growth with closely integrated business
processes that require instant communications to remote production units, R&D,
logistic systems and retail channels. Global carriers are beefing up their global
application support capabilities by expanding their professional service staff
levels and entering into strategic partnerships with vertical industry SI specialists.
The competitive differentiators focus on IP service portfolio breadth and the
quality of the carrier’s IP services, including managed local and wide area
networks, value-added services, vertical market solutions and global enterprise
mobility solutions.
• Legal Performance Requirements Are Driving Global Service Integration: MNCs
need to show accountability across their global footprint. This involves base-lined
application performance and business continuity assurance as well as content
protection and storage and availability for accounting and review purposes.
Carriers are addressing this with standardized infrastructure management
capabilities (e.g., COBIT and ITIL-based).
• User Experience to the Fore: For a long time, network performance
characteristics have dominated telecom service negotiations. This is seeing a
challenge in those enterprises where business people, rather than engineers,
define what is wanted.
Long-Term Market Drivers
• Application Performance as the Emerging SLA Parameter: Carriers continue to
develop end-to-end performance specs that reflect end-to-end application
performance. Today, this usually involves a combination of SLAs for the carrier
managed network segments and SLOs (service level objectives) for corporate or
third-party network segments. These are regularly reviewed with the customer.
Carriers continue to expand their reach both to the desktop and into the data
centre in order to ultimately provide end-to-end application performance SLAs.
• Clean Pipes and Application Security Integration: Initially, carriers will strive to
clean up their own networks and develop their own quality definitions, but over
time, these will merge into standard quality and security levels based on SOA-
like principles where security, quality assurance and third-party connectivity are
integrated.
• VNOs and SIs Expanding as the IP Network Layer Commoditizes: With a
common transport layer, content and connectivity, virtual network operators can
more easily roll out competing global IP services. Similarly, competitors in the SI
sector can move more decisively into network outsourcing based on their
strength in the corporate data centre.
• Carrier Services in the Network: To address VNO and SI challenges, carriers
will focus on their network integration capabilities to help customers transition to
an all-IP platform. Then, they will expand their network-based utility computing
services to provide fixed-mobile “business everywhere” services. As VNOs are
dependent on wholesale services, they can get the network access but not the
value-added services.
• NGN Deployments Will Provide More Intelligent Services: Carriers will combine
network-centricity (intelligence resides in the network) with greater user control
(single customer portal, proactive performance monitoring, easy scalability, etc.).
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