It's been about a decade since IP VPNs were introduced by CSPs as the next wave of WAN networking services to connect enterprise branch office, regional and headquarter sites. At that time, CSPs also offered alternative WAN services such as Frame Relay and ATM. IP VPNs enabled many enterprises to inter-connect all of their WAN sites in a full network mesh more cost-effectively than other alternatives, using routers running the IP protocol. IP VPNs also provided a new source of revenue to CSPs as they were often sold as a managed network service to enterprises. The adoption of IP VPNs coincided with the rapid transition of enterprise applications communicating from an environment using mostly legacy protocols such as IPX, SNA, and AppleTalk to the IP protocol.
Fast forward to 2011 and IP VPN services are widely available, mature and stable. The overall IP VPN market is growing at a more moderate CAGR of 5.3 %, as the industry matures. Competition amongst CSPs is fierce as many large and medium size enterprises have adopted IP VPN services, driving price erosion and VPN commoditization. Enterprise IT personnel have become increasingly aware of the WAN network and the role that the IP VPN plays in performance of the myriad of web-based and internal applications which can be hosted by the enterprise or increasingly in the "cloud". These enterprises expect more information, better SLAs, higher bandwidth and better performance from their CSP and some have switched CSPs. Some key questions remain unanswered: Can CSPs can fight off the inevitable IP VPN churn by offering more value-added VPN-related services such as reporting, KPIs, performance monitoring and application-aware services and are enterprises willing to pay for any of these services?
If IDCs 2010 WAN survey, where close to 30% of enterprises rated application & performance monitoring as one of the most important features that they plan to use next year is an indicator, then the answer is overwhelmingly YES!
Enterprises will pay their CSP a premium for performance monitoring and application-aware monitoring services, so this can be a real differentiator. Providing details and data on application usage, latency, site-to-site responses time, bandwidth usage and usage patterns by enterprise application provides IT managers a more useful service which helps them to fine-tune their networks. Improving application response time for latency sensitive applications such as video/telepresence, CRM, financial transactions, voice, or data center backups can translate into meaningful $ savings or increased customer satisfaction. The increasing adoption of business collaboration software applications and business social networking will only further the need for advanced application-aware services that can provide visibility into the usage patterns and help enterprise IT staff plan for future growth of data and prioritize by application.
CSPs that offer application-aware products and monitoring services are able to better leverage this rich data from their IP VPN network assets with a tiered managed service portfolio that enables more pro-active enterprise engagements, better long-term customer relationships reducing the IP VPN churn, which may then improve their bottom line!
Nav Chander is a marketing executive with over 20 years of engineering, product management, marketing and business development experience and has lead product teams to develop successful products in the fields of telecommunications, data networking and enterprise networking with leading global computer systems and data networking products.
Mr. Chander recently worked as Global OEM Account Executive for IBM Tivoli where he focused on strategic sales of embedded EMS/NMS software to Tier 1 Network Equipment vendors. His background includes extensive product management and marketing experience in Carrier Ethernet, MPLS, VoIP, Service Assurance, Wireless backhaul and VPN technologies and solutions. He also served in a marketing co-chair leadership role on the Metro Ethernet Forum (MEF).
This post is a part of our continuing Cloud Services Assurance Expert Blog Series featuring contributions from the analysts of IDC.
View part 1: Communications Service Providers (CSPs): Claiming a Seat at the “Cloud” Table by Melanie Posey, Research Vice President, IDC Hosting Infrastructure and Managed Network Services.
View part 2: For the CSP Cloud Customer: Seeing is Believing by Chris Cullan, Product Marketing Manager, Business Services Solutions, InfoVista
View part 3: Smart Clouds Require Smart Networks: Intelligent IaaS through Visibility by Melanie Posey, Research Vice President for IDC‘s Hosting Infrastructure and Managed Network Services
View part 4: Assuring the Quality of UCaaS with Application and Infrastructure Performance Management by Amy Harris, Research Manager, Enterprise Voice & IP Communications Services and Unified Communications, IDC