SERVICESManaged Hybrid and SD-WAN Network Transformation

Produced by In cooperation with

AUGUST 2018

CONTENTSExecutive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Top of mind themes for IT in the services industry: . . . . . . . . . . . . . 4

Research Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Benefits of SD-WAN Specific to the Services Vertical . . . . . . . . . .6

Case-study Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Securing WAN Traffic to the Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Broadband and Access Aggregation . . . . . . . . . . . . . . . . . . . . . . . . . . .7

uCPE and Sourcing Hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Drivers for SD-WAN and Hybrid VPN Adoption . . . . . . . . . . . . . . . . 7

Preparing for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Business Challenges and Opportunities . . . . . . . . . . . . . . . . . . . . . . . 8

Complexity in the Network Environment . . . . . . . . . . . . . . . . . . . . . . . .9

Future Opportunities and SD-WAN Market Evolution . . . . . . . . . . . . .9

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EXECUTIVE SUMMARY

The services vertical has a number of distinct networking demands that are essential components for the players in this segment to remain viable competitors. Companies in the services vertical industry recognize that they need to support businesses with high-end technology in order to build capabilities to survive and thrive in the face of future competition. Moreover they need to build trust and at the same time meet new demands of customers. The trust factor can be compromised by poor network performance and outages, and by security breaches.

For example, traditional financial services companies are seeing increasing competition from digital finance companies that represent the primary business challenge looking forward. New digital fin-tech companies are a disruptive force in the context of more traditional banking and financial services companies, some of which have been around 100 years or more and are very large corporations .

Such larger corporations need to digitally transform in order to compete, and in this scenario SD-WAN services offer many benefits that can help prospects advance . Thus, there is an evolution imperative in services to respond to business needs by quickly leveraging new technology including SD-WAN .

Standard attributes and challenges facing businesses in the services industry, that SD-WAN may help to solve, include:

●● Billable hours . Case-study quote: ‘Just one hour of network downtime per month costs your firm $60,000 in lost billable opportunities over the course of a year’ . Source: GlobalData Services Interviews,

November 2017 .

●● Services are often people businesses – and expanding global services companies will have growing numbers of end-users that need to be connected to the corporate network, and staff may wish to avail themselves of Bring Your Own Device (BYOD) policies to do their work . This industry is also heavily adopting cloud and seeking to control the costs of dedicated MPLS . One respondent in the GlobalData survey reported the following large-scale human resource dependent operation: ‘at one point IT needed to migrate more than 1200 users, 2000 mailboxes, over 2500 devices and significant number of applications over to cloud throughout the course of 2017 .’ Source: GlobalData Services

Interviews, November 2017 .

●● An example of a large services company might be one that has operations in 100+ countries including Latin America, North America, Europe, Middle-East,

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Africa and Asia Pacific. It may have grown through the acquisition of dozens of smaller local services companies . This would raise the need to consolidate, integrate applications, and maintain a uniform platform . For instance ERP and other business applications that will then be used by all sites for major business processes uniformly across all geographies .

●● From a performance perspective, there is an imperative that IT managers are able to monitor performance down to the application-level .

●● Critical applications need to get routed to the best available network based on a priority index .

Top of mind themes for IT in the services industry:

●● Billable hours, and HR management tools

●● Uniformity of business apps in use globally e .g . ERP . Extending application owners the ability to failover to any data center underpinned by compute automation

●● Integration of global sites, hardware, and software changes again for globally distributed sites

●● Increasing use of cloud including private/hybrid and connectivity with major cloud providers (AWS, Microsoft)

●● Aggregation of broadband and wireless (3G and 4G, satellite) connectivity to remote sites where there may be fixed infrastructure limitations

●● Automation and speed in operations, which can also be described as the need for operational agility

●● Cost-savings

●● Security

Vertical Challenges Benefits of Hybrid WAN & SD-WAN

Services Customers will want higher speeds on mobile devices, therefore the network must prepare for supporting new applications and bandwidth requirements on 5G

Intelligent and dynamic path selection and WAN optimization techniques available in hybrid WAN and SD-WAN

Cloud security, especially within the banking and financial services sectors, but also more generally industry-wide

Segmentation is possible to apply automated policy according to application and user groups for compliance

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A large-scale human resource dependent operation required its IT department to migrate more than 1200 users, 2000 mailboxes, over 2500

devices and significant number of applications over to the cloud.

RESEARCH FINDINGS

The services vertical is defined by several key characteristics:

●● Some services industry organizations can be large with managing and operating workforces over 10,000 .

●● Staff can be widely distributed all around the world .

●● The human resource is all important, with services and offered skillsets delivered as billable hours .

●● Close collaboration across teams is essential .

●● Back-office operations across dispersed global sites need to be as uniform as possible, and there should be uniformity in the way the major business apps used are integrated and synchronized .

Before the advent of cloud-based solutions and SaaS, companies in the services industry faced very high costs for on premise set-up of hardware, software and IT infrastructure . Costs would include one-time license fees, truck-rolls for technicians to provision connectivity; followed by the recurring costs for support, maintenance and regular updates . Cloud centric environments have reduced the above, and there is a trend in play whereby SD-WAN services are being deployed to drive down the costs and at the same time improve operational efficiencies by virtualizing network functions.

One respondent in the GlobalData Enterprise Survey November 2017 said the following:

Streamlining of operations is achieved through the application of innovative network and IT. The key objective is to completely move away from MPLS infrastructure. The company is using hybrid WAN, with the target of reducing OPEX by 50%. The company has been shown a proposal from a managed services provider for an SD-WAN deployment that will give 47% in cost reductions.

Source: GlobalData Enterprise Survey November 2017, profile a global Services company with operations across Africa, Latin America, US, Europe, and APAC .

One of the clear benefits of deploying an SD WAN overlay is the unification of network infrastructure . Services companies

need to modernize their IT infrastructure, but without adding complexity . Services companies leverage software to help support a more collaborative culture and for globally dispersed business, this runs on top of network infrastructure . Real-time communications such as video demands lower latencies, and financial transaction ultra-low latencies . SD-WAN can be seen as the collaborations platform-enabler allowing employees, channels, and partners to communicate effectively.

Overall there is a view in the market that services companies using cloud-based ERP and CRM apps need better latency . As more and more services move into the cloud, path selection and traffic steering, two attributes that are inherent in SD-WANs, become more important . IT services will typically be served by many vendors such as Accenture, Wipro, HP and others . Meanwhile enterprise databases might include Oracle, Sybase, Informix, mongoDB, and various operating systems such as Linux, Solaris 9, HP-UX 11i & Windows . This multi-vendor eco-system needs to be centrally orchestrated by an SDN controller to give a smooth back office experience.

One respondent reported the following:

Some of the benefits of our digital network transformation is the reduced downtime, being able to optimize bandwidth and maintaining a more robust network.

Source: GlobalData Enterprise Survey November 2017, profile: Global Services company with 160 sites and data centers, with roughly 25 cloud implemented data centers in South Africa, Poland, Sweden, Netherlands, Germany, UK, Spain, Switzerland, China, Thailand, Japan, US, Canada, Brazil, Australia, and more countries .

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COMPANY LEGACY WAN CHALLENGES & CONCERNS

BENEFITS OF HYBRID/SD-WAN

Global operations: The Netherlands, India, Malaysia, UK, US and more . Present in almost every country across the globe . 900-plus connected sites . Data centers spread across 3 locations in The Netherlands, US and Malaysia

●● Lack of security in the cloud

●● Network degradation and latency challenges

●● The WAN is not ready for 5G

●● Network segmentation

●● Path selection for better responses to latency issues

●● Better use of network resources, traffic prioritization

●● Improved control and management

●● Scaling to 5G

Global services company

Operations spread across Africa, Latin America, US, Europe, and APAC

●● Infrastructure changes are time consuming and complex

●● There is insufficient fixed infrastructure available

●● Latency problems and network outages

●● Agility and speed for making changes and adding sites

●● Access agnostic, ability to integrate with WLAN, broadband

●● Dynamic bandwidth selection, and robust underlay with Hybrid VPN

Banking company operating nearly 200 banks in the US and with data center locations in the US and India

●● Lack of security with financial institutions

●● Lots of legacy systems and associated complexity due to the older heritage of the company

●● Cloud security and segmentation of individual applications, and policy management

●● Centralized software-defined control and automation gives more efficient network management and control to reduce complexity

Large global services company with 10,000 employees worldwide, and operations in North America, South America, Europe, Africa and APAC

800-plus sites

Data center locations in the UK, US, Singapore, Germany and South Africa

●● Site expansions adding dedicated links is a high cost activity

●● Potential for error and too much time consumed for adding sites and network re-configurations

●● SD-branch offers significant cost-savings

●● Automation and virtualization technologies reduce the possibility of error and give fast re-configurations

BENEFITS OF SD-WAN SPECIFIC TO THE SERVICES VERTICAL

Case-study Table

The table below shows the legacy WAN challenges of four Services companies, with the basic profile information for each company, and in the right column the benefits of hybrid and SD-WAN to meet those challenges .

Securing WAN Traffic to the Cloud

Users need to be connected to Internet and access business applications being served from, for example, Amazon or MS Azure . This opens up some uncertainty around the ways data is being transferred from which cloud

through the Internet . So security is an issue . Current traditional WAN technologies such as IP/MPLS VPN support robust security, but the overall security is beginning to weaken as more traffic moves between the private dedicated WAN and clouds . SD-WANs should provide security mechanisms for private-

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cloud-Internet traffic to make data 100% secure, making sure the valuable data is reaching a specific location on time without compromise or packet-loss .

Broadband and Access Aggregation

SD-WAN supports aggregation of broadband and multiple access technologies (Wi-Fi, WLAN, 3/4G, and satellite) and along with LAN cabling restructuring required in older locations, this should supply more reliable connectivity to network end-points .

uCPE and Sourcing Hardware

Depending on location it can take a long time to ship hardware and get it cleared through customs . An advantage of SD-WAN and Universal CPE (uCPE) is that once the device is placed on site, additional virtualized functions can be provisioned without adding additional physical appliances every time . In this case the company can leverage NFV to layer on what used to be physical hardware devices and functions using regular software downloaded onto the x86 processor within the uCPE .

DRIVERS FOR SD-WAN AND HYBRID VPN ADOPTION

The services industry faces constantly changing business scenarios . There is a survival imperative for the IT department to deliver effective collaboration and speed in IT operations .

For example, if a services company does not invest in SD-WAN, its competitors will, and this will give them a first-mover advantage in the market . Business markets change, rapidly fueled by wider trends in globalization, workforce migrations, and digitalization . Services companies need to benefit from the self-service concepts that are encapsulated in SD-WAN solutions to gain better control over infrastructure, and more than that: to also achieve customization on the SD-WAN to get differentiators and provide an amazing customer experience to the final customers.

Preparing for the Future

Services companies face multiple challenges and continuous changes in technology

potentially leading to lack of compliance, security issues, and implementation issues . Companies that are migrating to an all-digital platform and SD-WAN overlay need to make sure no new security issues pop up, and that when changing the infrastructure or implementing any technology, profit margins remain healthy . Several services companies that GlobalData interviewed indicated that they are gearing up for intensive big data analytics and that this calls for certain changes to IT infrastructure services to pave the way .

For business that rely on transactions, legacy WAN services are not fit for purpose. IT systems and connectivity need to be supported with more automation . In the banking sector for example, there are various payment gateways, and managing security to prevent unwelcome traffic on any given port is a major concern . Provisioning a dedicated MPLS network to support the transaction through the payment gateways (for example to another bank) could typically take six weeks or more to implement . Sometimes the link might be prone to high latency and needs to be changed within a very short timeframe to make the network part acceptable, and again re-configuring the network on the legacy platform can be too time consuming . Similarly, within the hardware and appliance set up, the IT team will need to somehow integrate and collaborate multiple services to the data center linked to the geographically dispersed sites all around the world .

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SD-WAN services will typically bring solid solutions to the above challenges . Adding connected sites should be far more rapid and efficient, with the possibility to spin up VNFs on top of a low-cost x86 whitebox, or uCPE, which would be a cheap piece of CPE compared with more expensive vendor legacy IP routers . Similarly, dynamic path selection, allocation of traffic priorities by application, and the monitoring of performance down to the applications, should prevent latency issues from negatively impacting the network – providing of course that the underlay network is robust .

An existing WAN might not be effective in splitting traffic between multiple WAN circuits. SD-WAN should address this because of the overlay architecture and single interface .

There is a consensus that the services segment needs major progress in carrier automation in business operations in the back end . One company that GlobalData interviewed that had implemented SD-WAN in combination with its cloud-based infrastructure reported an improvement in operational efficiency by more than 15% in UK and Western Europe. If a services company adopts a cloud-first philosophy, then the result is a wide variety of cloud infrastructure from virtual machines to Microsoft Azure, and Office 365. In a hybrid WAN environment, when the company

delivers Internet access over secure channels through a VPN client, the solution supports the assignments of resources depending on the role or profile of the end user, and this is faster and easier to manage compared with more traditional WAN services .

Business Challenges and Opportunities

Security remains a major concern . The fact that businesses continue to increasingly move workloads and applications to the cloud has only exacerbated anxiety . Certain applications are sensitive to network latency, for example Visual Studio on Azure . GlobalData has observed that several services companies interviewed (November 2017, GlobalData enterprise survey) are looking to implement SD-WAN with one of the objectives being the reduction of reliance on dedicated MPLS circuits to all sites . The goal here is to connect smaller outlying branch offices that may have around 30-35 users via low cost broadband but without overly compromising on network and applications performance . In terms of speed and operational efficiencies, SD-WAN delivers network templates and scripts that are already defined, and the automated processes of network changes can be enacted without interfering with the existing network and IT of the individual sites .

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Old LAN equipment can also pose problems in cases where the cabling is very outdated . In such cases the cabling can be changed . Such companies may rip and replace older LAN cabling to implement newer switches that are more effective at traffic steering for a more structured approach .

Complexity in the Network Environment

Heterogeneity and complexity are challenges because often a services company cannot immediately address all the legacy IT in one fell swoop, even when some of the latest technologies are already in play . The speed of operational processes can end up slowing down because of the varying statuses of digital transformation across hardware, software, IT infrastructure, and networking, including on the LAN . An SD-WAN implementation should directly address these issues and support a faster cloud platform that is both simple and secure .

High availability and redundancy are required in the services industry, although admittedly this is not a requirement unique to services . The concern among companies here, however, is introducing greater complexity during the drive towards achieving better network availability and redundancy fail-over. Such difficulties might include potential configuration errors that could even cause potential downtime . Simultaneously, MPLS is not suitable for cloud adoption, keeping in mind its basic architecture of data center to branch communication .

Future Opportunities and SD-WAN Market Evolution

The main opportunity that SD-WAN providers have in targeting the services industry is that the traditional WANs already in place lack agility . There is always a strong chance that the heavier workloads slow down the network performance and overall throughput decreases as well . Services companies across the board find it cumbersome to manually configure and manage remote devices as a part of network architecture . There is a requirement to centrally manage the WAN via one single interface .

This single interface gap is filled appropriately by an SD WAN solution . Under SD WAN solutions, new hardware devices can be configured via zero-touch and automation in the back-end, hence, it becomes far easier to set up the network with a quick turnaround, and with fewer technician-induced errors .

Moreover SD-WAN platform vendors continue to develop new tools and solutions that better visualize and analyze data . This in turn allows services industry IT departments to communicate valuable data usage and analytical results to business stakeholders, and to act on outputs to make improvements . Finally, customizable dashboards can be created to consolidate all the data running over the SD-WAN to match up against performance SLAs and to closely monitor and assess performance data, including down to the applications .

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