Info Image

Study: Communication Service Providers Going for uCPE Will Be Winners

Study: Communication Service Providers Going for uCPE Will Be Winners Image Credit: blackboard/Bigstockphoto.com

Communication service providers who want to grow their managed services sales need to take a closer look at uCPE. This is the conclusion in a recent study by Heavy Reading.

Managed services continue their growth

As networks become increasingly complex and business critical, more and more enterprises want to buy networking as a managed service.

A recent study by Heavy Reading shows the move to managed services gathering pace. Enterprise IT managers were asked about service innovation and the role played by universal customer premise equipment (uCPE). It showed that while a majority of enterprises manage network functions such as firewalls, routers, and SD-WAN internally today, the majority say they are likely or very likely to change to managed services in the future.

How can a service provider be a winner and grab a share of the booming on-premises managed service market? Insights from the study point to flexibility, customization and cost-efficiency.

Enterprise networks play an increasingly important role as business critical applications move to the cloud. The network itself has become a business critical asset, and this shows in the survey: reliability is seen as the most important requirement for a managed service, ahead of cost savings. The enterprise network just needs to work, no matter what.

Question: How important are the following attributes in the decision to purchase a managed service vs supporting the service with in-house resources? Source: Heavy Reading

But as networks have become more and more critical, they have also grown in complexity with each new application, and with complexity comes risk. For the enterprise, a managed service can be a way to let someone else handle the risk and benefit from a more reliable network.

In either case, the move towards managed services is a golden opportunity for service providers.

Enterprises want to choose network function vendors

Enterprise networking is no greenfield though. There is a big legacy, embodied in deployments and configurations of specific network functions as well as in knowledge and ways of working. It affects how service providers can engage with enterprise users. No doubt is it easier for both the enterprise and the service provider to continue to use network equipment from the same vendors, keeping all soft assets but passing its management responsibility from the enterprise to the service provider.

The survey supports this reasoning. When asked how important the ability to choose equipment vendors for a managed service is, 85% of the respondents said it was important or very important. That’s a very convincing result.

Question: How important is that your managed services provider allows you to select specific vendors for on-premise network functions? Source: Heavy Reading

Security is a primary concern for enterprise IT: this is the most important selection criteria for managed services, with 80% of respondents saying it is important or critical. No enterprise wants to weaken security when moving to a managed service.

Feature availability, e.g. getting access to new features at an early stage, is also a top priority with 76% judging it important or critical.

Question: How important are the following attributes when selecting a service provider for a managed service? Source: Heavy Reading

When considering managed services, legacy support and features are key reasons why enterprises want to pick specific vendors for hardware, virtualization, applications, and management.

This has very strong implications for service providers as they need to match services with enterprise requirements, rather than their own preferences.

So what are the implications for service providers?

One thing is absolutely clear: service providers must offer flexibility and customization. It is too risky to rely on a single vendor for networking services and trust that vendor’s roadmap.

This is one of the reasons why uCPE is the first platform choice for service providers. When asked about uCPE, 69% of all enterprises say they have either implemented uCPE on-premises or plan to do so within the next 18 months. There is a strong momentum for uCPE right now.

The uCPE advantage

Because uCPE is based on standard white box hardware and open virtualization capable of consolidating any applications from any vendors on a single device, it is the perfect platform for service providers to match customer preferences. While the platform stays the same, service providers can offer any application from any vendor, deployable as a virtual network function (VNF) that can be downloaded from the service provider’s service catalog. As an extra bonus, the entire solution, including applications, infrastructure and networking, can be centrally and remotely managed.

Application knowledge can be a limiting factor though. Managing complex applications like firewalls and SD-WAN need substantial knowledge among the service provider’s staff, which may limit their ability to execute. Building knowledge takes time and resources.

A service provider does not need to start with all available VNF vendors in its portfolio though. A limited number of vendors in the catalog is fine as long as the platform is flexible enough to allow expansion. Additional vendors and applications can be added as new customers are signed up, expanding the service provider’s market without the need for speculative investments.

Who will be the winner?

So who will be the winner in the race to provide managed services? Service providers building their services on a flexible platform like the uCPE will have the advantage. The ability to create a service catalog catering to different needs and preferences opens up the market.

Niche players will still be able to do business using a limited service offering, especially if they can compete with customized services, but their available market will be much smaller.

Author

Tomas Hedqvist is director of product marketing at Enea, and part of the product management team 
for Enea’s virtualization and management platforms. He has extensive experience in international 
marketing and product management for high-tech companies and operators. 

PREVIOUS POST

Are You Ready to Serve Thousands of Network Slices to Your Customers?

NEXT POST

5G Ushers the Transition to Quality of Experience-Based Service Plans