WHITE PAPER The Business Case for Global Multinationals to Outsource Converged IP Services

Transcription

1 Global Headquarters: 5 Speen Street Framingham, MA USA P F WHITE PAPER The Business Case for Global Multinationals to Outsource Converged IP Services Sponsored by: Infonet Services Corp. Thomas S. Valovic June 2003 Courtney Munroe EXECUTIVE SUMMARY In daily dealings with customers, suppliers, business partners, and employees, most enterprises rely on a wasteful and complicated mix of separate networks for video, voice, data, and fax communications. By consolidating all types of communications traffic onto a single converged network, IP VPN services allow multinational companies (MNCs) and other enterprises to save on communications costs and greatly simplify system administration and network management. IP VPNs are today's fastest-growing connectivity solution, in part because they deliver the reliability, flexibility, and scalability required by today's enterprises. For MNCs, a global IP VPN service adds the further benefit of efficiently integrating existing data applications along with voice and video over a single infrastructure. Enterprise LAN data traffic is already predominantly IP based. However, in most organizations, voice still resides on a separate TDM-based infrastructure, while video rides over ISDN connections. This approach is changing, though, because of the growing deployment of IP-enabled videoconferencing systems and IP-PBX systems as well as the adoption of standards for multimedia conferencing over IP networks. As converged traffic builds in the LAN, it makes increasing sense for enterprises to transport all the traffic over a single WAN infrastructure. The more complex the business operation, the more benefits that a unified infrastructure can deliver to business executives and IT, network, and telecom managers. Further, by outsourcing rather than building such a converged network, enterprises avoid the expense of purchasing and maintaining the required equipment and software. Also, the service provider takes responsibility for implementation and end-to-end management. WAN managers interviewed recently for an IDC survey noted that IP VPNs are usually better handled by a service provider with a robust backbone and a core competency in data transport. Also, it is more efficient for the service provider to manage changes and to add or delete sites and users than for enterprises to do so. This white paper discusses the benefits for MNCs of outsourcing converged IP voice and video services to a global service provider. It also recommends the technical and business factors to consider in selecting the right service provider. INTRODUCTION Convergence has been discussed for years as a major driver of both products and services in the telecommunications industry. But progress has been uneven, partly due to the confusion created by the many definitions of convergence. For example, at least four types of convergence affect the evolution of next-generation systems and technology. By convergence, do we mean applications convergence, content convergence, service convergence, or transport convergence?

2 In the larger scheme of things, each specific type of convergence affects the others. In every case, though, convergence has been enabled or accelerated by the widespread adoption of the Internet Protocol (IP). Applications convergence, for instance, is a direct outgrowth of the Internet revolution. Initially, enterprises used IP to provide employees with access to the Internet and such applications as . Building on this infrastructure, businesses developed IP versions of popular enterprise applications, such as enterprise resource planning (ERP), customer relationship management (CRM), and sales force automation (SFA). These "Webified" applications could then be readily accessed via an IP VPN by employees throughout the organization, including those in branch or remote offices around the globe. Besides transporting such IP-based applications, IP VPNs are finding increasing enterprise use for extranets to facilitate faster and more reliable information flow with supply chain partners. Along with applications convergence, IP has also fostered content convergence, which enables certain types of content that were previously restricted to a particular device to be delivered by other devices. Webcasting is a classic example of IP's role in enabling such convergence. Having seen the benefits of integrating Internet access, , enterprise applications, and supply chain management over a common IP infrastructure, enterprises are now going one step further by using the infrastructure to carry voice and video traffic. Converged voice, video, and data services provide a host of new cost-saving and productivity-enhancing capabilities, ranging from unified messaging and integrated call center operations to leveraging the common wiring plant and a single technology platform. IP TRANSPORT CONVERGENCE Until now, voice, video, and data transport convergence have lagged somewhat behind the others in terms of industry reality matching marketing-based expectations. There are a number of reasons for this lag in technology adoption. First, most large enterprises have had distinct organizations for both voice and data services. The IT department handled desktop computing resources; telecom departments were responsible for phones on the desktop under a different set of technical and administrative policies and procedures; and yet a third group was responsible for videoconferencing. In addition, this division was exacerbated by the physical reality of having three different and incompatible systems of infrastructure, including separate wiring for PCs, phones, and ISDN for video. The three groups also had very little interaction, and, because the technologies and applications were so different, there was little need to interact. This organizational reality was one main inhibitor that served to slow the adoption of convergence. Another inhibitor was the lack of fully developed technologies to guarantee application performance in IP environments. In the WAN, various types of quality-of-service (QoS) capabilities were needed to effectively negotiate the specific requirements and organizational priorities of different types of network traffic. Isochronous traffic, such as voice and video, for example, needed to be handled differently in the network than data traffic, which has different needs for prioritization and queuing. In the LAN, issues of performance management and voice and video quality were also longtime barriers to adoption. These obstacles are no longer formidable. Technology advancement, coupled with slow but steady organizational change, has altered the landscape considerably. In addition, a variety of market forces now make consolidated IP-based transport more attractive to MNCs and other enterprises. 2 # IDC

3 One of the major factors driving IP transport convergence is the ever-increasing hegemony of IP as a data protocol. This transformation has been gradual but unmistakable, and much of it has taken place as a result of the sweeping success of the Internet, not only as a business solution but also as a foundation for applications in a variety of contexts. Enterprise LAN traffic is already predominantly IP based. However, in most organizations large and small, voice traffic is still carried on a separate TDM-based infrastructure, whereas video traffic is carried over ISDN connections. However, the growing deployment of IP-PBX systems, the use of native IP videoconferencing systems, and the adoption of standards for multimedia conferencing over IP networks are fueling organizations' interest in converging all traffic onto the LAN (see Figure 1). FIGURE 1 WAN AND LAN CONVERGENCE IP Conversion and Network Consolidation TDM PBX PSTN WAN ISDN ISDN WAN Ethernet Switch Data WAN Single LAN Infrastructure: IP and Ethernet Ethernet Switch Multimedia IP WAN IP PBX (server) Source: IDC, IDC #3741 3

4 By carrying data, voice, and video traffic over a single wiring infrastructure, enterprises can achieve substantial staff and equipment savings and greatly simplify maintenance and management. Convergence in one area of the network builds the business case for convergence in other areas. WAN convergence adds to the savings on infrastructure, equipment, maintenance, and staff. IDC predicts that 2003 will be a pivotal year in the development and deployment of IP-PBX systems and IP-enabled traditional PBXs. Although many sales to date have involved deployment of the latter, PBX vendors are moving beyond the IP-enablement phase of next-generation systems and toward delivering full-scale IP-PBX systems to their customer base. Vendors such as Cisco, Avaya, Nortel, Alcatel, Siemens, and 3Com are stepping up their efforts, and enterprises are evaluating and in many cases purchasing IP-PBXs. IDC projects a 66% increase in IP-PBX systems sales in 2003 and expects sales to reach $6.6 billion by However, the benefits of converged services can also extend to enterprises that have traditional PBX systems. This convergence is typically achieved via media gateways that convert TDM trunk traffic to IP formats so that the converged services can be delivered to interconnected enterprise sites via a VoIP VPN service. MNCs are also embracing IP networks as successors to ISDN-based systems for cost-effective and easily managed corporate videoconferencing. Cutbacks in business travel for economic and security reasons are fueling demand for videoconferencing. In addition, more companies are becoming interested in videobased applications, such as the broadcasting of corporate events and training sessions, and video-based collaboration among employees in dispersed offices. MNCs, in particular, are demanding global videoconferencing solutions to ensure that all locations have the capabilities. Legacy videoconferencing systems based on ISDN connections are hampered by poor quality, implementation and administration problems, and high costs. The expansion of IP networks and the adoption of standards for multimedia conferencing over IP networks have made IP VPNs a less costly and more flexible alternative to ISDN for multinational videoconferencing. When managed IP WAN and LAN connections are used, enough bandwidth can be assigned to guarantee broadcast quality, without incurring the per-minute charges of ISDN. As companies increase the use of IP voice and video in their LAN environment, they are taking advantage of the fact that they can consolidate these locally based networks into a single unifying architecture. The result is transport convergence in the customer premises, which increases the total mix of IP data transported across multisite organizations. As integrated voice and data traffic gains traction at the edges of the network, it creates a strong rationale for unifying and flattening network architectures throughout the entire network. When other types of IP-based traffic such as videoconferencing and facsimile are considered, the business case becomes all the more compelling. As converged traffic builds in the LAN, it makes increasing sense for enterprises to transport all the traffic over a single WAN infrastructure. Convergence offers the benefit of eliminating "spaghetti networks" that are more difficult to manage in terms of both cost and day-to-day operations. The more complex the business operation, the more benefits that a unified infrastructure can deliver to IT, network, and telecom managers. 4 # IDC

5 For a large MNC with geographically dispersed sites in a number of countries, for example, converged IP-based transport can connect PBXs deployed in multiple locations over a VPN and allow the company to avoid the high cost of international toll calls using switched services. If a dedicated voice line has been the norm, cost savings can accrue via the elimination of these lines and the consolidation of traffic onto a single network provided by a single carrier. Likewise, using an IP video solution in place of an ISDN-based solution can save on both line and management costs. In today's business climate, moving to these kinds of approaches increasingly makes compelling administrative, economic, and architectural sense. Technology convergence often forces the supporting organization to converge also. With converged LAN/WAN infrastructures, then, a discernible shift is taking place in the enterprise organizations that will oversee this transition. The merging of voice, video, and data under the rubric of the latter's protocols and transport capabilities has caused a shift in resource allocation toward IT departments. Increasingly, IT managers are now involved in the budgeting and decision-making processes associated with the deployment of new services and equipment. Thus, for optimal cost control, central management of budget responsibilities and purchases may be a more cost-effective approach than management at the divisional and branch office levels. BUILD VERSUS BUY When considering a converged voice and data network or a voice, video, and data network, MNCs and other organizations can choose to purchase, deploy, and manage their own networks, or they can leverage a service provider's IP network and contract for the service with full or partial management. Enterprises face many challenges in managing their own converged networks. Major issues include deploying and managing the convergence of different platforms and myriad applications. One of the most prevalent issues for many enterprises is establishing an efficient bandwidth-sharing system with effective policy and priority management. It can be a painful and costly odyssey for WAN managers, who are often unaware of the network requirements for new applications and who fail to recognize the impact of these applications on the network until long after they are implemented. In overcoming problems on a trial-and-error basis, enterprise network managers face a time-consuming and costly learning curve. Managing multiple equipment vendors in several countries is another key issue that can be a major roadblock to implementing consistent global policy management and performance parameters. By outsourcing the converged network service, enterprises avoid these problems and the expense of purchasing and maintaining the required equipment and software. The service provider takes responsibility for implementation and end-to-end management, which appeals especially to enterprises without adequate in-house expertise. However, many enterprises that have the needed in-house expertise still opt for outsourcing to free up IT staff from the time-consuming tasks of selecting and integrating all the necessary hardware and software. In IDC's 2002 survey of 400 U.S. WAN managers, cost savings was the main reason given for outsourcing to an IP VPN service provider, followed by the benefit of having a managed network and better service (see Figure 2). Only 11% of respondents who chose to outsource the service cited lack of internal company resources as the reason, confirming that, even when a company's IT staff is capable of implementing and managing an IP VPN on its own, it may not be justifiable on a time or cost basis IDC #3741 5

6 FIGURE 2 REASONS FOR OUTSOURCING AN IP VPN SERVICE Q. What is your primary reason for choosing a service provider IP VPN solution? Cost savings Managed network Better service Lack of internal company resources Contract/outsource Security Experience Other (% of respondents) Source: IDC's 2002 U.S. WAN Manager Survey The WAN managers believed that IP VPNs are usually better handled by a service provider with a robust backbone and a core competency in data transport. Many recognized that having a service provider manage changes and add or delete sites and users is a more efficient option than performing the tasks in-house. Those managers who were familiar with service provider management of frame relay services wished to obtain an IP VPN networking service that would be managed in much the same way. By outsourcing an IP VPN service, organizations avoid the capital expense of deploying, maintaining, and upgrading their corporate networks. They can also lower operation costs through simplified network management and the reduced need to find, train, and retain skilled IT professionals. Service providers can offer service level agreements (SLAs) that provide round-the-clock security, reliability, and performance guarantees. The service provider will typically transport end-user traffic over its shared IP infrastructure rather than the public network. Reliability and adaptability to changing conditions are built into the service provider's IP network. If there is traffic congestion or a service disruption in one location, the customer's IP VPN traffic is dynamically rerouted. In networks using multiprotocol label switching (MPLS), one customer's traffic is partitioned from another's on the shared IP infrastructure, as it is with frame relay and ATM services (see sidebar, "MPLS, DiffServ, CoS, QoS, and SLAs"). MPLS and DiffServ can ensure class-of-service (CoS) and quality-of-service (QoS) standards without the deployment of special end-user equipment or software. CoS standards permit the customer to determine the level of priority for different traffic types to ensure that time-sensitive applications receive precedence. SLAs guarantee that a 6 # IDC

7 carrier will provide the end user with the required level of service and will back up these guarantees with credits. SLAs designed specifically for IP voice and video services rely on protocols such as MPLS and DiffServ to ensure the high-quality, end-to-end network performance needed for telephony and videoconferencing. MPLS, DiffServ, CoS, QoS, and SLAs Multiprotocol label switching (MPLS) is a standard that allows traffic in an IP backbone network to be prioritized so that voice and video traffic can travel through the network with minimal delay. MPLS also allows critical data applications to continue running despite traffic congestion, enabling users to enjoy the quality of service (QoS) they need and expect. In an MPLS network, incoming packets are assigned a 32-bit "label" by a label edge router (LER), which defines the level of service, or priority, the packet should receive in traversing the network. Packets are forwarded along a label switch path (LSP), where each label switch router (LSR) makes forwarding decisions based solely on the label's contents. LSPs may be used to route around network congestion and to guarantee a certain level of performance. As the packet traverses the network, an LSR strips off the existing label at each hop and applies a new one, telling the next router how to forward the packet. Because the LER is on the service provider's side of the local loop, the customer premises router is not part of the MPLS backbone. The customer premises router is critical in end-to-end or LAN-to-LAN QoS design because it is responsible for managing traffic flows from the customer LAN across the local loop. In particular, the customer premises router must be able to provide the proper queuing and QoS assurance for real-time media flow or the LAN-to-LAN performance will be impacted. In effect, MPLS creates a virtual circuit across the network for each packet, speeding the packet flow and providing a more predictable performance, which is key to guaranteeing QoS. MPLS is also easy to scale because the switches and routers in the packet's path do not have to perform address lookups. MPLS' unique method of combining the switching and routing of packets creates a network capable of prioritizing traffic to provide a desired class of service (CoS) with the required QoS levels. CoS and QoS are sometimes used interchangeably, but they are quite different. CoS refers to the priority with which different packets are forwarded through the network. Voice and video traffic, for instance, is delay-sensitive; therefore, these packets must have top priority. Enterprise applications, such as enterprise resource planning (ERP), customer relationship management (CRM), and sales force automation (SFA), are typically more sensitive to network delay than or Internet access and therefore also receive a high priority. CoS enables organizations to use their networks more efficiently and cost effectively by aggregating traffic by class and by prioritizing applications so they can run effectively without overprovisioning bandwidth. MPLS does not provide CoS by itself; rather, it relies on additional techniques. The Differentiated Services (DiffServ) approach uses a number of functional elements implemented in the network nodes. These elements determine the per-hop behavior of certain combinations of traffic, based on markers set by the network boundary nodes that map to a particular CoS. Within each CoS, the traffic may require different QoS levels for such parameters as latency (i.e., packet transport delay), jitter (i.e., the variance in delay), packet loss, and availability. For revenue-generating applications, availability is critical. Packet loss may not affect the functionality of a Web page, but it could wreak havoc on an online financial transaction. Similarly, latency is tolerable for but unacceptable for voice and video communications, and jitter is acceptable for file transfers but unacceptable for interactive or time-sensitive ERP applications. To guarantee the required QoS performance levels, service providers offer service level agreements (SLAs) covering latency, jitter, packet loss, availability, and other important parameters. Service providers generally back up SLAs with credits or penalties if they fail to meet performance guarantees IDC #3741 7

8 Organizations that outsource service do not need to configure VPN tunnels or manage hardware and software upgrades at multiple sites. The service provider can provide the most extensive experience in the management and monitoring of the IP VPN for the enterprise, including adding or deleting new sites or users or making other administrative changes. MNCs cannot always anticipate where their next branch offices will be located. Because these offices often start with just a few employees and no in-house technical expertise, the advantages of IP VPN scalability, geographical coverage, and ease of installation and management become particularly important. Speed of implementation can also be vital to an organization's business strategy. OUTSOURCING CONVERGED SERVICES Enterprises now have many options for outsourcing converged services. In 2002, service providers rolled out a variety of VoIP-based services, including IP Centrex, PBX extension, and VoIP VPNs. These services have particular appeal to large MNCs. Many companies currently connect their PBXs via a combination of dedicated voice lines, which are leased from carriers in conjunction with switched services for off-net traffic termination. In other cases, switched services are primarily used. Although these approaches have worked well in the past, neither allows telecom managers to take advantage of the new bandwidth economics and efficiencies made available by state-of-the-art VoIP VPN services. MNCs can also outsource video services to an IP VPN service provider to speed deployment, control costs, simplify administration and technical management, and place systems in minimally staffed locations. No hardware or software purchases are needed, and the converged network service ensures seamless and synchronized audio and videoconferencing operations with full backup. IP video services, like their IP voice counterparts, can take advantage of the efficiencies of IP transport, including the ability to eliminate leased lines and ISDN and the ability to transport enterprise voice, video, and data over a single connection. A company does not necessarily have to converge voice, video, and data onto a single line to realize these benefits. In some cases, depending on traffic levels and network configuration, a converged service can be used exclusively for IP-based voice. Alternatively, if voice, video, and data are going to be converged, the service can be provided as an option to existing IP VPN services. With IP voice and video VPN services, companies can enjoy the benefits of a flat fee for on-net calling and usage-based pricing for off-net termination. Under this pricing arrangement, calls are essentially free when they remain on-net and site to site. When the call destination is off-net, IP gateways are used to provide access to the public switched telephone network (PSTN) and to ISDN in the country of destination. Due to economies of scale, large international service providers are able to make optimal pricing arrangements with local carriers in each country of coverage. As a result, off-net charges for switched services can be considerably lower when compared with traditional approaches involving switched services. When companies elect to rely on a large, established multinational service provider for this kind of integrated transport, they are actually outsourcing many functions to the service provider that are traditionally handled on a local basis and in a nonuniform fashion. With an IP voice/video VPN service, an enterprise enjoys the advantages of a uniform dialing plan that extends throughout the entire organization around the world. MNCs require such seamless global availability and consistency. 8 # IDC

9 In addition, monthly communications charges and activity can be consolidated in a single billing arrangement, enabling companies to provide granularity down to each branch office site by country, with detailed per-minute charges recorded for the switched services utilized. This approach allows centralized administration of complex, geographically distributed networks and a level of cost control free of the administrative burden associated with traditional approaches. This is especially important to companies looking for ways to control expenses at a time when cost constraint is a paramount consideration for both large and small companies. SELECTING THE RIGHT SERVICE PROVIDER In choosing a service provider for converged IP services, enterprises need to consider a number of business and technical criteria. For MNCs, a critical technical factor is the architecture of the provider's IP backbone and its geographical reach. Most incumbent telecommunications carriers lack the network and experience to provide global, cross-border services to MNCs. In addition, some domestic service providers depend on local partners in different countries to a much higher degree than global service providers, which have decades of experience providing cuttingedge services to MNCs. Incumbent carriers, which serve a wide range of customers, including residential and wireless subscribers, lack the dedication of global service providers, which focus on the specific needs of MNCs. For MNCs, one of the most important issues with the provider's backbone network is the number of countries that are on-net. Very few service providers can transport traffic to a large number of countries over their own network. Instead, they have to rely on local partners in several countries for support and the origination and termination of traffic. The higher the percentage of traffic that stays on the service provider's backbone, the lower the cost and the better the network management and QoS control. For IP voice and video services, the provider must have effective CoS and QoS capabilities. MPLS-based IP VPNs using DiffServ allow MNCs to assign the highest class of service to voice and video traffic to avoid transport delays. Some service providers have not implemented MPLS and DiffServ on an end-to-end basis. Also, some only use MPLS for its traffic-shaping rather than CoS capabilities. Additionally, many service providers transport much of their customers' data over the public Internet or backhaul the traffic over long distances to their nearest point of presence (PoP). Service providers that use MPLS in the core of the network, along with DiffServ, provide the best CoS and QoS capabilities. One way that MNCs can ensure adequate network performance from a service provider is with SLAs. MNCs need to make sure the SLAs are comprehensive and come with performance monitoring capabilities and meaningful credits. Good SLAs provide guarantees for service availability and specific latency, jitter, and packet loss performance in all classes of service. As IP VPNs continue to mature, enterprises can expect additional call-oriented SLAs for such parameters as call blocking, post-dial delay, and mean opinion scores. They should be wary of SLAs with loopholes (e.g., assessing penalties after two consecutive months of missing a metric). Also, credits should be paid automatically and be high enough to create an incentive for the provider to avoid further penalties. Given today's state of the industry, one important business consideration is the provider's financial stability. Does the service provider have a sound business model that will ensure its long-term viability? No MNC can afford the gamble of outsourcing a mission-critical service to a provider that may terminate the service if the business model fails IDC #3741 9

10 Besides financial stability, the provider should have experience in packet voice services and managing customer premises equipment (CPE). Also, the provider should be able to accommodate existing circuit-switched voice and video over ISDN and provide an easy migration path to native IP services. Finally, the provider should have attractive and predictable pricing so that MNCs can determine their current and future costs with greater accuracy. PROFILE OF A GLOBAL SERVICE PROVIDER One global service provider with a significant international presence is Infonet Services Corp., which offers on-net VPN termination in nearly 50 countries and off-net termination in more than 200 countries. Its IP Voice VPN is a managed international service for voice, fax, and data that targets MNCs looking to transition from traditional circuit-switched voice services. The service enables MNCs to interconnect their geographically dispersed PBXs over a virtual network. The optional, Infonet-managed, CPE-based IP gateway preserves the MNC's current PBX investments while providing global IP capabilities and migration to an end-to-end managed IP telephony solution. Infonet also offers an end-to-end managed IP video service for use with desktop, group, and high-end room videoconferencing systems. Infonet has made arrangements with PolyCom to support the firm's endpoints, which Infonet procures, installs, and manages for the customer. Infonet supports mixed IP and ISDN sessions and provides gateways and video-bridging capabilities to interconnect distributed video over IP endpoints around the world and enable off-net ISDN access. Infonet uses MPLS and DiffServ to support five classes of service with SLAs for network availability, packet loss, jitter, and latency. In addition, SLAs can cover service provisioning and CPE-to-CPE performance. Infonet provides a number of online monitoring and reporting tools that enable customers to check on performance. The company also provides help desk support and bridging for multipoint and media conversion, along with consulting and global project management. Infonet's IP Voice VPN service uses Cisco routers that are equipped with gateways to convert TDM-based PBX traffic to IP. As a result, companies with traditional PBXs can take advantage of converged IP transport as well. Infonet leases the routers to customers and provides local loop connections to its POP. The router/gateway presents an E&M, FXS, FXO, ISDN BRI, channelized T1, or E1 interface to the PBX. To ensure optimal performance, security, and reliability, Infonet manages the CPE router/gateways remotely from its Network Operations Center. The company has extensive experience in installation and provides global 24 x 7 support of these systems as well as back-office support. It also has seven years' experience with packet voice. Infonet's service road map includes a number of upgrades and enhancements, such as hosted service applications and IP-PBX interconnection. In addition, the company offers a call center option and a fax capability to customers. Infonet is leveraging its background in managing real-time IP voice traffic as it expands its videoconferencing services. Infonet's voice and video services use a flat fee for any-to-any on-net calling and aggressive usage-based pricing for global off-net termination, with detailed usage/billing reports by site. Its IP VPN networks can be configured for standalone voice; standalone video; converged voice, video and data; or any mix. Large sites and small branch offices can be supported with access speeds ranging from 128Kbps to 155Mbps. Infonet provides an ROI analysis tool to determine and optimize payback scenarios. In some circumstances, the reported payback period for the up-front investment in the service has been as short as 30 days. 10 # IDC

11 CONCLUSION MNCs and other enterprises can save on communications costs and greatly simplify system administration and network management by consolidating voice, data, and video traffic onto a single converged network. IP VPN services can provide such convergence, along with the reliability, flexibility, and scalability required by today's businesses. By outsourcing the IP VPN to a service provider, rather than building the converged network in-house, enterprises can avoid the expense of purchasing and maintaining the required equipment and software. Further, the service provider takes responsibility for implementation and end-to-end management, including the burdensome task of adding and deleting sites and users. MNCs now have a number of options for outsourcing converged services, and they must choose the service provider wisely. Critical factors are the architecture of the provider's backbone and its geographical reach. The higher the percentage of traffic that stays on the service provider's network, the lower the cost and the better the network management and QoS control. However, few service providers can transport traffic to a large number of countries over their own network. Instead, they have to rely on partners in various countries for support and the origination and termination of traffic. As for backbone architecture, MPLS-based IP VPNs using DiffServ allow MNCs to assign the highest class of service to voice and video traffic to avoid transport delays. However, some service providers have not implemented MPLS and DiffServ on an end-to-end basis. Besides financial stability, the service provider should have attractive and predictable pricing and extensive experience in packet services and managing CPE. Finally, the service provider should be able to accommodate existing circuit-switched voice and video over ISDN and provide an easy migration path to native IP services. COPYRIGHT NOTICE External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2003 IDC. Reproduction without written permission is completely forbidden IDC MP-WP #