1 A Blueprint to the Future of Managed Services Direction of Managed Services with Cloud Initiatives Key Takeaways Economic pressures and the new expectations of users, which are being driven by the growth of the consumer mobility market, are convincing IT organizations to change their virtualization and cloud mix. Consequently, service providers also need to respond. EXECUTIVE SUMMARY Businesses of all sizes are under pressure to reduce spend on IT and are turning to virtualization and cloud computing 1) to ensure always-on, always-available secure networks; 2) to address costs; and 3) to increase their productivity. Although cloud is gaining traction with businesses, they do have concerns and are evaluating security and performance standards associated with mission-critical applications in the cloud. In spite of these concerns, economic pressures have created IT initiatives for cloud, and it is estimated that 7 to 30 percent of IT spend will be on cloud initiatives by This evolution creates pressures for service providers. They now need to decide what offerings they will deliver: mission critical, on-premise applications requiring security versus cloud offers such as unified communications (UC) and collaboration. In this paper, ACG Research identifies the IT issues facing enterprises, small and medium businesses (SMB) and their business challenges. We provide solutions, such as managing services that offer virtual collaboration, communications and conferencing, to remove obstacles to business communications. We take a deeper look at a managed service suite of on-demand differentiated services that leverage the new Cisco ISR Generation 2 (ISR G2) Routers. Move from CPE to networkbased model Independent access infrastructure is driving virtualization. Cloud-based services have emerged as natural evolution. Reliable and secure access to mission-critical apps. Managed security is critical for enterprises Because of high cost of internal managing and monitoring. Standalone systems and internal IT can no longer keep up with threat landscape. 1 Sand Hill Group
2 TABLE OF CONTENTS Migration and Trends...3 Challenges and Drivers...4 Pain Points and Considerations...4 Solutions to Remove Issues of Cloud Migration...5 Cisco Borderless Network Solution...6 Solving business issues... 6 Business Challenges: Technology Answers...7 Conclusion...8 ACG Research w ww.acgresearch.net 2
3 MIGRATION AND TRENDS Enterprises and SMBs are transitioning their IT services from traditional internal services to business value enablement. Although cost and service levels are still important within an IT environment, ensuring that the infrastructure is optimized to deliver the appropriate level of value is now a top criteria. Enterprises and SMBs expect more productivity but lower costs from their IT and are investigating solutions that will reduce their OpEx and allow them to focus more on the strategic business initiatives they are selling and less on their infrastructure and applications. Businesses realize that they Size of Market Cloud services will reach $225.5 billion in the next 5 years. Global Industry Analysts Cloud will represent 7% to 30% of enterprises IT budgets by Sand Hill Group Enterprises will cumulatively pay $112 billion on SaaS, PaaS and IaaS over the next 5 years. Gartner 51% of companies use some form of cloud computing. Mimecast need more outsourcing, advanced technology, new applications, and advanced security features to keep up and meet clients growing productivity requirements. They also realize that they must simplify solutions and reduce the management of multiple builds and platforms, which is causing issues with training, interconnection, updates and management. Increased volume and network complexity require service providers to architect, operate and manage networks very differently. Business users, which have been influenced by social networking, YouTube and the growth of mobility application use, expect new offerings, which often introduce sophisticated security issues and threats. Although enterprises and SMBs more often maintain mission-critical or highly secure applications on premise, increasingly, the migration of network-based investments is outstripping on-premise or CPE spend with network growing at 27 percent CAGR and CPE declining to 13 percent CAGR (the migration of premise-based versus network-based products is measured quarterly in aggregate). Although service providers are taking advantage of this growing trend to outsource, out-task and virtualize offers in cloud offerings, trends indicate that security and application performance are the main service level agreement (SLA) issues or obstacles that service providers must address to ensure the transition to cloud-only with thin-client access solutions. Security has to not only evolve to adapt to a fluid and diverse mobile workforce but also to account for the proliferation of devices, application visibility and control, which have become more sophisticated to manage. Compounding these issues is competition from traditional and nontraditional players (SPs) and the increase in managed service provisioning by the value added reseller (VAR) market. ACG Research w ww.acgresearch.net 3
4 CHALLENGES AND DRIVERS With video and connectivity putting significant pressure on networks and bandwidth requirements, more IT departments are investigating cloud (although currently in the discussion phase in most businesses but definitely a priority) as the solution to manage the growing complexity of their network environments. However, companies adopting traditional services will have to have a bridge to new services as they become available. One of the biggest transitional challenges for organizations will be 1) identifying those specific parts of their business operations that will prevent them from moving forward effectively and 2) planning how to migrate their existing services to embrace cloud services as they are adopted. Consequently, they are turning to and leveraging service providers expertise in cloud. However, they are demanding that service providers address security and application performance, which are their main service level agreement (SLA) issues or obstacles that must addressed to ensure their transition to cloud-only with thin-client access solutions. This places additional pressure on service providers, for example, do they have flexibility in billing systems and are they able to migrate to an environment where SAAS like models are a requirement to provide a more competitive IT environment? If an MSP acquires a new client with 100 workers, does it have the flexibility in its financial model to allow for a per employee IT charge? What will this necessitate in terms of operational changes? For providers to maintain differentiation in this market and successfully outsource cloud or virtualize, they must demonstrate capability and consistent coverage and develop an account team that has expertise dealing with the migration issues (security and performance, specifically) and SLAs of the new business. Must-have table stakes for customers migration to service providers outsourcing or virtualization opportunities include: Consolidation and Optimization Operational Readiness Operational Framework Cost Reduction These criteria although important are not as critical as a value offering that delivers differentiation so compelling for the customer s productivity or impact in the market that the must-have basics is viewed as less of a requirement than the value offering. PAIN POINTS AND CONSIDERATIONS The following are pressures that service providers must address for successful migration to cloud: Address security in relation to any cloud-based application Consolidation of features inside of network products (mid to large-sized organizations) Establish 24x7 network ecosystem that are accessible by multiple users, such as partners, employees, customers and vendors Produce cost reduction opportunities within customers IT infrastructures ACG Research w ww.acgresearch.net 4
5 Service customers that have significant mobile workforce remotely using applications Service enterprises with remote offices and home office employees Provide video-enhanced content to customers, employees and partners Lower total cost of ownership (TCO) through energy efficiency and IT efficiency Deliver trusted seamless wired and wireless access from any device from any location Develop and deliver easy-to-deploy and integrate products/services into the current network infrastructure Establish requirements that include easy operations and management that support current networking, quality of service and security policies, monitoring and application response time management Ensure minimal downtime Establish a foundation capable of supporting application, unified communications, video and collaboration delivered from the cloud Support customers, employees and vendors that are geographically dispersed Allow increased access : o From any device (corporate approved or employee owned) o To any application (corporate, private or public cloud) o From anywhere (public, remote office, partner or home sites) SOLUTIONS TO REMOVE ISSUES OF CLOUD MIGRATION To support the growing expectations of users, cloud computing technology features must: Mobility: Consistently cover WLAN in branch and add applications such as voice or video, n, Public Hotspots, 3G/4G, IP Sec and SSL VPN access, etc. Security: 1) Meet compliance and regulatory for security monitoring and segmentation; 2) add infrastructure to support firewall, IPS and VPN; and 3) support existing security policies. 4) deliver consistent security to users from wherever they connect (in office, rooming users) Wide Area Network: 1) Improve application performance, minimize WAN bandwidth expenses; 2) consolidate maximum number of branch IT components to reduce device footprints and operational costs; 3) reduce branch IT costs through centralizing servers, storage and networking equipment into single data center; 4) improve remote employee productivity by ensuring local LAN like application performance. When moving to cloud, enterprises and SMBs must take into account the platforms they are currently deploying and if these meet customers requirements. They must also establish metrics to evaluate vendors and which of their solutions should be deployed as part of ongoing capacity planning. Service providers leading their customers through the process of investing and migrating toward new platforms must identify at the onset the following criteria: ACG Research w ww.acgresearch.net 5
6 Number of vendors used today for network Evaluation Question Mobility Security WAN 24x7 network accessibility by employees, customers, vendors and partners The need for cost reduction Remote application usage by mobile workers Remote offices and home worker accessibility Video-enhanced content required Energy reduction initiative Secure wired and wireless access for customer, employees, vendors and partners Easy to deploy and integrate with current investments Easy operations and management (quality-of-service, etc.) Minimal downtime Infrastructure growth for unified communications, collaboration and video Geographically dispersed customer, employees, vendors and partners Support any application from anywhere to any device CISCO BORDERLESS NETWORK SOLUTION Cisco Systems offers a new generation of integrated service routers that efficiently deliver managed services across the network. Cisco s Integrated Services Routers Generation 2 (ISR G2) offer a feature set that meets the performance requirements for the next generation of WAN, network, LAN, voice, security, application peroformance and optimization services to enable the cost-effective delivery of high-definition collaboration at the branch while providing the secure transition to cloud and virtualized network services. Solving business issues Servicing employees in branch and remote offices and cost-effectively addressing space, applications and technologies to support these workers are challenging for IT departments. Cisco s new generation of routers offers a revolutionary way to make the remote office more productive, more collaborative and more operationally efficient by supporting a new platform for delivering managed services. These new services address virtualization and distributed cloud to enable remote workers: Delivers next-generation WAN and network service requirements Enables productivity through video-based collaboration and rich media services Provides secure transistion to cloud and virtual environments Consumes minimal energy and supports green initatives for enterprises and SMBs Supports IT teams to scale services worldwide ACG Research w ww.acgresearch.net 6
7 TECHNOLOGY ANSWERS THE BUSINESS CHALLENGE To address constant change within the industry, organizations are reviewing their businesses and determining which aspects to address in order to position themselves strategically for future service requirements. To do so successfully, they must engage customers to determine what will be required get to them early for pilot tests on new services, options, etc. They will also need to determine which flexible billing options and support models best cover costs, minimize risk, and ensure valid offering for customers. These requirements must be supported by product platforms that enable flexibility, offer opportunities for services. Cisco s ISR G2 Routers addresses these network requirements via secure, reliable, multifunctional premise equipment platform for metro Ethernet and other high-speed WAN environments. Service delivery on a single platform offers up to eight times greater performance than the previous version, delivers architectural scalability and provides robust features. The following outlines examples of managed service offers and how the Cisco ISR G2 addresses them: Managed Service Transformation Differentiation 1. MPLS VPN Service Supports highly available, highly secure, mission-critical IP data, voice and video business applications across the WAN. Customers reduce costs by using a shared network and benefit from any-to-any architecture. Users gain a dependable service outside the office, giving them secure access to applications, information and collaboration tools. MPLS also simplifies configuration, management and provisioning, and supports managed service providers by delivering highly scalable, differentiated end-to-end IP-based service. 2. TelePresence Network Connection Service Fully managed, high bandwidth collaboration and conferencing solution that simulates face-to-face interaction through life-sized video images of each remote participant. Managed service providers can provide the appropriate network connection with the intelligence to assign priority to TelePresence traffic and dynamically allocate bandwidth as needed. Addressing communications across customers, suppliers, partners and vendors worldwide, the collaborative experience of TelePresence network is maintained and enhanced. 3. Collaboration as a Service Growing new revenue opportunity for managed service providers, web, audio and video conferencing as well as instant messaging and document collaboration services are optimized. 4. Cloud-Based Services Managed service providers link to web-based services, application and storage can be provided in an on-demand service model. ACG Research w ww.acgresearch.net 7
8 5. Managed Internet Access Services Provide customers with highly reliable, secure, always-on access to the Internet and may be offered as a standalone service or bundled with other managed services such as managed IP telephony, video or security. 6. Managed IP Trunking Service Transforms the traditional voice-only trunk into a converged IP connection for voice, video, and data and also opens a new business opportunity for managed service providers to work with value added resellers to sell the service to small and medium-sized businesses. Customers using the service can lower their telephony costs, including local and long-distance tolls. 7. Managed Metro Ethernet Service 8. Cisco Application Performance Management Managed Services Provides managed service providers with the opportunity to improve the customer experience by using a private, managed network to route traffic and avoid as much of the congestion on the public Internet as possible. Metro Ethernet services are provided over a managed service provider s dedicated IP backbone network to help ensure fast, reliable service in a metropolitan area. Today s intelligent Ethernet equipment delivers flexible high bandwidth, advanced network security and superior quality-of-service capabilities that help managed service providers offer a customized mix of services and data rates for different business customers. Enable service providers to gain new revenues by offering the intelligence, tools, and capabilities necessary to natively understand the content and context of application traffic. These intelligent technologies and capabilities perform operations on application traffic to provide greater visibility, marketing. 9. Security Services IPVPN; Identity Access; OP Center; Perimeter Protection; Platform Security; Authentication; Single Sign-On/Access Control; Network & Event Log Management; Incident Response; Security Threat Intelligence; Firewall; Content Filtering; Intrusion Detection/Prevention; Desktop/Laptop Management; Server Security Management; Network Access Control; Vulnerability Management. 10. Managed LAN/WAN Services Services that can be delivered using ISR G2 Ethernet switch module and WLC on SRE and built-in AP on some low-end ISR models. This is a key component for delivering UC (iptel) services and video medianet services. CONCLUSION The market continues to see a proliferation of consumer-driven devices and applications that enhance collaboration and unified communication, and the network is rapidly becoming the platform that transforms how people connect, communicate, and collaborate. Service providers are addressing the requirements associated with this influx through virtualization and cloud services. ACG Research w ww.acgresearch.net 8
9 To stay ahead of the competition service providers must prepare their organizations for the implementation of cloud services by ensuring that their networks/platforms can offer a myriad of services (demand generation), shortening time to service delivery, and investing in marketing activities that allow for ongoing up-sell to existing customers. Cisco differentiates itself from other vendors by responding to these new requirements and introducing service enabled ISR G2 router devices with next-generation features to enable these services. Lauren Robinette, principal analyst, managed services, ACG Research, offers a comprehensive Managed Service Consulting portfolio consisting of market share, forecasts, white papers, go-to-market services, pricing and projects. Contact Lauren at ACG Research focuses on providing market analysis and consulting to help service providers and vendors monetize their existing infrastructures and increase operational efficiency and profitability. Through ROI and TCO analysis, product and service message testing, and business model review, reports and forecasts, ACG Research gives you strategic and tactical advice, services and products, and timely answers so that you can better understand market dynamics and grow your telecom operations more efficiently and profitably. We help you make business decisions with confidence! Copyright 2011 ACG Research. The copyright in this publication or the material on this website (including without limitation the text, computer code, artwork, photographs, images, music, audio material, video material and audio-visual material on this website) is owned by ACG Research. All Rights Reserved. ACG Research w ww.acgresearch.net 9
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