Global Headquarters: 5 Speen Street Framingham, MA USA P F

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F W H I T E P A P E R T h e N e t w o r k - E n a b l e d E n t e r p r i s e : S t r a t e g i c C o n s i d e r a t i o n s Sponsored by: Level 3 Communications and Alcatel-Lucent Melanie Posey August 2013 E X E C U T I V E S U M M A R Y The digital economy is no longer emerging; it has arrived. The changing nature and velocity of business, the pace of technology innovation, and enterprise IT transformation trends are converging to raise the profile of the network-enabled enterprise. In this new era of highly interdependent business processes, applications, and supply chains, wide area networks (WANs) take on greater importance as the unifying, performance-enhancing element supporting today's technology-dependent business environments. This new era of the network-enabled enterprise brings heightened efficiency and productivity for business operations, but only if corporate WANs are sufficiently dynamic, responsive, and performance oriented to meet the needs of real-time business. E N T E R P R I S E W A N T R A N S F O R M A T I O N : S U P P O R T I N G H Y B R I D I T / N E T W O R K E N V I R O N M E N T S Today's enterprise networks must handle more requirements than ever before but the cost of failure is also greater than it has ever been in the past and the network lies at the heart of connecting business-critical applications to business growth. In rapidly changing business environments, companies must constantly plan, implement, and execute strategies to grow revenue, improve operational efficiencies, and reduce costs. The technology landscape in which companies operate is becoming more complex. IT initiatives such as datacenter consolidation, IT infrastructure virtualization, and automated, interconnected business process architectures are being implemented. At the same time, emerging applications such as cloud computing, unified communications (UC), video, mobile applications, Big Data, the Internet of Things, bring your own device (BYOD), and social media are being adopted both inside and outside enterprise datacenters. Furthermore, the nature of work is changing as employees and business locations are more dispersed and business ecosystems are expanding to include suppliers, partners, and customers. As shown in Figures 1 and 2, business initiatives drive IT investment and vice versa. Enterprises are looking to cloud services, simplified network structures, virtualization, and application performance technologies to reduce overall corporate costs. Mobility, UC, and cloud services are being enlisted to improve employee productivity. Enhanced data backup/recovery capabilities and WAN security are key network/it initiatives related to improved business processes and expanded use of Big Data applications. Figure 3 highlights current and planned use of emerging technologies among U.S. enterprises.

2 F I G U R E 1 K e y B u s i n e s s I n i t i a t i v e s D r i v i n g N e t w o r k / I T I n v e s t m e n t o v e r t h e N e x t 1 2 M o n t h s Q. Of the following business initiatives, which are the top 3 that will be significant in driving network and IT investments in your organization over the next 12 months? Select up to three items. Improve business processes 49 Reduce overall cost structure 48 Increase employee productivity 46 Expand use of business intelligence/data analytics 29 Update business applications 28 Attract new customers 22 New product/service development 21 Customer retention 19 Expand into new geographies/countries (% of respondents) n = 1,212 Notes: Multiple responses were allowed. Values represent the percentage of respondents ranking each factor number 1, 2, or 3. Source: IDC's 2012 U.S. WAN Manager Survey 2 # IDC

3 F I G U R E 2 K e y T e c h n o l o g y I n i t i a t i v e s C u r r e n t l y D r i v i n g B u s i n e s s I n v e s t m e n t Q. Of the following technology initiatives, which three are the most important to your organization at the moment? Enhance WAN/network security 41 Improve data backup/recovery capabilities 38 Improve perf ormance of business apps 37 Implement a corporate mobile strategy 27 Implement/expand use of cloud services 27 Simplif y WAN/network structure 26 Server/datacenter virtualization 22 Deploy unified communications and collaboration (UC&C) 19 Converge voice and data networks onto IP 15 Enable enterprise social networking 9 Put video over the WAN (% of respondents) n = 1,212 Notes: Multiple responses were allowed. Values represent the percentage of respondents ranking each factor number 1, 2, or 3. Source: IDC's 2012 U.S. WAN Manager Survey 2013 IDC #

4 F I G U R E 3 C u r r e n t a n d E m e r g i n g T e c h n o l o g y I m p l e m e n t a t i o n Q. Are you implementing or do you plan to implement any of the following services or technologies? Unif ied communications Cloud computing used for IT inf rastructure (IaaS) Cloud computing used for software applications (SaaS) Videoconf erencing solutions Managed mobility (% of respondents) Use now Plan to use in 12 months n = 1,212 Source: IDC's 2012 U.S. WAN Manager Survey These trends IT transformation, emerging applications, new technology consumption/delivery models, and highly distributed business ecosystems result in more traffic running on enterprise WANs, added pressure on the network, and a greater need for network optimization and security solutions. The network-related challenges of technology transformation include the following: Datacenter consolidation, IT virtualization, Big Data/analytics, business continuity/data replication, and virtual machine portability. These initiatives require bigger and more intelligent "east-west" (datacenter-to-datacenter) bandwidth to handle the volume of the traffic flow and the business criticality of the data and applications. Increasingly distributed end users. End users include not only employees in remote offices with wired connections but also on-the-go mobile device users and machine-to-machine "users" who require access to increasingly centralized business applications on-net and off-net (i.e., cloud); "north-south" (datacenterto-branch office) connectivity must keep pace. Real-time, IP-enabled communications and processes. Real-time applications such as voice and video and business-critical applications such as point-of-sale or financial transactions compete for bandwidth on converged networks alongside less critical or delay-sensitive traffic streams. Cloud computing. End-user consumption of external cloud services (whether IT sanctioned or "shadow IT") creates data protection issues as well as identity access, policy management, and quality-of-service (QoS) issues on the network. 4 # IDC

5 Modern enterprise networks are highly heterogeneous, featuring complex combinations of the following: IT/application sourcing strategies: In-house, third-party colocation, managed hosting, IT outsourcing, and external cloud services Application performance requirements: Latency and packet loss tolerances, bandwidth needs, and routing imperatives Connectivity types: LAN, WAN, and public Internet; fixed and mobile access End-user devices: Desktops, laptops, smartphones, tablets, wireless terminals, and sensors End-user communities: Employees, customers, partners, and suppliers Highly reliable, secure, and performance-optimized WANs become increasingly important components of enterprise ICT strategies as mission-critical business processes and applications become more network dependent. Adoption of a holistic view that positions IT and networks as interdependent components of next-generation IT/application delivery frameworks is the first step toward becoming a networkenabled enterprise. N E X T - G E N E R A T I O N A P P L I C A T I O N - A W A R E D E L I V E R Y N E T W O R K S : R E L I A B I L I T Y, P E R F O R M A N C E, A N D S E C U R I T Y The expectations of end users who rely on the network to deliver business-critical applications and communications have expanded dramatically in recent years. Inside the network-enabled enterprise, data streams are not just bits and bytes: They are purchase orders, invoices, design specifications, online transactions, and customer service interactions that must flow across the network reliably, securely, and in real time. Network issues that impede access to these applications can translate into diminished employee productivity, disrupted production schedules, lost sales, and customer/line-of-business user dissatisfaction. Security also takes on heightened importance in interconnected business environments. Organizations must protect against targeted Web site attacks, maintain strict controls for access to business-to-business (B2B) and corporate portals, and comply with regulatory mandates related to data protection and information security. Ensuring network reliability and security was difficult enough back when business processes operated within the confines of corporate LANs and private WANs. In nextgeneration enterprise application delivery environments, workloads and application components no longer reside exclusively within the controlled confines of enterprise datacenters and closed corporate networks. Furthermore, convergence in the datacenter, LAN/WAN, and network access domains as well as growing use of externally sourced PaaS, IaaS, and SaaS services ups the ante for network/it managers who must supply the bandwidth needed to support processing- and storage-intensive workloads and manage the network traffic flows generated by an ever-shifting mix of applications and end users IDC #

6 Converged environments require dynamic networks designed to adjust to different application-centric and end user or device-specific requirements. Not all networkenabled applications are created equal some are more mission critical, latency sensitive, or bandwidth hungry than others but all must be network enabled to provide consistent, predictable performance. The first step in building a next-generation application-aware network involves optimal leverage of the various network technologies. The inherent traffic engineering and class-of-service (CoS) capabilities of MPLS-enabled Layer 2 and Layer 3 VPNs facilitate assigning different priorities to different types of network traffic and the ability to dynamically allocate bandwidth among the different CoS designations. Other MPLS attributes, scalability, route management, and any-to-any connectivity position MPLS for use in site-to-site VPNs and converged voice/data/video applications. For some applications, the ubiquity of public IP provides solutions for remote access, large file transfer, and public cloud gateways. Finally, high-performance optical networks provide dedicated large-bandwidth connectivity, low point-to-point latency, and reliability for applications such as datacenter-to-datacenter interconnection, data/storage replication, high-speed transactions (such as algorithmic trading), and business analytics/data mining. However, other tools and techniques are required to fine-tune network traffic flows and optimize applications for network delivery. These tools, collectively grouped under the name WAN optimization, attack performance issues at the data layer (caching, compression, deduplication), the application layer (optimization to overcome the chattiness of certain application protocols), and the transport layer (traffic optimization across multiple transport protocols). Application performance management, a key capability of next-generation WANs, provides a framework for fine-grained network traffic profiling and control, and it enables the visibility and intelligence needed to establish performance thresholds, implement proactive network planning strategies, and make informed network-tuning adjustments. Ongoing initiatives such as software-defined networks (SDNs) and network function virtualization (NFV) will introduce additional traffic management, quality-of-service, and tuning capabilities. C A S E S T U D I E S : W H A T C A N H I G H - P E R F O R M A N C E C O N V E R G E D N E T W O R K S D O F O R Y O U? High-performance, scalable, and secure WAN environments provide consistent, reliable, and optimized access to a wide range of horizontal business applications such as , content management, and file storage, which, depending on the industry, may or may not be mission critical. However, across all industries, there are certain business processes in which the speed, reliability, and responsiveness of the network can literally mean the difference between profit and loss, customer retention or churn, and successful or unsuccessful patient outcomes. Examples include: Financial services. High-speed algorithmic trading firms rely on highperformance optical connectivity for linkages to the broad array of ecosystem participants involved in trade execution, including liquidity and execution venues, market data providers, and clearinghouses/settlement houses. In the world of 6 # IDC

7 electronic and increasingly automated trading, reliable, high-capacity, and scalable connectivity is a table-stakes requirement for accessing large volumes of data identifying price arbitrage opportunities and executing the trade in the space of milliseconds before the opportunity vanishes. Delays or variable latency at any point in the trading workflow are the make-or-break difference between a winning or losing day in the market. Healthcare. The healthcare industry is in the midst of digital transformation as electronic medical record exchanges, point-of-care information systems, remote diagnostics, medical monitoring devices, and other innovations converge to facilitate "connected healthcare." Hospitals and non-hospital care facilities, healthcare providers, insurance companies, medical device manufacturers, and the life science industry are collaborating to make the delivery of healthcare services more efficient while also containing costs. Scalable networks that can expand rapidly to connect additional locations and end-user devices are vital to the expansion of connected healthcare ecosystems. As more medical information is captured, stored, and exchanged electronically, identity access management and layered security to protect data in flight and at rest are required for regulatory compliance and to promote the use of telemedicine and mobility-based healthcare services. Remote diagnostics for chronic disease management is another healthcare application that requires reliable and secure access and distribution network services. Media and entertainment. Distributed digital workflows for content creation and sourcing, media capture, pre- and post-production, ad insertion, and content distribution are mission-critical elements of media/entertainment companies' supply chains. If the content does not get to where it needs to be, the content owners, aggregators, distributors, and advertisers all take a hit. As media migrates to the Internet, digital media subscription services risk alienating their advertisers and losing paying customers, given that alternative sources of content are only a click away. M A N A G I N G N E X T - G E N E R A T I O N N E T W O R K S : C O N S I D E R I N G T H E O P T I O N S Visibility is a necessary prerequisite for guaranteeing the performance of networkcentric applications, but network/it managers often don't know what applications are running on the network. Nor is there widespread awareness of how the applications impact the broader network and end-user environments what the bandwidth requirements are, when new applications are added, how applications interact with each other, and how business processes powered by applications perform on a day-to-day basis. However, without baseline knowledge of traffic flows, usage profiles, and application dependencies, it's impossible to get at the root causes of network performance problems and implement targeted solutions. Intelligence gathering about the applications running on the network and the associated resource utilization levels can be used to benchmark the traffic flows and categorize them based on business criticality or application characteristics as well as establish application-specific performance metrics (delay, packet loss, etc.). This discovery 2013 IDC #

8 process also has a security dimension. Visibility plays an important role in identifying unauthorized applications and users on the network and feeding into policies that establish parameters on acceptable use of corporate network resources and isolating potentially malicious traffic. Network access and control policies inform the security measures, which must be integrated into performance-optimized network management. Performance and security are not mutually exclusive network management objectives. When combined with WAN optimization techniques, security measures and policy controls accelerate productive processes and applications in a manner consistent with business requirements. The WAN optimization tool box provides a variety of levers for fine-tuning network performance: CoS designations, traffic-shaping policies, application prioritization, dynamic bandwidth allocation, and protocol optimization. Correlation of application/process metrics to network resources enables real-time problem detection and resolution. Ongoing monitoring yields trending data that can be applied to remediation of recurring issues; development of proactive, fact-based capacity planning; and setting of performance baselines that can be translated into service-level agreement (SLA) metrics. As networks take on a higher profile in enabling the optimized delivery of enterprise applications and cloud-based solutions, internal network/it personnel are feeling the pinch. Large companies with the resources to support in-house staff, expertise, and centralized network management systems may be able to undertake comprehensive network management without too much difficulty. However, emerging technologies and the pace of enterprise IT transformation may require a fundamental reworking of the network architecture, which current staff may be not be in a position to undertake. For smaller companies, DIY network design and optimization are typically not options on the table. Businesses of all sizes must balance the increasing cost and effort involved in network enabling the enterprise against other business functions that also require time, resources, personnel, and management attention. A network solutions partner can help ease the strain. Specific benefits of the network partner approach include the following: Sharpened focus on the core business. IT staff in today's enterprises have multiple responsibilities across the networking, IT, and application domains, serving the needs of both individual end users and operational line-of-business units. By working with a network solutions partner, companies can focus (or refocus) on core business priorities, freeing up internal staff to concentrate on managing the application layer, improving existing business processes, and developing new processes that will run even more efficiently on applicationaware networks. Expertise on-demand. Enterprises can tap into their network solution partner's engineering expertise to design finely tuned networks that leverage the latest WAN optimization and application performance management technology and monitoring capabilities. Leveraging the network solution partner for access to the various tools and techniques for network visibility, optimization, and control facilitates a more systematic approach to the increasingly taxing problem of delivering optimized application performance on the network. 8 # IDC

9 Positive impact on business operations. Network solutions partners can help companies establish standardized network management processes and best practices for all business locations, ensuring consistent application performance across the organization. Cost control. Running a next-generation application-aware network can be a constant process of moves, adds, changes, and upgrades across the extended enterprise environment. Working closely with a network solutions partner offers enterprises more predictable cost structures made possible through the service provider's economies of scale and dedicated, specialized resources. Agility. As enterprises adopt new business processes at an unprecedented pace, the systems supporting these processes and the business analytics driving operational changes need to evolve just as quickly. A network solutions partner businesses build flexible networks suited to the requirements of the digital economy and provide the professional services resources needed to power the network-enabled enterprise. N E T W O R K S O L U T I O N S P R O V I D E R S E L E C T I O N : K E Y D E C I S I O N F A C T O R S The network-enabled enterprise offers a solid foundation for companies looking at technology-driven ways to operate more cost efficiently, improve business processes, increase business productivity, and enhance communication and collaboration throughout the supply chain. Going forward, corporate network/it departments will be tasked with the procurement, operation, management, and coordination of heterogeneous, application-aware network environments that must meet a diverse array of internal and external business requirements. Next-generation networks, positioned as the federation engine of dynamic IT, play an increasingly important role in delivering high-quality end-user experiences with optimal performance and security for mission-critical business applications. The right network solutions provider can help make the network-enabled enterprise a reality. When evaluating solution providers, buyers should keep in mind the usual selection factors such as industry reputation and growth trajectory, as well as the following: Network reach, density, and penetration. Global access and transport capabilities, national inter-city route diversity, international/inter-regional connectivity, and broad and deep metro area coverage Flexible WAN solutions portfolio. Support for various QoS, performance, reliability, capacity, security, and cost requirements, depending on application and end-user profiles Application performance management solutions. Network/application visibility; assessment and discovery tools; performance monitoring, troubleshooting, and analysis capabilities; and application-level SLAs Network architecture. Edge router density, metro fiber coverage, off-net local loop minimization, and route efficiency 2013 IDC #

10 Cloud ecosystem interconnection. Peering, NNI, and Internet transit relationships with key cloud service providers Dynamic bandwidth options. On-demand burstable capacity and usage-based pricing options On-net cloud applications road map. "Beyond connectivity" business-enabling services such as voice over IP, IP-enabled contact centers, videoconferencing, unified communications, Web site acceleration, content delivery, and content management Network consulting and design services. Professional services oriented engineering resources that can help enterprises design networks customized to their mission-critical application requirements and optimized to eliminate the network-related issues that can adversely impact application performance C o p y r i g h t N o t i c e 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 2013 IDC. Reproduction without written permission is completely forbidden. 10 # IDC