ISG Provider Lens™ Network - Software Defined Solutions and Services Partners - Germany 2020 - Managed WAN Services

Existing managed local area network (LAN) and wide area network (WAN) services, multiprotocol label switching (MPLS) and related technologies form the backbone of the enterprise customer installed base of telcos and other communication services providers and represent the majority of revenues they generate. This trend, however, has been rapidly changing in the last three years. The software-defined network (SDN), which is closely related to network function virtualization (NFV) and software-defined WAN (SD-WAN) technologies and services, are evolving and rapidly penetrating the enterprise market. A similar trend exists with several related network services such as performance assurance (management) and 4G and 5G mobility (4G/5G), with associated additional (non-core) mobile services based on those faster mobile data stream standards, along with their triggers and influences.

In the German region the main factors driving this rapid change for enterprises are:

Assists in cloud and multi-cloud migrations: Enterprises are increasingly focused on migrating their IT and network operations into the cloud. SDN has proven to assist with this, by reducing complexity and migration risk to single or multi-cloud environments.

Increasing flexibility and agility: Enterprises have become increasingly focused on improving integration, automation, orchestration and management of network resources and processes. This has evolved to encompass NFV and has, since, led to software defined networking in a wider sense. This trend is being driven by the desire to increase flexibility and agility and seamlessly add applications and network resources to meet business and user goals more efficiently and securely without creating silos or depending on vendors.

Increasing customer satisfaction while increasing sales: The ability to respond quickly to customer enquiries and rapidly (often automatically) provide new services via the software-defined network helps to improve client experience and boost sales and repeat custom.

Reduce costs and improve usage efficiency: Enterprises can improve network utilization efficiency while reducing network usage costs even beyond the savings achieved by adopting an NFV strategy. This is particularly relevant with the explosion of data usage in mobile devices, often in areas that are not business critical, and while using social media applications or related services. Traffic can be routed over lower cost connections, and at reduced reliability and quality levels, automatically via software-defined pathways with little or no human interaction involved.

Simplify management and planning of networks and integrating them with other enterprise IT initiatives: SD-WAN, by moving its control layer to the cloud, can operate and be managed via a one touch or single-pane-of-glass fully integrated management and reporting tool, coupling in it the use of policy and automation, in real time. Flow and integration with other applications and IT services can be coordinated via this, and policybased management services, together with SLA/KPI based rules can be applied.

Form basis for new or near-term innovative technologies and solutions: Many new innovations (such as intent based networks, artificial intelligence and machine intelligence-driven solutions, services and systems, rapid hot spot provisioning and data flow allowance, self-healing networks, etc.), require the flexibility and abilities of software defined networks in order to fully be utilized and effective, and drive solutions to their full potential.

The aforementioned factors have been driving significant changes in networks and their operations in the past three to four years. Most telecommunication service suppliers and network service suppliers, as well as many systems integrators, now field an impressive portfolio of SD-WAN and other SDN solutions, ranging from partial or function-specific solutions, through to complete end-to-end SD-WAN solutions, with many offering SD-WAN solutions dependent on enterprise size, scope of offering, industry type, or desired reach and interaction with customer or user. Others have introduced SD-WAN implementations to reap benefits in a shorter term or prepare themselves for other advanced technological innovations, such as intent based networks, utilizing AI/MI interactions and control. In Germany, currently, there are many international as well as local suppliers, representing a more fragmented base of suppliers than seen in many other Western and European Union (EU) markets. Following similar trends in information and communications technology (ICT) and cloud markets in the last decade, this fragmentation is expected to lead to a period of consolidation and merger/acquisition, as already observed over the last 12 months, (for example, Extreme Networks acquiring Aerohive, etc.). This, in turn, will, over the next few years, lead to reduced overall volume of medium to large providers offering a portfolio of managed SD-WAN and SD network services to enterprises in Germany.

The German region currently holds approximately 9 percent share of the Global SDN market, while Europe holds a share of approximately 30 percent. GSMA estimates that Germany’s share in the global market will grow at a CAGR of 24 to 25 percent during 2019-2020, although figures publicly reported by multiple sources estimate a growth range of 24 to 43 percent. The presence of advanced connectivity infrastructure, the replacement and updates on hardware-based controllers and switching methods, together with high proliferation of 4G and increasingly 5G pilot mobility solutions, are enabling this market share. This is further assisted with the migration of many enterprises to cloud and multi cloud environments, which is supported by SDN. Telecom providers in the region are investing in advanced networking technologies to improve infrastructure capabilities. As an example, 5G licenses were awarded in June 2019, and by end 2019 Deutsche Telekom had sites running in eight cities, with 450 base stations, which is expected to increase to 18 cities and 1,500 base stations by the end 2020. At the same time, 4G/LTE antennas from them are set to increase by 10,000 in the next four years, mainly in rural areas. Many other providers, such as Vodafone, are set to expand aggressively over this period. Forecasts on 5G coverage alone show an expected 10 million (potential) users covered during 2020 and 20 million by year end 2021.

As part of this ISG Provider Lens™ quadrant study, we are covering the following six quadrants under Network — Software Defined Solutions and Service Partners 2020.