ISG Provider Lens™ Network - Software Defined Solutions and Services Partners - U.S. 2020 - Managed WAN Services

Existing managed LAN and 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 still account for most of the revenue generation. This trend, however, has been rapidly changing over the last three years. The software-defined network (SDN), 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 with additional (non-core) mobile servicers based on the faster mobile data stream standards, along with their triggers and influences.

In the U.S., the main factors that drive these rapid changes in enterprises are:

Support for cloud and multi-cloud migrations: Enterprises are increasingly focused on migrating their IT and network operations into the cloud. SDN has been proven to assist with this by reducing complexity and enabling a reduced risk migration to single or multicloud environments for enterprises. 

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

Increasing customer satisfaction while boosting sales: The ability to respond quickly and seamlessly to customer enquiries and rapidly provide (often automatically) new services via SDN helps to elevate the client experience, boost sales and retain customers.

Reducing costs and improving 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 other related services. Traffic can be routed over lower cost connections and at reduced reliability and quality levels automatically via SD pathways with little or no human interaction involved.

Simplifying management and planning of networks and integrating more fully with other enterprise IT initiatives: By moving its control layer to the cloud, SD-WAN can operate and be managed in real time via a one touch or single-pane-of-glass fully integrated management and reporting tool, coupled with the use of policy and automation. This facilitates the flow and integration with other applications and IT services as well as the application of policy-based management services together with SLA/KPI based rules.

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

The aforementioned factors have been driving significant changes to networks and their operations over the past three to four years. Most telecommunication service suppliers and network service suppliers, as well systems integrators, have an impressive portfolio of SD-WAN and other SDN solutions. These range from partial or function-specific solutions to complete end-to-end SD-WAN solutions, with many solutions differing based on the enterprise size, scope of offering, industry type, or desired reach and interaction between enterprises and customers or end users. 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 that utilize AI/ML interactions and control.

The U.S. currently holds a 40 to 41 percent share in the global SDN market. The GSMA estimated that the region will report a compound annual growth rate of 24 to 25 percent during 2019-2020, while publicly reported figures from multiple sources range between 24 and 43 percent. The presence of advanced connectivity infrastructure along with replacement and update of primarily hardware-based controllers and switching methods, together with a high level of proliferation of 4G and 5G pilot mobility solutions, are boosting its market growth. This is further driven by the transition of many enterprises to cloud and multi-cloud environments which are well supported by SDN. Telecom providers in the region are investing in advanced networking technologies to improve their infrastructure capabilities. Many of the SDN solutions developed in the U.S. are being rolled out on a global scale to traditional markets in Europe and the Asia Pacific region. They are also making their way to less penetrable markets such as Africa and South America due to the price point and ease of deployment in these regions.

Many service providers that are reviewed in this study are involved in pilot projects and are often converting them into production-level deployments. Some have already completed such activities or have demonstrated many such instances on behalf of their clients. This progression, coupled with the relative newness of SDN as a whole, leads ISG to believe that many of the companies that are currently categorized as product challengers or market challengers in this study could improve their positioning over the course of the year to become leaders in their respective segments.

It must be noted that significant volatility exists in the constellation of market providers, partly due to the multitude of mergers and acquisitions that occurred during the last 18 months. This trend is expected to continue and may even escalate during 2020 as SD networking becomes mainstream.

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