Communications Industry, Business in General Shifting From Products to Services

This year promises to be pivotal for both technology companies and network operators, as virtualized network functions and cloud services anchor into the business strategies of all.

That’s according to Frost & Sullivan’s Stratecast Predictions 2017: The Year Ahead. The predictions are provided by its analyst teams.

“When Stratecast talks about our predictions for 2017, it is in relationship to the many different ‘piece parts’ that define the rather broad communications industry sector,” said Karl Whitelock, Stratecast/Frost & Sullivan director of operations, orchestration, data analytics and monetization (ODAM) global competitive strategies. “These include the use of analytics to push forward new customer experiences and business strategies as mentioned by our big data and analytics predictions, to the interaction of cloud-based strategies for various business needs, to the operations, orchestration and monetization requirements that must be addressed for bringing all new technology plays into business reality and making money. Often, it is the business side of the equation that is neglected (billing and collecting revenue) until just before a new technology idea is ready to go to market.”

Partners doing business as cloud-enabled digital services suppliers will increase the need for using orchestration platforms focused on end-to-end business offerings, rather than only on the need to stitch together a connection between shared network technologies, he said. While network connectivity continues to be important, 2017 is going to be about bringing partners together to “better enable digital businesses everywhere,” he said.{ad}

In 2016, AT&T and Verizon introduced virtual network services targeted at enterprises. Using network functions virtualization (NFV), these service providers offer key network functions – such as WAN optimization, firewall or load balancer – as software, rather than via the traditional dedicated hardware-centric model. Enterprises are expected to closely evaluate and embrace virtual network functions in 2017 as they look to create an agile WAN.

The cloud services consumption-based procurement model continues to drive demand for network capacity and its related functions as a service, according to Stratecast. Buoyed by the early success of their bandwidth-on-demand offerings, service providers like AT&T, Verizon and Level 3 will use their maturing SDN and NFV capabilities to launch a new class of network-as-a-service (NaaS) offerings. The ability to obtain and grow bandwidth on demand through a portal, and to run virtual network functions on commodity servers, offers a “compelling” value proposition for enterprises, it said.

SD-WAN suppliers with limited success penetrating the enterprise market on their own saw improvement in 2016 by partnering with leading network service providers eager to bring SDN functionality to the enterprise segment, according to Stratecast. Among the most promising are managed SD-WAN services, in which the service provider installs and manages the edge devices, obtains and manages access links from multiple network service providers, and manages the day-to-day aspects of the service. This will be the year when SD-WAN will emerge out of …

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… the early adopter stage, and be ready for wide-scale market adoption, driven by the availability of managed SD-WAN services.

Hybrid IT became the norm in 2016, with nearly three-quarters (73 percent) of enterprises surveyed using or expecting to adopt a hybrid model within two years. Management of hybrid environments remains challenging, but has been eased by the introduction of new, cross-infrastructure management platforms that can aggregate and manage resources across multiple infrastructures. These “infrastructure-neutral” management platforms will gain traction in 2017 as hybrid IT adoption continues to increase, the report says.{ad}

Other predictions include: