Network predictions for 2017

It’s hard to believe the year is almost up. That means ‘tis the season to be jolly and to deck the halls. For analysts, it’s time to put on a Carnac the Magnificent hat and try and predict the future. I already did a couple of posts look at the strategies of Cisco and some of its key competitors, so I’ll stick to broader industry themes. 

1. A repatriation holiday passes and stimulates some mergers and acquisitions.

I have been beating the repatriation drum for years. In fact, in 2011 I wrote a post asking President Obama to grant a one-time holiday.

If you’re not familiar with what I’m referring to, repatriation is the process of bringing foreign cash back into the United States. The tax rate on this has been absurdly high, so companies with large foreign holdings leave the cash outside the country. A lower rate would bring some tax dollars into the country and allow companies such as Cisco, Microsoft and Apple to invest more domestically. 

Donald Trump appears to be more business friendly, and I predict he will grant a one-time holiday. The large tech companies can bring the cash back in and will use it for stock buy backs and the likes, but they will also use it to stimulate job growth and M&A activity in the U.S.

2. Automation comes to life.

As an industry we’ve talked about automation for years now, although it’s never really caught on. Part of the reason is that for the longest time, it was a solution looking for a problem. I would agree automation lets network managers do things faster and more accurately, but not doing it didn’t really hold the company back, so network operations felt no real pain by staying with manual tasks.

Today, the environment is quite different. Digital businesses are moving at blazing speeds, and legacy network processes are holding companies back and the pain is being felt. Network automation tools, such as Brocade’s Workflow Composer go from being a nice-to-have to an absolute, no-brainer must-have.

3. More network functions become cloud native.

Businesses are adopting cloud computing at blazing speeds. In a private data center, it’s easy to surround the workloads with the required management, optimization and security tools. In the cloud, that isn’t so easy. Over the past few years, though, we’ve seen a handful of vendors acquire or build cloud-native functions, such as A10’s purchase of Appcito and F5’s cloud-based Silver Line.

However, many of the “cloud” tools went through a “lift and shift” model where businesses are running a virtual version in the cloud. Obviously, this has some benefits, but often it can’t dynamically scale up and down on demand. Expect to see a flurry of network and security tools released in a cloud-native form factor to better meet the needs of cloud-first companies.

4. Industry consolidation continues.

There are a few network companies up for sale, most notably the networking business unit at Avaya and the IP networking group at Brocade. There are also a number of companies with activist interest, such as F5, Aerohive and Ixia. I predict that 2017 will see both Avaya and Brocade’s IP division sold off to existing vendors for consolidation purposes and four more be taken private. The consolidation is long overdue, as fewer, bigger vendors will be able to compete better with the larger vendors, such as Cisco and HP. 

5. Network Function Virtualization (NFV) becomes an enterprise thing.

The topic of NFV has been around for years, but it always seems to be associated with network operators for the purpose of service chaining. While this is a strong use case for NFV, there’s no reason it can’t become something enterprises leverage, particularly for branch offices. 

In data centers, where guaranteed performance trumps all, businesses may prefer the comfort of dedicated hardware to the flexibility of virtual services. However, in branch offices, agility and flexibility are far more important than dedicated performance, since branched offices have the same demands as a data center. NFV enables businesses to spin up network functions in branch offices when they need to without requiring local resources.