Are enterprises loving managed services?

Netops specialists are hard to find, and Cisco, Extreme, and Juniper are among those trying to fill the void with managed services.

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jamesteohart

There's a lot in networking that never measures up to the hype, so maybe it's good that this is balanced sometimes by areas where the hype falls far short of reality. Managed services is one of those things.

It always seems to be bubbling just below the surface of attention, and yet it may be the most important topic in networking today. I had a chance to chat with 59 enterprises that were involved with or launching managed-service projects and another 118 who had no current managed-service projects. I'll summarize what I found here.

All of these enterprises had been aware of managed services for at least 20 years, and all but 31 had considered them at one point or another. Interestingly, 141 of the 177 total enterprises believe that MPLS VPNs are a form of managed service, and when I dug into this, the response was that “managed services” are about reducing the user's management burden. VPNs do that, so they're a sort-of-managed service.

Enterprise netops pros get hired away

The reason enterprises want to reduce their network-management burden is difficulty in acquiring and maintaining skilled network-operations specialists. This has been a problem for decades; network-operations specialists have no career paths in most enterprises, so they top out in salary and promotion opportunity. Over half of the 59 enterprises I talked with said that they had a problem retaining a network specialist for more than three years, and 12 said they had problems retaining them for two years. Every enterprise said that it took longer to find qualified network specialists than programmers.

The problem with skilled netops people is growing, say enterprises, because of competition for employees from equipment vendors, network operators, and cloud providers. Of my 59 enterprises, 40 said their problems with acquiring and retaining skilled netops people was “significantly worse” than it had been only five years ago, and 38 said they'd lost skilled net0ps people to vendors, operators, or cloud providers.

Hard to support remote sites

A close second in terms of managed-service drivers was difficulty in supporting remote sites.  The problem with remote network support, said 50 of my managed-service enterprises, is that the best way for diagnosis of network problems at remote sites requires that the network be used to project central technology skills to those locations.

Obviously, that's Catch-22 in action. This is one reason why SD-WAN is so often associated with managed services; SD-WAN is all about adding small, remote, sites to the company VPN. Without some network technology skill at those locations, it's difficult for central netops support to walk anyone through diagnosis and remedy. What surprised me with respect to remote-site support is that 44 of the enterprises that cited remote-site support as a managed-service driver said they'd consider a managed service that included on-site LAN support as well as WAN.

No network, no business

The third-most-common driver for managed-service interest was increased dependency on network continuity for successful business operations. Of the 59 companies, 34 said that their smaller sites could not operate without the network, and 21 said that their company couldn't operate at all. These numbers are almost double those of just five years ago. Worst of all is the fact that 52 of the 59 said that they believed that within five years they would be fully dependent on network operational status for their businesses to run.  Forty-two said they did not believe they could sustain network operations successfully without some managed-service assistance.

I was a bit surprised to hear that the goal of expensing networks rather than capitalizing them wasn't a big driver for managed services. Only 11 cited that as a major justification for their managed service interest, and seven of that group said it was a CIO priority but not their own. I don't think this disproves interest in expensing rather than capitalizing networks; it only shows that isn't considered a managed-service feature.

Network vendors becoming service providers

All this managed-service love has captured the attention of both vendors and service providers. Just over half the 59 enterprises used some managed-service-provider (MSP) services, and two-thirds said they were asking their network vendors for their plans to provide or facilitate managed services. And vendors are listening.

Cisco may see managed-service interest as a reason to offer its own. Cisco Plus, which Cisco says is a network-as-a-service (NaaS) offering, combines managed services and expensing of networks, and so may compete with MSP services. Cisco's WAN-on-Demand positioning seems to push traditional network services down to be invisible under SD-WAN, and its ThousandEyes multi-cloud monitoring seems to facilitate the use of managed SD-WAN over public-cloud backbones instead of traditional MPLS VPNs. 

Rival Juniper acquired its own SD-WAN multi-cloud overlay solution with 128 Technology. It added integration with artificial intelligence and machine learning to reduce the skill levels needed to support network operations, either in remote branch locations or at headquarters. It’s promoted these capabilities aggressively to both communications service providers and MSPs.

Extreme Networks just bought the Ipanema SD-WAN division from Infovista and will be integrating it into their existing managed SD-WAN portfolio. Ipanema is already used by some CSPs and MSPs to provide managed services, and it offers intelligent application awareness for improved QoE.  It's clear that Extreme is making a significant managed-SD-WAN commitment.

In the long run, the economy-of-scale issue may be decisive in managed services, and AI may be the right path to achieving it. Of my 59 enterprises with some level of managed-service commitment, 57 were “excited” about the possibility that AI/ML could improve management economy of scale and lower the price of managed services. They were a bit more wary about AI/ML as a do-it-yourself strategy; 41 said they'd be “interested” but of that group 37 said that they'd have to validate that AI/ML would reduce the level of technical skill they'd need in-house. That shows enterprises are still wary of AI/ML as a means of dealing with their problem with acquiring and retaining skilled netops people.

The 118 enterprises with no current managed-service activity were also very interested in AI, and 104 suggested they might look at managed services again if there was a strong AI/ML dimension to the offering. This group's main reason for not adopting managed service was cost, and they see AI/ML as a way costs could be reduced without reducing support quality.

Where is this all heading?  Of the 59 enterprises who were managed-service committed, 50 said that they believed that NaaS was the ultimate solution. Even among the 118 who had no current managed-service commitment, 71 held that view, and 111 of the 177 enterprises I talked with think that virtual-network, SD-WAN-like connectivity management is the future of NaaS, of managed services, and (eventually) of their own networks. That may be the biggest-managed service revolution of all.

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