Magic Quadrant for Global Network Service Providers
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Magic Quadrant for Global Network Service Providers Gartner RAS Core Research Note G00210009, Neil Rickard, Robert F. Mason, 31 March 2011, RA1 07052011 Competition in the global network service provider market is intense. The growing interconnection of providers’ networks is diminishing the importance of coverage as a differentiator, and shifting the focus to the value-added service portfolio and customer experience. WHAT YOU NEED TO KNOW The global network service provider (NSP) market remains highly competitive, with additional pressure from regional sourcing options. This is good news for enterprises, because, when combined with competitive purchasing strategies, it ensures continued downward pressure on pricing (of as much as 10% to 15% per year, depending on service and geography), which we expect to continue for at least the next three years, as well as the opportunity to gain more-favorable commercial terms. The increasing use of partnerships and network-to-network interconnects (NNIs) is gradually diminishing the importance on ownership of network assets; however, such arrangements are seldom entirely equivalent to a single network solution, and enterprises need to focus on the outcomes, especially SLAs, when comparing providers with different quantities of their own infrastructures. Multiprotocol Label Switching (MPLS) and Internet virtual private networks (VPNs) have been joined by Ethernet services as the standard portfolio of underlying transport services. Overlaying these services are an ever-broadening array of value-added capabilities, with WAN optimization, managed LAN, cloud (infrastructure as a service) and SIP trunking joining hosted Internet Protocol (IP) telephony, unified communications, remote access, telepresence and security services. While few organizations will take all of these services from a single provider, global NSPs are gaining credibility in supplying these strategic services. 2 Market Overview Figure 1. Magic Quadrant for Global Network Service Providers The providers in this year’s Magic Quadrant are unchanged from the previous edition. Taken together, with the option of using regional providers, especially as enterprises challengers leaders centralize their IT into fewer larger data centers, this ensures a fiercely competitive market. Reaping the benefits of this environment, however, will still require enterprises to maximize leverage through AT&T Verizon competitive sourcing practice. Orange Business Services BT Global Services This year saw the gradual evolution of the largest network deals, with the trend NTT Communications away from classical “your mess for less” T-Systems outsourcing, where the client’s existing Cable&Wireless Worldwide Tata Communications assets, staff and services were transferred to Telefonica a provider and run with little change, toward Global Crossing deals built from a collection of standardized ability to execute Reliance Globalcom managed-service components, with a minimal professional service wrapper and little or no transfer of assets, existing contracts or people. This trend is increasingly blurring the lines between outsourcing and managed service sourcing approaches. The use of these standard managed service building blocks is driving lower costs and better niche players visionaries scalability, but does require enterprises to be prepared to accept off-the-shelf offerings that are “good enough,” rather than insisting on completeness of vision custom solutions, where they specify every As of March 2011 detail. A growing focus of competitive differentiation Source: Gartner (March 2011) has moved to value-added service portfolios and service quality. Transport services, like MPLS and voice, are the core services for this Magic Quadrant, but these are typically sold as part of a managed Enterprise networking has been a horizontal market, with most service bundle. Such a bundle normally includes managed routers, providers interested in winning clients from any industry sector. and often will include additional services like managed security However, we are seeing strong growth in vertical industry services, managed LANs and WLANs, and hosted IP telephony. solutions, with many providers offering unique value-added Managed video communications, especially telepresence, and solutions for a handful of sectors, such as ultra-low latency managed WAN optimization services have now become expected, networks for the financial trading community or content distribution and the frontier areas for managed services are managed unified and management for the media sector. We expect this vertical communications and “infrastructure utility” services. Increasingly, approach to become an area for increasing differentiation. these managed services will be delivered with end-to-end SLAs. Growing interest in services like Session Initiation Protocol (SIP) Enterprises should focus on the critical capability to integrate trunking and enterprise video means that WAN services will network elements successfully from different sources into an end- become an even stronger point of account control for providers to-end solution. Enterprises should look for seamless SLAs and that establish credibility through service execution. © 2011 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner’s prior written permission. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. 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For further information on the independence and integrity of Gartner research, see “Guiding Principles on Independence and Objectivity” on its website, http://www.gartner.com/technology/about/ombudsman/omb_guide2.jsp 3 global account and service management, preferably following ITIL Evaluation Criteria standards, as well as a track record and references of successful delivery. Portals giving online visibility and control over many Ability to Execute aspects of the solution are an increasingly important tool to deliver Our emphasis is on a vendor’s service quality, pricing and track this end-to-end experience. record. These elements are particularly important for global networks because the issues of infrastructure, language and The capability to provide portal-driven reporting and control, and cultural problems become more complicated and prolonged than if help enterprises manage costs continues to grow in importance. applicable to only one country (see Table 1). Many providers have launched services like managed mobility and telecom expense management (TEM), which are directly covered in Gartner’s communications outsourcing and professional services Magic Quadrant. They are important proof-points of a provider’s Table 1. Ability to Execute Evaluation Criteria willingness to deliver services involving third parties. Although Evaluation Criteria Weighting fixed-mobile convergence offerings are emerging, outside of North America the mobile service market continues to be a distinct Product/Service high market, which Gartner covers in separate Magic Quadrants. Overall Viability (Business Unit, Financial, standard Strategy, Organization) Market Definition/Description This Magic Quadrant assesses suppliers that can deliver fixed Sales Execution/Pricing high corporate networking services worldwide. Services to be provided include: Market Responsiveness and Track Record high • WAN services, predominantly managed, including MPLS and Marketing Execution low IPsec VPNs and Ethernet services Customer Experience high • Voice services, including switched and dedicated voice, SIP Operations standard trunking and IP telephony Source: Gartner (March 2011) • Dedicated Internet services, including managed VPN offers In addition to traditional voice services, it is highly desirable for providers to offer value-added networking services, including, but not limited to, application-fluent networking, managed LANs, Completeness of Vision hosted or managed IP telephony, unified communications and managed security services. Integrators, virtual operators and We look for a thorough understanding of what clients want in carriers are included, but only if they provide and manage offerings a global provider, which is different from the requirements of that include data networking and converged services. a domestic provider, because it inevitably includes third-party elements, and frequently includes a wider set of managed services. Inclusion and Exclusion Criteria NSPs should have a clear and evolving geographic strategy to meet