Larry York

Agenda

Introduction to Transformation Keys to Successful Transformation WAN Technology Opportunities

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INTRODUCTION TO TRANSFORMATION

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Transformation and Innovation are current buzzwords, but...

The term transformation has resonance with CIOs, CTOs, IT Executives and business unit representatives• It is important to have a view on what it might mean

Many organizations are seeking procurement projects that drive transformation, and transformational projects need competitive sourcing• Easier to justify a transformation project than an as-

is sourcing project (which can be viewed more as “normal business”)

• Can also be more attractive for vendors

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Transformation and Innovation are current buzzwords, but...

Transformation can drive lower costs than simple price-down• But cost reduction may not be the primary

driver In procurements, innovation is about

allowing vendors to present different solutions to meet the organization’s requirements• But, think of innovation as a transformation

enabler

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Transformation can mean many things…

In telecom, Telecom Transformation, or IP Transformation, is a term that describes the evolution of the telecommunications industry from a capital-intensive, technology-focused model to a user-centric service-delivery model• But much of this is provider/carrier focused, in dealing

with competitive threats from disruptive technologies and solutions such as Google, Skype, and the Internet in general

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For enterprises, transformation can be whatever you want it to be…

IPT, Lync and UC&C* Cloud based services Internet as a ubiquitous alternative to MPLS Outsourcing and extending managed services BYOD for wireless services Including some, arguably, less

transformational activities:• Ethernet access

• Equipment refresh

• SIP Trunking

• Changing supplier mix – regional vs. global

* Unified Communication and Collaboration – or the Microsoft coined Universal Collaboration!

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You might have to deal with the hype…

It can be difficult to work out what is truly relevant

Let’s take a snap-shot view on a few common “transformation” drivers

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Transformation starts with strategy…

Not simply talking gap / opportunity analysis on the current state• It is more than a “Sourcing Strategy” for more of

what you already have About being prepared to engage earlier

in• The vision and mission (for delivering IT and

telecom services)• Helping and influencing the vision in translating

this into goals and strategic objectives• Developing a strategic plan, and business

case(s)

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Transformation starts with strategy…

We support facilitation session / workshops for clients trying to pull this strategy together• Background and current landscape• Strategy objectives• Opportunity / actions identification• Actionable road-map based on opportunity

assessment• Basis for ongoing iterative development of

strategy

KEYS TO SUCCESSFUL TRANSFORMATION

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What’s a Successful Transformation?

Deal built on measurable business outcomes

A focus on performance, customer cost and provider margin• Business affecting innovation only works if it works

for everyone – cost reduction and performance / process improvements for the customer and attractive profits for the provider

Heightened risk and reward • Transformations need buy-in by all stakeholders• The best provider often wins over the low bidder

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What’s a Successful Transformation?

The provider is closely bound to the customer• Relationships are less “transactional” and more

interdependent

• Emphasis on aligning customer and provider interests

• Governance designed to find improvements and make realignments

• This heightens “valued partner” lock-in risk

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Foundations for SuccessA Strategy Tailored to Specific

Objectives The strategy should be well-defined and agreed

upon, encompassing

And should be founded on well-defined needs and objectives

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SOURCING • Sole sourcing vs competitive sourcing• Providers to engage• Structure of the sourcing program• Scope of program (including outsourcing or

managed services)• Pricing model and requirements

TECHNOLOGY • Degree to which design / solution is pre-determined vs will be determined by the sourcing process

• Basic principles of the required solution and requirements set

• Defined and specified managed services

Foundations for Success A Competitive Procurement Process

Transformation projects are intensely competitive• They are attractive to providers because

change projects level the playing field

• Not taking advantage of that would be a crime! Structuring procurements so you can

compare competing solutions / bids without stifling innovation is important – and not easy

Plan for a longer procurement process

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Foundations for SuccessBusiness Case Supporting Desired

Outcomes

Successful transformation projects start with a robust business case

The business case should address• Current costs, future state costs, and the cost

to move from the current to the future state• Operational resilience, performance,

functionality and usability The business case should be refined

and updated as the project moves from procurement to contracting to implementation

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Foundations for SuccessDisciplined, Collaborative, Flexible

Sourcing Plan Preparation• RFP / requirements document

• Stakeholder management

• Communications management

Structure your procurement and negotiation process• Provide feedback verbally and in writing

• Engage collaboratively with the providers

• Document your communications

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WAN TECHNOLOGY OPPORTUNITIES

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Introduction

Increased network capacity is demanded by transformational technologies like collaboration, UC, and video, and by exploding growth in use of web content

Flat or declining network budgets require new approaches, solutions, and technologies to meet this demand

We’re going to examine some approaches which may help address this gap

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Ethernet Access – What is it?

Last-mile transport using the Ethernet protocol for the local loop • Standards-based (but there are multiple

standards)

• Underlying bandwidth multiples of 10Mbps (10Mb/100Mb/1Gb/10Gb, etc.)

• Provided as Ethernet over Fiber (EoF) and Ethernet over Copper (EoC)

1Mbps to 10Mbps can be provided over voice-grade copper

Higher speed services usually provided over fiber

Ethernet handoff / interface at the premises instead of TDM (UNI)

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Tale of Copper, Fiber & Coaxial Cable

The physical layer – historically (in the US)• “Business locations” have not been as well

served by broadband facilities as have residences

• No more than 10%-15% of all business locations were on anything better than copper

• DSL was limited, e.g., weak SLAs because of distance-from-CO restrictions

• “NxT1” – the multiplexed go-to service for those needing more than 1.5M

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Industry Players

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Rank Incumbent Providers

Competitive Providers

Cable MSOs

1 AT&T Level 3 Time Warner

2 Verizon XO Cox

3 CenturyLink Cogent Comcast

4 Windstream Zayo Charter Business

Top 4 Ethernet US Providers by Segment

Industry Players

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Incumbent providers are pushing Ethernet

Competitive providers have success with• Larger “transformational” contexts (many sites

moving at once)

• Installation of FastE/GigE (100Mb/1Gb) for connectivity to data centers and/or cloud services providers

Rates are continuing to fall due to capacity growth and increased competition

Benefits and IssuesEnterprise Experience Has Been

Mixed

Benefits / Advantages• Standardized interface – straightforward and

accepted globally

• Recurring charges are often less than competing services (lower equipment, service, operational costs)

• Scalable – permits the addition of bandwidth incrementally (can even be done remotely)

• Effective E2E protocol from LAN to WAN supports multimedia services

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Benefits and IssuesEnterprise Experience Has Been

Mixed Issues / Challenges• Less available than legacy TDM service

Enterprises with many locations in remote areas will likely find low-speed availability limited (even if promised initially)

Diversity for multiple circuits can be a challenge

• Lower speeds over EoC can deliver inconsistent performance• Longer installation intervals

Ethernet installations are typically 75-120+ days Special Construction at a site can takes 6+ months

• Higher than expected costs for Special Construction

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Use of Multiple VRFs with MPLS

VRFs (Virtual Routing and Forwarding) provides network segmentation and control between segments• Without the need for multiple ports or devices

• Provisioned as an additional feature; check for capability and additional charges

• Sites in different VRFs cannot communicate with each other without additional configuration

Improves network security; can eliminate the need for encryption and authentication

May allow consolidation / optimization26

MPLS Bandwidth on Demand (BoD)

Dynamic port or CoS bandwidth changes (VzB)• Portal based access to change either port speeds

(within existing access limitations) or Gold CAR• Process immediately or schedule up to 365 days in

advance• Can change once per 24 hour period• Not available with OSPF, EIGRP, DSL access or

NxT1 access• Charges are blended based on days at different

speeds Not to be confused with usage based

billing options such as HiCap Flex w/ AT&T27

On-Net Access to the Cloud

Providers have been integrating network services with their own cloud services for some time• E.g., Terremark, Savvis, AT&T Hosting, BT One Cloud

Such integration (via MPLS) is now being extended to 3rd party cloud services such as• Salesforce.com, AWS, Azure, Google Compute

Benefits include• MPLS is more secure than Internet access to the cloud

• Predictable network performance and reduced latency (normal MPLS any-to-any benefits)

• Dynamic scalability to match cloud usage variability

• Security and control

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VPLS – Virtual Private LAN Service – MPLS alternative

Layer 2 VPN technology – Ethernet only Best fit for high bandwidth requirements at

selected sites (it is not universally available)• Can provide better price performance ($/Mb) than MPLS at

higher bandwidths

• Lower latency and higher security

• Simplifies LAN/WAN boundaries (and equipment) –Ethernet interface looks like a regional or national LAN

Requires a higher level of management (routing is controlled by the customer vs. by the provider)

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Broadband VPN MPLS Access

As broadband speeds and performance improve, customers are looking at leveraging broadband for cheaper MPLS connectivity• Can leverage DSL, Cable, Wireless

• Access MPLS core network via a secure gateway Gateway should be in-region with user communities Look out for extra charges

• Often used as a back-up to primary MPLS circuit

• Important to review SLAs

• Watch out for complex contracting / product structures E.g., no integration with broadband aggregation products

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Internet Off-load

As Internet traffic grows exponentially Enterprises are starting to look seriously at Internet off-load• Providing Internet access at remote locations –

rather than carrying traffic to the data center

Cisco’s iWAN technology (becoming available on the latest routers) is an enabler• Allows more sophisticated routing of network

traffic and management of routing plans

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Internet Off-load

Once in place, Internet off-load can also be leveraged for non-critical business applications• Can allow reduction in MPLS network capacity, or

simply accommodate growth

Cost savings rely on use of low cost (business grade) local broadband technologies / providers

It’s common to examine broadband aggregation services rather than contracting with multiple local providers• SPOC for ordering, managing and invoicing

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Summary Points

Transformation is a current buzzword CIOs (sic) can find transformation more

appealing (or at least very helpful) than cost reduction as justification for important sourcing initiatives

You need to think about what transformational solutions and services might be relevant

Try to have a view on what transformation means to you

Questions?

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