Lisa Pierce Ryan Hudson Vice President Analyst

ForrTel:Results Of Forrester’s Business Technographics® May 2005 Network And European Telecommunications Benchmark StudyLisa Pierce Ryan Hudson

Vice President Analyst

Forrester Research, Inc.

June 10, 2005. Call in at 12:55 p.m. Eastern Time

Agenda

• Survey purpose and scope

• Review of results

» VPNs

» Network security

» VoIP

» Wireless

• Findings and recommendations

Survey scope and purpose

• Telephone survey to 652 US, 50 Canadian, and 305 European enterprises (enterprises have 1,000 or more employees)

• Assess adoption rates of new telecommunications- and network-related technology and services

• Understand migration rates from legacy to new services and technologies

• Validate reasons for migration — and obstacles to it

Key enterprise data take-aways

• At a gross level, use of legacy data services will be flat in 2005

• Adoption of IPSec VPNs, firewalls, and intrusion detection has reached maturation

• Adoption of newer VPN and security technologies is significantly less pronounced

• In many instances, customers have no plans to fully embrace new VPN and security technologies

Projected 2005 enterprise frame relay and ATM spending levels

“How will your landline (non-IP) data equipment and services spending in 2005

change as compared with last year?”

“If your company uses Frame Relay or ATM, how do you expect

the use to change in 2005?”

Base: 652 US, 50 Canadian, and 305 European enterprises

18%

48%

27%

2%

Increase

No changeDecrease

Other

Significantly higher this year (10% increase or more)

Somewhat higher (1%-9%)The same

Somewhat lower (1%-9% decrease)Significantly lower (10% decrease or more)

0%

10%

20%

30%

40%

50%

9%

21%

49%

12%5%

Source: Business Technographics® May 2005 And European Network And Telecommunications Benchmark Study

2005 enterprise VPN adoption

“At what stage is your company in the adoption of the following technology?”


0% 20% 40% 60% 80% 100%

MPLS VPN

SSL VPN

Site-to-site IPsec VPN

Remote-access IPsec VPN

Fully deployed/in production/upgrade underwayInitial rollout underwayPilotingEvaluatingNo plans

2005 enterprise network security adoption

“At what stage is your company in the adoption of thefollowing technology?”


0% 20% 40% 60% 80% 100%

Network quarantine

Content security

Intrusion detection

Firewalls


2005 enterprise interest in managed VPN services

“What level of interest do you have in procuring this technology as a managed service?”


0% 20% 40% 60% 80% 100%

MPLS VPN

Remote-access IPsec VPN

Site-to-site IPsec VPN

SSL VPN

Very interested Somewhat interested Not interested

2005 enterprise interest in managed security services



0% 20% 40% 60% 80% 100%

Firewalls

Intrusion detection

Content security

Network quarantine


Key voice take-aways

• At a gross level, use of legacy voice services will be down slightly in 2005

• Current and intended adoption of IP telephony and WAN VoIP is fairly lock-step, but a significant percent have not developed a VoIP/IPT infrastructure management plan

• Adoption of IP videoconferencing and unified messaging has greater variation — with UM lagging behind IPT, VoIP, and IPV

• In many instances, customers have no plans to fully embrace these new technologies

Projected 2005 enterprise landline voice services spending levels

“How will your landline voice services spending in 2005 change

as compared with last year?”

“In 2005, does your company plan any changes in the

number of contact centers it directly operates?”


12%

66%

7%

2%

We plan to increase the number

No change

We plan to decrease the number

We plan to outsource/offshore contact center

6%14%

53%

18%7%0%

20%

40%

60%

Significantly higher this year (10% increase or more)Somewhat higher (1%-9%)The sameSomewhat lower (1%-9% decrease)Significantly lower (10% decrease or more)


2005 enterprise VoIP/IP video/UM adoption



0% 20% 40% 60% 80% 100%

Unified messaging (UM)

Site-to-site VoIP

IP telephony

IP videoconferencing


Preferred enterprise IP telephony system suppliers and network management plans

“From whom do/will you procure your IP

telephony system?”

“How will your company monitor the VoIP systems and services it acquires?”


26%

42%

70%30%

7%7%

Train internal staff on VoIP and provide staff with necessary tools

Hire full-time staff with the expertise

Hire outside consultants on a temporary basis

Buy outsourced or managed services

Don’t know

No plans for LAN-WAN VoIP training or system improvements

51%

62%

24%

30%

Your current primary voice system vendor

Your current primary data system provider

An alternate voice system vendor

An alternate data system vendor

Base: 652 US, 50 Canadian, and 305 European enterprises (multiple responses accepted

2005 enterprise interest in managed VoIP services



0% 20% 40% 60% 80% 100%

IP videoconferencing

Site-to-site VoIP

IP telephony

Unified messaging


Key enterprise wireless take-aways

• Centralized management of mobile services and devices is now the de-facto standard, but that doesn’t necessarily mean that enterprises have embraced corporate-liable contracts

• Enterprises are beginning to rely solely on mobile (vs. landline) voice

• Current and intended adoption of IP telephony and WAN VoIP is fairly lock-step

• Adoption of wireless data technologies, services, and applications has been rapid

• There is strong interest in seamless WLAN/2G products and services

Enterprise management of mobile services and devices: Centralization is no longer the exception

“Does you company centralize planning, procurement, and management for mobile services and devices?”


8%

8%10%

73%

Centralize both mobile voice and mobile data services

Centralize only mobile voice service

Centralize only mobile data serviceCentralize neither mobile voice nor mobile data services


The enterprise mobile workforce in 2005

“What percentage of your company’s workforce will use mobile applications?”

“In 2005, what percentage of your company’s voice traffic will use mobile voice services instead of landlines?”

Percentage using mobile applications: Mean 22%

Percentage using mobile voice: Mean 17%

“What percentage of your company’s local- or toll-access landlines has been

disconnected?”

Percentage using mobilevoice: Mean 4%


2005 enterprise network WLAN and 2.5/3G adoption



0% 20% 40% 60% 80% 100%

Mobile data

Wireless LAN hotspots


Enterprise adoption of general business mobile applications

“At what stage is your company in the adoption of the following technology?”


0% 20% 40% 60% 80% 100%

Wireless email or Blackberry

SMS alerts

Sales force applications

Personalized contacts and calendar

Mobile VPN

Logistics applications

Intranet

Instant messaging

Field service applications

Customer-facing applications

Content/information for employees

Fully deployed/in production/upgrade underway

Initial rollout underway

Piloting Evaluating No plans

Enterprise adoption of WLAN/2G phones in 2005

“At what stage is your company in the adoption of phones that use both cellular and WLAN connectivity?”


0% 20% 40% 60% 80% 100%

37% 11% 6%5% 41%

EvaluatingPilotingInitial rollout underwayFully deployed/in productionUpgrade underwayNo plans


Key enterprise migration factors to new technology

• New network technology evaluation criteria and obstacles: Reliability, manageability, and security often cited as chief concerns

• Managed telecommunications services rationale and obstacles: Culture and competency are strong predictors of adoption

• Effect of M&As on new technology adoption: Enterprises say one thing, but are planning another

Enterprise network evaluation criteria and obstacles

“What is the most important factor you consider while acquiring the following technologies? What is the largest obstacle to

implementing the following technologies?”


VPNsPurchase criteria rank

Implementation obstacle

SecurityPurchase criteria rank


Voice- and video-over IPPurchase criteria rank


Wireless technologyPurchase criteria rank


Reliability Manageability Cost Availability Scalability Compatibility Security30% 6% 12% 5% 5% 3% 38%14% 18% 22% 5% 6% 9% 18%




The most important factors and obstacles in using managed telecommunications services

“The reason why we would choose to use managed telecommunications services is . . . ? Why we would never purchase managed telecommunications services is . . . ?”


Our company prefers to outsource

It simplifies our operations

Better quality and reliability

Cost savings

We lack in-house expertise, or can’t spare the resources

It mitigates the risk of technology change

We would never use managed telecom services

Purchase criteria rank

19%

55%

41%

55%

46%

37%

23%

Our firm’s culture is against outsourcing

Too expensive

Loss of control

Already have the hardware and expertise in-house

We do not trust the service providers


24%

33%

46%

76%

21%


The effect of provider mergers and acquisitions on the use of new network technology

“How do mergers and acquisitions affect planned time frames to implement new technology?”


6%9%

84%

No changeSpeeds up our migration time framePostpones our migration


Enterprise migration plans for site-to-site VPNs and WAN VoIP

“In what year do you anticipate fully moving to IP VPNs for site-to-site connectivity?”

“In what year do you anticipate fully moving to VoIP for all

your outgoing calls?”


No plans to fully move 42%

Don't know 7%

1998 0%

2000 0%

2002 1%

2003 1%

2004 8%

2005 10%

2006 9%

2007 9%

2008 7%

2009 1%

2010 4%

2012 0%

2015 0%

2020 1%

No plans to fully move 45%

Don't know 8%

2004 1%

2005 3%

2006 9%

2007 12%

2008 12%

2009 2%

2010 6%

2012 1%

2013 0%

2015 1%

2020 1%

Findings and recommendations

• Enterprises should develop plans concerning:

» Effects of M&As around the timing of technology migration, and contractual terms/conditions

» Management of new technology, such as VoIP and wireless

• Suppliers should improve offers based on reasons customer cite for and against using new technology and managed services

• This survey is one slice of a multifaceted process

» North American vs. European technology adoption

» Customer service/support

» Customer satisfaction criteria

Look for upcoming Forrester reports on this subject

• 2Q and 3Q publications

• Business Technographics® report

• Subject-specific reports written by telecom analysts

• Unlimited access to the complete data set is available to Forrester TD&S clients — email Ryan at [email protected] for more information

Lisa Pierce Ryan Hudson Vice President Analyst

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