Oct 18, 2016
About a month ago I attended an analyst session with Michael Dell at VMWorld. During the event, Mr. Dell stated that he learned many years ago that when things are good for businesses, customers are going to do it, with or without the vendors’ help. He cited Dell’s initial resistance to virtualization as an example. Dell tried to stave off customers deploying server virtualization as it was bad for Dell but customers did it anyway, seriously hurting Dell’s position as a key technology supplier. Chuck Robbins made a similar statement shortly after he took the reigns at Cisco regarding software defined networking. He said something to the effect that Cisco’s job is to help customers through transitions, not get in the way, and that it would never again be dismissive of a technology that was beneficial to its customers.
I bring these examples up because I would like to offer a word of caution to the incumbent telcos – embrace managed SD-WAN services or customers will seek out a another service provider that will help them. The SD-WAN market is maturing rapidly, meaning it is moving out of the early adopter phase, which is typically dominated by more technical companies that prefer to roll their own solution. Once a market matures there is a significant increase in demand for managed services by organizations that would rather focus on their core business and shift the operations of running the network to a managed service provider — and based on conversations I have had with customers recently, I believe we are hitting that point with SD-WANs now.
In actuality, there are a number of managed SD-WAN solutions available on the market today, primarily from competitive service providers such as Masergy that offer Silver Peak-based offerings. Of the network operators considered to be incumbents, Verizon has easily been the most aggressive. The other mainstream service providers have lagged behind, but there have been a number of recent announcements indicating more activity from this group.
I certainly get why there might be hesitation for an incumbent to be wary of SD-WANs, as this shift could be highly cannibalistic to current revenue streams. However, as Michael Dell stated, if something is good for customers, they’re going to do it anyway. Legacy networks are inflexible and will soon hold companies back as digital initiatives require a much higher level of network agility. If a customer can’t get a managed SD-WAN service from the service provider they are currently using, they will look elsewhere.
However, I’ve never liked the concept of offering anything for defensive purposes. A defensive posture means the sales force will only bring up the service when forced to by a competitor, and this will likely lead to being a share loser, as customers will be exposed to many other solutions from a vendor that is much more aggressive. Instead of being defensive, service providers should embrace SD-WAN and be aggressive with managed services for the following reasons:
SD-WANs have many benefits to businesses of all sizes, and they will make this shift with or without the help of their incumbent. Network operators need to embrace managed SD-WAN services and lead this market instead of considering it a threat to their traditional business.