Dec 4, 2017
The early days of offering a managed SD-WAN service that provides basic network connectivity are drawing to a close. There is clearly burgeoning demand from customers to manage the network providers and network types that make up the growing mix of SD-WAN bandwidth options. As customers see the value of having different network providers and networks to improve reliability and overall cost per megabit for bandwidth, service providers increasingly will be needed to manage those networks and providers. This is one of the basic tenets for revenue opportunities from SD-WAN services. And with many providers, those revenue opportunities may include the use of wholesale agreements to improve the margin of network services along with the revenue inherent in managing multiple providers for customers.
Ovum predicts that service providers will have more revenue opportunities as they enhance managed services with SD-WAN beyond WAN optimization, security, and managing multiple network providers. As new services such as analytics and detailed segmentation are developed, voice and SBC services will start to provide a broader set of features that have revenue upside and tend to increase the stickiness of customers as they find it harder to replace service providers without sacrificing these new services or features.
In addition to the emerging set of services that can be offered, creative pricing models will make it easier for the service provider to offer “try it, you’ll like it” promotions and programs. That includes the ability to extend “freemium” service offers where the service provider can offer some basic, free level of services with optional premium-level, revenue-generating services. Think of the many variations of this where service providers could offer a simple firewall or SBC service for free or a low price, but also have a premium level of service with more complex, sophisticated offers. Along with pay as you go (e.g., Fujitsu’s SD-WAN-as-service), service providers will be able to turn features on for a short trial period and then provide reports on the result of the proposed new service.
Customers already are willing to pay for managed network services, and service providers will see increasing demand as customers mix and match network types and providers. Service providers will have even more revenue upside opportunities with the growing list of features and virtualized services that can easily be layered on basic managed network services. Many of these revenue opportunities may require some experimentation to evaluate customers’ interest and willingness to pay and to develop creative pricing models that allow customers to trial new services before they make a commitment to buy. Leveraging the ease of service deployment, there will also be many creative ways to test new services and entice customers to pay for them. One size does not fit all.
Mike Sapien is a chief analyst at Ovum. Within his role, Mike tracks the areas that are of importance to global large enterprise customers and complex managed services. He provides analysis of the networking, security, and enterprise mobility requirements of these large customers globally. Mike also covers global enterprise service trends with a focus on the large enterprise market. His recent work has featured managed security, SD-WAN, data analytics, and vertical solutions with a focus on healthcare solutions.