Managed Service Providers who have been challenged with trying to provide IT services to budget-constrained small-to-medium businesses (SMBs), while maintaining profitability, now have the opportunity to achieve a win-win for themselves and their SMB customers with virtualized networking. With the enhanced, virtualized ability to provide services at the network edge, MSPs can now offer distributed SMB and enterprise remote office customers a fully-managed enterprise-class of services that require no local expertise or onsite resources, and deliver enterprise-class routing functions without the associated labor and transport costs of conventional network deployments. By being able to extend their reach to a broader range of customers, MSPs would have a new managed networking service to offer that would materially boost revenue and increase profitability.
If you are a Service Provider looking to offer the full benefits of virtualized networking at the edge for your distributed SMB and enterprise remote office customers, then you want to find a vendor offering a solution based on the concepts of software-defined networking (SDN) or network functions virtualization (NFV). To be thorough in your research and make sure you find the vendor that will meet your needs as well as those of your customers, you should ask the following questions of any virtualized networking solution vendor you are considering:
1. How does this product improve my service profitability?
A virtualized network vendor’s level of automation should demonstrate to you that design and deployment of services would be relatively easy and require no special expertise. The vendor should be able to reduce your operational expenses dramatically — by as much as 10:1 — allowing you to deploy services and grow your customer base quickly. If the vendor supports an open ecosystem of virtual applications, you can feel confident that you would be on your way to increasing the average revenue per user (ARPU) over time, because new requirements won’t obsolete your general-purpose hardware.
2. What’s the compelling value of your product to my end customers? What will make them want to buy services from me?
SMBs want enterprise-class products for their networking service, but the SMB just doesn’t have the required capital to buy, maintain or support them. SMBs typically find themselves buying networking devices that are underpowered and dedicated to specific functions. They need to put a great deal of thought into what they’re going to buy because they’ll need to keep it for a long time, and that’s not what they want to be doing. They want to be flexible, to turn services up or down, to move and change, and to make a future-proof decision, however, you can’t offer this agility to them with traditional, purpose-built networking equipment.
More importantly, IT is not a core business function for SMBs; they want and need to focus on their core business. An ideal scenario for an SMB would be to obtain low cost, secure and reliable edge connectivity with a fully managed service that requires no local expertise and no on-site service support. This service would also provide them with:
- Network scalability that matches their business needs on a pay-as-you-grow basis;
- On-demand responsiveness to service requests for network configuration changes;
- Access to a wide selection of business services, such as 4G WAN backup, advanced security/UTM, WAN optimization, session border control, voice services, etc.; and
- Predictable maintenance and support costs, lowering both CAPEX and OPEX.
3. How much capital expenditure (i.e. investment risk) do I have to make before I start to realize revenue?
When evaluating a vendor, you want to determine how much up-front capital build-out has to be made before first revenue can be achieved. You want a vendor that lets you scale capital investment along with revenue — enabling “cost/revenue co-scaling,” where you spend money at almost the same time you make your revenue. You should be able to ramp up your services quickly and at your own pace without capital risk.
Even if you’re a smaller Service Provider, you can get started with SDN or NFV without taking much risk. Look for a vendor that hosts the cloud service for you and supports deployment of the service on low-cost, commercially available servers, then you don’t have to build out a big core infrastructure before servicing your customers from that infrastructure. With a completely virtualized edge solution that runs on general-purpose server hardware, you can buy infrastructure right before you need it. You don’t need to spend that much money or build out before you can validate that the service will be successful for you. If you can reduce your up-front capital expense, then you can try out this new technology without it being scary.
4. How does your product help me grow my customer base faster than I can today?
How quickly you acquire new customers comes down to how automated the vendor’s ability is to install, maintain and deliver services. Virtual networking is only as good as the capabilities the vendor has to automate the orchestration of the network. You want to look for orchestrated installation and completely automated network plumbing, fully automated deployment capabilities and a zero-touch end-user experience. The network should be designed once and deployed to many customers from a centralized management system with no truck roll. That is key to rapid service deployment and time-to-revenue.
5. How does your product help me expand my services outside of my current service area to penetrate new markets?
With SDN or NFV, your service shouldn’t be confined geographically because the cloud-based orchestration technology should provide for low-touch to zero-touch capabilities. By having the low-touch installation capability of virtualized networking, you should be able to provide over-the-top service delivery to someone outside of your service area because you’re not required to have that network transport ability. Your customer could be using another Service Provider’s transport and still be your customer.
6. Is your SDN/NFV platform open?
Your vendor should support you in upselling multi-vendor services and applications by embracing an open ecosystem of best-of-breed virtualized applications that can be automatically deployed, installed, maintained, upgraded, and plumbed into the network. Doing so not only gives you flexibility to choose new applications at a future time, it also lets you upsell your customers through a “try-before-you-buy” offer without having to make a service call or invest in new hardware. You can keep yourself open for future innovation by requiring your SDN/NFV vendor to be open. This openness also allows you and your customers to avoid costly purchase and deployment of purpose-built appliances to support new applications — a huge win for both the MSP and SMB.
A big benefit of openness for the end-customer is not having to think about what they’ll need for the next three years — they’ll only have to think about what they need today. If they grow their office, or need additional applications, they will know their Service Provider is going to take care of them.
This list of questions is by no means exhaustive; once you start interviewing a vendor, additional questions will likely arise that are focused on your specific requirements and your customer’s needs. However, it’s important the questions above are presented to any virtual networking vendor you’re considering. How they respond is critical, as their answers should thoroughly address the challenges, issues, and requirements raised here before they make it to your short list.
About the Author. Tricia Hosek is Chief Operating Officer at Netsocket, provider of virtualized networking solutions, where she is responsible for managing the company’s overall operations as well as the company’s product and marketing strategy. Her career is highlighted by high growth and profitability achievements spanning early stage start-ups through multi-billion dollar operations in the telecommunications network industry.