Service Provider:Trends & Possibilities

Bjørn Andreas Wentzel

Norway SP Challenger Team

Collaboration

Service Provider: Trends & Possibilities

Data is moving.. becoming Centralised / Fluid

Video is happening!

The underlying infrastructure:

– CapEx/OpEx challenge

• Identify new revenues.. video

– The dark side of consolidation eg. Virtualisation introduces complexity …

…and the bright side when solved; New Market Opportunities

Data is moving..

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“ A style of computing where massively scalable IT-enabled capabilities are delivered as a service to external customers using Internet technologies.”

Thomas Bittman and Carl Claunch

Gartner Symposium/ITExpo, April 2008

Defining Cloud Computing

© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialbawExpo-1 5

add 3x5 photo here“CLOUD: Common, Location-independent, Online

Utility provisioned on-Demand.”

Joe Weinman

www.on-demandenterprise.com

Or…

Technology,Industrialisation andEconomy of Scale

An Evolution

Bits of information..

–Shell-accounts

–Web accounts

–Hosted Email

–IP Centrex

Application Service Providers (Citrix-SPs)

Vertical Industry Solutions

Finance, Banking, POS Term, etc.

Enterprise DCs (Clouds)

Cloud Computing:

– SaaS

• Salesforce.com

• Webex

– IaaS/UCaaS/CaaS

• Managed Services

– PaaS

• Amazon, Google, MS ++

The General Cloud Concept

Customer Data Center

Capabilities as Consumed by the

Subscriber

Cloud Datacenter

Infrastructure Creatingthe Capabilities

IP Cloud

Example: TOC comparison for 200 seat CRM deployment

Source: McKinsey

Note: On-going operations include management, customization of business process change. Other include unscheduled down time,

unscheduled licenses, and other minor costs.

480

1500387

750

681

10634

Traditional SaaS

Other

Data Center

Implementation, Deployment,On-going Operations

Software

$2,298,000

$1,640,000

Three revenue streams

1. License

2. Professional Services

3. Ongoing Maintenance

One revenue stream

1. Recurring subscription fees

Move to Cloud ComputingThe Delivery of Applications over the Internet

• From 1991 – 2006 the performance / price ratio has grown 60X for computer processing power, 7,500X for hard drives

• From 1996 – 2006, the Internet has grown 20,000 fold from 45Mbps to 1Tbps

• Customers now demanding Cloud Computing (5x – 10x more efficient)

SP Based Services

Fluid Applications and Processes

Web Services Web App/SaaS

SP Based ServicesSoftware + Services

Emerging Cloud

Enterprise Cloud

OTT CDN

SP Based Services

.. The Future – Fluid Computing

Web Services Web App/SaaS

SP Based ServicesSoftware + Services

Emerging Cloud

Enterprise Cloud

OTT CDN

Impact

How would this affect SPs as market players?

Which value does an SP offer in this new business model?

Important to understand and define a strategy!

Defend, Compete, Enable, Partner..

Let’s look at ways you could build a commonfoundation to do it all....

OTTs have massive scale & global footprint

OTTs have challengesSPs have

points of differentiation

OTTs & Service Providers Key Points of Differentiation

Apps.(SaaS)

xxx subscribers globally

> $1Bn revenue expected in ’08

$xxxM DC investment

SaaS providers spend 30-60% of revenues on sales and marketing

Silo applications

No embedded communications

Integration platform for different SaaS applications with embedded communications

CPE enabled models for storage and IT management

AbstractServices

Google Apps Engine

>$1Bn annual DC investment

Very low price:

$.15/Gb/month $.10/CPU/hour

Flexible Infra-

structure

Amazon Web Services

Very low price (like Google)

“Services at scale from day 1: Amazon.com is our biggest client”

No end-to-end control

Concerns about stability

Concerns about vendor lock-in

No support for legacy applications

Data protection and privacy

Security concerns

Use end-to-end network control to deliver premium:

– On-demand network features

– SLAs, QoS, Security, …

– Traffic shaping

Deliver IT services for cloud migration and legacy support

Partner with existing clouds to deliver traffic & NW features

Drive cloud inter-operability

Source: Cisco IBGG, including “Unlocking the Value of Service Provider Assets to Win the SMB Customer”

Network

Storage

Compute

General Purpose Network Infrastructure

General Purpose Storage Infrastructure

General Purpose Compute Infrastructure

What’s Under the Hood?

Capabilities Packagedfor Web Delivery

PhysicalHardware

Abstraction / VirtualizationLayers

Network

Storage

Compute

Cloud Computing

Cloud May Not Be the Provider’s Only Offering

Network

Storage

Compute

Mgd. Svcs. Video

Network

StorageC

usto

mer A

Cu

sto

mer B

Cu

sto

mer C

Network

Lin

ear B

road

cast

Storage

Stre

am

ing

On

-Dem

an

dCompute

Cu

st. D

Cu

st. E

SP Through a Cloud Lens

Understand the service and application SLA’s

Companies should include the cloud itself in theirapplication/computing strategy.

Develop SP DC solutions that span all the verticalsolutions.

– Internal IT

– Operational systems

– Todays services

– A platform for future services

Video is happening!

Video is impacting the net…

Linear Broadcast

IPTV

On-demand

Enterprise Video

– Digital Media Solution

– Video surveillance

– Telepresence

– Unified Communications

Video on the internet

Fueling the Broadband EraConsumer Services incl. Video

Bandwidth

Demand

Service Creation

Demand

Service Availability

Demand

~20% of the global population is online

Internet penetration grew at 265% over last six years

0

100

200

300

400

500

600

2007 2008 2009 2010 2011 2012

Broadband

Broadband is Fueling the Disruption

Source: eMarketer, internetworldstats.com

Millions of Households Worldwide Broadband

Households

Broadband is Fueling the Disruption

Source: http://www.insidetelecom.no

”På en pressekonferanse la PT fram en prognose der de anslår at det blir 300.000 nye som kjøper bredbånd via koaks/fiber i løpet av de to kommende årene mens 100.000 faller fra på xDSL.”

Changing Pattern of Technology AdoptionConsumers Become Driving Force in Latest Disruption

Early Internet Days…

Today…

Universities Money Center Banks Enterprise Service Provider

Consumer Service ProviderUniversities Enterprise

From Early Adopters to Mass Market

• User Generated

• Stored Centrally

• ”No cost”

• Limited access

File Sharing

• M&E Industry-lead published

• Stored Centrally

• Limited open-ness

• High cost

iTunes• User Generated

• Complex

• No industry support

Communities

• Industry supported

•New market players (Spotify, Last.fm)

•Ad-revenue driven

•No cost on consumer

New Model

Premium Service

High Cost

Lite Service

No Cost eg. Ads

WebTV New Model

Industry-led

Consumer-led

Technology Can Close the GapBoth Consumers and Content Owners Have Unmet Needs

Content Owners:

Fragmenting Audience

Monetization Disruption

Increasing Consumer Expectations

Plenty of Point Solutions, no Platforms

Cost, Complexity of Reaching Audience

Consumers:

Finding Relevant Content

Personalizing the Experience

Interacting with and Around the Content

Increasing Demand for Content

TechnologyCan CloseThis Gap

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Service Provider:Possibilitieswith Managed Services

The network asset

SP Based Services

Web ServicesWeb App/SaaS

SP Based Services Software + Services

Emerging Cloud

Enterprise Cloud

OTT CDN

Which Apps to the Cloud?

Source: http://www.cloudcomputing.informationweek.com/

Application Aware VPN

Preferred Provider

Q38: Which type of provider would you most prefer for application networking services? N=151 (Application services respondents excluding don’t know)

34% of respondents would prefer their own network service provider for application networking services

However, 23% prefer to do it themselves

This is higher among Government (35%) and larger companies (31%: 3000+ employees)

SP Based Services

Fluid Applications and Processes

Web Services Web App/SaaS

SP Based ServicesSoftware + Services

Emerging Cloud

Enterprise Cloud

OTT CDN

Network-Centric vs. Application Centric SLA

Talking the Language of Applications, not networks

Optimizing the relationship between the application performance and network resources

SiSi SiSi

WAN

DATA CENTER

CAMPUS

TELEWORKER

BRANCH

What if I add a new application?

How can I control network trafficbased on application priority?

What is optimum WAN bandwidth?

Am I meeting users and business needs?

What is causing slow user response?

What apps or transactionsare being used & by whom?

Application Aware VPN

NGN Architecture Provides the Foundation for Application-Aware VPN

Application Aware VPN services have been able to command a 15-20% premium over standard MPLS VPN service (Ovum 2/06)

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Cisco Wide Area Application Services (WAAS) solution

Service Provider Deployment Models

Deployment Model DescriptionsManaged Service

Application acceleration is a value-added service for existing subscribers to managed MPLS VPN or WAN service.

Remotely manage Cisco WAEs at the branch offices as well as the core Cisco WAE in the enterprise data center.

Market-entry phase service can earn incremental revenue with little upfront investment.

Helps retain customers that want a complete WAN optimization service.

Cisco WAE’s, storage and application servers are deployed in the service provider data center.

Attracts enterprise customers that want a backup data center

Appeals to small and midsize businesses that want to out-task their data center operation entirely.

Deployment Model DescriptionsHosted Service

Future option to partition a single Cisco WAE to serve multiple customers.

Offer additional data center services, such as hosting, managed storage services, business continuity services, and Software as a Service (SaaS).

Offer managed application-acceleration services in conjunction with application-aware VPN services.

Leverage Cisco IP NGN to recognize the application, user, or site, and then use QoS to assign priority accordingly.

Application-aware VPN services also enable more granular reporting of network usage, again by application, subscriber, or site.

Deployment Model DescriptionsAdvanced Application Management

© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialbawExpo-1 51

add 3x5 photo hereSP Go-To-Market

Cisco’s Offer-Based Program Model

OutsourcingManaged ServicesResale

Program model geared to unique needs of MSP’s

Provides consistent Global discount rights

Drive AT and Cisco IP Transport

Create preference for Cisco Powered Services

Program Components for MSPs

Envision BuildMarket

Selland

• Envision (Service Creation) resource kits

• Business analysis tools

• Case studies

• Best practice resources

• Custom managed service market research

• Market intelligence update

• Marketing benchmarking studies

• Service designation architectures

• Technical whitepapers and best practices

• Technical training courses 200+

• Online technology practice labs

• Networkers @ Cisco Live benefits

• Educational webcast series

• CCIE support

• Cisco brand

• Sales and marketing toolkits

• Cisco.com profile, leads, spotlight, and banners

• Vertical industry resources

• Go to market tools

• Sales training

• Demand Accelerator

• Educational webcast series

• Cisco Live Partner Pavilion

• Cisco Powered Summit

Managed IP VPN Services

Managed Security Services

Managed Unified Communications Services

Managed Metro Ethernet Services

Managed Wide Area Application—Empowered Branch

Envision Your ServiceResource Kits

A wealth of materials to help you give your services a solid foundation

Service Opportunity Overview

Marketing Overview and Key Trends

Market Research

Service Planning Guides

Customer Segment Requirements

Competitive Landscape

Case Studies and Best Practices

Align Revenue Opportunities With Your Business Model

Envision

Kits are available for:

http://www.cisco-powered.com/cp/auth/marketing_sales_resources/envision_resource_kits/

Final Summary

SPs are in the middle of a transition introducing new business models

Network and Data Center… together as unique asset

Web 2.0 and xaaS: play or enable is a key decision

Consumer and Corporate services…. Unified Service Delivery

Cisco is evaluating new business models to address this.

THANK YOU!