Managed WAN services cover the features and functionality carriers offer in their wide area networks (WAN) and at the customer point of demarcation. These are a collection of value-added services that can include monitoring and reporting, security, and outsourced CPE functions.

Market Definition

Large businesses see managed network services as a way to outsource IT functions and purchase them along with consulting and professional services that assess, design, and implement their enterprise networks. At a basic level, carriers’ managed WAN services offer monitoring and alerts of critical problems such as network outages. Higher tiers of service can add configuration management; proactive troubleshooting and trouble resolution; SLA management; more sophisticated/granular monitoring and reporting; on-the-ground CPE installation and hardware support, ensuring CPE software is up-to-date and configured correctly; and overall lifecycle management.

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WAN management emerged in the late 1980s, starting in the U.S. with outsourced management of a few, very large enterprise frame relay networks. The practice boomed alongside widespread adoption of IP networks and IP VPNs (MPLS VPN). The IP revolution converged networks – public with private traffic, priority with best-effort delivery, and voice with data applications – making them more dynamic and complex. These trends fueled enterprise customers to off-load WAN management responsibility.

In managed WAN services, Current Analysis includes network infrastructure from Layer 1 transport through Layer 3 IP; the definition also includes carrier-managed CPE deployed at the customer point of demarcation, as well as premium SLA guarantees available when customers purchase carriers’ management and network redundancy options. Besides the network services themselves, managed WAN services coverage takes into account support resources: staff on the ground to provide on-site installation, service, and support; network operations centers and related facilities; and customer portals that deliver alerts, reports, and other vital information to customers. Finally, though general-purpose consulting and professional services are not covered, managed WAN services include packaged disaster recovery/business continuity services; a primary customer driver remains higher service level guarantees and rapid recovery in the event of an outage.

Market Review

Global Masters of Managed WAN:

Many smaller service providers offer managed WAN services effectively. However, when it comes to breadth, depth, and reach of services, the world’s biggest carriers field tremendous resources to help shoulder the management burden and let the largest multinational corporations focus on their core business. AT&T, Verizon Business, Orange Business Services, and BT Global Services offer such a spread of managed network services, backed by strong consulting and professional services capabilities, global networks, and a global on-the-ground presence.

A Broad Base of Players:

There are plenty of additional service providers that offer managed network services domestically and/or internationally. Other major providers include Qwest, Sprint, and Global Crossing as well as virtual network operators such as Virtela. Domestic service aggregators such as New Edge Networks and MegaPath are additional purveyors of managed WANs. CLECs including Windstream are rising stars, and Hughes Network Services is among the top players in terms of endpoints, as its satellite/terrestrial segments are managed by default.

IP Spurs Managed WAN Adoption:

Enterprises traditionally employed private line/digital data service, frame relay, and ATM to build static data communications networks consisting of point-to-point real or virtual circuits to connect locations. The world of IP/Internet traffic uses mesh networks and enables converged services on one pipe that are more dynamic and complex. While managed network services have been spurred by IP, major carriers also continue to tout off-the-shelf management options for frame relay/ATM networks and even for transport services.

Customer Portal Automation:

AT&T and Verizon are among the carriers that have initiatives dating back to the 1990s to pull together network management platforms and coordinate information. These internal projects were described as iGEMS and IMPACT, respectively, and became the information engines powering their BusinessDirect and Verizon Enterprise Center customer portals. Online portals are now commonplace among major carriers, and they are a two-way conduit for customer self-service, including submitting instructions and receiving reports on customers’ managed services.

Business Continuity Tie-In:

Managed WAN services have a natural tie-in to service providers’ business continuity/disaster recovery portfolio of services. As with managed network services, these programs mix consulting engagements and professional services programs with off-the-shelf network/hosted services and active management of customer networks. Together, these services aim to keep uptime high for the customer and provide rapid alternatives in the event of a failure such as network re-routing, hardware and configuration repair, data storage, and recovery.

Ground Forces:

Many managed WAN functions can be delivered remotely through a network operations center or customer support center. Carriers can tap a high level of automation to deliver customers’ network services. However, at some point, customers with managed CPE components will need on-the-ground support for hardware installation, break/fix, or replacement – a role that channels and VARs can play in some cases, but one that requires a distributed field force and/or a partnership with a professional field services specialist such as Endeavor Telecom or Dimension Data.

Near-Term Market Drivers

Opportunity in Economic Malaise:

For multinational corporations, financial pressures from the economic downturn may funnel them into one of two directions in their communications strategy. They can lower network costs by cutting services and signing with lowest-cost providers, or they can outsource to trusted service providers and cut internal staff. The former trend may be troublesome for big global providers, but the latter could present big new opportunities for providers to sell comprehensive portfolios of network, managed, and hosted services.

Managed Diversity for Premium SLAs:

One reason customers turn to a service provider for managed WAN is to have agents in the network who are in charge of proactively monitoring and maintaining the best possible uptime. Through a combination of end-to-end control over services and access backup/diversity options (such as redundant CPE and failover access), service providers typically offer premium SLA guarantees. These SLAs can range up to 99.9% and even 100% availability, scaling up to a 100% monthly credit on the affected port(s) for less than 24 hours of downtime, for example.

CPE Router Management Tiers:

Most providers of managed IP router services have settled into a set of three standard tiers: a monitor/notify tier to issue reports and notify the customer of critical problems; a physical tier to add assistance with physical hardware problems; and a complete tier that takes full control of the customers’ routers, including configuration changes and software updates. Carriers that assume full responsibility for customer routers do not have to own them outright, but they will usually insist on full operational control to rule out customer errors.

Global Applications Optimization:

Global carriers often are called upon by their large enterprise customers to serve business locations in countries where bandwidth is scarce and/or costly. While MPLS-based IP VPNs offer broad classes of service, these services do not distinguish individual applications. Practices such as data compression and caching can help use available bandwidth more efficiently. Global providers have turned to a combination of managed and professional services with equipment from providers such as Ipanema, Riverbed, Blue Coat, and Packeteer and products from Juniper Networks and Cisco Systems.

Continuous Portal Improvement:

Service provider portals tend to be in a constant state of development and evolution. Most of the time, individual feature enhancements are not publicized because they are individually too insignificant to note. However, occasionally there is a new feature set breakthrough, such as AT&T’s adding an inventory viewing and analysis tool, and previously a mobile device access option to Business Direct, or Verizon Business adding document sharing to Verizon Enterprise Center.

Expanded Enterprise eBonding Options:

The practice of eBonding used to be a telco-internal reference for direct machine-to-machine links between carriers. Some very large enterprise customers have been invited by AT&T and Verizon Business to interconnect telco customer portals directly with enterprise management systems. Both carriers have issued toolkits to help enterprises build interfaces rapidly; Verizon even has an eBonding appliance option that very large enterprises can drop in to jumpstart their direct connection.

Long-Term Market Drivers

Applications-aware Management:

There have been competing examples in the industry of how an applications-aware network should look and what sorts of abilities such a network that is context-aware should have. Prioritizing and optimizing applications so far has mainly taken hold at the CPE level, but vendor products such as Ipanema Technologies may push forward the features carriers can offer – and manage – on behalf of their customers.

Management by Business Function:

Orange Business Services takes a different approach to packaging and presenting managed services via its Service Select portfolio. Instead of being network resource-centric (i.e., managed IP, managed CPE router), Service Select is built around functions: for example, Problem Management (to identify and prevent service problems); Change Management (to manage service change requests); and Release Management (to plan and test service changes). The concept of managing business-level challenges instead of network-level resources is different and compelling, and other providers may adopt a similar approach to take their value message to non-technical management.

Other Managed Services Tie-Ins:

Managed WAN services are one component that can tie into a host of additional managed services, among them more comprehensive managed security solutions (such as intrusion detection and prevention, authentication and compliance), managed storage, hosted messaging, managed/hosted applications, software-as-a-service, and virtual computing in affiliated data centers. More information on the building blocks of the universe of hosted and managed services available from service providers is available in Current Analysis’ Internet/Managed Services module.

Managed Services for SMBs:

Managed WAN services were born out of a need by the world’s largest global enterprises, and as networking becomes more widespread and complex, they have made their way down-market to mid-sized and smaller enterprises. Some attempts have been made to try and extend managed network and CPE services to SMBs, but it has been a hard sell due to less sophisticated networks, less rigorous uptime needs and lower telecom/IT budgets. These businesses are relying on self-service via customer portals, but there has been some success from carriers selling bundled on-site premises management and technical support.

Europe’s Pro Services Push:

U.S.-based providers handle consulting and professional services engagements as they relate to the network and direct customers’ complex IT projects to systems integrators. Europe’s largest global carriers, Orange Business Services and BT Global Services, have proved themselves willing to tackle more complex IT projects. Despite BT’s current and anticipated write-downs partly due to issues with professional services contracts, the practice remains an important differentiator for multinational enterprises looking for one entity to consolidate networks, consulting, management and outsourcing under one roof.

Cable Providers Absent:

Cox Business and Optimum Lightpath, which have been ahead of the curve in competing in the business telecom market, already tout basic managed router, managed firewall, and managed VPN options for their customers. The business telecom divisions of Time Warner Cable and Charter offer a managed security suite that includes an IP VPN product. However, these competitors and Comcast have yet to build a reputation as enterprise-ready managed services providers, sporting an array of services and several tiers of proactive network and CPE management and maintenance.