The network is the last thing that IT fully controls within the enterprise and consumes 12-15% of the enterprise technology budget. Compute, storage and applications are moving to the cloud with its elastic, pay for what is used, model. Users are going mobile, working from anywhere. Networking will be the last thing that is moved to the cloud, but this too will happen.
Users get frustrated with the enterprise network because it is slower to work in the office than when they work from home. CIO’s wonder why they pay 20x more for enterprise bandwidth than what they pay as a consumer. Business leaders are also frustrated with the enterprise network because it is slowing down their digital transformation projects.
Enterprise networks are inherently slower, less agile, less secure, and more expensive because of:
- Backhauling – Sending all Internet destined traffic back to a data center before going out to the Internet. 80% of enterprise branch office traffic is Internet destined and the backhauling is both expensive and slows down cloud based applications. Mobile device managers also backhaul cellular data traffic, causing the same problem.
- Legacy business models – Buying upfront tons of equipment (routers, firewalls, load balancers, network optimizers, intrusion detection) and signing multi-year contracts with 1-2 network service providers.
- ACL hell – Access Control Lists are used by network equipment to define on every interface where packets can and cannot go. This manual process can lead to thousands of rules and spirals out of control with no one understanding why a rule put in 3 years ago still applies. Also, routers are not able to report on which ACLs are used. Every network change requires new ACLs, which can break existing applications, making networks very complex and fragile.
- Perimeter Security – The assumption that a private network is more secure has not proven true as the many hacks that have been published and the greater frequency in which they are occurring. A zero trust model is required to provide end-to-end security.
Software Defined Wide Area Networks (SD-WANs) are a step towards making networks faster, more agile, and lower costs. SD-WANs utilize broadband Internet to the branch office and provide a security stack at the edge of the network to minimize backhauling and cheaper bandwidth than MPLS. SD-WANs use centralized controllers and IPsec or GRE tunnels to create an overlay network to mask the underlying network complexity. This is why the SD-WAN market is going to grow from 500M this year to 6B by 2020.
But, SD-WANs are just a step towards the Next Generation WAN (NG-WAN) which will be managed by cloud providers through Network as a Service (NaaS). Microsoft, Google, and other large Cloud Service Providers (CSPs) are becoming network operators. Gartner reports that 50% of cloud implementations have business impacting problems due to the network. CSPs realize that if they are going to provide a Quality of Experience (QoE) for their applications, that they need to have greater control of connecting their users.
To achieve complete end to end control of business IT computing and incent migration to cloud services, CSPs will offer secure seamless networking solutions to connect from customer on-premises servers to in-cloud-based resources. The next generation networks will leverage broadband Internet connectivity and high speed optical and Ethernet networks that are inter-connected at the carrier neutral collocations where the CSP’s reside. On the premises will be white box switches and wireless local area networks connected to a very intelligent router and security stack that can dynamically establish direct, secure sessions between application services and users.
This can be done at a fraction of the cost because the CSPs already possess significant technical resources in networking and they have different business models than the traditional Network Service Providers (NSPs). CSPs over time will marginalize existing NSPs and shed the complexity, that inhibits broader migration to cloud-based services.
The market for enterprise networking will go through a radical shakeout and will become commoditized. White box/brite box providers that develop the appropriate partnerships will see new opportunities. Winners will include low cost access and transport service providers along with existing and new network equipment providers bold enough to morph into a volume player for a low margin business.
The best lens into the IT future is to watch what start-up companies are doing. These companies do not have any legacy baggage and adopt the latest and greatest technology and solutions. Few start-ups are creating their own private networks. AirBnB and Uber are examples of companies without a private MPLS WAN.
This is a paradigm shift for the enterprise to go to the 1,000 plus fiber networks and Internet Service Providers (ISPs) that the cloud providers use, versus bringing 1-2 NSPs & ISPs into the enterprise.