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The large telecom service providers have put a lot of effort into rethinking and repackaging their cloud-based services for enterprise companies. But, even as they push those offerings, enterprises are still deciding how they intend to do business with the likes of AT&T, CenturyLink and Verizon in service areas outside of network connectivity.
After exiting the public cloud business when Amazon Web Services, Microsoft Azure and Google proved too formidable for competition, the large telecom providers focused on cloud services that targeted enterprises with a mix of networking services and private-labeled offerings. Services range from software-defined WAN (SD-WAN) and security tools to productivity software from companies such as Microsoft and Salesforce.
Service providers are successfully peddling their SD-WAN services, but they aren't faring as well in marketing their other offerings, according to Will Townsend, a telecom analyst at Moor Insights & Strategy. "It's clear the telecoms have to do a better job selling some of these other services," he said.
Dan Bieler, a principal telecom analyst at Forrester Research, said carriers will need to recognize they should link their services outside network connectivity to a business requirement or outcome if they are going to be successful in marketing them.
"The telecoms understand that they have to move past SLAs [service-level agreements] and network uptime," Bieler said. "When the cloud took off, they spent money on data centers and were surprised when AWS, Microsoft, Google and now Alibaba did so well. Just offering storage and computing power is not good enough; it needs to be a different pitch."
Only network connectivity in demand so far
Take Bush Brothers & Co. The food manufacturer -- based in Knoxville, Tenn., and perhaps best known for its baked beans -- runs its four facilities for 24 hours a day, six days a week, and it can't afford any downtime.
Ron Grohman, senior network engineer at Bush Brothers, said he has no interest in using carriers to supply the company with productivity apps or other cloud services, but he is interested in SD-WAN.
SD-WAN is compelling, primarily due to the technology's ability to allow him to oversee multiple connectivity conduits encompassing MPLS, internet and 4G LTE, Grohman said. More importantly, however, he said he would want to deploy SD-WAN so Bush could get those network connectivity services from more than one telecom provider.
"I foresee being able to use one provider for internet, another for MPLS and yet another for an LTE modem connection," he explained. "The management capabilities in SD-WAN would let us manage all those options more efficiently. Without SD-WAN, it gets complicated managing them all in one place."
To that end, Grohman said Bush Brothers will roll out SD-WAN sometime later this year, and the company might go with one of the telecoms.
"I would not go with a telecom unless they just resell one of the market leaders in the space -- in which case, the cheapest offer would win," Grohman said. "I would definitely not be using any of their homegrown solutions."
Again working around a telecom service provider, the University of California, Davis, is also evaluating SD-WAN, but is likely to manage the technology internally, using software from a vendor like Cisco or Juniper, said Chris Clements, network operations manager at the university.
But the university is intrigued by 5G and, as a result, is continually meeting with its current telecom provider, AT&T, to determine how the next-generation wireless network will affect the school.
"5G will be a big game changer, especially with video services. But when it comes to SD-WAN, we have enough technical depth on staff to handle that, and we would more than likely do that with established networking vendors," he said.
For organizations with less staff and fewer resources, telecom-provided SD-WAN is appealing. One such institution, Blue Hills Bank, based in Hyde Park, Mass., will deploy SD-WAN as part of a network upgrade orchestrated by Independent Bank Corp., which acquired the 18-office company earlier this year.
"The acquiring company has SD-WAN, and it plans to use its provider to deploy it with us," said CTO Rod Landstein. "In many ways, I don't understand why the telecoms haven't approached me. We are the perfect kind of midsize business. We don't have a large IT staff and would be looking to outsource these types of services."
So, what's in store for the carriers as they seek to grow their enterprise business? Forrester's Bieler said he is looking for the telecom providers to shift the discussion to edge computing, where potential customers are examining ways to move process-intensive operations away from the data center.
"It could be part of a package sold by systems integrators," he said. "Right now, there's no set model."
In the meantime, 5G will focus renewed attention on connectivity services, especially over the next decade, as businesses raise questions about how the wireless technology will change their operations.
But carriers will need to do more work to persuade companies to sample their security and productivity services that fall outside of network connectivity. They still have a shot, but as Moor Insights' Townsend pointed out, they need to sell it better.