Service Differentiation: Moving Beyond Network Features To Bundles And High-Value Virtualized Services

By Mike Sapien, Chief Analyst, Ovum

Many service providers today are offering managed SD-WAN services that provide basic network connectivity and network-centric features such as WAN optimization, network monitoring, and some level of application performance management. Managing a new mix of network providers and service types for each customer location has been part of most SD-WAN offers, but that has become table stakes for competitive SD-WAN service offerings. Customers are willing to pay for new virtualized managed services (think advanced security or a WAN optimization-as-a-service), especially if they can be provisioned quickly, cost much less than traditional options, be offered in a cloud consumption model, and be provisioned and managed through a simple, easy-to-use portal.

Ovum sees service providers creating new service bundles based on their early deployment experience, leveraging the ability to service chain and integrate multiple VNFs into a singular VNF service bundle. In some cases, customers may be willing to pay more for improved application performance, which would include offering tiered services and receiving a premium SLA based on the performance improvement. Ovum sees application performance as rising in importance to customers beyond the initial cost-savings motivator of early SD-WAN adoption. Offering advanced security services beyond basic firewall is another great option for enhancing the SD-WAN offer, as part of either a premium service bundle or a tiered overlay security service.

As managed SD-WAN services mature, service providers will need to continually monitor, assess, and develop new service bundles and value-added service enhancements for differentiation and further monetization opportunities. Most SD-WAN customers are looking for differentiated services beyond the basic network-centric features offered today. This is just a quick review of some the possibilities, but service providers need to continually innovate to stay in front of the competition and increase their value. For example, recent Ovum studies find that application performance is clearly rising in importance; in a survey of 200 customers, “better performance from my network” ranked as the highest pain point among two-thirds (67%) of the respondents. That opens up opportunities for service providers if they can offer more advanced, tiered application performance options.

(This article first appeared here).