This report focusses on ngena, a multi-operator alliance founded in 2016, which offers multi-national networking services aimed at enterprise customers. ngena is interesting to STL Partners for several reasons:
First, it represents a real, commercialised example of operators working together, across borders and boundaries, to a common goal – a key part of our Coordination Age vision.
Second, ngena’s SDN product is an example of a new service which was designed around a strong, customer-centric proposition, with a strong emphasis on partnership and shared vision – an alternative articulation, if you like, of Elisa’s cultural strategy.
Third, it was born out of Deutsche Telekom, the world’s sixth-largest telecoms group by revenue, which operates in more than fifty countries. This makes it a great case study of an established operator innovating new enterprise services.
And lastly, it is a unique example of a telco and technology company (in this case Cisco) coming together in a mutually beneficial creative partnership, rather than settling into traditional buyer-supplier roles.
Over the coming pages, we will explore ngena’s proposition to customers, how it has achieved what it has to date, and to what extent it has made a measurable impact on the companies that make up the alliance. The report explains STL Partners’ independent view, informed by conversations with Marcus Hacke, Founder and Managing Director, as well as others across the industry.
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Shifting enterprise needs
Enterprises throughout the world are rapidly digitising their operations, and in large part, that involves the move to a ‘multicloud’ environment, where applications and data are hosted in a complex ecosystem of private data centres, campus sites, public clouds, and so on.
Digital enterprises need to ensure that data and applications are accessible from any location, at any time, from any device, and any network, reliably and without headaches. A large enterprise such as a retail bank might have physical branches located all over the place – and the same data needs to be accessible from any branch.
Traditionally, this sort of connectivity was achieved over the wide area network (WAN), with enterprises investing in private networks (often virtual private networks) to ensure that data remained secure and reliably accessible. Traditional WAN architectures work well – but they are not known for flexibility of the sort required to support a multicloud set-up. The network topology is often static, requiring manual intervention to deploy and change, and in our fast-changing world, this becomes a bottleneck. Enterprises are still faced with several challenges:
Key enterprise networking challenges
Source: STL Partners, SD-WAN mini series
The rise of SD-WAN: 2014 to present
This is where, somewhere around 2014, software-defined WAN (SD-WAN) came on the scene. SD-WAN improves on traditional WAN by applying the principles of software-defined networking (SDN). Networking hardware is managed with a software-based controller that can be hosted in the cloud, which opens up a realm of possibilities for automation, smart traffic routing, optimisation, and so on – which makes managing a multicloud set-up a whole lot easier.
As a result, enterprises have adopted SD-WAN at a phenomenal pace, and over the past five years telecoms operators and other service providers worldwide have rushed to add it to their managed services portfolio, to the extent that it has become a mainstream enterprise service:
Live deployments of SD-WAN platforms by telcos, 2014-20 (global)
Source: STL Partners NFV Deployment Tracker
Includes only production deployments; excludes proof of concepts and pilots
Includes four planned/pending deployments expected to complete in 2020
The explosion of deployments between 2016 and 2019 had many contributing factors. It was around this time that vendor offerings in the space became mature enough for the long tail of service providers to adopt more-or-less off-the shelf. But also, the technology had begun to be seen as a “no-brainer” upgrade on existing enterprise connectivity solutions, and therefore was in heavy demand. Many telcos used it as a natural upsell to their broader suite of enterprise connectivity solutions.
The challenge of building a connectivity platform
While SD-WAN has gained significant traction, it is not a straightforward addition to an operator’s enterprise service portfolio – nor is it a golden ticket in and of itself.
First, it is no longer enough to offer SD-WAN alone. The trend – based on demand – is for it to be offered alongside a portfolio of other SDN-based cloud connectivity services, over an automated platform that enables customers to pick and choose predefined services, and quickly deploy and adapt networks without the effort and time needed for bespoke customer deployments. The need this addresses is obvious, but the barrier to entry in building such a platform is a big challenge for many operators – particularly mid-size and smaller telcos.
Second, there is the economic challenge of scaling a platform while remaining profitable. Platform-based services require continuous updating and innovation, and it is questionable whether many telecoms operators are up to have the financial strength to do so – a situation you find for nearly all IT cloud platforms.
Last – and by no means least – is the challenge of scaling across geographies. In a single-country scenario, where most operators (at least in developed markets) will already have the fixed network infrastructure in place to cover all of a potential customer’s branch locations, SD-WAN works well. It is difficult, from a service provider’s perspective, to manage network domains and services across the whole enterprise (#6 above) if that enterprise has locations outside of the geographic bounds of the service provider’s own network infrastructure. There are ways around this – including routing traffic over the public Internet, and other operators’ networks, but from a customer point-of-view, this is less than ideal, as it adds complexity and limits flexibility in the solution they are paying for.
There is a need, then, for a connectivity platform “with a passport”: that can cross borders between operators, networks and markets without issue. ngena, or the Next Generation Enterprise Network Alliance, aims to address this need.
Table of Contents
- Executive summary
- What is ngena?
- Why does ngena matter?
- Has ngena been successful?
- What does ngena teach us about successful telco innovation?
- What does this mean for other telcos?
- What next?
- Context: Enterprise needs and SD-WAN
- Shifting enterprise needs
- The rise of SD-WAN: 2014 to present
- The challenge of building a connectivity platform
- ngena: Enterprise connectivity with a passport
- A man with a vision
- The ngena proposition
- How successful has ngena been?
- Growth in alliance membership
- Growth in ngena itself
- Making money for the partners
- What does ngena teach us about successful innovation culture in telecoms?
- Context: the need to disrupt and adapt in telecoms
- Lessons from ngena
- What does this mean for other telcos?
- Consider how you support innovation
- Consider how you partner for mutual benefit
- What next?