Summary

The pandemic sharpened the message of the value of cloud based services. The unprecedented ramp of collaboration tool usage “At Home” could only be accomplished with the “burstability” of a cloud platform. Covid heightened the focus on site diversity and supporting a more distributed workforce. More than ever, enterprises are running the mission critical applications over networks, placing greater demands on premium network performance. Enterprises have heightened demands for a high bandwidth premium service experience. “Best effort” for mission critical enterprise functions is fading while enterprises now demand committed high bandwidth, high availability, low latency services- rapidly provisioned. The enhanced enterprise needs and requirements are the communications service providers opportunity. Premium services and high bandwidths needs can command premium revenues. The CSPs have an opportunity to step up to garner their fair share of the growing digital economy.

Key Market Trends

Omdia is tracking three major cloud and bandwidth market shaping industry trends that are impacting the enterprise and consumer markets.

1. The digital economy continues to drive a massive cloud infrastructure roadmap.

2. The pandemic accelerated and cemented the value of cloud services and we witnessed an unprecedented adoption of collaboration tools by enterprises and consumers. Additionally, enterprises have developed a heightened appreciation for the value of digitizing and having a very robust distributed IT strategy.

3. And the 3rd key trend is tied to the preceding two trends. The new applications need to be served by high bandwidth, robust connectivity. Large enterprises are increasing their consumption of premium private line services and connecting their key sites.

Key Findings from Enterprise Bandwidth Survey

Omdia recently conducted a major survey of 175 governments and enterprises representing the financial services, manufacturing, cloud, energy-utility, media, transport-logistics and healthcare verticals. The survey yielded a number of major themes:

Enterprises are reevaluating their networks to meet heightened performance expectations.

• There is increased vigilance on security and data privacy.
• Optical private lines are in demand for secure connectivity between critical sites.

Bandwidth needs are increasing with stricter demands on network performance and availability.

• 63% of enterprises expect to more than double network bandwidth in two years.

Enterprises have diverse bandwidth needs for private lines from 50Mbps up to 100GE speeds.

• Private optical networks are in demand for bandwidth from 1Gbps to over 10Gbps
• 100Gbps optical private lines are most in demand by the cloud and SaaS companies.

More than 90% of organizations surveyed plan to replace legacy TDM lines in the next two years.

When enterprises need high performance, guaranteed bandwidth, high availability and security, Optical and Ethernet private lines are among the top choices.

The full survey results are available (see Further Reading in the Appendix below). Two of the survey’s highlight questions and responses are provided below.

Most Important Factors in Driving the Private Line Purchase Decision

What are the most important factors driving the private line decision for enterprises, see Figure 1.




Figure 1: Survey Highlights: Important factors in driving the private line purchase decision



Source: Omdia

Enterprises have a heightened desire for committed, highly available, low latency bandwidth that can be provisioned very rapidly.

Critical Business Applications

Across all verticals, the leading use cases for optical private lines include:

• Connecting large sites and private data centers to public clouds

And the major applications are:

• Data replication, real-time business continuity and disaster recovery
• Storage area networking and big data/large file transfers
• Low-latency applications required guaranteed bandwidth (e.g., financial trading networks, videoconferencing, e-learning, and other applications).

See Figure 2 for Enterprise responses to the survey question on “which business applications are the most critical in driving the private line decision?”




Figure 2: Survey Highlights: The WAN supports business critical applications



Source: Omdia

Many enterprises that do not currently use optical private lines would consider deploying them in the future but they:

• require optical bandwidth in smaller increments
• together with a wider choice of pricing and SLA options.

All of these trends and applications lead to opportunities for carriers for service at the full wavelength rate and subrate services.

The High Speed Forecast is Up

Omdia is positive on the optical network enabled, high speed private line forecast. Enterprises will consume higher bandwidth 1Gbps, 10Gbps and higher services. And the Cloud and SaaS companies will continue to deploy more and more 100Gbps and beyond services. See Figure 3 for the Omdia CSP Ethernet service high speed forecast.




Figure 3: The high speed service forecast



Source: Omdia




Appendix

Author

Ian Redpath, Practice Leader, Omdia

Ian Redpath leads Omdia's Optical Networks, Optical Components, and Core Switching practice. He heads new research in the rapidly growing data center interconnect (DCI) and intra connect market.

Further Reading

The Transforming Private Lines for Business Growth White Paper (publicly available) https://omdia.tech.informa.com/commissioned-research/articles/transforming-private-lines-for-business-growth