Planning for IT Transformation Larry York Agenda

Planning for IT Transformation Larry York

Agenda n n n 2 Introduction to Transformation Keys to Successful Transformation WAN Technology Opportunities

INTRODUCTION TO TRANSFORMATION 3

Transformation and Innovation are current buzzwords, but. . . n The term transformation has resonance with CIOs, CTOs, IT Executives and business unit representatives • It is important to have a view on what it might mean n Many organizations are seeking procurement projects that drive transformation, and transformational projects need competitive sourcing • Easier to justify a transformation project than an asis sourcing project (which can be viewed more as “normal business”) • Can also be more attractive for vendors 4

Transformation and Innovation are current buzzwords, but. . . n n Transformation can drive lower costs than simple price-down • But cost reduction may not be the primary driver In procurements, innovation is about allowing vendors to present different solutions to meet the organization’s requirements • But, think of innovation as a transformation enabler 5

Transformation can mean many things… n In telecom, Telecom Transformation, or IP Transformation, is a term that describes the evolution of the telecommunications industry from a capital-intensive, technology-focused model to a user-centric service-delivery model • But much of this is provider/carrier focused, in dealing with competitive threats from disruptive technologies and solutions such as Google, Skype, and the Internet in general 6

For enterprises, transformation can be whatever you want it to be… n n n 7 IPT, Lync and UC&C* Cloud based services Internet as a ubiquitous alternative to MPLS Outsourcing and extending managed services BYOD for wireless services Including some, arguably, less transformational activities: • Ethernet access • Equipment refresh • SIP Trunking • Changing supplier mix – regional vs. global * Unified Communication and Collaboration – or the Microsoft coined Universal Collaboration!

You might have to deal with the hype… n It can be difficult to work out what is truly relevant n Let’s take a snap-shot view on a few common “transformation” drivers 8

Transformation starts with strategy… n Not simply talking gap / opportunity analysis on the current state • It is more than a “Sourcing Strategy” for more of what you already have n About being prepared to engage earlier in • The vision and mission (for delivering IT and telecom services) • Helping and influencing the vision in translating this into goals and strategic objectives • Developing a strategic plan, and business case(s) 9

Transformation starts with strategy… n We support facilitation session / workshops for clients trying to pull this strategy together • Background and current landscape • Strategy objectives • Opportunity / actions identification • Actionable road-map based on opportunity assessment • Basis for ongoing iterative development of strategy 10

KEYS TO SUCCESSFUL TRANSFORMATION 11

What’s a Successful Transformation? n n Deal built on measurable business outcomes A focus on performance, customer cost and provider margin • Business affecting innovation only works if it works for everyone – cost reduction and performance / process improvements for the customer and attractive profits for the provider n 12 Heightened risk and reward • Transformations need buy-in by all stakeholders • The best provider often wins over the low bidder

What’s a Successful Transformation? n The provider is closely bound to the customer • Relationships are less “transactional” and more interdependent • Emphasis on aligning customer and provider interests • Governance designed to find improvements and make realignments • This heightens “valued partner” lock-in risk 13

Foundations for Success A Strategy Tailored to Specific Objectives n The strategy should be well-defined and agreed upon, encompassing SOURCING TECHNOLOGY n 14 • Sole sourcing vs competitive sourcing • Providers to engage • Structure of the sourcing program • Scope of program (including outsourcing or managed services) • Pricing model and requirements • Degree to which design / solution is pre-determined vs will be determined by the sourcing process • Basic principles of the required solution and requirements set • Defined and specified managed services And should be founded on well-defined needs and objectives

Foundations for Success A Competitive Procurement Process n Transformation projects are intensely competitive • They are attractive to providers because change projects level the playing field • Not taking advantage of that would be a crime! n n 15 Structuring procurements so you can compare competing solutions / bids without stifling innovation is important – and not easy Plan for a longer procurement process

Foundations for Success Business Case Supporting Desired Outcomes n n Successful transformation projects start with a robust business case The business case should address • Current costs, future state costs, and the cost to move from the current to the future state • Operational resilience, performance, functionality and usability n 16 The business case should be refined and updated as the project moves from procurement to contracting to implementation

Foundations for Success Disciplined, Collaborative, Flexible Sourcing Plan n n 17 Preparation • RFP / requirements document • Stakeholder management • Communications management Structure your procurement and negotiation process • Provide feedback verbally and in writing • Engage collaboratively with the providers • Document your communications

WAN TECHNOLOGY OPPORTUNITIES 18

Introduction n Increased network capacity is demanded by transformational technologies like collaboration, UC, and video, and by exploding growth in use of web content n Flat or declining network budgets require new approaches, solutions, and technologies to meet this demand n We’re going to examine some approaches which may help address this gap 19

Ethernet Access – What is it? n Last-mile transport using the Ethernet protocol for the local loop • Standards-based (but there are multiple standards) • Underlying bandwidth multiples of 10 Mbps (10 Mb/100 Mb/1 Gb/10 Gb, etc. ) • Provided as Ethernet over Fiber (Eo. F) and Ethernet over Copper (Eo. C) n n n 20 1 Mbps to 10 Mbps can be provided over voice-grade copper Higher speed services usually provided over fiber Ethernet handoff / interface at the premises instead of TDM (UNI)

Tale of Copper, Fiber & Coaxial Cable n The physical layer – historically (in the US) • “Business locations” have not been as well served by broadband facilities as have residences • No more than 10%-15% of all business locations were on anything better than copper • DSL was limited, e. g. , weak SLAs because of distance-from-CO restrictions • “Nx. T 1” – the multiplexed go-to service for those needing more than 1. 5 M 21

Industry Players Top 4 Ethernet US Providers by Segment Rank Incumbent Providers Competitive Providers Cable MSOs 1 AT&T Level 3 Time Warner 2 Verizon XO Cox 3 Century. Link Cogent Comcast 4 Windstream Zayo Charter Business 22

Industry Players n n Incumbent providers are pushing Ethernet Competitive providers have success with • Larger “transformational” contexts (many sites moving at once) • Installation of Fast. E/Gig. E (100 Mb/1 Gb) for connectivity to data centers and/or cloud services providers n 23 Rates are continuing to fall due to capacity growth and increased competition

Benefits and Issues Enterprise Experience Has Been Mixed n Benefits / Advantages • Standardized interface – straightforward and accepted globally • Recurring charges are often less than competing services (lower equipment, service, operational costs) • Scalable – permits the addition of bandwidth incrementally (can even be done remotely) • Effective E 2 E protocol from LAN to WAN n 24 supports multimedia services

Benefits and Issues Enterprise Experience Has Been Mixed n Issues / Challenges • Less available than legacy TDM service n n Enterprises with many locations in remote areas will likely find low-speed availability limited (even if promised initially) Diversity for multiple circuits can be a challenge • Lower speeds over Eo. C can deliver inconsistent performance • Longer installation intervals n n Ethernet installations are typically 75 -120+ days Special Construction at a site can takes 6+ months • Higher than expected costs for Special Construction 25

Use of Multiple VRFs with MPLS n VRFs (Virtual Routing and Forwarding) provides network segmentation and control between segments • Without the need for multiple ports or devices • Provisioned as an additional feature; check for capability and additional charges • Sites in different VRFs cannot communicate with each other without additional configuration n n 26 Improves network security; can eliminate the need for encryption and authentication May allow consolidation / optimization

MPLS Bandwidth on Demand (Bo. D) n Dynamic port or Co. S bandwidth changes (Vz. B) • Portal based access to change either port speeds • • n 27 (within existing access limitations) or Gold CAR Process immediately or schedule up to 365 days in advance Can change once per 24 hour period Not available with OSPF, EIGRP, DSL access or Nx. T 1 access Charges are blended based on days at different speeds Not to be confused with usage based billing options such as Hi. Cap Flex w/ AT&T

On-Net Access to the Cloud n Providers have been integrating network services with their own cloud services for some time • E. g. , Terremark, Savvis, AT&T Hosting, BT One Cloud n Such integration (via MPLS) is now being extended to 3 rd party cloud services such as • Salesforce. com, AWS, Azure, Google Compute n Benefits include • MPLS is more secure than Internet access to the cloud • Predictable network performance and reduced latency (normal MPLS any-to-any benefits) • Dynamic scalability to match cloud usage variability • Security and control 28

VPLS – Virtual Private LAN Service – MPLS alternative n n Layer 2 VPN technology – Ethernet only Best fit for high bandwidth requirements at selected sites (it is not universally available) • Can provide better price performance ($/Mb) than MPLS at higher bandwidths • Lower latency and higher security • Simplifies LAN/WAN boundaries (and equipment) –Ethernet interface looks like a regional or national LAN n 29 Requires a higher level of management (routing is controlled by the customer vs. by the provider)

Broadband VPN MPLS Access n As broadband speeds and performance improve, customers are looking at leveraging broadband for cheaper MPLS connectivity • Can leverage DSL, Cable, Wireless • Access MPLS core network via a secure gateway n Gateway should be in-region with user communities n Look out for extra charges • Often used as a back-up to primary MPLS circuit • Important to review SLAs • Watch out for complex contracting / product structures n 30 E. g. , no integration with broadband aggregation products

Internet Off-load n As Internet traffic grows exponentially Enterprises are starting to look seriously at Internet off-load • Providing Internet access at remote locations – rather than carrying traffic to the data center n Cisco’s i. WAN technology (becoming available on the latest routers) is an enabler • Allows more sophisticated routing of network traffic and management of routing plans 31

Internet Off-load n Once in place, Internet off-load can also be leveraged for non-critical business applications • Can allow reduction in MPLS network capacity, or simply accommodate growth n n 32 Cost savings rely on use of low cost (business grade) local broadband technologies / providers It’s common to examine broadband aggregation services rather than contracting with multiple local providers • SPOC for ordering, managing and invoicing

Summary Points n n 33 Transformation is a current buzzword CIOs (sic) can find transformation more appealing (or at least very helpful) than cost reduction as justification for important sourcing initiatives You need to think about what transformational solutions and services might be relevant Try to have a view on what transformation means to you

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