We’re heading into the fall now, and with the change in season will come a new period of technology-strategy planning for both enterprises and the service providers. I’ve tracked the former group with a formal fall survey since 1982 and the latter since 1991, and the results of the surveys are always interesting. This year instead of publishing a special report in November to cover the results, I’m integrating them into our December Annual Technology Forecast issue of our technology journal, Netwatcher.
For the enterprises, the challenge with project spending has been identifying projects that provided a net benefit. Over the last ten years the focus of enterprise projects has shifted from providing some enhancement to the top line to one of defending the bottom line. That means shifting from a productivity-driven thesis for projects to a cost-management thesis. The problem is that cost management vanishes to a point; you can’t continually build IT spending on a static set of benefits and at the same time demand “improvements” in ROI unless you take spending levels toward zero. There is still a credible “cost” on the table, associated with the management of application performance, but it’s not been addressed in an organized way by the vendor community in general and by networking vendors in particular. Neither group has been able to come up with productivity-based benefits to drive spending UP, either. This fall we may see whether that will change.
For network operators, the big problem is obvious; monetization. Right now I’m seeing operators pretty pessimistic about wireline investment except in emerging economies. The Internet is the only wireline driver for traffic growth and it’s a driver whose growth is currently non-monetizable under neutrality rules and the unlimited-usage paradigm. Operators have identified three priority areas for monetization (content, mobile/behavioral, and cloud) but only the latter is getting much near-term capital support because the former two rely almost totally on the emergence of a service-layer paradigm—an NGN Advanced Intelligent Network architecture. That’s not been happening, at least not in an open sense, and so I’m seeing an accelerating shift of capex to mobile networking, where dollars buy cell sites and backhaul and switches and not routers. That shift works against the network vendors overall, but in particular against those who don’t have much of an RF/cellular stance. Which is why Cisco did their agreement with NEC, of course.
Operators haven’t abandoned monetization of content or mobile services; Telefonica just restructured to create a division that’s explicitly charged with that task, for example, and our survey in May showed that most operators had board-level projects underway to identify a variety of monetization goals. The current problem is that about half these projects have near-term milestones the operators say they can’t meet for lack of conformant implementation tools. I’m always amazed at these complaints because they show that even when vendors are confronted by buyers with well-articulated requirements they’re finding it impossible to simply address them. Instead they want to talk about taking a “first step” that, absent any credible longer-term vision for the project, might be the only step they can support. That’s what’s stalling progress.
One vendor who has recently taken some of this to heart is Alcatel-Lucent, who has quietly beefed up its Application Enablement story with some real insight into how services are created. For example, they say that the service layer develops “Platform APIs” that can then be exposed to developers, and an example of such an API is multi-screen video! I just finished an open-source app note on this same service opportunity, and I’d love to be able to compare it to the details of the Alcatel-Lucent approach, but so far the inner workings of these Platform APIs and the way they get developed (including by whom) isn’t on the website. I’ve also noticed some recent positioning by NSN in this space, and even by Ericsson (who has been gaining some traction in the multi-screen video space over the summer). An interesting contrast to Cisco, who despite having what might be the clearest technical picture of a service layer seems to be stalled by reorganizations in the exploitation of their assets.