Analyst(s):Neil Rickard, Bjarne Munch, Ted Corbett, Katja Ruud, Takeshi Ikeda
Driven by cloud IT service adoption, the market for global enterprise network services is undergoing a generational shift in both technologies and the provider landscape. Infrastructure and operations leaders must adapt their network sourcing approaches to reflect this transformation.
Gartner defines the global network service market as the delivery of fixed (wireline) enterprise networking services with coverage in at least three of the world's five major geographic regions.
The global enterprise network service market is on the cusp of a major transformation, with new generations of software-based virtualized network technologies enabling new services and new business models that place less emphasis on the ownership of large-scale infrastructure. Therefore, this Magic Quadrant is focused on transformational technologies or approaches aimed at addressing the evolving needs of enterprises, including greater agility and the adoption of cloud-based applications and infrastructure. Our assessment is not simply focused on the market as it is today. Technologies evaluated in this report include those detailed below.
WAN services, predominantly managed hybrid WANs — Combines Multiprotocol Label Switching (MPLS), internet virtual private networks (VPNs), and Ethernet services. Hybrid WAN architectures, especially when they incorporate broadband internet access, are typically much more cost-effective than pure MPLS networks. Fully featured hybrid WAN services should support secure local internet access and distribute traffic across multiple links based on application policies.
Cloud connectivity — Direct MPLS and/or Ethernet connections to leading providers of cloud services, both infrastructure as a service (IaaS) and SaaS. These services improve the performance, availability and security of connectivity to critical cloud services, compared with public internet access. The insertion of network functions, such as firewalling and WAN optimization, into these connections is gradually becoming available.
Managed software-defined WAN (SD-WAN) services — Lightweight edge devices with zero-touch installation able to dynamically route traffic over different links based on application policies under central policy management. SD-WAN improves hybrid WAN agility by allowing easier and faster deployment of new sites, flexibility in the link types used and simplified addition of new applications to the network. In addition, SD-WAN services typically provide significantly enhanced levels of application visibility compared with traditional managed router services. SD-WAN is the most widely adopted of the emerging network services.
Network function virtualization (NFV) services — The replacement of special-purpose network devices, such as routers, security devices or WAN optimizers, with virtualized software. This can be run in NFV service nodes located in the provider's network or in virtual customer premises equipment (vCPE) — on-site x86 devices, typically optimized for network-edge use supporting multiple virtualized network functions. NFV allows network functions to be activated on demand and consumed on an "as a service" basis, improving both the agility and cost-effectiveness of the enterprise WAN.
Software-defined networking (SDN) services — Software programmability of the network, so that a single-access connection (typically Ethernet) can be dynamically configured to deliver varying bandwidth and/or multiple services including Ethernet, internet and MPLS services. These services enable the rapid accommodation of new applications and other changes in traffic patterns.
In addition, it is highly desirable for providers to offer value-added networking services, including, but not limited to:
Managed WAN optimization
Managed wireless LANs (WLANs)
Integrators, virtual operators and carriers are eligible for inclusion in this Magic Quadrant, but only if they will bid for stand-alone WAN deals, and provide and manage offerings that include the WAN connectivity.
In the past 12 months, the need to support continued enterprise adoption of cloud services, as well as the desire to improve the agility of the network (to align with the greater agility of cloud and bimodal approaches to IT), has transformed enterprise requirements and buying criteria for global networks. Cost control remains important, but not if it constrains agility.
To support these needs, enterprises are increasingly willing to consider smaller providers and innovative new services, such as managed SD-WAN, SDN and NFV services. They are placing less emphasis on supplier size, network scale and the availability of large numbers of provider staff to deliver customized capabilities.
There is an increased emphasis on standard off-the-shelf managed services, rather than customized solutions, and in consuming network services on an "as a service" basis.
Network service providers (NSPs) are taking advantage of the marketplaces created by communications hubs to allow them to source access, which is distance-insensitive, at the national or even regional level, reducing the need for the deployment of a large number of network points of presence (POPs). This is dramatically lowering the barriers to new provider entry into the global network service market.
We have changed both the inclusion and the evaluation criteria of this Magic Quadrant to reflect these important trends.
Source: Gartner (February 2017)
AT&T is a leading U.S. incumbent operator, with an extensive global networking business. Of the major global providers, AT&T has been a leader in pursuing NFV, with its FlexWare (formerly Network Functions on Demand) services. These are able to be deployed both on-premises using its Universal CPE (uCPE) x86 devices and in AT&T Integrated Cloud (AIC) nodes, which are network-based NFV service nodes. AT&T is planning to roll out AIC nodes in far greater numbers than any other competitor, with 84 already deployed and plans for over 300 outside the U.S. by 2H18. AT&T has been extending its own network into markets such as Latin America that were covered by partners under its previous "global virtual model," although its network remains strongest in the U.S. and Europe. AT&T has extended its IP Flexible Reach SIP trunk offering — which was previously only available in the U.S. — to 24 countries worldwide. U.S.-headquartered enterprises or those requiring significant U.S. coverage should consider AT&T for their global networking services.
AT&T's FlexWare NFV offering, one of the few such services actually launched, is currently available in 153 countries, with multiple virtualized functions that include routers, firewalls and WAN optimization, and with SD-WAN planned for 1H17.
In October 2016, AT&T announced two managed SD-WAN services based on VeloCloud, filling a major gap in its enterprise networking portfolio. They include an on-premises solution and a network-based service, built into its AIC NFV service nodes, which will become available in 1H17, enabling additional configuration options and scalability.
AT&T's NetBond cloud connectivity offering connects to 16 cloud providers in 50 locations globally (more than most other providers in this report), and supports virtualized firewall services.
Gartner clients without a significant U.S. presence report low levels of sales interest from AT&T in their global network business.
Gartner clients frequently cite price as an issue when considering AT&T, particularly for sites in emerging markets such as the Middle East, Africa and Latin America, where it has less-dense network coverage.
AT&T is still conservative in its approach to network sourcing and contracting; for example, it is reluctant to incorporate benchmark-based price revision.
BT continues to market itself as a cloud services integrator supported by its Cloud of Clouds strategy. It has a strong hybrid WAN offer, including cellular-based rapid site delivery. BT was an early adopter of cloud connectivity services and SIP trunks. BT's plans for NFV and vCPE services, which it markets as Dynamic Network Services, will see progressive rollout of these capabilities throughout 2017 and 2018, culminating in approximately 50 NFV service nodes globally, with an app store of virtualized functions. BT's network has extensive global coverage, with particular strength in Europe and Latin America. The provider should be considered by all enterprises with global networking requirements.
BT's cloud connectivity service, Cloud Connect, connects to six IaaS and SaaS providers across 13 cities in nine countries globally, and is one of a few such services to allow the insertion of virtual services such as WAN optimization and firewalling into these connections.
BT has a broad range of application visibility and optimization capabilities, and offers web/application performance monitoring bundled into larger deals.
BT plans to offer managed SD-WAN services based on Nuage Networks in 1Q17, in addition to its current Cisco IWAN-based service.
BT's plans for NFV and vCPE services are later than those of several other providers in this Magic Quadrant.
Gartner clients still report some issues with BT's new site delivery and incident management, although BT's investments in service and delivery have significantly reduced levels of dissatisfaction.
The vendor's network and sales coverage in the important U.S. market is not as strong as that of its U.S.-headquartered competitors.
CenturyLink is the third largest U.S. network service provider. However, in comparison to leading providers, its global coverage is relatively modest outside North America. On 31 October 2016, CenturyLink announced its intention to acquire Level 3 Communications, also featured in this report. The deal is expected to close in 3Q17. CenturyLink should be considered by organizations requiring extensive network coverage in the U.S., but with less extensive requirements in other regions.
CenturyLink was early to launch a commercial managed SD-WAN service (based on Versa Networks) in the U.S., which it plans to extend internationally in 1H17.
CenturyLink has one of the largest internet service backbones in the U.S.
CenturyLink has specific networking services for the financial services sector, such as IQ+ Financial, offering low-latency transport between 50 financial exchanges.
CenturyLink has limited network coverage outside the U.S., with points of presence in only 17 countries; and a number of services, such as SIP trunks and cellular WAN access, are currently only available in the U.S.
CenturyLink's vCPE and NFV services will not be available internationally until 2H17 and will have only a limited range of virtual network functions at that time; however, a virtualized security service is already available globally.
CenturyLink's Direct Connect cloud service has limited coverage — in terms of cloud providers and locations — compared to the services from leading providers in this report. It connects to five IaaS providers, via three locations in the U.S., with plans to expand internationally in 1Q17.
Global Cloud Xchange is the enterprise networking arm of Reliance Communications, a large Indian network service provider that owns undersea cables circling the globe and connecting large emerging markets such as India, China, Asia/Pacific and the Middle East to the U.S. and Europe. It focuses on serving markets along those routes. Global Cloud Xchange delivers hybrid WANs and its Cloud X WAN services for SD-WAN, vCPE and NFV are in the evaluation phase. Global Cloud Xchange should be considered for global networks whose coverage requirements are primarily focused on linking Asia/Pacific and the Middle East to the U.S. and Europe, and/or those requiring very high-bandwidth services between major global hubs.
Global Cloud Xchange has a strong standardized hybrid IP WAN offering, with comprehensive SLAs.
Global Cloud Xchange has a very extensive global cable network that is able to address high-bandwidth needs between major global hub locations.
The provider's cloud connectivity offer directly connects to four leading IaaS providers in 11 cities globally.
Global Cloud Xchange has not yet launched SD-WAN, NFV or vCPE services, although a phased rollout is planned during 2017, beginning with Cisco-based SD-WAN in 2Q17.
Global Cloud Xchange's network coverage in Eastern Europe, Latin America and Africa is weaker than that of leading providers in this Magic Quadrant, relying instead on partners for depth of coverage of these regions.
The provider's own SIP trunking service is only available in India, with global coverage via partners.
GTT is a smaller, but fast-growing, provider of global enterprise networking services. It operates one of the largest internet backbone networks. GTT has broad network coverage in North America and Europe, but limited coverage in other regions; although, GTT is continuing to add points of presence to its network at a significant rate. On 9 January 2017, GTT completed its acquisition of Hibernia Networks, an independent network operator, adding extensive undersea cable assets, a terrestrial fiber network and a portfolio of high-capacity network services to its portfolio. GTT should be considered for global networks, particularly those requiring strong coverage of North America and Europe.
GTT offers hybrid WAN services and has more than 2,000 local access partners globally, enabling flexible end-to-end WAN designs.
GTT offers global SIP trunks and has direct cloud connectivity to four IaaS providers in 19 locations in North America, Europe and Asia/Pacific.
GTT operates one of the largest internet backbones in the world, which shares a common backbone with its MPLS services.
GTT does not yet offer SD-WAN, NFV or vCPE. SD-WAN is planned for 1Q17, while some NFV and vCPE capabilities are planned for 4Q17.
GTT's own network coverage in Asia/Pacific, Latin America and Africa is weaker than that of leading providers in this Magic Quadrant.
Compared with most other providers in this Magic Quadrant, GTT has lower brand recognition and sales coverage, causing it to miss out on being considered for many opportunities.
Level 3 has an extensive global network, which is particularly strong in North and South America and Europe. It currently offers managed hybrid WAN services, and, while it has selected SD-WAN vendors, it is not expecting to launch services until 2H17. Level 3 is also planning to launch vCPE and NFV services in the second half of 2017. On 31 October 2016, CenturyLink, also featured in this report, announced its intention to acquire Level 3 Communications. The deal is expected to close in 3Q17. Level 3 should be considered for global networks, particularly those requiring strong coverage of North America, Latin America and Europe, but with less extensive requirements in other regions.
Level 3's Adaptive Network Control platform is an SDN service, currently supporting bandwidth on demand for Ethernet services globally and MPLS services in the U.S., with plans to extend the MPLS service coverage globally in the first half of 2017.
Level 3 has direct cloud connectivity to 26 cloud providers in 63 locations, with security gateways in many of these locations.
In 2016, Level 3 extended its Voice Complete SIP trunk service from North America to five European markets, with plans to extend it still further in 2017.
Level 3 does not currently offer managed SD-WAN services.
Level 3's plans to roll out NFV and vCPE are later and less complete than those of leading providers in this report.
The provider has been adding POPs in Asia/Pacific, but Level 3's own network coverage of Asia/Pacific, the Middle East and Africa is weaker than its coverage of other regions.
Masergy is a comparatively smaller, but fast-growing, provider of enterprise network services that uses a software-defined-platform-based approach to delivering network services. This made it one of the earliest providers to deliver SDN, NFV and vCPE globally. NFV services can be delivered from vCPE devices or 48 NFV service nodes that are supported by a much larger number of access nodes. Masergy uses this platform to offer managed hybrid WAN and SD-WAN services. Masergy has SIP trunk services in 21 countries globally. Masergy should be considered by organizations requiring network services in the major economies globally.
Masergy offers a global NFV and vCPE platform with a wide range of virtual network functions including: SD-WAN, router, firewall, encryption, WAN optimization, session border controller and encryption.
Masergy's Intelligent Service Control (ISC) portal offers real-time customer control as well as extensive analytics, visibility and reporting.
Masergy offers direct cloud connectivity via its Cloud Marketplace to eight cloud providers across 17 locations worldwide.
Masergy has a limited network of its own in Europe, Asia/Pacific and Latin America, and none in Africa and the Middle East. Significant expansion, especially in Europe, is planned for 2017 and the company currently delivers services in over 75 countries.
Masergy's platform approach makes it less suitable for unmanaged, bandwidth-only network needs.
Compared with other providers in this Magic Quadrant, Masergy's global brand recognition is low, and, being early to market, the language it uses to describe its services is different from other providers, causing it to miss out on being considered for many opportunities.
NTT Communications is the incumbent provider in Japan, one of the leading regional providers in the Asia/Pacific region, and, through its ownership of Internet Solutions, a strong provider in Africa. Its network coverage in other regions, while growing, is not as strong. Through its acquisition of Virtela, NTT Communications gained a broad suite of NFV services, delivered from 50 points of presence globally, to which it has added vCPE services. NTT Communications currently offers SD-WAN based on one vendor, with support for multiple additional vendors planned in 2017, and direct cloud connectivity to five cloud providers in 15 countries. NTT Communications should be considered by enterprises with global WAN needs, and it is particularly strong for enterprises requiring extensive coverage in the Asia/Pacific region and/or Africa.
NTT Communications' Virtela NFV platform supports a wide range of virtual functions, including WAN optimization, firewalls, intrusion detection system (IDS)/intrusion prevention system (IPS) and VPN termination, deployed in 50 nodes globally or in vCPE devices in customer locations.
NTT Communications' global network is particularly strong in the Asia/Pacific region and Africa, where it enjoys a reputation for high service quality.
Dimension Data, a separate company in the NTT group, frequently introduces NTT into accounts and also provides support services to NTT Communications.
NTT Communications' own network coverage is more limited than other leading providers, particularly in Latin America, the Middle East and Eastern Europe.
NTT Communications' rollout of SD-WAN services is behind that of the Leaders in this Magic Quadrant, although support for multiple vendors is planned for 2017.
Some Gartner clients report issues with the service quality they are experiencing from NTT Communications, principally in North America, especially when compared with its general reputation for high quality.
Orange Business Services has the broadest global coverage of any provider, including all the emerging regions, with particular strength in France, Poland, Russia and Africa. Orange has now fully embraced hybrid WANs and is taking an evolutionary approach to SD-WAN, with services based on Cisco IWAN and on InfoVista, each delivering some elements of SD-WAN. Orange also has an offer called Easy Go Network using technology from Ciena and Fortinet, which can deliver other SD-WAN attributes including zero-touch provisioning and "bring you own access." NFV services delivered from vCPE and points of presence are planned for 1Q17, with an initial eight NFV POPs growing to 40 by 2018; although, confusingly, Orange refers to this service as SDN. The vendor should be considered by all enterprises with requirements for managed global networks.
Even allowing for its recent network consolidation, Orange Business Services still has the broadest network coverage in terms of countries connected to its own network, with strength in all the major emerging regions.
Orange's cloud connectivity offering, VPN Galerie, connects to 11 cloud providers in 15 cities and offers virtualized firewalls and WAN optimization for these connections.
Orange's SIP trunk service has global coverage, which was extended to the U.S. in 2016 and offers a full self-service capability for number management.
Orange's evolutionary strategy to SD-WAN has led to it having multiple overlapping offers, none of which currently includes the full range of SD-WAN capabilities.
Orange prefers to offer managed network services and does not typically pursue unmanaged, bandwidth-only network opportunities.
Although Orange Business Services' network reach is very broad, it lacks the depth of some of its competitors in some major markets, including in the U.S., the U.K. and Germany.
Sprint is a U.S.-based, fixed and wireless service provider majority-owned by SoftBank of Japan. In 2016 Sprint created a new Global Wireline Business Unit to increase its focus on large-enterprise needs. Sprint does not offer a managed hybrid WAN service, but it has selected VeloCloud as an SD-WAN vendor, with services expected to launch in 1H17. Its cloud connectivity services are currently based on Equinix Cloud Exchange. It has an extensive network in North America, lighter network coverage in other regions and none in Africa; although, it provides services in 155 counties using a combination of its own network and partners. Sprint should be considered by organizations requiring wide network coverage in North America, but with less extensive requirements in other regions.
Sprint has dramatically expanded its U.S. MPLS network coverage from 30 to 146 points of presence in 2016, with more expansion planned for 2017.
Sprint has a strong global SIP trunk offer covering North America, Europe and Asia.
Gartner clients report that Sprint is easy to do business with, with good portal functionality and good global account management.
Sprint does not currently offer hybrid WAN or SD-WAN services, although SD-WAN using VeloCloud is planned for 1H17.
Sprint currently has no specific plans to deliver vCPE and NFV services, but these services are included as part of its longer-term efforts to virtualize its network.
Sprint's own network coverage in Asia/Pacific, Latin America and Africa is lighter than that of leading providers in this Magic Quadrant.
Tata Communications' network coverage is particularly strong in India, Asia/Pacific, the Middle East and Africa, and continues to grow with 22 new POPs added in 2016. In addition to its unique Izo Internet WAN service, Tata Communications has added Izo Hybrid WAN and two variants of Izo SDWAN: Izo SDWAN Prime, which uses Tata Communications-developed software to control Cisco routers; and Izo SDWAN Select, based on software from Versa running on x86 hardware. A full vCPE offer with multiple virtual functions is planned for trials in 1Q17. Tata Communications' Izo Private Connect offers direct cloud connectivity from 18 gateways to a range of cloud services and virtualized WAN optimization; while Izo Public Connect provides direct internet connectivity to cloud services. Tata Communications should be considered for global networks, particularly those requiring strong coverage of Africa, the Middle East and the Asia/Pacific region.
Tata Communications has strong plans for SD-WAN and vCPE, including a unique offer that can deliver SD-WAN-like capabilities on legacy Cisco routers.
Tata Communications has a strong global SIP trunk offer with full public switched telephone network (PSTN) replacement in 21 countries and unique video calling support.
Tata Communications Izo Internet WAN is a unique transport service, offering a price-competitive alternative to MPLS using predictable routing across multiple internet service provider networks to deliver end-to-end SLAs, managed encryption, monitoring and reporting, and is now available in 82 countries.
Tata Communications does not yet have a full NFV service platform with a suite of virtualized functions, although, trials with 20 NFV POPs are planned in 1Q17 and its Izo SDWAN Select offer is virtualized.
The vendor's network coverage in Latin America and Eastern Europe is weaker than that of other leading providers in this Magic Quadrant.
The vendor does not currently offer managed LAN and WLAN services globally, but plans to launch a cloud-managed LAN service in 1Q17.
Telefonica Business Solutions is a dedicated business unit focused on the enterprise market, ranging from small businesses to multinational companies. While Telefonica has a global presence, its geographical focus and strength is in Latin America (particularly in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru) and Europe (particularly Spain, Germany and the U.K.), where it has significant local operations and network presence. Telefonica offers hybrid WANs and has deployed SD-WAN services using Cisco IWAN and Viptela. MPLS connectivity to cloud services is delivered directly and via Equinix to Microsoft and Amazon Web Services (AWS), and is available in Europe, the U.S., Latin America and Asia/Pacific. Telefonica currently has NFV security services deployed from a small number of NFV POPs, with plans to add some additional POPs and additional virtualized functions during 2017. Telefonica is particularly well-suited to enterprises with strong coverage requirements across Latin America and Europe.
Telefonica's network coverage in Latin America and Europe is strong.
Telefonica's SIP trunking offer has PSTN replacement in over 60 countries, the most of any provider.
Feedback from Telefonica clients shows consistent satisfaction with current functionalities for most areas of Telefonica's networking portfolio.
Outside of its geographic focus areas, Telefonica has weaker coverage and sales presence than the Leaders of this Magic Quadrant.
Telefonica's plans for NFV services are behind those of the Leaders in this Magic Quadrant, especially for vCPE.
While Telefonica has excelled at developing custom solutions for its customers, both from a services and commercial perspective, it has struggled to incorporate some these capabilities into its main portfolio.
Telstra is a major network service provider in Asia/Pacific. Its capabilities were strengthened through its acquisition of Pacnet, which had a unique joint venture in China and an innovative SDN/NFV network called the Pacnet Enabled Network (PEN). Telstra offers managed SD-WAN using Cisco IWAN and is considering a second SD-WAN vendor. Telstra is also planning a vCPE appliance for multivendor virtual network functions (VNFs). Telstra's multidomain orchestration platform, Symphony, will initially cover the vCPE platform and evolve to cover both PEN and the vCPE platform. Telstra interconnects its PEN and MPLS networks to four cloud providers in 10 cities worldwide. Telstra uses network-to-network interface (NNI) agreements to extend its coverage, and has uniquely added instrumentation within its partners' networks to ensure consistent performance of these connections. Telstra should be considered by organizations requiring strong network coverage in the Asia/Pacific region, but with less extensive requirements in other regions.
Telstra's PEN network is an SDN/NFV network focused on data center interconnection, with 32 POPs globally, and it offers multiple network-based virtual functions.
Telstra has a unique joint venture in China, giving it particular strength in delivering services to this important market.
Gartner CIO research shows Telstra has positive brand recognition as an enabler of cloud IT.
Telstra's support of, and roadmap for, SD-WAN, vCPE and NFV is incomplete and based on multiple separate platforms.
Telstra's network coverage is weaker outside the Asia/Pacific region than that of leading providers in this Magic Quadrant, particularly in Latin America, Africa and the Middle East.
Telstra has limited experience in supporting very large global networks.
T-Systems has reorganized to create a specific Telecoms organization to deliver enterprise networks globally. It has a global network with its strongest coverage of Europe and very deep coverage of the central European countries. T-Systems offers hybrid WANs, including cellular backup, rapid deployment and WAN optimization. A managed service based on Cisco IWAN running on x86 hardware is planned, with pilots expected in 2017. T-Systems has founded the Next Generation Enterprise Networking Alliance (ngena), a separate company to deliver SDN, NFV and vCPE services globally, in combination with regional alliance partners. Ngena is expected to begin delivering services in 3Q17, growing to 22 global NFV POPs. Enterprises with global networks that are heavily weighted toward Europe should consider T-Systems.
In 2016, T-Systems launched its own SIP trunk service with coverage in 19 countries, although some of this coverage is based on partners.
T-Systems has a partnership with Akamai to enhance the performance of internet VPNs and internet-based cloud access.
T-Systems has a strong portfolio of managed LAN and WLAN services, including cloud-managed and per-port utility options.
T-Systems is reliant on the innovative but untested business model of ngena for NFV and vCPE services, but ngena is behind leading providers in delivering these services.
T-Systems' "Universal Cloud Gateway" currently only connects to public cloud services hosted in Germany by T-Systems, although it has plans for expansion to additional regions and cloud services in 2017 via the Equinix Cloud Exchange.
T-Systems' coverage outside of Europe is not as strong as leading providers in this Magic Quadrant, forcing it to rely more heavily on NNI partners.
Verizon has an extensive global network and was the first network service provider to deliver managed SD-WAN services from multiple vendors, starting in 2015. Verizon has a strong global SIP trunk offering and a bandwidth-on-demand capability for its MPLS network, which delivers SDN-like outcomes. Based on Gartner client feedback, Verizon seems to have recovered from its recent service quality issues surrounding the introduction of its Verizon Rapid Delivery (VRD) initiative. Global enterprises of all sizes should consider Verizon for both managed and unmanaged networks.
Verizon offers managed SD-WAN services globally using both Viptela and Cisco IWAN.
Verizon offers NFV, with a strong library of virtualized functions, on vCPE in 65 countries. Network-based NFV from 30 NFV service nodes is in limited release, with general availability planned in 1H17.
Verizon's Secure Cloud Interconnect cloud connectivity connects to nine cloud providers in over 50 global locations, and virtualized services can be applied to these connections.
Verizon's coverage of the Middle East and Africa is not as extensive as some of its competitors.
Some Gartner clients still report confusion and less negotiating flexibility around the pricing and contractual conditions for the migration of existing services to Verizon Rapid Delivery services.
Some Gartner clients report that Verizon has not been as aggressive in offering its new generation of network services to its existing clients as it has been for new opportunities.
Vodafone continues to expand its geographic network coverage with direct coverage in 73 countries. Vodafone has introduced direct cloud connectivity to three providers in eight cities across Europe, Asia/Pacific and North America, with virtualized security services, and plans to add three more cloud providers, four more cities and additional virtualized services in 2017. Vodafone offers managed SD-WAN services based on Cisco IWAN. Vodafone plans to introduce SDN/NFV services as part of its "ready network" program, with 20 NFV POPs in 2H17, growing to 34 by 2018, and with vCPE in 2H17. Enterprises with coverage needs that are weighted toward Europe, the Middle East, Africa or Asia/Pacific should consider Vodafone.
Vodafone has added a further eight countries to its global MPLS network to reach a total of 73 countries directly (182 countries indirectly), comparable to leading global providers. Additionally, it has extensive national networks in 23 markets including the U.K., Germany, South Africa and India.
Vodafone will launch its own global SIP trunk service covering 17 countries in 1Q17.
In 2016, Vodafone undertook several initiatives to automate its processes, leading to reduced cycle time for international fixed orders, from 82 to 73 days, and delivery on customer-agreed dates at 96%.
Vodafone is behind the Leaders in launching SD-WAN, NFV and vCPE services, although its ready network roadmap will deliver these capabilities in 2017.
Vodafone's coverage of South America is light compared with leading providers in this Magic Quadrant, and its coverage of the U.S. is lighter than that of U.S.-based providers.
Gartner clients using Vodafone network services globally sometimes cite frustrations with alignment issues between the Vodafone entities in different geographies.
We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.
The following vendors met our revised inclusion criteria:
Global Cloud Xchange
No vendors were dropped from this Magic Quadrant.
To qualify for inclusion vendors need to:
Provide Global WAN services to enterprise customers, with a minimum of five POPs in each of the following regions: Asia/Pacific, North America and Europe.
Have contracts signed in three geographic regions out of the following five: North America, South America, Europe, Africa and Asia/Pacific, within the past 12 months for global network services.
Generate at least $250 million in direct global enterprise network service revenue annually (excluding domestic and wholesale business).
Not simply resell network services from another global provider, or simply resell services from regional providers in any of the European, North American and Asia/Pacific regions.
Gartner analysts evaluate vendors on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective; and to positively impact revenue, retention and reputation within Gartner's view of the market. Our emphasis is on a vendor's service quality, pricing and track record. These elements are particularly important for global networks, because the issues of infrastructure, language and culture are more challenging than if applicable to only one country.
Product or Service
Source: Gartner (February 2017)
Gartner analysts evaluate vendors on their ability to convincingly articulate logical statements. This includes current and future market direction, innovation, customer needs, and competitive forces and how well they map to Gartner's view of the market. Visionary providers should have a clearly articulated strategy in evolving areas of enterprise networking, including, but not limited to, networking for cloud services, SD-WAN, SDN, network function virtualization and vCPE. The portfolio should be broad enough to satisfy the evolving requirements of most enterprises, not just a specific vertical industry or customer size.
Offering (Product) Strategy
Source: Gartner (February 2017)
Vendors in the Leaders quadrant are performing well today and maintain a stable organization with a clear vision of market direction. They deliver comprehensive portfolios of network services, across broad geographies, with good service quality. They address the global networking needs of a broad range of enterprises is terms of size, geographic distribution and vertical industry. Leaders shape the direction of the market by extending their coverage, developing new class-leading capabilities and new commercial models, and deploying these at scale.
These vendors are strong in execution, but narrower than Leaders in their vision for taking market leadership. Their focus is more on established network services and geographies, and they are typically followers of the market innovations created by Leaders and Visionaries.
Visionaries have market-leading plans for the future in terms of geographic and/or network service innovation. However, their current capabilities are not class-leading in terms of scope and/or quality.
Companies in the Niche Players quadrant may focus on a particular segment of the market, as defined by characteristics such as size, vertical sector, geographic coverage or technology, and may be strong providers for those requirements. However, they lack the current capabilities to address the needs of the broader range of enterprises or the vision to significantly alter their position in the market.
Global enterprise networks continue to grow in importance as enterprises deploy centralized critical applications including cloud services, which are often hosted in markets that differ from the point of consumption. Video, Internet of Things and big data/analytics continue to drive up enterprise bandwidth needs by an average of 30% per year. With digital initiatives making businesses evermore dependent on IT (and, therefore, their networks), reliability and performance control are growing in importance.
This demand is being met not only by the global providers featured in this Magic Quadrant, but also by enterprises combining multiple regional operators as an alternative to a single global provider, and by system integrators creating networks for enterprises by interconnecting multiple providers using carrier hubs. This intense competition is driving down unit prices for global networking services. However, in a market where there are no meaningful price lists, enterprises will obtain the best prices only via competitive procurement and strong negotiation.
The number of global network service providers included in this research has grown, with enterprises increasingly willing to consider smaller, often more flexible, providers for their global networks. In addition, regional providers, such as those featured in Gartner's Critical Capabilities for U.S. wireline, Pan-European and Asia/Pacific network services, and the Market Guides for Pan-African and Pan-Latin American services, may have limited global capabilities or can be combined to fulfill an enterprise's global networking needs.
The global network service market is rapidly moving toward a more software-driven, "as a service" model, with increasing levels of visibility and self-service via portals and APIs. However, this means that providers are increasingly reluctant to allow any deviation from the standard offering, as it will require the deployment of a fully custom solution at a much higher cost and the solution will be in danger of rapidly becoming obsolete in this fast-moving market.
The adoption of hybrid — and now software-defined — WANs is moving the network buying discussion away from technologies and more toward outcomes and service levels. Providers continue to improve their SLAs with more realistic objectives and more meaningful penalties for failing to meet those objectives, increasingly including the right to cancel the service in the event of chronic breach. Installation lead times — a pain point for many enterprises with global networks — are now starting to be covered by SLAs, and providers are making considerable efforts to improve delivery times; although, they are often frustrated by local access providers. The ever-increasing speeds of cellular services are making this technology more useful as a rapid deployment solution, as well as providing a truly diverse backup option.
The global networking market continues to increase in complexity, with most contracts involving multiple services. In the responses to our vendor reference survey for this Magic Quadrant, virtually all of the references used MPLS services, approximately two-thirds used internet VPNs, a third used Ethernet services, and 40% used managed routers. SIP trunks, security services, WAN optimization and managed LAN/WLAN were the most significant services used by reference customers, beyond the WAN itself.
Enterprises' adoption of cloud IT service delivery is driving transformation of their WAN architectures, adding new origin points for applications. Global network service providers are now deploying a range of capabilities to address enterprises' cloud connectivity needs. Virtually all providers have directly connected their MPLS and Ethernet networks to leading cloud service providers such as Amazon and Microsoft — with the specific cloud providers and cities connected being key differentiators. Additionally, leading providers have enabled virtualized security and WAN optimization services to be added to these connections.
New global network proposals are predominantly for hybrid IP WANs, combining internet with MPLS, deployed in active/active configurations, with different applications using the most appropriate link type, and increasingly with direct internet access from every site, including corresponding security solutions. Leading providers are offering managed SD-WAN services to simplify the management of complex hybrid configurations and to speed up the deployment of new locations. We expect virtually all providers to have deployed this capability by the end of 2017.
To support internet-connected cloud services, some providers are launching enhanced internet service capabilities in conjunction with partners like Akamai, or enhancing their own internet services with new nodes and improved peering, so as to improve the performance of the internet portion of their hybrid WAN offers.
Ethernet services (virtual private line and virtual private LAN services) are principally used for data center interconnection. Different combinations of each of these services can be used to obtain different service levels appropriate to each enterprise location.
WAN access is evolving, with traditional leased-line access, such as T1 or E1 lines, no longer proposed in new deals, except when no other form of access is available, such as in some emerging markets. They have been replaced by optical Ethernet access at 10 Mbps, 100 Mbps, 1 Gbps or even 10 Gbps. In developed markets, enterprises tend to purchase access lines with much higher speeds than they currently require, with the actual port capacity limited to their current needs, allowing them to easily and quickly upgrade capacity in response to changing requirements. Some providers are delivering bandwidth-on-demand services, enabling self-service changes by the enterprise itself via a portal, often using SDN technologies.
For smaller, less critical or remote locations, broadband (increasingly, "superfast broadband" such as VDSL, cable modem or passive optical network [PON]) is the access technology of choice, despite having poorer SLAs than Ethernet access. When enterprises require large numbers of broadband connections, they can find that they are able to get better pricing than that offered by global service providers. In response to this, many providers now support "bring your own broadband," where the service provider delivers managed services over broadband sourced by the enterprise, which either purchases its broadband directly or from a broadband service aggregator.
Finally, cellular connectivity (4G where available) is increasingly being used for backup, rapid deployment or temporary locations. As with broadband, enterprises may be able to get attractive deals for data-only mobile services themselves, which will then be managed by their global provider.
The vast majority of global WANs are delivered on a managed service basis, with the on-site devices, such as routers, security appliances and WAN optimizers, provided and managed by the service provider; although, U.S.-headquartered multinationals are more likely to manage their networks in-house. Providers are now exploring alternative ways to deliver this functionality, including NFV, where these capabilities are delivered as software on x86 standard servers, either on-site vCPE or in the provider's points of presence. NFV can either be delivered on top of existing transport networks, such as MPLS or hybrid WANs, or as a feature of a software-defined network. These offerings promise to greatly improve the agility of enterprise networks, with the potential for the rapid deployment of new sites, as well as on-demand capacity upgrades and the addition of incremental services. Although Gartner expects rapid uptake of these services over the next two to three years, they are at the early stages of their deployment and no two providers have the same roadmap, let alone rollout timetable.
An increasing number of global WANs incorporate managed application visibility and/or WAN optimization, with some providers now offering application-level visibility by default. SD-WAN services, which operate based on application-level policies, also typically offer inherently higher levels of application visibility.
New deployment options, such as network-based and branch-based virtual-machine-based options, enable lower cost and greater flexibility in deployment, as well as the ability to optimize cloud services.
Enterprises are also extending their use of managed services into areas beyond the WAN, such as managed LAN and wireless LAN, due to the commoditization of these functions and the desire to reduce the number of suppliers involved in the end-to-end delivery of the network. This is especially true when the WAN and LAN are used to support IP telephony or unified communications. Standardized utility and/or cloud-managed LAN services, with portal visibility, are increasingly common.
SIP trunk adoption continues to grow, and it is the most common add-on service among the reference customers surveyed for this report. In many mature markets, ISDN has become a legacy technology and the price differential is increasingly in favor of IP voice. Global SIP services need to accommodate the complex national regulations related to fixed voice services, and this can inhibit SIP adoption, especially cross-border consolidation, and services in emerging markets and in markets where country-level taxes and other regulatory restrictions can make SIP service costs prohibitive. Coverage, including the availability of inbound and outbound calls, special rate numbers, resilience features, pricing, and various call routing options, is a key differentiator.
Downward pressure on global network service prices is relentless (e.g., global MPLS services see unit price declines averaging 10% per year, although with strong regional variance). Gartner has produced a report summarizing and predicting pricing trends for different services and geographies, "How to Save 10% to 20% on Your Next Landline and Mobile Telecommunication Service Contract."
The response from providers varies, with some focusing on extending their own networks, while others are relying heavily on NNI connections to partners to improve their regional coverage. Most providers are increasingly using carrier-neutral communications hubs, such as those operated by Equinix, to allow them to cost-effectively interconnect with multiple access, backbone and cloud providers. These hubs, particularly when combined with NFV and/or SD-WAN, have dramatically reduced the level of investment required to be competitive in the global network service market, allowing smaller providers, including some of the new entrants in this report, to offer solutions competitive with those of the largest providers. However, maintaining a consistent set of service features and user experiences across all of these different elements is challenging.
Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.
Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.
Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.
Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.
Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.
Business Model: The soundness and logic of the vendor's underlying business proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.
Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.
Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.