Based on the data and research from market analysts, as well as the insights from our consulting experts, the telecommunications landscape in 2014 will see some major changes in the data services space. Enterprises, especially IT departments, should set and execute a strategy to manage increasing bandwidth demands and plan for technology shifts both in the near term (big data, cloud computing, and Carrier Ethernet) and longer-term (Internet of Things).
Here are the most critical considerations for organizations reviewing their 3-5 year data strategy:
1. Bandwidth Demands: U.S. business wireline data is expected to triple from 2012 to 2017, driven by cloud computing and video. Video growth will come from collaboration tools (Unified Communication and WebRTC), consolidated video standards and growing consumer acceptance of interactive (Facetime, Skype) and pure streaming video services. We predict that this increased use of video by consumers will translate to demand for similar technology solutions in the enterprise.
To put consumer video appetite in its proper context, video will consume an estimated 80 percent of all US public IP traffic in 2014, with Netflix making up 30 percent of traffic alone. SMBs, start-ups and a growing number of large enterprises are migrating from IT consumption to the cloud. This is often based on needs for OPEX vs. CAPEX solutions of their exploding data demands. Cisco predicts this is the year when we will see work move away from data centers and toward the cloud.
Key Takeaway: Bandwidth demand planning will be critical for enterprise IT departments to successfully budget and then to execute their internal networks, servers/storage, and third-party connections. Failure to plan collaboratively within their companies broader business plans create the risk that the enterprise’s bottom-line will be negatively impacted when IT has to ‘spend its way’ out of their capacity problems (or worse, if the enterprise fails to compete because of the constraints).
2. Ethernet Growth: According to Northridge’s global consulting expert in access products, Jeff Kissell, “Carrier Ethernet usage is much simpler, more scalable and flexible than other access options. As you expand beyond domestic offices, business managers may need to consider the access services in other countries. The further an office gets from the larger cities, Ethernet will become less ubiquitous.”
The Carrier Ethernet market growth will become more popular as cloud deployments grow and Ethernet becomes the ideal technology. Other factors fostering Ethernet growth include the lower operating costs for carriers of IP/Ethernet network as compared to TDM networks, along with government and carrier plans to migrate voice service to VoIP.
Key Takeaway: Metro Ethernet, and Ethernet access growth continues in the US as other methods decline. Expect similar Ethernet growth internationally, but coverage will be impacted by proximity to metro areas. The closer a business is to a metro area, the more access it has to Ethernet. Enterprises must plan for technology migration to Ethernet in their equipment purchasing/leasing as well as their carrier contracts else they will find themselves ‘land-locked’ outside this shift in the technological tides.
3. Internet of Things (IoT) and Machine-to-Machine (M2M): IoT includes connected devices leveraging the power of robust networks and big data. Miniaturization, battery technology, and ubiquitous wireless connectivity will lead to M2M connections to be the primary driver. Cisco projects that 25 billion devices will be connected by 2025.
Key Takeaway: Many of these 25 billion devices will be critical components of an enterprise’s service delivery, operations, inventories, vendor management, assets, and/or IT. We may look back on the period of 2014-2015 and identify enterprises that broadly planned for this technological tectonic shift – which is well underway already in 2014 – as the Darwinian indicator of survival in the 2020s.
Migrations to the cloud continue to see substantial growth, and the IP traffic growth is startling. Enterprises should plan for tremendous growth in data communications and external bandwidth demands. Most enterprises should plan for increased cloud implementation as PaaS, as well as Ethernet growth in the access services around the world.