1. Enterprise Network Sourcing & Price: Cost Considerations for WAN Design
Brianna Boudreau
Senior Analyst

2. Basic WAN Sourcing Questions
What services are available and where?
How much do they cost and how are these rates changing over time?
How can I optimize my WAN sourcing to get the best network for my needs at the lowest cost?
Impact of Geography on total cost
Impact of provider selection on total cost
Impact of technology selection on total cost

3. Global Enterprise Networks
Surveyed provider community on what products are available in 166 global hub cities

4. What Services Are Available?
Global Availability of Enterprise Network Products, 2015
Ethernet services (EVPN, EoMPLS, EoSDH) growing fastest though, all over 10% CAGR threshold over last 4 years

5. Where Are They Available?

6. Who Can I Buy It From?
Top 10 International IP VPN Service Providers in Key Business Centers, 2015

7. What is it going to cost?

8. Prices Vary by Geography
Median 10 Mbps Best Efforts VPN Port Prices, Q1 2016

9. Prices Fall, At Varying Rates
Median 10 Mbps Best Efforts VPN Port Prices, Q Q1 2016

10. Performance May Not Be Cheap
VPN 10 Mbps Prices by Carrier in London, Q1 2016
Carriers charge an average of 22% more for CoS1 traffic over CoS 1. Premiums for CoS1 traffic in London extended up to 70%.

11. Annual Network Port Charge by CoS Configuration, Q1 2016
Cost vs. Performance
Annual Network Port Charge by CoS Configuration, Q1 2016
Higher CoS = 30% CoS1, 30% CoS2, 40% CoS3.
Base Model = 10% CoS1, 20% CoS2, 70% CoS3

12. Prices Vary Widely By Product
Median 10 Mbps Network Port Prices by Product, Q1 2016

13. Business Broadband Saves Big Money (Where Appropriate)
Price Multiple Between 10 Mbps Business Broadband and
VPN Solution, Q1 2016
Price Multiple between 10 Mbps Business Broadband and 10 Mbps VPN + Local Access circuit

14. Prices Range, So Provider Choice Matters
New York 10 Mbps, Best Efforts VPN Pricing, Q Q1 2016

15. Local Access Can Be Expensive
10 Mbps Metro Access Prices, H2 2015
10 Mbps 0-5 km
Discuss: greenfield buildings vs. built out office buildings, distance bands, carrier positioning

16. WAN Benchmarking Scenario
What do different WAN configurations cost?
How does my provider choice affect my WAN TCO?
What product choices will save me the most money?
What balance do I strike between cost and performance?

17. Our Hypothetical Network
Scenario analysis based on hypothetical global network
37 sites – 10 in Asia, 10 in Europe, 6 in LatAm, 10 in the US, and 1 in Africa

18. Our Hypothetical Network
Mix of Low and High Capacity Sites with Leased Line
& Ethernet Access
Capacities range from 2-1,000 Mbps. Most common are 2 and 100 Mbps
CoS mix: 10% voice/video, 20% Business Critical, 70% Best Efforts
Ethernet access preferred over lease line, except at low capacities.

19. Single Product Strategies
Annual Port Charge by Enterprise Network Product, Q1 2016
Network costs for using a single product type (all Providers, median rates) – this excludes Access and CPE data
Ordering may be simple, but not tailored for specific needs (and your network probably doesn’t have 1-size fits all needs)

20. Provider Selection & Network TCO
Annual Total Network Cost by Carrier Coverage, Q1 2016
Two methods of global network sourcing. One stop shopping from a global provider with most cities on-net. Managing multiple providers across countries or regions
Single provider strategy often comes with a price premium. Regional providers may be cheaper, but requirement more vendor management. Access as a wildcard – Global providers may have access procurement advantages, but are savings passed on to the consumer?

21. Hybrid Networks Options
Technology Matters
Hybrid Networks Options
All MPLS may be the past; MPLS, layer 2 & IP hybrids are the future
Layer 2 VPN for high capacity sites
IP connections for high cost sites or augmenting MPLS with DIA or broadband
Layer 2 point-to-point for inter-office/DC connections

22. Internet Offload to DIA
Further savings can be had when shifting capacity to DIA
For sites 10 Mbps and higher, we shifted 50% of each site’s capacity from VPN/EVPN to DIA service (savings offset somewhat by additional CPE spend)
Recall from earlier, Business Broadband as a substitute rather than DIA can lead to even deeper savings

23. Internet Offload to Business Broadband
BB at all sites below FastE, except Africa. MPLS kept at key, high capacity sites.

24. Share of WAN Spend by Site, MPLS Configuration
Site Optimization
Share of WAN Spend by Site, MPLS Configuration

25. Site Optimization Majority of Sites
Focused on 31 least expensive sites – set port pricing from Median to Low and access pricing from Median to 25th percentile
This models provider choice and negotiation focused on a wide variety of sites
From base model – Savings of $638,043 or 30%

26. Site Optimization Most Expensive Sites
Focused on 6 most expensive sites – set port pricing from Median to Low and access pricing from Median to 25th percentile.
This models provider choice and negotiation focused on getting a good deal at a few select locations
Savings over base model - – Savings of $661,726 or 31 percent
Savings over focusing on 31 least expensive sites approx $24k

27. Change in WAN TCO Over Time
Median CoS3 VPN WAN TCO, Q Q1 2016

28. Key Takeaways Sourcing Technology Negotiations
Provider coverage, port prices and access prices differ significantly around the world
Working with global or regional providers can have a significant impact on network cost.
Technology
IP VPN services are widely available. Ethernet availability is growing.
Numerous alternatives including Ethernet, DIA, and broadband can lower TCO, even while keeping MPLS as a key part of the network
Negotiations
Optimizing a few key sites can reduce network costs
Prices will fall over your contract term. Review them annually if possible!

29. Evaluation and Materials
Take this time to go the conference app find this class, and fill out evaluation.
If you need the PowerPoint, it’s on your thumbdrive