Boost Revenue with Managed Application-Acceleration Service [Emerging Services]

Service providers can differentiate their MPLS VPN service by offering a complete WAN optimization and application-acceleration service based on Cisco® Wide-Area Application Services (WAAS) technology.

Abstract

A burgeoning global trend toward branch-infrastructure consolidation is creating a significant new managed-service opportunity. Enterprises that centralize their application, file, and print services need assurance that their branch-office employees can access services over the WAN as quickly as they could over the LAN. Service providers can meet this need by offering a managed application-acceleration service in conjunction with their existing Multiprotocol Label Switching (MPLS) VPN service.

Cisco estimates that the worldwide market for managed application-acceleration services will reach US$1.3 billion in 2011. The total revenue opportunity is even greater because enterprise customers that subscribe to the service are also candidates for additional managed services, including high availability, managed security, colocation, and storage.

Providers that introduce a managed application-acceleration service have a strong value proposition. The service optimizes branch-office application, file, and print services across the WAN while also reducing operational expenses, increasing operational efficiency, and enabling centralizing backup, which protects data and helps ensure regulatory compliance. Good candidates for the service have a few to thousands of branches and might be initiating consolidation efforts, experiencing slow application performance, or beginning WAN refresh projects.

This white paper, intended for service provider business executives, explains why business customers subscribe to a managed application-acceleration service, how the service works, and benefits for providers as well as their customers.

Why Business Customers Subscribe to a Managed Application-Acceleration Service

Approximately 80 percent of enterprise employees work outside of headquarters¹ and, not surprisingly, branches consume 70 to 90 percent of business resources.² Therefore, growing numbers of enterprises are consolidating their branch IT infrastructures in centralized data centers to reduce the costs of branch servers, storage, backup, and management, which Cisco estimates at US$6 billion annually.³ The approaching end of life for Microsoft Windows and Windows NT servers is galvanizing many enterprises to begin server consolidation now.

Centralized backup is an especially powerful incentive for branch consolidation. Most branch or remote offices that maintain local file servers, print servers, and network servers perform their own backup, which increases the risk of noncompliance with best practices or regulatory requirements. Cisco IT estimates that branches experience server outages an average of four to six times a year, and that data recovery takes an average of two days.

By moving the branch IT server and storage infrastructure to the data center, organizations gain the following advantages:

• Improved resilience and regulatory compliance, a result of consistent practices for security, business continuance, and backup

• Decreased operational expense

• Simplified IT infrastructure

• Avoidance of redundant processes, equipment, and administrative resources in multiple remote offices

• Improved business responsiveness by enabling dynamic provisioning of additional storage and giving authorized employees access to information throughout the company

Why hasn't every enterprise consolidated its branch IT infrastructures? A major barrier until now has been slow application performance. If an application that takes 10 seconds over the LAN takes 10 minutes over the WAN, the productivity loss can outweigh the benefits of branch consolidation. A managed service that accelerates application delivery to the branch overcomes this barrier. Service providers can further bolster customers' confidence in centralizing branch data servers with ancillary services such as server hosting, additional backup and recovery services, and business continuity services.

Managed Application-Acceleration Service Description

A managed application-acceleration service optimizes the performance of any TCP-based application across a WAN, thereby enabling enterprise customers to confidently deploy centralized applications and consolidate costly branch servers and storage into well-managed data centers. Table 1 lists the main service benefits:

Table 1. Business Value of a Managed Application-Acceleration Service for Enterprise Customers

Service Feature	Business Value
Improved application performance	Productivity increases because of enhanced performance for TCP-based applications, including SAP, Oracle, Microsoft Exchange, Lotus Notes, and Microsoft Office.
WAN link optimization	The existing WAN investment goes further because of reduced latency and effectively increased throughput.
Business data protection	Backup reliability increases because the enterprise can centralize infrastructure and processes in the data center. Backups over the WAN are faster and therefore more practical.
Service assurance	Enterprises can confidently out-task to the service provider because of 24-hour monitoring and management for faults, configuration, and performance, as well as monthly or more frequent reports.

Service Components

A managed application-acceleration service combines hardware, software, and services:

• Cisco wide-area application engines (WAEs): The service provider deploys a Cisco WAE at each branch office, as well as a core Cisco WAE in the data center where storage and application services are hosted. The Cisco WAE is available both as a module for Cisco integrated services routers (ISRs) or as an appliance. The service provider typically owns the equipment and leases or rents it to the enterprise customer.

• Cisco Wide-Area Application Services (WAAS) Software image and license, available in transport or enterprise versions.

• Central management system: The central management software is deployed on a Cisco WAE appliance in the data center and is managed locally or remotely by the service provider. Enterprise customers can log onto a Website to view recent statistics from the central management system. Service providers also have the option to provide customers with read-only access to the central management software so that they can view even more current statistics.

• Managed service: Services include assessment, design, and installation; 24-hour monitoring and management; performance reporting through an online customer portal; and equipment maintenance.

Phased Approach

Service providers can introduce the managed application-acceleration services in phases to begin earning revenues as soon as possible (Figure 1).

Figure 1. Three Phases for Offering Managed Application-Acceleration Services

• Phase 1 - Managed Service: The service provider introduces quality-of-service (QoS) guarantees for critical business applications as a value-added service for existing subscribers to its managed MPLS VPN service. The service provider manages Cisco WAEs at the branch offices as well as the core Cisco WAE in the enterprise data center. In this market-entry phase, the service provider can earn incremental revenue with little upfront investment because no changes are required to the service provider data center or network. The market-entry phase also helps retain customers that will eventually want a complete WAN optimization service.

• Phase 2 - Hosted Service: The service provider offers a hosted service, deploying the Cisco WAE as well as storage and application services in its own data center. This service attracts enterprise customers that want a backup data center and also appeals to small and midsize businesses that want to out-task their data center operations entirely. Service providers have the option to partition a single Cisco WAE to serve multiple customers. In this phase, the service provider can also offer additional data center services, such as application and server hosting, managed storage services, business continuity services, and Software as a Service (SaaS).

• Phase 3 - Advanced Application Management: The service provider offers managed application-acceleration services in conjunction with its application-aware VPN service. Most service provider networks cannot apply different QoS policies based on the application or subscriber. In contrast, a Cisco IP Next-Generation Network (NGN) can recognize the application, user, or site, and then use QoS to assign priority accordingly. Application-aware VPN services also enable more granular reporting of network usage, again by application, subscriber, or site.

Tiered and Pull-Through Services

To maximize the revenue opportunity for the application-acceleration service, providers can charge incrementally for tiered WAAS transport services and additional enterprise licenses. Table 2 shows tiered services and the enabling Cisco technologies.

Table 2. Tiered Services for a Managed Application-Acceleration Service

Tiered Service	Description	Cisco Techniques Used
Generic application acceleration	All TCP/IP applications are accelerated.	Compression, data redundancy elimination (DRE), and transport flow optimization (TFO)
Wide-Area File Services (WAFS)	Branch office employees can access remote files over the WAN as fast as if the files were local. Additionally, the service provider can set up and manage local print services on branch WAEs.	Read-ahead, prediction, suppression, and caching
Application-specific optimization	Enterprise customers choose the applications that they want to receive the highest priority.	Service provider needs application-management skills or else can work with a partner

Following are additional pull-through services and service options for managed application-acceleration services:

• High-availability cluster configuration, a premium service for additional business continuity.

• Enterprise-class storage area network (SAN), network-attached storage (NAS), and backup core. Fully managed, highly available SANs are attached to NAS gateways to provide a dedicated back-end infrastructure for the managed service.

• Daily replication of centralized data to a recovery site, for customers that require advanced business continuity and compliance.

• Completely automated backups using centrally managed, flexible data policies.

• Offsite data protection for primary data within the data center on transportable media.

• File-level restore services for data hosted or managed within the data center.

• Managed LAN, managed security, and storage transport services.

• Pre-positioning plan for software distribution.

• Data migration services to provide secure transport of data to primary storage.

Target Customers

Following are the characteristics of companies with the most to gain from managed application-acceleration services:

• Multiple branch offices with 5 to 200 people in each, with no or limited dedicated IT support

• Links from 128 Kbps to T3, with 40 to 200 milliseconds latency

• Branch file servers due for refresh

• Backup, software distribution, and collaboration challenges

• Knowledge workers who use IP applications, Microsoft Windows, and Microsoft Office

• Print services required in the branch

• Challenges in conforming to regulations such as the Sarbanes-Oxley Act and others which require access controls, business continuity, and visibility into business policies

• Initiatives to reduce total cost of ownership

Benefits for Service Providers

For service providers, a managed application-acceleration service provides immediate revenue opportunities as well as long-term strategic advantages:

• More strategic role in customers' business, strengthening customer loyalty: By positioning the managed service as a strategic part of business process transformation, the service provider augments its portfolio of branch office and business continuity solutions, and also increases its value beyond simply providing transport.

• Revenue opportunity: Cisco predicts that managed application-acceleration services will generate a total of US$1.3 billion in worldwide revenue through 2011. Pull-through services, such as managed storage and business continuity services, are expected to generate an additional $2.6 billion.

• Low cost of entry: Service providers can meet customers' business needs for a managed application-acceleration service at very low cost. The service requires no additional equipment or reconfiguration to the core network. Instead, it uses existing QoS mechanisms and security technologies such as access control lists and firewalls. The service provider is already selling connectivity services at the branch offices, so selling a managed service with a Cisco WAE network module for the Cisco integrated services router or Cisco WAE appliance is a natural upsell.

• Competitive differentiation: The managed service differentiates the provider's existing managed MPLS VPN service. Not only does the provider offer secure remote access to the corporate network, it can also provide fast performance with a complete WAN optimization service. This differentiator is especially appealing to enterprises that want to centralize mission-critical applications.

• An entry for cross-selling: Customers that subscribe to the managed application-acceleration service are also candidates for managed application-aware services, application-management services, managed storage, business continuity services, load balancing, and SaaS.

Benefits for Enterprise Customers

A managed application-acceleration service enables enterprises to experience the business advantages of branch consolidation. Major benefits include:

• Cost reduction: Centralized servers and storage can decrease capital expense, and centralized administration decreases operational costs. In addition, outsourcing 24-hour monitoring and management of branch office infrastructure to a service provider is generally more cost-effective than performing these functions internally.

• Improved resilience: The managed service provides 24-hour monitoring, centralized management, branch data protection, business continuance, faster recovery, and enhanced regulatory compliance.

• Improved responsiveness and flexibility: Enterprises that consolidate their branch servers and storage in a central data center can dynamically provision additional resources as needed to respond to changing business needs. Authorized employees in any location can access branch information and applications at LAN speeds.

• Improved productivity: Cisco WAAS technology accelerates application performance by a factor of 2 to 100, depending on the application (source: Cisco benchmarks).

Differentiators of the Cisco Solution for Wide-Area Application Services

All-in-One Solution

A complete, end-to-end solution for application acceleration, the Cisco WAAS system is integrated with Cisco IOS® Software, the Cisco integrated services router, and the Cisco application control engine (ACE), which provides load balancing. Uniquely, the Cisco WAAS solution combines all technologies needed for branch consolidation: application acceleration, WAN optimization, and wide-area print and file services.

High Performance

Cisco WAAS technology accelerates application performance by a factor of 2 to 100 compared to traditional WAN performance. Figure 2 shows the performance improvement for four common applications, and Figure 3 shows acceleration across several other popular protocols and applications.

Figure 2. WAN Performance Improvements for Microsoft Office Tasks (source: Cisco and customer benchmarks)

Figure 3. WAN Performance Improvements for Other Popular Applications

*Actual performance improvement varies based on user workload, compressibility of data, and WAN characteristics and utilization.

Cisco Powered Program Resources

The Cisco Powered Program, the premier partnering program for service providers, provides valuable marketing and technical resources to help service providers introduce, build, and deliver successful managed services. Marketing resources include market research, sales readiness training, and sales and marketing toolkits. Technical resources include training, managed service architectures, and managed services design guides and best practices. Members of the Cisco Powered Program can take advantage of Cisco expertise and market recognition for planning, building, and going to market with the managed application-acceleration service.

Conclusion

Consolidating branch application, file, storage, and print services in a well-managed data center offers strong business advantages for enterprise customers. The prerequisite is LAN-like performance over the WAN. Service providers can address the need by offering a managed application-acceleration service that includes the Cisco WAAS system as well as professional services. By offering the managed service, providers differentiate their managed MPLS VPN service and gain a new revenue source with little upfront cost.

For more information on the Cisco WAAS, visit: www.cisco.com/go/waas

For more information on the marketing resources available through the Cisco Powered Program, visit: http://www.cisco.com/cpn/marketing

For more information on the technical resources available through the Cisco Powered Program, visit: http://www.cisco.com/cpn/technical

For more information on managed services, visit: http://www.cisco.com/en/US/netsol/ns546/networking_solutions_solution_category.html

¹Nemertes Research 2006

²NetworkWorld 2006

³Estimates based on data provided by IDC and Gartner

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Boost Revenue with Managed Application-Acceleration Service

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