Who will enterprises trust to guide network transformation?

Who do you trust? Thirty years ago, enterprises answered that question with three almost-equally cited sources: their primary computer vendor, their network provider (almost always their “interexchange” provider), and their network equipment vendor. This fall, in a group of 158 enterprises who commented, the runaway leading response was “nobody.” Any other option was an afterthought. And while you could say that their first response was perhaps driven as much by cynicism as by reality, you’d then have to wonder how they got so cynical.

This is way more than an exercise in sociology, too. Trust is what guides decisions on tech, and on pretty much any other major investment, for individuals and enterprises alike. “Oh, how I need, someone to watch over me,” as the song goes. Over the years, one thing has remained constant, and that is the fact that enterprise IT pros who can’t find a trusted partner will hunker down on the status quo. They’ll reject new technologies, new players, new anything. Does that sound like what you’re hearing, and maybe doing, this year? When you’re asking how to transform networks in a low-trust environment, the answer you hear is likely “You don’t,” and that sounds familiar to many network professionals, too.

Who do we trust? What about network integrators, analyst firms who publish ratings, people (like me) who write technology articles? Enterprises admit that they use all of these sources, but their views on each are interesting. Network integrators are seen less as strategic partners than as suppliers of installation services, particularly for multi-vendor networks. Analyst firms’ reports are used mostly to justify decisions, not drive them. Technology writers are a mixed bag; most enterprises have some they trust, but they generally don’t trust the group.

If all this sounds like the knell of doom for meaningful network advances, I can cite some more music in a hopeful way. Remember “Everything old is new again”? Trust in 2024 seems to be circling back to the three sources of thirty years ago, with a few important changes. To pull the meaning out of all this, we need to look again at those trusted three of yesteryear.

Back then, roughly three-quarters of the enterprises said they had a “primary” IT vendor. Of those who did, almost two-thirds trusted that vendor more in 2023 than they had in 2020, making this the only category that actually saw trust improve over time. In fact, the primary IT vendor is again the most trusted source of network transformation insight. Enterprises who don’t have a primary vendor tended not to trust IT vendors at all, which is perhaps why they didn’t have one on strategic speed-dial when it comes to transformation planning.

Who did those dominant-IT-less enterprises trust for strategic guidance? Their network vendors and their primary network service provider, in roughly equal measures. That was also true for the one-third of companies who did have a primary computer vendor and didn’t trust that vendor much. But the “equal measures” here weren’t that impressive because fully one-third of both groups couldn’t name any source they trusted. This group, a group we’ve all read about, believed that trust was impossible and only contracts could serve you. There’s a lot of that going around, even when there are trusted vendors, but this no-trust group is, according to some, spending as much on contract lawyers as on technology assessment.

Enterprise wish list: A trusted partner and open technology

You’re probably wondering why there’s any hope here, so let me explain by digesting the numbers. There are 117 enterprises who commented on trust, who had a primary IT vendor, and 79 of them increasingly trust that vendor as a strategic partner. There are 41 enterprises who don’t have a primary IT vendor and 38 who have one they don’t trust strategically. That’s a total of 79 (interesting statistical coincidence), but 49 of that group have increased their trust in another source – 26 in their primary network vendor and 23 in their primary service provider. That leaves 30 enterprises who still don’t have a trusted partner for network transformation, almost a fifth of all enterprises who offered comments. It also means that over 80% have such a partner, and that’s the high point in trust for 15 years. That itself is interesting because it suggests that buyers are looking to “trust” one vendor, and that one vendor increasingly drives both strategy and purchasing.

So what are the 80-plus-percent doing in terms of planning and buying network technology? Well over 90% say that the most significant message is that best of breed is a bad idea. Ironically, almost the same number also want open technology in their transformation. Openness in the sense of creating a no-lock-in market isn’t all that helpful to the buyer. Openness is good for creating a consensus on a given element or architecture, or to ensure that somebody going out of business doesn’t strand you. Openness for product convergence is good, but they want source convergence too. One source, one trusted partner, period. That’s likely what was behind the Broadcom acquisition of VMware, and behind the recently announced HPE deal for Juniper. Mass up and move up, everyone. One enterprise said: “I don’t want to marry my lead vendor, but I want to go steady.”

What are the enterprises telling their vendors, including their going-steady preferred partners? That network technology is becoming secondary to application and mission, according to nearly all the enterprises. That’s the reason why computer vendors are more trusted than network vendors; the network is subordinate to the computer, which is subordinate to the applications, which are subordinate to the business mission. A computer vendor can navigate that chain the best.

Best, but perhaps not good enough. And that may be the challenge that picking a transformation partner may pose for enterprises. It may also explain why users want a single partner. To help with transformation, a partner needs to track that chain from mission to technology, and that requires a breadth of understanding that few can supply. Those who could do best may be the vendors who have persistent account presence, which means that they’re likely exclusive providers, or nearly so, and have been for some time. They have a dedicated account team for larger enterprises, industry specialists for smaller ones. Of the computer vendors, IBM has the greatest level of customer loyalty and the closest and longest-standing relationships. HPE is second, and Dell is third. A broad portfolio not only gives you more opportunity on the table, but it also gives you the revenue to justify assigning dedicated sales resources.

Differentiation key for network vendors

All of this sounds bad for network vendors, but there are signs in both directions. It doesn’t mean network vendors are going to face impossible competition from computer vendors. IBM sold off its networking, which suggests that maybe computing influence doesn’t have to spread to networking. On the other hand, HPE is buying Juniper, which makes it look like networking may be turning into nothing more than a way of building up a computer vendor’s portfolio. Do we flip a coin?

We don’t need to. The problem for network vendors is that transformation justifications are based on strategic shifts in what enterprises do with networks. That stuff is increasingly out of reach to network vendors, because those justifications aren’t found in the network. Only security products offer network vendors a shot at strategic transformation, and no vendor I’ve talked with believes that security spending growth can go on forever. That means transformation justified by cost reduction is what remains, and cost-based transformation equals commoditization. Network vendors can fight over commoditized scraps, but if computer vendors start exercising their strategic influence, the network vendors can’t move into the big-league projects.

For network equipment vendors and service providers, this explains a lot and also demonstrates a risk. These players have long faced commoditization of what they sell, and we can now see that this is because they can’t easily connect with a business case that will justify increased spending, so they fight over orders and RFPs. The risk, of course, is that the increased focus on tactical sales issues that this has created will be difficult for these players to reverse. That magnifies that cost-is-the-only-differentiator trend we’ve been seeing. Bucking that, according to these enterprises, is what network players should be working on in 2024.