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Aruba Research: Network as A Service Adoption to Accelerate by 38% Within the Next Two Years as Businesses Adapt to COVID-19
CIO Review
SINGAPORE - Media OutReach - August 24, 2020 - Businesses will experience profound changes as employees' transition to hybrid work environments following COVID-19, in turn changing the way IT teams procure and consume networking solutions. In response to the pandemic, IT leaders are now investing more in cloud-based, analytics and assurance, edge compute and AI-powered networking technologies as business recovery plans take shape. That's according to a global survey of 2,400 IT decision-makers (ITDMs) commissioned by Aruba, a Hewlett Packard Enterprise company.
As IT leaders respond to the challenges associated with enabling a highly distributed workforce and the emergence of the hybrid workplace -- with people needing to move seamlessly between working on campus, at home and on the road -- they are looking to evolve their network infrastructure and shift away from CapEx investments towards solutions consumed 'as a service'. The average proportion of IT services consumed via subscription will accelerate by 38% in the next two years, from 34% of the total today to 46% in 2022 globally, whereas from 35% to 48% in APAC, and the share of organizations that consume a majority (over 50%) of their IT solutions 'as a service' will increase by approximately 72% in that time both globally and in APAC.
"With the emergence of the hybrid workplace, IT leaders in Singapore are being asked to deliver a delicate balance between flexibility, security and affordability at the edge," said Justin Chiah, Senior Director, South East Asia, Taiwan and Hong Kong/Macau (SEATH), for Aruba, a Hewlett Packard Enterprise company. "It has become increasingly clear that to support these new needs, IT decision-makers are attracted to the reduced risk and cost advantages offered by a subscription model. While 85% of organizations surveyed in Singapore (77% for global) have delayed or postponed projects because of COVID-19, businesses remain resilient and are already looking for ways to remain agile, as seen from their increased investment in cloud-based networking (38%), analytics and assurance (42%), edge compute (40%) and AI-based networking technology (28%)."
The report, which surveyed ITDMs in over 20 countries and eight key industries, looked at how they have responded to IT and business demands in the wake of COVID-19, what investment decisions are being made as a result, and the consumption models now being considered. A number of key findings stood out:
IMPACT OF COVID-19 HAS SIGNIFICANT IMPLICATIONS
ITDMs reported that the impact of COVID-19 has been significant both on their employees and short- term network investments:
• 22% describing the impact on their employees as 'significant' (widespread furlough or layoffs), while 52% considered it 'moderate' (temporary reductions in some functions), and 19% 'low' (very few jobs impacted).
• ITDMs in India (57%) and Brazil (34%) were most likely to cite a significant impact on their employees, while those in Hong Kong (12%) and Mexico (10%) reported the least, highlighting a massive swing in experiences between regions.
• 78% in APAC markets said that investments in networking projects had been postponed or delayed since the onset of COVID-19, and 27% indicated that projects had been cancelled altogether.
• Project cancellations across APAC markets were highest in India (37%) and lowest in Australia (17%), showing there are also significant disparities between countries within the same region, while 37% of ITDMs in education and 35% in hotels and hospitality globally said they have had to cancel network investments.
THE FUTURE IS BRIGHT: INVESTING FOR EMERGING NEEDS
By contrast, future plans are aggressive, with the vast majority of ITDMs are planning to maintain or increase their networking investments in light of COVID-19, as they work to support the new needs of their employees and customers.
• An astounding 38% globally will increase their investment in cloud-based networking, with 45% maintaining the same level and 15% scaling back. The APAC region was the global leader with 45% stating an increased investment in cloud-based networking, rising to 59% among ITDMs in India. With cloud solutions allowing for remote network management at large scale, these capabilities are particularly enticing for IT teams when being on-premises is not possible or challenging.
• ITDMs are also seeking improved tools for network monitoring and insight, with 34% globally planning to increase their investment in analytics and assurance, 48% indicating that they will maintain their level of investment and 15% reducing it. This allows IT organizations to troubleshoot and fine-tune the network more efficiently, as demands on it are augmented by a distributed workforce.
• There is also an emphasis on innovative technologies that simplify the lives of IT teams by automating repetitive tasks. We found 35% of ITDMs globally are planning to increase their investment in AI-based networking technologies, with the APAC region leading the charge at 44% (including 60% of ITDMs in India, 54% in Hong Kong, and 28% in Singapore).
ADOPTION OF NEW CONSUMPTION MODELS IS ACCELERATING
As ITDMs shape their investment plans, they are looking at alternative modes of consumption to achieve the best balance of value and flexibility.
• 59% in Singapore say that they will explore new subscription models for hardware and/or software, 61% managed services for turnkey hardware/software and 34% financial leasing -- all as a result of the impact of COVID-19. This reflects the increased need for more financially flexible models in a challenging environment.
• Networking subscription models are more popular in APAC (61%) than in the Americas (52%) or EMEA (50%), and at a country level the highest demands are in Turkey (73%), India (70%) and China (65%).
• The industries most likely to be considering the subscription model are hotels/hospitality (66%), technology and telecom (58%) and education (57%). The impact of COVID-19 on IT behavior has made the desire for flexibility and predictability in spending, while reducing risk from initial capital costs, greater than before.
• In stark contrast, just 8% globally plan to continue with only CapEx investments, though the proportion is higher in the Netherlands (20%), US (17%), Spain (16%) and France (15%). Across industries, 15% in retail, distribution and transport will continue to focus solely on CapEx investments, versus just 5% in IT, tech, education and telecoms, and 2% in hotels and hospitality.
"With the needs of customers and employees have changed so comprehensively in recent months, it's no surprise to see IT leaders seeking more flexible solutions," says Chiah. "They are pushed to adapt fast and ensure that more complex, distributed networks can securely support the experiences users' demand. The need for agility and flexibility in network management is now greater than ever. From the global survey, it shows that 58% of ITDMs in APAC region would explore managed service solutions -- higher than the global average of 53%, which is a reflection of how the positive outlook that the APAC businesses have."
While the pandemic has clearly impacted ongoing projects at varying degrees, this research suggests these impacts will also catalyze medium-term investment into advancing networking technologies, and a shift to more flexible models of consumption that limit up-front capital demands. Trends that were already taking hold will now accelerate, including the move to the Edge and the adoption of cloud-based and AI-driven intelligent networks.
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