Managing a network across desktops located in disparate offices is becoming more complex and resource-intensive in the globalised business environment. It involves managing multiple contracts with different suppliers - one for the wide area network (WAN), one for the local area network (LAN) and several more for managing desktop and other applications. This scenario has created a compelling need for an integrated LAN/WAN service that can alleviate such complexities.

However, with the initial roll-out of integrated LAN/WAN services, it has become apparent that understanding of customer demands and requirements is virtually non-existent among service providers.

Suppliers are also unsure about the value proposition to be offered and the manner for addressing implementation-related issues such as pricing and service level agreements (SLAs). Even the level of technological awareness among customers, their decision-making patterns and the buying process are unclear to the market participants. Such reservations have forced them to adopt a cautious approach.

Against this backdrop, Frost & Sullivan's latest end-user study aimed to ascertain customer perspectives regarding integrated LAN/WAN, to identify how comfortable enterprises are with 'out-tasking' their LAN/WAN requirements and how much control the latter would actually hand over to a service provider.

The end user study also sought to determine the key factors considered by enterprises while evaluating a service provider besides discovering their requirements in terms of pricing structures and SLAs, two of the critical issues influencing purchase decisions.

Market trends across different segments indicate that enterprises are becoming increasingly comfortable with the concept of outsourcing their WANs or at least availing of managed services for WANs. However, in the case of the LAN, most medium-sized enterprises prefer to install and manage their own network systems.

"As with all new services, the integrated LAN/WAN market must be approached by highlighting the benefits while addressing the key concerns of customers," says Frost & Sullivan ( Industry Analyst Niamh Spillane. "Cost concern - both in terms of the total cost of ownership and time-related cost - is still the biggest issue for the majority of enterprises, and needs the immediate attention of service providers."

"Highlighting fringe benefits such as having a single point of contact, availability of long-term assistance and the design of a single, consolidated SLA could be useful in attracting potential customers," adds Ms. Spillane.

Integrated LAN/WAN service requires a high degree of customisation and hence, escalates into a project-based transaction. This, in turn, provides an opportunity for service providers to boost their revenue flow by 'locking-in' customers. The desire to increase average revenue per user (ARPU) has driven many service providers towards the development of a complete solution through which they can cater to the entire networking and information and communication technology (ICT) requirements of customers.

However, service providers need to take initiatives to overcome customers' concerns such as the lack of trust and apprehensions about tangible return on investment (ROI), the possibility of network disruption and legacy instalments besides confronting the reluctance to give up control by the in-house information technology department. This is a demanding task considering the prevailing slowdown in the telecommunications industry, unwillingness of enterprises to change and the difficulties in justifying replacement of existing systems/equipment.

"Understandably, integrated LAN/WAN is a nascent market shrouded with uncertainties that are unlikely to be eliminated until customers are educated about the benefits of integrated solutions and the subsequent acceleration in market adoption," says Ms. Spillane. "Any service provider intent on participating in this market needs to be in a position to dispel negative opinions of customers and convince them that they are offering a valid proposition."

The study's findings also reveal that implementations are likely to be made only after extensive deliberations on critical implementation aspects such as pricing and SLAs. This, in turn, is likely to prolong the decision-making process at least by a year.

For driving market adoption, respondents stressed the need for highly transparent pricing structures with no hidden costs. With regard to SLA, they insisted on availability, bandwidth, rapid response time, minimal downtime, penalties/compensation for downtime, reporting services, 24/7 support, defined fix times and quality of service (QoS).

The Frost & Sullivan study revealed that price was the most important criterion in the selection of a service provider, followed closely by its reputation and ability to meet SLAs.

Interestingly, many customers were unaware of the expertise of service providers and the range of services that can be offered by them. This calls for a straightforward marketing strategy exclusively focused on educating customers, enhancing market awareness, and thereby, developing a clear value proposition of integrated LAN/WAN solutions with a special emphasis on financial stability.

To achieve this, participants would need to develop case studies with clearly defined ROI arguments, train account managers in consultative selling and conduct frequent trade shows and web seminars. These steps could be expected to alleviate customers' concerns and gradually propel integrated LAN/WAN into the mainstream market.

If you are interested in a summary of this research service providing an introduction to the European Integrated LAN/WAN end-user industry, please send an email to Kristina Menzefricke, Corporate Communications at with the following information: full name, company name, title, contact telephone number, email. Upon receipt of the above information, the summary will be emailed to you.

Title: Integrated LAN/WAN End User Study
Code: B263


Frost & Sullivan, an international consultancy firm, has been supporting clients' growth for over four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes strategic consultancy, market intelligence and management training. Our mission is to work with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of more than 500 consultants, industry experts, corporate trainers and support staff spans the globe with 19 offices worldwide.

For further information, please contact:

Kristina Menzefricke
P: +44 (0) 20 7343 8376

Published on: 12:00AM on 8th April 2004