There’s a significant change underway in the network technology industry brought on by various internal and external factors. Supply chain issues, a hybrid work environment, security concerns, a talent shortage, and artificial intelligence (AI) are shifting focus to channel partners regarding networking technology. That will heavily impact the technology industry outlook for 2024 and beyond.
Relying on partners is nothing new, as the cloud ushered in an era of partner services. However, with the growing complexities of technologies combined with continuous issues like talent shortage and procurement delays, more companies today are looking to expand partnerships to keep operations running. For the most part, this shift is only going to drive innovation.
In this article, we will discuss the following:
- An increased dependence on channels.
- Managed security services becoming sought-after.
- Other trends you need to be aware of.
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Increased Dependence on Channels
The reliance on partners for products and services will increase in 2024 and later. According to IDC research, nearly 60% of organizations will have increased the number of partners they work with.
The research notes several factors, such as pandemic-induced supply chain shortages, cloud adoption, and a rise in the use of infrastructure as a service (IaaS), that contribute to the increased reliance on channel partners.
But challenges aren’t the only reason for enterprises to take this route, as many are also partnering for innovation.
Vendors also adopt the “service” ideology, offering products and platforms as a managed service. For instance, Cisco plans to sell most of its offerings as managed services in the next few years. The announcements at Cisco Live 2023 hinted at the platform direction the company is taking with integrations and partnerships with other companies.
IBM is also taking a similar approach with its storage products. It aims to turn its storage offering into a data platform for clients with increasingly sophisticated storage needs.
More and more vendors are expected to lean into creating mutually beneficial partnerships and relying on channels for distribution.
Managed Security Services Take the Top Spot
Research by Canalys, a technology market analyst, found that merging networking and security is making managed security services the most sought-after. The research, commissioned by Cisco, found that the growth in spending on managed security services may surpass the overall growth of spending on IT.
Of course, this trend can be attributed to the growing threat of sophisticated cyberattacks. As enterprises ramp up security efforts and regulations on data protection get tougher, malicious actors are also becoming increasingly good with their attacks. In short, there’s little room for mistakes on the part of enterprises.
That’s why detection will be critical for the growth of managed security service providers. Companies interested in hiring managed services to protect their networks will likely choose a provider emphasizing threat detection and response.
The research from Canalys says that current investments in this sector have often failed because the focus is simply on protection, which isn’t enough.
Rise of Network Observability
An emerging area within the network technology industry is network observability. That refers to the ability to get insights from all network layers, allowing enterprises to find the answers to the bigger questions and optimizing all operations, not just applications or individual parts of the infrastructure.
Companies like Cisco are doubling down on their network observability tools and bundling them with other services.
The observability tools and platforms market stands at $2.4 billion in 2023 and is expected to grow to $4.1 billion by 2028.
Much of this growth for the observability market will come through AI. The technology is positioned to provide more observability for enterprises with data and telemetry.
Cisco is already betting on aggregating data from different systems within the network for observability, using AI to achieve the goal.
AI Fever to Continue
AI will continue to shape networking technology as critical hardware in networks, including servers and storage, become more AI-ready. Reports have shown that current enterprise infrastructure lags behind in providing the power AI applications require. Therefore, as more companies adopt AI development in-house, they’ll look to upgrade network infrastructure with more powerful equipment.
Again, channel partners will prove crucial in this expansion, as companies will turn to channels that offer AI solutions. In that regard, AI as a service is expected to grow with an impressive CAGR of 25%, possibly reaching $75 billion by 2032.
After tackling the chip shortages for the past few years, vendors are gradually shifting focus to innovation, more specifically, AI innovation. Major networking equipment manufacturers like Cisco, Juniper, and Aruba have announced a slew of new hardware explicitly incorporating or enabling AI adoption.
Networking Product Sales May Surpass Servers
Canalys also predicts that sales of networking products through channels will surpass servers by 2027. According to the company, switches, routers, and other LAN equipment sales account for 36% of sales through channels. However, this number will reach 40% in the next few years.
The current adoption of Wi-Fi 6 and the imminent release of Wi-Fi 7 can be heralded for this change. As the latter becomes available, companies will refresh a chunk of their network equipment to adopt the newer, faster Wi-Fi protocol.
This adoption may not necessitate a refresh of servers, which many companies have already been delaying due to long lead times and increased spending cuts.
The Takeaway
The technology industry outlook shows channel partners, including managed service providers, are increasingly vital for organizations navigating modern challenges. Managed security services, mainly focusing on detection, are becoming crucial in the face of rising cyber threats.
Vendors like Cisco and IBM are adapting to a service-oriented approach, turning products into managed services. Network observability and AI integration are emerging trends, with channel partners pivotal in providing AI solutions.
The forecast of networking product sales surpassing servers by 2027 highlights the growing importance of networking hardware, driven by advancements like Wi-Fi 6 and Wi-Fi 7. Infrastructure, especially hardware, and collaborative partnerships with channel entities are pivotal in driving innovation and improving network capabilities and performance.
Infrastructure is at the heart of everything, and PivIT understands that better than anyone. As a procurement channel for many enterprises, we’ve already established what research from Canalys found. We’ve helped our clients through the lead time delay fiasco, ensuring their refresh cycles for network hardware aren’t delayed more than they have to.
Leveraging our extensive network of suppliers and partners, we can deliver hardware for data centers, campuses, and field offices in a shorter lead time than your average VAR.