Conventional wisdom says managed services providers (MSPs) and their customers should shift from lofty CapEx costs to predictable OpEx costs. But here's a radical next step: It's time for service providers and customers to find ways to aggressively drive down OpEx expenses. That's the chatter at Juniper Networks' (NYSE: JNPR) Global Partner Conference in Las Vegas, where CEO Kevin Johnson unveiled the company's software-defined networking (SDN) strategy. Here's the background.
During multiple keynotes, Juniper executives said service providers (telcos, cloud services providers, MSPs) and large enterprises are starting to drown in OpeEx costs. Each time you build a new service that requires management, it adds incremental OpEx costs. Johnson predicted SDN -- which moves network applications onto virtual machines -- will help to drive down OpEx costs.
That seemed like a radical, forward-thinking statement to me. The world is talking about CapEx to OpEx, and Juniper is saying the next really big inflection point on IT budgeting and payments has arrived -- time to lower OpEx costs.
Is Juniper right? I asked that question during multiple one-on-one meetings. Here are some soundbites:
From CEO Kevin Johnson:
"I'm absolutely confident in the statement that we can make [some OpEx costs] go away. We will dramatically accelerate the time it takes to get things implemented. When we work with our largest customers, they have far more OpEx [challenges] vs. CapEx. It’s not all abouy commoditizing the physical network. Our domain requires custom silicon for the scale and volume of traffic that our customers must handle. Now we’ll change the operating expense part of the equasion. It comes down to execution for us."From Brad Brooks, VP of worldwide enterprise marketing and solutions:
"We will have some specifics to share over the next few months. We will have business model case studies that will get behind that statement. When you turn networks into a bunch of apps, the potential for value creation in software is immense. If you capture even 10% of that value for software it’s big."From Lauren Flaherty, executive VP and chief marketing officer:
"SDN addresses cost pressures. Think about the [financial] pressures of people, resources, training and time. Those are all operating expenses. High-performance networking [like SDN] will address that."
True ConfessionI concede: Many MSP-oriented software companies (particularly PSA and RMM software providers) have spent recent years showing MSPs how to automate and drive down costs. So in a way, Juniper is merely repeating what the MSP industry has already stated.
But what's different here? I think Juniper is the first company to offer this hugely important sound bite: The hype about shifting from CapEx to OpEx is getting old and tired. It's time for all businesses to take a hard look at those OpEx costs. Surely, there are additional ways for MSPs and businesses to drive down those operational costs...
Read between the lines and MSPs are in perfect position to lead that transition.