2015/01/06 NFV and SDN enable CSPs to stay relevant to their customers in the digital economy

Since the commercialisation of the Internet, telecoms has ceased to be a closed market with its own unique standards and processes; we just did not realise it. It has taken the market two decades to come to terms with the business consequences, and for communications service providers (CSPs) and their vendors to realise that increasing their relevance in the wider Internet economy will require significant changes to their organisations and processes. Using virtualisation techniques from IT, including network function virtualisation (NFV) and software-defined networking (SDN) technology to rethink the way communications networks are built and managed is critical for CSPs to rebuild relevance.

CSPs can strengthen their relevance by combining the best of the IT world and the telecoms world

CSPs' improved relevance will spring from improving their ability to quickly launch compelling new services. Vendors will increase their relevance to CSPs and CSP competitors by becoming more software-oriented and supporting customers' evolution into digital economy service providers. To prosper in the evolving cloud-based, virtual digital economy, CSPs and their vendors must do more than simply tap the new virtualisation technologies to improve asset and customer engagement flexibility: CSPs and their vendors must learn to combine the best heritage of the telecoms world (solid technical standards and operational processes, and a customer-centric approach) with the best of the IT world (agility, cost-efficiency, a flat development and operations (DevOps) organisation). NFV and SDN can enable the flexibility that will support increased relevancy, but only if they are implemented with clear business goals and a willingness to upend operational processes and human resource practices.

Virtualisation is the most significant communications networking shift in 50 years, so the evolution will not be quick or painless

CSPs competing for relevance in the digital economy must master the shift to cloud computing, NFV and SDN, which represent the most significant shift in communications networking since that from analogue to digital (see Figure 1).

Figure 1: Timeline for the development of communications networking technology [Source: Analysys Mason, 2015]

The following critical areas will require significant work during the next 2–3 years to create the proper base for realising the NFV/SDN-enabled promise of being important, not just relevant, in the digital economy:

• establishing sound business cases for NFV and SDN
• planning business and network evolution priorities with revolutionary technology
• managing organisational and process changes.

Analysys Mason is in the process of creating a business case framework for NFV and SDN. Meanwhile, in discussions with a range of CSPs and vendors, we have established a timeline illustrating the parts of network operations that are likely to benefit from NFV and SDN during the next decade (see Figure 2).

Figure 2: Roadmap of initial NFV and SDN use cases and functions adopted by CSPs, 2013–2023 [Source: Analysys Mason, 2015]

Business and operational support systems (BSS and OSS) must evolve to manage hybrid physical–virtual networks, and organisational and process change to support the shift will also be ongoing during this period.

New thinking is needed to harness virtualisation: a view from the SDN & OpenFlow World Congress 2014

In an Analysys Mason-led CSP keynote roundtable panel discussion on managing next-generation networks at the industry's largest SDN/NFV conference in Düsseldorf in October, Colt Communications, Deutsche Telekom and Telefónica called for new thinking to ensure that the industry overcomes existing, past and even future operational challenges. The following is a summary of the key messages from the discussion.

• Eliminate silos: CSPs expect vendors to develop solutions with a service and customer focus, extending beyond their own range of technology solutions and areas of strength via partner ecosystems and open, standards-based architecture. What is good for vendors applies to CSPs as well; operators must also eliminate silos and reach out to third parties that can add relevance to their communications services.
• Change operations: Vendors and CSPs must change corporate culture, staff mindsets and skills, and the tools and systems to migrate to a DevOps organisation where the design, development and operations teams are equally responsible for the problems and successes of operations and delivery (time to market). This is likely to be difficult, but it is essential.
• Increase process automation: Panellists agreed that the cost of running a poor or complex implementation for years may have been acceptable in the past, but will be unacceptable in the future. Some panellists claimed to be comfortable with a proliferation of orchestrators, provided the operational overhead is less than the status quo and they can increase service and operational agility. However, Analysys Mason believes this presumes a level of standards and interoperability to which the industry aspires, but has yet to demonstrate. We suggest a minimum set of orchestrators at the service and network levels as a design goal.
• Future-proof vNGN architecture: We will have failed as an industry if we implement NFV and SDN technologies but do not radically improve service agility, operational efficiencies and innovation capabilities and create a foundation that can meet the challenges and requirements needed for 5G and beyond.

Ultimately, relevance must be derived from offering compelling new services

A strong vNGN platform and a streamlined operations approach will support increased relevance in the digital economy provided CSPs build attractive new services on these assets. Policy and orchestration software will link the three components of differentiated and personalised services in a cloud-based NFV/SDN world: communications, intelligent devices and compute power.