Everyone knows that Software Defined Networking (SDN) and Network Function Virtualization (NFV) technologies are key to future Service Provider(SP) success. But how to get there is something that most service providers are struggling with. I was at SCTE/ISBE conference in Philly last week, which is one of the largest cable technology shows with over 10,000 attendees roaming through the Philadelphia convention center. I gave a session on the business impacts of SDN and NFV. I was also able to attend a few of the talks to get an idea of where the overall cable industry is moving from a technology standpoint.
One of the key areas of focus was 5G and its emergence as an opportunity for operators to get into new business models driven by IoT and digitization. And the common theme was that to take advantage of the next generation digital opportunities, cable operators have to start moving to SDN- and NFV-based architectures to differentiate themselves in the marketplace.
While SDN and NFV were recognized as ways forward for SPs, every SDN/NFV session focused on specific solution deployment – From SD-WAN, to SD-Optical and SD-DOCSIS. So coming out of those sessions, I thought, if operators are expected to transform how they do business and compete in a digital market, they will have to look at a comprehensive migration beyond deploying specific solutions.
So here is a way forward that could make the transition more transformational, smoother and operationally impactful. I recommend focusing on three steps:
- Implement an SDN automation and orchestration platform
- Deploy NFV infrastructure
- Deliver virtualized services
Starting with Automation and Orchestration
Talking to various operators, two key challenges they are facing today are operational complexity and service rigidity. SDN from its inception was meant to automate the network to make it more flexible. So the first step should be to transform your operations and your back-office by deploying an automation& orchestration platform.
Figure 1. Impact of Automation on Opex
My colleague recently did a blog highlighting what type of impact automation is having on existing service provider operations. The results from the customer case studies show on average 60-70% in time and motion savings across service and network operations. Automating individual service lifecycle processes, such as adding a new customer, resolving an incident, handling a change request and disconnecting a service, has an immediate impact on your bottom line. So operators should start with automation to get 50-60% operational expenditures (OpEx) efficiency shown in Figure 1.
The business case analysis included customers that specifically implement the Cisco Network Services Orchestrator. A North American operator saves on average $117 in OpEx for every dollar invested in automation as shown below in figure 2. The numbers vary by region and operator, but the theme remains the same –there is tremendous amount of savings from automation.
Figure 2. Average annual savings for every dollar invested in automation
Moving to delivery of Virtual Services
Once the automation platform is in place and existing services and network operations are automated, the next step is to deploy virtualized infrastructure to deliver virtual services that are on-demand, zero touch and elastic. The deployment of a Network Function Virtualization Infrastructure(NFVI) solution will enable you to tap into new revenue opportunities such as SD-WAN and other virtualized ICT services. A recent global survey done to identify these new opportunities by AMI-Partners shows that the adoption of SDN and NFV by SPs could open up a $47B new opportunity by 2019. This ICT as a Service (ITaaS) global opportunity is shown in figure 3.
Figure 3. Regional SP revenue opportunity in ICT services with the adoption of SDN & NFV
So to get the operational efficiency and tap into the new virtual services revenue opportunities, SPs need to make a transformational move to SDN & NFV. To get more details, please check out my colleague Sanjeev Mervana’s blog on automation and a recent ITaaS webinar on the ICT revenue opportunities from SDN & NFV.