Some Progress to Report in the NFV Business Case

There’s some good news on NFV, which I’m happy to be able to report since good news (other than hype) is hard to come by these days.  I reported early this year that operators’ CFOs had told me in the spring of 2014 that they were so far unable to make a conclusive business case for NFV.  They also said that they were not of the view that current PoCs would enable them to do so.  Over the last three weeks those same operators have told me that they are in fact seeing more clarity on the business case.

Where we stand today is that about half the operators I’d talked with in 2014 now believed that they could make a business case for NFV deployment based on the evolution of their current tests and trials.  The difference between then and now is that operators say they’re getting a lot more involved with operations integration in their testing, and that operations was the weak link in their business cases up to now.

An even more heartening piece of news is that l two thirds of operators now say that their CIO is getting engaged in the NFV trial process, representing the OSS/BSS side of things.  While many network vendors are squeamish about CIO involvement because they don’t deal with that side of the house much, the fact is that without strong support from operations there was never much of a chance of making NFV work.

Most of this progress has come along since late November when operators completed their annual technology preview to their 2015 budget processes.  A couple operators told me that this process is what brought what one called “clarity” to their trial planning and was instrumental in getting the CIOs involved.  The general view was that this fall’s tech planning will likely focus on broader deployment, which means 2016 could be a good year for NFV types.

I got a couple of other interesting comments from operators while talking about the trials, and so I want to summarize them here.  I can’t say too much in detail without violating confidences.

First, it seems clear that trials are dividing into those that are starting to get broader CxO buy-in and those that are still science projects.  About a third of all PoCs seem to fall into the latter category and I’d guess that as many as two-thirds of these won’t advance beyond the lab this year.  All I can say is that the ones that have made the most progress are those that involve one of the key vendors I’ve talked about.

Second, even where CIO involvement has solidified and operations progress made, there is still an indication that the scope of the projects is pretty limited.  While the operators themselves may not see it this way it’s my own view that most of the cases where the business case for NFV can likely be made will still not prove the NFV case broadly.  Early applications “covered” by the tests probably won’t involve more than about 10% of capex maximum, which means NFV has to be pushed further into other areas to make a big impact.  As far as I can see that big impact can be proved in only five or six trials.  Everyone else may have to dance some more before they get a broader sign-off.

Third, we are starting to see a polarization in NFV announcements just like we have already noted for trials.  Some vendors are involved enough with the “real” activity, the stuff with a business case behind it, to be able to frame products or product changes in the light of real opportunity.  The rest are still just singing in the direction of the nearest reporter/editor.

Fourth, we’re starting to see some pressure and desperation among vendors, even sadly a few who are actually doing good things.  Operators have long sales cycles and a lot of backers/VCs and even internal company sponsors are just not able to stay the course much longer.  We will almost surely see some casualties in the space late this year or early in 2016.

Fifth, I’m starting to see some winners.  Some companies—a very few—are stepping up and doing the right thing in trials and in customer engagements.  My favorite vendor has generated a lot of good stuff now, documents so thorough and relevant that it is amazing that so little is known about it.  Perhaps those who really have the right stuff aren’t interested in letting it all out yet, or perhaps companies are still groping for way to make something as technical as NFV into a marketing story that’s not going to take rocket scientists (or at least computer scientists) to understand.

So are we ready for field trials?  Even the more optimistic operators aren’t betting on trials before perhaps September, though a few say that if things were to go just soooo…well, perhaps mid-summer.  Personally I think that as many as three operators could go to full field trials by mid-July if they and their vendors did the right thing, but there’s a lot of work still to be done, particularly on the integration front.

That’s my key take-way, in fact.  Yes, we are finally making progress but a full solution to agile, efficient, operations is still elusive.  A few players could get there for sure, a few more could get close enough to be able to do a convincing trial and complete their work in the fall.

There are still a few troubling signs, even among operators who are making progress.  The question “Where do I start with NFV?” still rates among the top three in the most-advanced group of operators.  What they’re asking is for help identifying the places where NFV can make an early difference at the business level, and that shows that planning for NFV is still more technically driven.  The fact that they’re asking vendors the question is troubling given that there is no simple answer, no strategy that works for even a majority of operators.  You have to understand your own business to understand how to improve it.

And yet…I’m more hopeful.  It’s better to be wondering about NFV business cases than worrying over details of standards and specifications in a vacuum.  NFV has absolutely no merit if it doesn’t have business value, and we’re further along in deciding where that value can be found and how prevalent those situations are in various markets and operators.  That’s good progress.