The Paths to an SDN/NFV Business Case

The issues I’ve raised on the difficulties operators experience making a business case for SDN and NFV are increasingly echoed by other sources, so I hope that at this point most objective people believe there is a problem here.  One question, then, is how business-case difficulties might impact SDN and NFV deployment and the future of both technologies.  And, of course, how it might impact vendors.  Another is what vendors could or are doing about the business case.

The best place to start this off might be with what could be expected to play out if we had a number of convincing players promoting a viable business case for SDN and NFV.  In such a situation, the immediate impact would be to create a validated long-term vision of what NGN would look like, both in terms of infrastructure and operations.  This vision would serve as a template to validate the discrete steps taken in the direction of SDN and NFV, which would make incremental (per-project, per-service) evolution practical.  If we knew what we were building toward looked like and what benefits it would generate, we could then take the steps that moved us furthest at the lowest risk, and both technologies would begin to fly.

What would happen if that general business case is not made?  Without it, individual projects would have to prove themselves out in a vacuum, without any broad benefits from infrastructure change as a whole.  On one hand that might seem to be a good thing; many vendors would like to promote their own narrow vision.  The problem is that both my modeling work and input I’ve received from operators shows that most of these narrow projects would not be able to deliver the benefits needed.  Worse, there’s no guarantee that these individual projects would even add up to a harmonious vision of infrastructure or operations, and we could end up with a bunch of silos—the thing we’ve been trying to get rid of for decades.

The big problems are operations and economy of scale.  NFV is a cloud technology that demands enough deployment to achieve hosting economies.  SDN is a transformation of cost that demands enough scope of deployment to make a consequential contribution to reduction in capex.  Both technologies have a very strong and not very often acknowledged dependence on operations automation to prevent the additional complexity from creating an opex explosion that would swamp all other benefits.  How do you accommodate operations of hybrid SDN/NFV/legacy infrastructure, a problem that’s ecosystemic by definition, when you can only drive benefits on a narrow service front?

The most popular NFV application, based on operator activity, is virtual CPE.  The most popular SDN application is data center networking.  vCPE in the form where a general device is placed on-prem and used to host VNFs is actually fairly easy to justify for some operators like MSPs, but it’s not easy to build the business case on a broad scale.  Host vCPE with service chaining in the cloud and it actually gets harder to justify.  And data-center SDN isn’t transformative to carriers.  It’s not even clear if it is to vendors.  Getting SDN out where it can build a complete service architecture would be transformative, but operators admit that nobody is really pushing that vision.

So what do you do?  You’ve got to broaden the benefit front, and the most obvious of our broadening options is the classic “killer app” problem.  You win in SDN or NFV if you can find a single application of the technologies that delivers enough scale and enough benefit to justify a pretty significant transformation that builds critical mass in both areas.  This then creates the “gravitational attraction” to pull in other services/projects to leverage what’s in place, and from that we end up with systemic SDN or NFV.

This killer-app approach is obviously most credible for SDN/NFV providers who have a credible candidate of this sort, and the market position to drive it.  The most obvious example is Alcatel-Lucent, who has one of the few credible holistic SDN/NFV positions and also has a commanding position in mobile infrastructure (IMS/EPC) and content delivery (CDN, IPTV).  No matter how many other VNFs and opportunities may be out there, few if any can hope to pull through enough SDN/NFV to establish that critical mass.  One mobile or content infrastructure win could establish enough scale in both infrastructure and operations to build a viable SDN/NFV platform on which other stuff can build.

What do you do if you don’t have pride of place in some critical service area?  You could, (to quote the poet Milton), “stand and wait.”  You could forget specific services and think horizontally, or you could look for a new/emerging critical area to be champion of.

If some vendor eventually gets a critical mass in SDN/NFV, it’s unlikely they’ll be able to command the whole market (particularly in NFV).  Thus, you join everyone’s partner program to hedge your bets and hunker down until somebody makes a success of SDN/NFV large enough to establish convincing momentum, then you sell your heart out to that vendor’s customers.  For most NFV and SDN hopefuls, this is the only realistic choice because they lack the product feature scope to deliver a business case on any scale.  It’s hard to see how this approach would create a big winner—too many hungry mouths are waiting to be fed at the table of SDN/NFV success.

Obviously a subservient role like that isn’t appealing to a lot of vendors, and for those with strong product breadth (those who can make a business case with their own stuff), another option is to jump over the killer app and go for the critical horizontal element that will underpin all business cases.  That’s operations efficiency and service automation.  If you can show a decisive impact on opex, you can generate so big a benefit case that you can justify virtually any SDN/NFV service or project.  In fact, you could justify your service automation even without SDN and NFV.  Oracle seems committed to this path, and it would likely be the route of choice for OSS/BSS vendors like Amdocs.

This is a path any major vendor with a complete NFV strategy could take, but it would be harder for a smaller player.  Operators themselves are split on whether modernization of management and operations should preserve current tools and practices or have the specific goal of eliminating them in favor of a different model.  They’d probably trust a big player with a compelling story to do either of these things (literally either; they’d like to see a kind of elastic approach that can either reorganize things or replace them), but only a big one.

The final option is perhaps the most interesting.  Suppose the “killer app” is an app that’s got no real incumbent?  Suppose there’s something that could have such profound impact that if it were implemented using SDN/NFV principles it would create that critical mass of support whoever does the implementing?  There is only one thing that fits this, and it’s IoT.

IoT, as the mass-media hype says, could change everything, but that’s about as much as the mass media has right about it.  It won’t develop as many believe, meaning it won’t grow out of a bunch of new and directly-on-the-Internet, mobile/cellular-connected devices.  IoT is an abstraction—three in fact, as I suggested in a blog last week.  The center of it is a big-data and analytics amalgamation that will be cloud hosted as a vast array of cooperative processes.  From it there will be a series of cloud-, NFV-, and SDN-enabling changes that will transform mobility, content delivery, and networking overall.  It’s not that “things” will be the center of the universe but that thing-driven changes will envelope the rest.

The good news for SDN/NFV vendors is that IoT in itself could justify both SDN and NFV and drive both into rampant adoption.  The bad news is that if SDN and NFV have a problem today it’s that they’re too big to confront effectively and IoT dwarfs them both in that sense.  Vendors who are presented with giant opportunities tend to see giant costs and interminable sales cycles, and somebody will inevitably blink and think small.

It’s hard to see how IoT could become a credible driver for SDN/NFV as things stand, because the link to either could be created only when a credible IoT architecture could be drawn and the role of the two technologies identified.  If we diddle for years on the former, SDN/NFV’s fate and leadership will be settled before IoT even arrives.  Thus, it’s hardly surprising that no vendor has stepped forward with a compelling story here.

Here’s where we are, then.  We have limited candidates to pin SDN/NFV business hopes on because there are only limited number of full-spectrum NFV solutions out there.  Only a vendor who can implement everything needed for SDN/NFV can make the business case.  Long-time functional leaders Alcatel-Lucent, HP, Huawei (a maybe because I don’t have full detail on their approach), Oracle, and Overture Networks have now in my view been joined by Ciena after its Cyan acquisition—if they follow through on their commitments.  So optimistically we have six total solution players.

We have two (Alcatel-Lucent and Oracle) committed to something that could lead to a business case—the killer app of mobile/content in the former case and operations revolution in the latter.  Neither, though, has delivered an organized proof of their ability.  That may be because they’re holding their cards close for competitive reasons, because the business case is too operator-specific in details to make a general document useful, or because they can’t do it yet.  The same issues could be holding back those players who have no visible commitment to an approach.  Maybe they are holding back, or maybe they are just hoping none will be required.

For all the NFV hopefuls, time is short.  Operators need to respond to what they say is a 2017 crossover between revenue- and cost-per-bit.  To do that they’ll need to get something into trial by mid-2016, and the trial will have to prove a business case with an impact large enough to influence their bottom line.  I think SDN and NFV, properly presented, could do just that, but as operators have told me many times “We have to hear that from vendors who can prove the business case!”  They’re as anxious to know who that could be as I am.