You can’t have a market for next-gen tech without a business case for transformation. As the famous saying of Project Mercury, the first step in the US space program went, “No bucks, no Buck Rogers.” The news out of MWC, recent LinkedIn posts, and other more direct metrics are all showing that vendors and operators alike are starting to realize this crucial point. What’s interesting is that the focus of the NFV business case is a fairly narrow set of tools that we could call “full-spectrum orchestration” and the costs and fruits of an NFV victory lie largely elsewhere. That could create some interesting dynamics.
I’ve talked in past blogs about the nature of the NFV business case and the role that operations efficiency has to play in making it. There are a half-dozen sub-categories inside what I’ve called “process opex” meaning the opex related to service/network processes and not to things like mobile roaming settlement, but all of them depend on applying a very high level of software automation to OSS/BSS/NMS processes, both today and as they evolve toward SDN/NFV. This automation injection is literally that—it’s a fairly small quantity of very insightful software that organizes both operations/management processes and resource allocations. You don’t rewrite all of OSS/BSS/NMS, and what you actually do doesn’t even have to be a part of either of these things, which is what’s so interesting.
The largest cost of NFV, and the largest pie vendors will divide, is the resources, what ETSI calls the NFV Infrastructure or NFVI. The virtual network functions are a distant second. My model says that NFVI will make up about 90% of total capex for NFV, with 8% from VNFs and 2% from that critical and central operations/management orchestration thing. The core of NFV, the central management/orchestration stuff, wags a very large dog and yet represents where all the NFV proof points have to be developed and NFV resistance overcome.
Most vendors would love for somebody else to do the heavy NFV lifting as long as that someone wasn’t a direct competitor. Resource-biased NFV is emerging, as I’ve noted recently, as vendors recognize that getting the big bucks can be as easy as riding a convenient orchestration coat-tail. The challenge is that NFVI without the rest of NFV isn’t going very far.
So the question for NFV today is whether the secret business sauce will come from a vendor or from an open activity, like OPEN-O or OSM. That’s an important question for vendors because if there is no open solution for the orchestration part then an NFVI player is at the mercy of an orchestration player who has NFVI. Such a player would surely not deliberately make a place for outsiders, and it’s likely that even operator efforts to define open NFV wouldn’t totally eradicate such a vendor’s home-court advantage.
We will probably have an open-source orchestration solution…eventually. We probably won’t have one in 2016 and maybe not even in 2017. That means all those hopeful NFVI vendors and VNF vendors will have to wait for something to coalesce out of the commercial space that can meet operator goals financially and not be so proprietary that they gag on their dinners.
The big Hope for the NFVI faction is that there will be an orchestration-business case giant who doesn’t sell NFVI. While that might seem a faint hope at best, the fact is that of the six vendors who can currently make a business case for NFV, only one is clearly an NFVI incumbent (HPE). All the rest are potentially allies of any/many in the NFVI space, but so far none of these orchestration vendors has been willing to take on the incredibly difficult task of doing what’s needed functionally and at the same time wringing an open ecosystem from specifications that aren’t sufficient to assure one.
And then there’s the OSS/BSS side. None of the OSS/BSS-specific vendors are among my six, but it’s obvious that both Amdocs and Ericsson are stepping up an operations-centric solution to opex efficiency and service agility. OSS/BSS vendors have good operator engagement, and new services and service operations start with OSS/BSS, after all. With an NFV power vacuum developing you could expect these guys to move.
Amdocs has been especially aggressive. At MWC they announced some explicit NFV stuff, and they’ve been advertising for NFV test engineers. The big news from them IMHO was their focus on “digital transformation”. If you’re an operations vendor you gain little or nothing by tying yourself to an infrastructure trend. You don’t sell the stuff. What you want to do instead is what every vendor who doesn’t sell stuff in a new area wants to do—superset it. You want to climb up above the technology, which tech vendors usually build and try to justify from the bottom up, and eat all the benefits before they get a chance to filter down. Transformation is what operators have been trying to do for almost a decade, so revisiting the notion is appropriate.
It’s especially appropriate when the benefits that are needed to drive network transformation can be secured without much in the way of network investment, or even new infrastructure. If you recall my blog on this, you can gain more cost savings by service-layer automation than by network modernization. I’ve been working on the next-gen services numbers, and they also seem to show that most of the barriers lie above the network. The ROI on service automation is phenomenal, and that’s both a blessing and a problem.
It’s a blessing if you’re Amdocs or maybe Ericsson, because you can absolutely control the way operators respond to their current profit squeeze. No operator presented with a rational picture of next-gen services and operations efficiency driven by service automation from above would consider lower-level transformation until that service-automation process had been completed, at least not after their CIO got done beating on them. Thus, an OSS/BSS vendor with some smarts could control network evolution.
Which makes it a curse to those who want a lot of evolving to be done, and quickly. Remember those optimum, hypothetical, hundred thousand NFV data centers? If you’re Intel or HPE or any platform vendor you want that full complement and you want it today. Sitting on your hands while OSS/BSS vendors and operator CIOs contemplate the which-ness of why isn’t appealing.
What I think is most interesting about the picture of NFV and network transformation that’s emerged from MWC is that we seem to have lined up everyone who wants to benefit from NFV and sorted them out, but we’re still trying to enlist the players who can actually drive the deal. I again want to refer to a prior blog, this one on the Telefonica Unica award.
The details aren’t out in the open, but it seems pretty clear that Telefonica found that NFV integration is a lot harder than expected. Yes, this almost certainly comes out of a problem with the NFV ISG’s model, but whatever the source the point is that fixing it now will either consume a lot of time (in a traditionally slow-moving open-source project) or require a vendor offer an open solution even if they undermine their own participation in the NFVI money pit.
Who might that vendor be? One of the “Super Six” who can make an NFV business case directly? An OSS/BSS vendor who’s growing downward toward the network eating operations benefits along the way? A new network or IT vendor who’s not a major player now? Whoever it is, they have to resolve that paradox of effort and benefits, of orchestration and infrastructure, and they have to be willing to show operators that NFV can be done…from top to bottom.