I got back from a holiday to a flood of data from both enterprises and network operators/service providers—the former group focusing on cloud and network service views, and the latter group focusing on NFV. Because all the data is so interesting I thought it was important to get it into a blog ASAP, so here we go!
Let’s start with my last group, the operators/providers. The issue I was working on was the expectations for NFV in 2016, now that we’re a third of the day through the year. I got responses from key people in the CIO, CFO, and CTO areas, and I had some surprises—perhaps even a few big ones.
The biggest surprise was that all three groups said they were more sure now that they would deploy some NFV infrastructure in 2016 than they had been at the start of the year. Nearly five out of six operators responded that way, which is a pretty optimistic view of NFV progress. What was particularly interesting was that the three key groups all responded about the same way, a sharp departure from last year when CFOs weren’t convinced there was any future in NFV at all.
The second-biggest surprise, perhaps related to the first, was that the amount of NFV infrastructure expected to be deployed was almost universally minimal. None of the operators said they believed that NFV spending would reach 3% of capital spending even in 2017. This suggests that operators weren’t rushing to NFV, but perhaps waving earnestly in its direction.
The reason for the limited commitment expected even in 2017 is complicated, and you could approach it in two ways—what makes up the commitment and what has impacted the planning. Let’s take the first of these first.
There are two paths of NFV that are considered viable by all the key operator constituencies—NFV targeting business customers with premises-hosted virtual CPE, and NFV targeting mobile infrastructure. The first of these opportunities is not seen as a driver of large-scale systemic NFV at all, but rather a way of addressing the needs of businesses better, particularly through accelerated order cycles, portals for service orders and changes, etc. The second is seen as potentially ground-shaking in terms of impact, but NFV in mobile infrastructure is very complicated and risky, in operators’ eyes, and thus they expect to dabble a bit before making a major investment.
Add these together and you can see what operators are seeing in 2016 and 2017. vCPE is going to happen, but nobody thinks that it’s going to shake their spending plans except perhaps MSPs who lease actual service from another operator and supplement it with CPE and management features. Mobile applications could be very big indeed, but that very bigness means it’s going to happen at a carefully considered pace.
If all the “Cs” in the operator pantheon are in accord on these basic points, they still differ on the next one, which is the factors that got them to where they are. The CIO and CFO organizations feel that a business case has been made for vCPE—enough said. They also feel that there’s enough meat in mobile NFV to justify real exploration of the potential, including field trials. But they do not believe that a broad NFV case has been made, and in fact these two groups believe that no such broad case for NFV can be made based on current technology. The CTO, perhaps not surprisingly, thinks that NFV’s broad impact is clear and that it’s just a matter of realizing its potential.
Everyone is back in sync when it comes to what might realize NFV potential—open-source software. In fact, the CIO and CFO are starting to think that their transformation is more generally about open-source use than about NFV in particular. This, perhaps, is due to the fact that the CTO organizations have shifted their focus to open-source projects aiming at NFV software, from the standards process that’s still the titular basis for NFV. Getting all the pieces of NFV turns out to involve getting a lot of related open-source stuff that can be applied to NFV, but also to other things.
Everyone has their own example of this. The CIOs are starting to see the possibility of having OSS/BSS transformation based more on open-source tools—or at least those who are interested in OSS/BSS transformation. It’s clear from the responses I got that CIOs are split on just how much the fundamentals of their software needs to change. A slight majority still see their job as being simply the accommodating of SDN/NFV changes, but it seems more and more CIOs think a major change in operations software is needed.
There’s also more harmony of views than I’d expected on just how far NFV will go in the long run and what will drive it there. Only about a quarter of CIO/CFO/CTO responses suggest that systemic infrastructure change will drive broad adoption of NFV. The remainder say that it will be service-specific, and the service that has the most chance of driving broad deployment is mobile. Those operators with large mobile service bases think they’ll be adopting NFV for many mobile missions, and this will then position more hosting infrastructure for other services to exploit. Those without mobile infrastructure see NFV mostly as a business service agility tool, as I’ve said.
My impression from this is that operators have accepted a more limited mission for NFV, one that’s driven by specific service opportunities, over the notion of broad infrastructure transformation. That doesn’t mean that we wouldn’t get to the optimum deployment of NFV, but it does suggest that getting there will be a matter of a longer cycle of evolution rather than an aggressive deployment decision. The fact that the CIOs are not united on a course for OSS/BSS transformation seems the largest factor in this; you need those opex benefits to justify aggressive NFV roll-out.
Services that prove a broad benefit case—that’s the bottom line for NFV.
On the cloud side, enterprises’ views are related to media coverage of cloud adoption, but only just related. Nearly all enterprises and about a third of mid-sized businesses report they use cloud services directly (not just hosting, but real cloud deployment of their apps). Only one enterprise, a smaller one, said they had committed more than 15% of IT spending to the cloud, and none of the enterprises expected to shift more than 30%. The cloud will be pervasive, but not decisive.
The problem seems to be that enterprises still visualize the sole benefit of cloud computing to be lower costs, in some sense at least, and that the cloud will host what they already run. Given this picture, it’s not surprising that both Microsoft and IBM reported that while cloud sales have grown for them, it hasn’t replaced losses on the traditional IT side. Users who adopt the cloud because it’s cheaper will always spend less. The only way to get out of that box is to unlock new benefits with new cloud-specific techniques, but users have almost zero understanding of that potential. Part of that is due to lack of vendor support for new productivity-benefit-driven cloud missions, and part to the fact that current enterprise IT management has grown up in a cost-driven planning age and can’t make the transition to productivity benefits easily.
There’s one common thread between the operator NFV and enterprise cloud stories, and that’s over-expectation. Well over 90% of both groups say that they’ve had to work hard to counter expectations and perspectives that just didn’t jive with the real technology the market was presenting or the realistic benefits that technology could generate. We live in an ad-sponsored age, where virtually everything you read is there because some seller has paid for it in some way. That’s obviously going to promote over-positioning, and while the results aren’t fatal for either technology, I think it’s clear that NFV and the cloud would have progressed (and would continue to progress) further and faster if buyers could get a realistic view of what can be expected.