What Operator Experts Think is Wrong with Vendor NFV Strategy

If you are a company with aspirations in the SDN or NFV markets, then operators themselves say you have a problem.  In fact, you probably have more than one problem, and those problems are hurting your ability to engage customers and build revenue.  This is a message from those same literati I talked “tech-turkey” with last week, and again it’s interesting that their views, my views, and vendor views of the issues are both congruent and different.

I’ve noted in past blogs that SDN and NFV salespeople have complained to me that their markets are not moving, they’re not making their sales goals as a company, and they’re frustrated by what they see as the intransigence of buyers.  The key phrase from their emails is “The buyer won’t…” as though salespeople had either the right or ability to simply expect that buyers would adopt a frame of reference that’s convenient to the sales process.  What do operators see, through the literati, see?

The number one problem with vendors, according to operator literati, is “they act like SDN and NFV are decisions already made and all they have to do is differentiate themselves from the competition.”  This, when 100% of the CFOs I’ve talked with or surveyed say that they still can’t make a broad-based SDN or NFV business case and so there is no commitment as yet to either technology.

I’ve done sales/marketing consulting for a lot of years, and one point I’ve always made is that there are three message elements in positioning your offering.  The first and most important are the enablers, meaning the features and value propositions that can make the business case for a deal.  Second are the differentiators that make you stand out from others who can “enable” too, and last are the objection management statements that can put to rest mild issues of resistance or credibility.  What the literati are saying is that vendors aren’t enabling SDN or NFV, and so there’s not really much of a market to compete for.

There’s unanimity among the literati on this first problem, but not on what the next one is.  About half the literati say that problem two is that vendors don’t address the complexity of getting support for their projects from all the relevant buyer constituencies.  “The CTO doesn’t have a deployment budget and can’t make a deployment decision,” says one literati who happens to work in the CTO organization.  The other half say that vendor views of the market are set by the media, who in turn are setting their views from vendors.  “Most of what these salespeople tell us is what they read somewhere, and at the same time they know that their own company is promoting analysts and writers to say that very stuff.”

It’s not going to surprise you to hear that I believe that the media processes in the tech industry took a turn over two decades ago when subscription publications were replaced by ad-sponsored controlled-circulation pubs.  At one point, I had an opportunity to review the reader service cards for a mainstream network rag, and the total value of purchases the respondents said they made decisions for was at least triple the total market.  Processes took another turn with the online shift, because serving an ad happens pretty much as you click a URL, where you have a better chance of seeing a print ad the longer you’re on the page.  At any rate, what we see and hear and read is increasingly set by vendors.  Even if you assumed it was all true (which obviously it is not) then it makes no sense for salespeople to simply mouth the same story.  Why should a buyer even bother to take a sales call if that’s what happens?

The engagement issue is probably the longest-standing problem, and it’s related to another issue the literati brought up, which is that vendors don’t understand anything about my business.  I remember consulting with a switch/router vendor two decades ago, and pointing out to them that the diagram they were showing for network evolution by US operators was in fact a violation of the regulatory framework that governs the industry.  Operators used to send me moaning emails making that same point, and they saw it as an indication that their vendors didn’t take the trouble to understand the customer.

The thing is, there’s more than one customer.  A transformation like SDN or NFV would bring has to be lab tested, network operations-tested, CIO/OSS/BSS-tested, pass CFO muster, and get CEO and executive committee approval.  All these constituencies have to buy in, all will do so if their own issues are addressed, and vendors tend to expect their own sales contacts to run the ball internally, which in most cases can’t be done because the internal operator groups probably no less about each other than the vendors do.

And the literati say vendors don’t present their total solution either.  SDN and NFV are not monolithic.  Generally speaking, you have a combination of IT infrastructure on which stuff will be deployed, facilitating software that handles the virtualization and deployment processes, and operations and management tools and processes that manage the commercial offerings and the sales/support processes.  In all of the SDN or NFV vendors I’ve talked with, these three pieces of tech transformation are different profit centers, or they’re not even present (the buyer, seller, or integrator would have to add in stuff from outside).

How many cars would an auto giant sell if you had to talk to a showroom salesperson about the car, another about the engine, yet another about tires and the seats?  “Infrastructure” isn’t seamless but it has to be cohesive.  Yet I’ve listened to vendors who won’t talk about NFV orchestration because they want to sell servers and platforms, and others who won’t talk OSS/BSS because that’s either another business unit or it’s a partner company.

There seems to be a “vendors are from Mars and operators from Venus” thing going on here.  I think part of the reason is that vendors are looking for profits in the next couple quarters and transformation is seen by telcos as a three-to-five-year process.  Another part is that vendors are used to selling equipment into what could be called an established paradigm, not to working to invent one and then sell into it.  Finally, they are used to the telco’s own internal processes taking “successful” trials into production, where today the trials don’t have a broad enough scope to make the business case.

One operator literati made what might be the definitive comment on all of this, relating to the tendency for vendors to go after tactical service-specific NFV and SDN projects.  “These services that they’re talking about, if you presumed they were 100% converted to NFV hosting, and assuming they delivered on the benefit case promised, would make a difference for us that’s a rounding error on our bottom line.”

You can’t easily creep by midget steps into NFV because none of the steps make a visible difference in profits.  Somehow, vendors have to convince operators that they can do more than creep.  The disconnect vendors face now makes that hard, but far from impossible, because the literati say the operators want vendors, and NFV, to succeed.