The Gap Between NFV Sellers and Buyers and the Three Things Needed to Bridge It

The more things change, the more they stay the same, as the saying goes.  That certainly seems to be true with NFV, based on what I’ve heard over the last couple weeks from both vendors and network operators.  Two years ago, I noted that vendor salespeople were frustrated by the unwillingness of their buyers to transform their businesses by buying NFV technology.  There was clearly a fault in the operators’ thinking, and there were plenty of media articles that agreed that operators had to modernize the way they thought.  Operators have consistently said that they’d be happy to transform if somebody presented them with a business case.  Same today, for both groups.  Take a look at the media this week and you’ll find the same kinds of stories, about “digital mindset” or “breaking through the fog” or how an NFV strategy is only a matter of defining what it’s hosted on.

Five different vendor NFV sales types or sales executives told me this month that buyers were “resisting” the change to a virtual world, or a cloud business model, or something.  I asked each of them what they believed the problem was, and not a single one mentioned an issue with business case, cost/benefit, or anything that would normally be expected to drive a decision at the executive level.  Seven operator strategists in the same period said that vendors were “lagging” in producing an NFV solution that could validate a business case.

I think that the biggest problem here is one of focus.  The operators don’t have an NFV goal at the senior exec level, nor should they.  They do have a goal of getting more engaged in higher-level services and another in reducing the cost of their network connection services, both capex and opex.  While most operators think that NFV can play a role in achieving these goals, the technology that they think would do the most is “carrier cloud.”  They believe that somewhere between a quarter and a half of their total capex should refocus onto hosted functionality, partly to offer valuable new services (all of which are above the connectivity layer of the network) and partly to reduce costs.  They “believe”, but nobody is proving it to them yet.

What would get operators to the grand carrier cloud end-game?  At the CIO or CEO levels, the operators themselves think that the three primary drivers are OTT video, mobile contextual services, and IoT.  At the CTO level, the drivers are said to be NFV and 5G.  A disconnect between CFO/CEO and CTO isn’t uncommon, but what I think is offering some hope is that some operators and some vendors are seeing the disconnect and working to bridge it.  The question is whether their efforts will spread.

AT&T has, with Domain 2.0 and ECOMP, done more than other operators in framing a strategy that is capable of transforming to the carrier cloud.  Interestingly, it does that by creating converging cloud models that target each of the two goals—new higher-level revenue and cost management.  For revenue, AT&T has an aggressive and insightful hybrid cloud strategy that includes the ability to bond AT&T VPNs with cloud services offered by all the major providers (NetBond).  It also has content caching and IoT services.  ECOMP and D2 are aimed at the cost side and at creating a holistic service lifecycle automation process.  They have taken a business-cost-and-opportunity path toward carrier cloud without making it the specific goal, just the convergence of two separately justified evolutions.

Vendors may have taken hold of this same notion of converging approaches, but with less success.  AT&T’s D2 model divided infrastructure into zones and works to prevent vendors from gaining too much control by becoming dominant in too many zones.  That places AT&T in a role of a “benefit integrator” because vendors can’t propose a full solution because it would give them too much control.  Most operators haven’t taken this approach and thus are still looking for vendors to connect the dots to benefits.

What I see from vendor discussions is that they’re dodging that mission, for several reasons.  First, it creates a broader sales discussion that takes longer to reach a conclusion and requires more collateralization.  Vendors (salespeople especially) want a quick sale.  Second, most vendors don’t really have the complete answer to the revenue-and-cost-reduction story.  They rely instead on the notion that “standards define the future” and that operators should accept that, which lets the vendors place their offerings in a purely technical framework.  Third, vendors don’t really have a clear picture of the technology framework they’re trying to be a part of.  That’s largely because the standards don’t really draw one.

The central element in carrier cloud is an agile virtual network that, in my own view, almost has to be a form of overlay SDN.  Operators have accepted a very limited number of candidates here; Cisco, Juniper, Nokia, and VMware lead their lists.  Juniper (Contrail) and Nokia (with its Nuage SDN product) just won deals with Vodafone.  Interestingly, the first three of this list have tended to position their SDN assets cautiously to avoid overhanging product sales, and VMware is still promoting NSX more as a data center strategy than as a total virtual network.  Because of cautious positioning, vendors with credentials in the virtual-network space haven’t really promoted a virtual network vision, and the lack of that vision more than anything else muddies up the infrastructure model.  Vendors with no offering in this critical area are at risk to marginalization.

The second thing that’s needed is an updated model for deploying hosted (virtual) functions.  NFV has long focused on OpenStack and VMs, and the industry is migrating to containers, microservices, and even functional (Lambda) programming.  Much of the credible growth in opportunity lies in event-driven applications.  In fact, you can argue that without event-driven applications, there probably isn’t a large enough new-revenue pool to drive more than a quarter to a third of carrier cloud opportunity to fruition.  This is a whole new kind of component relationship, one that Amazon, Google, and Microsoft have all proven (with their functional programming features) to be incompatible with past notions of hosting, even DevOps.

The final thing is that old song, service-wide lifecycle management and automation.  The current practices cost too much, take too long, and tend to create inflexible service-to-resource relationships that limit operators’ ability to respond to market conditions.  This has to be based on a very strong service/application model and it has to be integrated with the other two points without being inflexible with respect to their state of implementation.  Abstraction is a wonderful tool in creating an evolving system even if you’re not totally sure where it’s evolving to or how fast it’s going.

No vendor really has all the pieces here, which of course explains why operators who don’t have their own vision and glue are frustrated and why vendor salespeople are likewise.  I don’t think there’s any chance that 5G standards will develop in a way that helps carrier cloud in general and NFV in particular, at least not before about 2021.  I don’t think NFV standards will evolve to address the key issues here, at least not much faster than that.  So, vendors have to hope that operators converge on their own approach (which will probably commoditize all of the elements of NFV and carrier cloud, working against vendor interest) or move more effectively to promote a solution with the right scope.  Complaining about operators’ lack of insight won’t help.

Nor will complaining about lack of vendor support.  Operators have to decide if they’re willing to sit around and wait for something to be handed to them, or work (perhaps with the ECOMP/Open-O activity) to create a useful model that they can use to guide their own evolution.