Both SDN and NFV have seen unprecedented hype in recent times and they do offer several benefits to justify it, however we see that actual commercial deployments at a mass scale are still lagging. Today, the industry faces several fundamental challenges that have to be overcome for successful adoption of SDN and NFV. Technology maturity, a clear industry direction and consensus on multiple open-source standardization initiatives, and proven business cases are some of the examples of technology-related challenges. However, given the paradigm shift that SDN and NFV bring, we really need more than just technology solutions to make them succeed in large implementations. Operators need to revamp their processes, skills, and people capabilities and even their business and operation models. The goal is to ensure that all parts of the service provider organization work in harmony in the new network cloud era.
To highlight the impact and transformation requirements in achieving true benefits of SDN/NFV, this article utilized McKinsey 7S framework, which is one of the best models to assess and monitor changes in organizational analysis and internal transformation.
The operators should develop a clear vision of why they need to deploy SDN and NFV. One option is to move faster and create a competitive advantage over direct competition by offering new services to have a positive impact on the top line of income statements. However, questions should be asked as to how to sustain the advantage, and the answers lie in building the right network cloud architecture, embracing new business models, and offering new service capabilities as well as reducing costs/overhead to enable sustainable value creation through simultaneous pursuit of differentiation and low cost. This is a key concept of Blue Ocean Strategy, which can carve the way for success against increasing competition from OTT players.
The core values evidenced in corporate culture, operating mindset, and general work ethic are at the heart of any organization. Transforming the culture of an organization is the most difficult task and needs clear planning and continued efforts starting from management. Telecom operators are used to competing with each other while maximizing the value for customer and themselves, but Internet over-the-top players have changed the paradigm by creating new value chains and business models. Operators have to both adopt and adapt to the changing market dynamics. Making the organization customer centric is one way that several operators have adapted. Another change in the mindset is moving from “fail proof” to the “fail fast and recover” approach.
Usually telecom operators structure themselves around functional areas like engineering, operations, IT, procurement, finance, HR, etc., while more technical divisions are sub-divided into technology area, for example it is common to see engineering divided into fixed access, mobile access, IP core, optical transport, fixed core, mobile core, etc. Network cloud has brought IT infrastructure to engineering (albeit with more stringent requirements), and all network functions will be hosted as VNFs (virtual network functions). There is a clear need to restructure operator organization by combining network and IT operations, collapsing long planning cycles by introducing DevOps (combined development and operations) teams, and assigning SMEs (subject matter experts) to service functions, as opposed to technology areas.
Systems & Processes
These are the daily activities and processes followed to get the job done. Traditionally, operators have followed very stringent and complex process frameworks to ensure high quality and conformance. The result is long lead time for service order resolution and new service development. However, with the rapidly changing market dynamics and customer behavior, operators need to adapt more agile management methodologies.
Similarly procurement models have to evolve from long RFP cycles of turn-key (hardware and software integrated) solutions to facilitating separate procurement models for software & hardware allowing best-of-breed software VNFs to be integrated on unified NFVI.
Skills & Staff
The telecom industry faced this challenge while moving from TDM to all-IP architecture; it will be a similar journey moving toward network cloud. This is perhaps the area requiring most of the investment. Each operator should conduct a skills-gap analysis to estimate training needs of existing staff or the necessity of hiring new people with emphasis on software skills. Training current employees has challenges that whether to train telecom and IP/data network specialists on cloud technologies or IT experts on telecom functional requirements. Moreover, the tendency to learn new technologies reduces after spending several years in the same job. There is another limitation of available training and certification programs for network cloud (SDN and NFV). And hiring new people is also not straightforward because it takes a lot of effort to understand telecom market dynamics and integrate with the company culture. The solution is perhaps a mix of both approaches with new blood coming in with app development, cloud, and API management capabilities. In order to have successful adoption of network cloud, skills and capabilities should be benchmarked, and improvements should be monitored and assessed against the goals.
Leadership commitment, endorsement, and participation can help to facilitate this transition. Leaders should also manage the balance between creating cooperative and competitive team behaviors, as both have their merits in certain environments. A strong leadership belief in the technology and its benefits could be the difference between success and failure of SDN and NFV initiatives.