SAN JOSE, California — It’s time to make money in software-defined networking (SDN) and network functions virtualization (NFV), according to Enrique Gracia, chief technology officer of SDN and NFV at NEC and Netcracker.
“The technology is sound enough,” he told NFV and Zero Touch World Congress attendees today in San Jose, California. “At this point we can move onto the business of SDN. Why should we care about the business side of it? Because we have extensive experience on what happens to companies that solely focus on technology.”
He’s talking about Opera Software, which lost the web browser wars to Google, a company that focused on the technology and the business side of the equation. And don’t forget BlackBerry.
“The king of the hill used to be BlackBerry,” Gracia said. “And yet by changing the business model, integrating the software with the hardware, and changing the way we consume, Apple has become dominant in the market. Most business users have a Mac, have an iPhone.”
NEC and Netcracker’s customers take various approaches to capitalizing on SDN, he said, highlighting four of these: digitizing operations, improving customer experiences, adding new services, and adding new business models.
Digitized operations reduce costs and mean faster time to market. His company worked with a service provider and helped it deploy a new virtual network function in 12 weeks, Gracia said.
“We changed the way we worked with them,” he explained. “Instead of being a vendor to them and supplying a solution, we partnered with them. We approached it like a DevOps operation, a joint team of our people and their people. The target was to bring a new service to market as fast as possible.”
This involved daily meetings, both virtual and on site. And within 12 weeks the team stood up a platform with NFV management and network orchestration (MANO) and operations support systems and business support systems (OSS/BSS).
“Instead of taking the usual nine months, we were early by six months,” Gracia said. “Those are six months of revenue that they were able to receive and create a return on investment earlier for this product.”
It also reduced by 70 percent the time spent on new virtual network functions (VNF) on-boarding, and only took between two and four weeks to launch the next set of services, he added.
Another way service providers can use SDN to drive revenue growth is by providing better customer experiences, for example, by providing marketplace-driven services.
“Things you cannot do with a traditional approach, like offering customers try before you buy,” Gracia said. “They can log onto the marketplace and test [a service] before they actually buy it.” This approach resulted in a 15 percent conversion rate increase, he said, adding, “Customers that are coming to the marketplace and testing are becoming regular subscription customers for us.”
This also presents a “huge opportunity for upsell” — Gracia puts it at four-times revenue growth — because it makes it so easy for customers to try new services, see how much they use and what they pay for, and connect to the marketplace from anywhere.
Finally, SDN makes it easier to enter new markets and add business models, Gracia said.
Traditionally, a North American service provider wanting to expand its operations into other regions would need to set up physical offices and networks in these new locations. “But if you are entering the realm of virtualization, VNFs can be delivered from a central data enter onto the customer site,” he said.
Automation and virtualization reduce costs and time to market for new services. Working with another service provider customer, “We automated, we created a portfolio, and our intent is to increase by 40 percent their market size,” Gracia said. “With launching new VNFs, we expect to reduce the time to market by 50 percent. Those VNFs become building blocks for new services.”
In another example, Gracia said his company helped a customer in Europe transform its business from box reseller to cloud service provider. Moving to an “everything-as-a-service” business model translated to a 13 percent revenue increase over five years, he said. “The time is right to capitalize on these technologies.”
Photo: Enrique Gracia, chief technology officer of SDN and NFV at NEC and Netcracker