I’m embarrassed to say last week was my first visit to the SDN World Congress show in Germany. Missed Darmstadt 2012. Couldn’t do Düsseldorf last year. Have I lost all credibility? Have you stopped listening? Let my try to regain your attention by carefully sifting through copious notes to point out some key takeaways from last week’s gathering of networking geeks and service providers.
Many of us arrived on Monday, getting a glimpse of the week’s last glimmers of sunshine before the Swissotel Neuss, located on the banks of the Rhein, was swallowed up for the rest of the week in fog and rain. Axel Clauberg, vice president of IP & Optical with Deutsche Telekom, kicked off the Congress on Tuesday, pointing out that after maturing for four to five years, SDN and NFV technology is getting put into live production in 2015. But it’s still early, he pointed out: “This is still a young technology.”
There were some hits against SDN and NFV, said Clauberg. One problem is the emergence of too many open source projects, he said. “There is inflation of open source projects. How many open source projects can we lead?”
He also had some cultural tips. Clauberg pointed out that when in Düsseldorf, you need to do as the locals and drink Altbier, the local brown ale considered superior to the ubiquitous Pils. I followed Axel’s instructions and later in the week discovered Braueri Schumacher, which makes a world famous Altbier.
David Amzallag, head of network virtualization, SDN, and NFV for Vodafone Group, struck a bit of a different tone in his keynote. There was no mention of beer. Amzallag pointed out that SDN and NFV are about operations-driven transformation for large service providers. The dynamic technology presents the opportunity for service providers to tie all of their operations to the underlying networks.
“It’s very rare that at an operator that there is a team understanding the entire pipeline. [Vodafone is focused on] operations-driven deployment for SDN and NFV. Every decision that came out is super aligned with operations.”
Aloke Tusnial, VP of SDN and NFV sales with Netcraker, said that the operations team became key to selling NFV technology at Vivo, a Telefonica mobile subsidiary in Brazil. Tusnial said that service provider operations teams won’t support SDN and NFV technology until it can be proven fully integrated with operations support systems (OSS) and billing support systems (BSS).
This was part of the theme that popped up several times during the week: Some service providers believe the SDN and NFV technologies need be driven by business processes that operationalize the new technology. This is what’s known in the industry as “top down” implementation vs. “bottom up.” Several people thought there was an interesting contrast between Clauberg’s presentation from DT and the Amzallag Vodafone presentation. While Clauberg was focused on the nuts-and-bolts of running the network (bottom up), Amzallag stressed the operationalizing of SDN and NFV technologies with a top-down approach.
On Day 2, Hiroshi Nakamura, senior VP at NTT Docomo, also pointed to the need to integrate with operations. “Integration with existing BSS/OSS is key for success in NFV,” said Nakamura.
It’s the Economics
The technology stories are interesting, but there were a lot of people in Düsseldorf wondering how much money they could make. So what does this all mean economically?
On Day 2, Michael Howard, an analyst with IHS Technology, gave his overview of the market sizing of SDN and NFV. He pointed out that unfortunately, most of the new technology revenue was “displaced revenue” — a matter of the SDN and NFV software technology replacing previous generations of proprietary hardware.
Although Howard projects $30 billion of service provider capital spending (capex) on SDN by 2019, only $6 billion of the total $30 billion will represent new capital spending.
“Sixty percent of it is what they would spend anyway,” said Howard. “There is displaced revenue.”
For NFV, Howard said there would be $1.2 billion in new spending by 2019. Seventy-four percent of the NFV market represents displaced revenue (for a total of $8.6 billion by 2019).
“So SDN and NFV is virtually free,” said Howard.
Awkward silence. Time for some more Altbier? Then some coffee.
This is the challenge for NFV and SDN. At their core, these technologies represent the creation of value in software, at the expense of commoditized hardware. While the fact a new open software platform is designed to squeeze out costs and streamline operations, an industry accustomed to decades of purchasing proprietary hardware and software needs to rewire itself for a broad, open software platform.
Many of the technology vendors are reacting and reformatting their offerings accordingly. One example is how Ciena has already subsumed Cyan and created a new software division, Blue Planet, based on the Cyan deal. Blue Planet is Ciena’s orchestration and management platform, which has been expanded and built on a container-based architecture, which I wrote about last week.
Joe Marsella, CTO of EMEA for Ciena, gave an interesting talk on Day 2 about the convergence of orchestration and management in operator networks, which is a lot more complicated than it sounds. This will require new software archiectures — and containers — which can be distributed in the system to update data in realtime.
“We’re not talking about a godbox, we’re talking about functional convergence,” said Marsella. “We’re in an era where we recognize the benefits [of end-to-end orchestration], simplifying hardware and virtualization and combining with programmability to grow revenue capabilities.”
A key element here, said Marsella, is an integreation between SDN control, NFV, and OSS and BSS systems. Again: The theme of using software to integrate with operations.
Eric McMurray, senior engineer in the CTO’s office at Oracle Communications, echoed the thoughts that emerging software technology will be used to orchestrate services from end-to-end. He also believes that container technology will be a part of this.
“As you distribute things and get them closer to the edge and make them easier to orchestrate, that drives you to smaller [software] components,” McMurray told me in an interview. “This is where containers come into play. That general trend is continuing in this space.”
This indicates that operators and technology vendors alike are looking to build their platforms with a distributed, software-centric bent. They are also focused on how all of this software, including a mix of open source and components, can be used for organization-wide engineering of business processes.
Is Current Staff Up to the Task?
How do you create a new software development platform that can quickly roll out new services, while at the same time integrating with existing pieces of the network and operations? Are the technology vendors or the service providers organized for this? Many are not. They’re used to departmental decisions about specific technologies — looking at an OSS, a router, an optical switch, or an access device.
The SDN and NFV revolution is changing this, requiring increased coordination among business and technology divisions. Indeed, many operators — as well as vendors — are going to have to rethink how this technology is implemented from the top down.
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