Last month I wrote that Lifecycle Service Orchestration (LSO) would be the next big development in service provider networks, and I promised to tell you more about the market size. Here it is: This market will be multiple billions of dollars, approaching $2.75 billion by 2019.
More on these numbers, but first let’s talk about the technology. LSO is defined as the software layer that communications with SDN– and NFV-enabled hardware to automate the provisioning, management, usage, service assurance, and fulfillment of these network services and existing WAN platforms, using open standards. The concept, which will involve a number of standards and development frameworks, is being shepherded by the collaboration recently formed by the MEF and the TM Forum, two of the largest service provider organizations.
Is it possible that the market for a new software acronym can be worth multiple billions of dollars in just a few years? The answer is yes, and here’s why: Based on a survey of service providers, the data indicates that the global operators want these systems now, and they see them as crucial to their business survival.
Service providers have indicated they are ready to make big changes to their operations support system (OSS) software infrastructures, which is all of the information technology (IT) systems that support functions such as fulfillment and billing. LSO includes a wider range of functionality, based on next-generation standards. The Rayno Report estimates that 20 percent of spending on OSS will be migrated into LSO-focused development over the next four to five years. This comes from the results of a survey of more than 80 operators conducted in partnership with the MEF, called “Emerging Dynamic ‘Third Network’ Services & the Role of LSO.”
In the survey, 54.6 percent of operators said they regard their OSS as “outdated” with a need to be updated or overhauled, and 60 percent said they were lacking a capability to launch new services in an economical and timely manner. Global operators cited the need to quickly provision, launch, and manage dynamic services as the top reasons to move to LSO.
This creates the business urgency. With data services changing rapidly, service operators need more flexible platforms to deploy new offerings. SDN/NFV technology provides this platform, and LSO provides the glue — it is the software layer that provides more flexibility to accelerate service deployment, especially those based on cloud or SDN platforms.
Now, how do we get to $2.75 billion so quickly? The answer lies in how this market evolves. Service providers I interviewed for my recent report, “Service Provider Lifecycle Service Orchestration (LSO) Overview and Market Forecast,” described a scenario in which the OSS market evolves toward emerging open standards. Some of the key standards efforts to watch in the development of LSO include the ETSI MANO (management and orchestration) model for NFV, the Metro Ethernet Forum’s “Third Network” initiative, OpenStack, and the YANG and Netconf development models in the IETF.
The new LSO software layer will be built to tie the open standards ecosystem together. It can be built in two ways — either existing OSS vendors and legacy platforms can be evolved into a more open, flexible LSO-style system, or new software will be purchased and customized. There are already a handful of interesting startups in this area, which I have highlighted before, including CENX and UBIqube.
I believe the new spending will be a combination of these two investment models, with the effect being fast growth in LSO overall. When you add up the numbers, it’s not hard to get to $2.75 billion. My model uses a conservative estimate of $8 billion in OSS spending on enterprise data services, of which at least 20 percent will be migrated to the LSO market in the next four years. Then you add $1 billion in investment in new, “native” LSO software.
This is how we get to a target of $2.75 billion by 2019. The LSO market is happening, and it’s being driven by SDN/NFV architectures as service providers see an urgent need to overhaul OSS and develop new support applications for a software-driven world.
The Rayno Report’s new 32-page premium report describes in detail the emergence of the LSO market, including extensive customer feedback about what service providers want to see in native LSO implementations and next-generation OSS systems. “Service Provider Lifecycle Service Orchestration (LSO) Overview and Market Forecast” can be purchased for $850 for a single-user license.