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NFV: The reality of cost reduction

Grantby ‎02-21-2014 08:37 AM - edited ‎09-30-2015 07:01 AM



As with any new technology introduction, the decision to deploy Network Functions Virtualization (NFV) by Communications Service Providers (CSPs) will be guided by a realistic business case and not just marketing promises. Fortunately, cost savings can be estimated. And these savings open a new world of opportunity for providers to drive innovation.


What do you need to consider when deploying NFV?

ABDO: Several things, including accrued cost savings, business models, and architectural options. Cost must be considered over a full five year lifecycle that would include both capital expense (CapEx) as well as operating expense (OpEx). CapEx (hardware and software licenses) reductions may become apparent immediately, while OpEx (installation, support, and power) will improve over time.


How do you arrive at CapEx reduction figures?

ABDO: The cost benefits of NFV can be illustrated with a virtual customer premises equipment (vCPE) use case, which includes set-top boxes and ADSL routers. Assumptions regarding the costs of virtual and physical appliances, servers, labor costs, and power consumption have been made.




As the above cost model shows, a small NFV deployment can reduce costs from $34,015 to $27,828, or about 18%. Even with increased software costs, the reduction in hardware, installation, configuration, and power costs more than compensate.


The results for a larger NFV deployment are even more dramatic. Total costs can be reduced from $18,935 to $14,435, or 24%. And in both cases, there will be additional benefits over time from new revenue opportunities that are not considered in this analysis.


NFV and the New Style of IT

NFV solutions from HP mark the beginning of a new method of delivering network capabilities that exponentially change the economics of CSPs. This helps create a new foundation for a level of massive industry innovation never before experienced.


To learn more about how the broad portfolio of NFV solutions from HP can help you reduce capital costs, visit hp.com/go/csp.


Join HP at Mobile World Congress

In today’s mobile environment, connectivity is increasingly taking precedence over traditional business models that, as a result, are experiencing lower usage and revenue streams. Make your plans now to join HP at Mobile World Congress (MWC) in Barcelona, Spain to learn more about leveraging new operating models, extending market reach, and engaging with non-traditional and emerging partners to remain competitive.


Select from a range of HP activities at MWC to best meet your specific business needs—from solution demonstrations to executive programs.


For additional information, please contact the HP event team mailto:concierge@hpatmwc2014.com or your HP representative.


HPB20397_MWC_Cover-95x124_NoTitles.pngHP Industry Edge eZine—NFV edition

The latest version of HP Industry Edge is devoted entirely to NFV.  


About the Author


I've devoted more than a decade to writing about technology products, solutions and services.

on ‎03-03-2014 07:06 AM

Certainly the reduction of costs is essential to compete in an increasingly difficult and demanding market.
Develop a project cost with accuracy is essential.
Outsource part of working with different suppliers and get a quality improvement and innovation with respect to competitors.
Definitely a continuing challenge.
Best regards.

on ‎04-13-2014 02:10 PM

Really interesting chart about cost reduction. I plann to do something similar in my company, but in a smaller scale.


Thanks for sharing.

on ‎06-19-2014 12:30 PM

Due to actual economic circumstances in my country I also had to analyse some business I was running. Mobile conectivity made us think in a new different way. That congress was really a success.


Than you!

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