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Speeds & Feeds No Longer Rule: CSPs head toward virtualization

Telco_Editor

The days when technology suppliers won business from communications network operators just because their boxes offered more ports and higher throughput are over, writes Light Reading's Editor-in-Chief Ray Le Maistre.

 

'Transformation' has joined the likes of SDN, NFV, virtualization, IoT and 5G as one of the hot buzz-terms in today's global communications networking community but most often it's used to describe the change processes being undertaken by the traditional communications service providers – the fixed line, mobile and cable operators (and media broadcasters).

 

And it's true, those companies are undergoing dramatic change – some of it unwillingly – as the competitive, technological, economic and cultural landscape around them becomes increasingly digitally-oriented at a pace that is making their collective heads spin.   

 

The CSP community transformation is not happening in isolation, though: Indeed, it's a catalyst for change amongst the companies that supply the CSPs with technology, services and professional support of all kinds. 

 

That's because the CSPs, to survive beyond the short term, need new technologies, new skills and new partners. In the past, network operators sourced much of their technology from a core set of large suppliers, who would for the most part determine the (slow) pace of new technology innovation. Those suppliers successfully marketed their products based on speeds and feeds: That system worked and there was little dissent.

 

The CSPs would then develop services using those technologies at a pace that suited them – they were in charge, they set the tempo.

 

That modus operandi is now defunct. It's over, at least for any company that wants to still be in business in 2016. The CSPs understand that the game has changed and that they need to change their underlying networks, their skillsets and their partnership and procurement policies.

 

To be relevant and profitable in the near, medium and long term, CSPs need to migrate to agile, efficient, cloud-oriented networks that, in essence, will eventually become large connected, programmable IT systems incorporating networking, IT and data center assets that work as a unified whole.

 

As a result, network operators' procurement processes are changing. A recent survey of almost 140 CSPs by Heavy Reading (www.heavyreading.com) found that less than 10% of respondents had not changed their procurement processes at all during the past 3 years, while almost half said their procurement processes had changed "a lot."

 

So can the 'old guard' of traditional suppliers meet CSPs' current needs? That seems unlikely. In addition to delivering the best speeds and feeds (because that's still important), CSPs are now looking to develop partnerships with suppliers that can meet a much broader set of key criteria, including:

  • Experience of enterprise IT technologies and languages, as many of the key technologies of the present and future for CSPs are those that have predominantly evolved from the enterprise sector – cloud capabilities are a prime example here.
  • Support for virtualization in terms of developing SDN- and NFV-related functionality (SDN controllers, APIs, multi-protocol support, NFV infrastructure, virtual network functions, MANO… the list is growing all the time), supporting and providing cloud infrastructure (including management and security), support for open source developments such as OPNFV and OpenStack and so much more.
  • A coherent ecosystem that brings together skillsets from various partners, as no one company can hope to have the best-of-breed solution in-house to meet the increasingly wide variety of CSP needs, particularly with relation to virtual network functions and applications.
  • Verifiable multivendor capabilities, particularly in terms of systems integration expertise. The importance to CSPs of independent systems integration was just one of the key findings from a Heavy Reading survey conducted in late 2014, as the infographic below shows:

 

Blog Infographic.png 

These are just some of the key criteria now becoming deal-breakers for CSPs, though there are others that are of varying importance depending on the nature of the CSP's business, such as speed of delivery and power efficiency.

 

But what is clear is that the rules have changed. Such criteria would have been deemed eclectic at best if listed by a CTO/CIO office at a CSP only two years ago – now such considerations are essential.

 

That means CSPs are no longer relying on the 'old guard.' They want proof that these new criteria can be satisfied and are willing to try new partners to get what they want – the power pendulum has swung towards the CSPs.

 

That in turn means that the companies wanting to be the key CSP partners of the future need to prove themselves and show they can meet these new requirements. For many vendors that means a transformation process that is counter-intuitive and counter-culture – old habits can die hard. Some will make the transition but others won't.

 

Talking the talk is one thing: Walking the walk is another.

 

In the meantime, companies that have a history in both telecoms and IT are well positioned to broker groundbreaking deals with CSPs around the world and establish a new world order. The next few years are going to be disruptive and transformational: For CSPs and their suppliers alike, those that can adapt and innovate will survive and thrive and we'll be saying goodbye to those that can't.

 

Read LightReading’s State of the State report to read more about new vendor criteria. 

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