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Winning the NFV journey – Why CSPs need a transformational approach

MFerachoglou

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In today’s world, the Communication Service Providers (CSP) business model is becoming unsustainable: traffic is growing exponentially faster than revenue while in parallel costs continue to climb. 

 

From my perspective CSPs need to foster top-line growth by attracting new clients, increasing service signups from their customer base or selling a richer mix of profitable services, since Over-the-Top (OTT) players are eating into their revenue base. According to Ovum, OTT social messaging applications cost CSPs $13.9 billion in lost SMS revenues in 2011, and are predicted to cost $54 billion by 2016. Additionally, by 2020, OTT VoIP providers will have cost the global telecoms industry $73 billion in lost revenues.  

 

In addition, as Capex spending has continued to grow through 2014, carriers’ network infrastructure proves inflexible and expensive to maintain, containing proprietary hardware elements that are forcing them to reduce costs and find new operational efficiencies in the network.

 

In the face of the mounting pressure of diminishing margins, the Telco industry has revealed that Network Functions Virtualization (NFV) can help to move from a world of captive cost, long new service introduction timelines and complex, specialized operations, to a world of fundamentally scalable cost, agile services lifecycles and standardized operations.

 

By virtualizing the network, CSPs will be able to innovate and trial new applications more rapidly and cost-effectively. Innovation is unleashed as it is no longer tethered by time-oriented trappings that we have in the physical world.    

 

But the question we must ask is how?  In order to define NFV transformation, I recommend that CSPs:

 

1. Review key business priorities and identify the critical opportunities for growth

 

Each service provider ranks and rates the business impact of NFV differently. HP has gathered data from the top 25 service provider CTOs of CSPs to measure their own thoughts and directions against.

  • If increasing revenue is the key driver, then CSPs can explore how revenue flows are changing with the impact of OTT players and discuss how they might use NFV to better respond in delivering time to revenue quicker through automation and virtualization.
  • If driving innovation is high on the agenda, CSPs have to consider how creating a common NFV architecture can open up their network to potential new suppliers and companies that can add to and accelerate innovation cycles.
  • If cost reduction is the focus, CSPs have to quantify this and estimate how they can expect NFV to deliver those targeted savings.
  • Finally if agility is the core focus area, then CSPs have to explore what NFV can do to unlock the capability to deliver an elastic per-tenant service model.

 2. Align technology and architectural choices with these critical opportunities

 

In order to meet their priorities, CSPs have to invest in an NFV architecture that accelerates innovation by orders of magnitude while enabling a large open Virtual Network Functions (VNF) ecosystem with proven, carrier-grade performance. However they not only need to enable a transformation, they also have to sustain the value of investments in traditional networks. Critical factors of success are multiple: the converged infrastructure must meet carrier grade SLAs and KPIs, ensure multi-level orchestration, provide an open approach that avoids vendor lock-in, support integration and validation that enables a rich ecosystem, and provide an agile services life-cycle approach. 

 

3. Examine ways to mitigate disruption to existing environment (people, process and technology) when introducing NFV

 

Network teams responsible for planning and deploying NFV do not typically utilize IT disciplines to rollout network services. To meet the needs of the new lifecycle management introduced by NFV, the network teams need to evolve to assimilate IT processes into network planning and rollout practices. To help them undergo this transformation in this blended world, CSPs need the right partner with extensive experience in both enabling the world’s most demanding IT environments and also being the partner of choice for OSS/BSS.

 

With our consultative approach, HP will bring the benefits of the HP OpenNFV program (*) combined with HP’s IT and Telco expertise along with decades of system experience and virtualization and cloud capabilities to guide CSPs through the NFV journey. This includes:

 

  • Providing a framework for identifying, evaluating, prioritizing, and selecting NFV projects  against key KPIs
  • Assessing the impact that NFV creates on revenue, people, processes and operations, for a particular function
  • Discussing partner preferences and constraints
  • Evaluating financial options
  • Defining a practical roadmap to NFV transformation

 

 

(*) The HP OpenNFV program at a glance - Press Release. I encourage you take a look. You’ll discover:

  • Open architecture delivering a multi-vendor approach to NFV
  • HP NFV labs, a one-stop center where integration, collaboration and testing can occur in a safe   environment
  • Global partner program for accelerating “tested” application and industry innovation
  • Proof of concepts, deployment and services supporting CSPs with more expedient time to market with NFV delivery

 

Meet us at TM Forum Live June 2-5 Nice France -   Booth – 94 - to discuss your journey, learn more about HP OpenNFV and try out our new HP NFV Director Orchestration and Management solution

 

Meet us at HP Discover Vegas June 10 -12 Las Vegas US to discuss your journey.

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About the Author

MFerachoglou

Michel Ferachoglou has over 20 years in IT and Communications, holding senior Product Management, Business Development, and Marketing positions with HP, as well as held various people management, strategic and business planning roles. Today, Michel is leading the NFV marketing program for CMS, along with a number of cross-portfolio activities within HP CMS Solution Enablement team.

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