Sutherland Insights. Network Function Virtualization

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1 Sutherland Insights Network Function Virtualization

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3 e NETWORK FUNCTION VIRTUALIZATION Communication service providers (CSPs) are facing several challenges due to a decline in their traditional sources of revenue, i.e. voice and text along with rising infrastructure costs. Network Function Virtualization (NFV) is a telecom led initiative that leverages standard IT virtualization technology to consolidate telecom network equipment. With NFV is poised to transform the entire telecom infrastructure ecosystem. Apart from decline in traditional sources of revenue, i.e. vendors, which are providing services on the former s data networks. In addition, new network standards aiming at faster data connectivity, quick video streaming with high resolution and rich multimedia applications, and mobile broadband, which are becoming the most lucrative sources of revenue are pushing wireless operators to expand has resulted in infrastructure costs growing at a faster pace than the subscriber revenue. While the operators focus on reducing their infrastructure cost, they also need to make their networks more responsive to reduce the time to market for their new services. Evolution of Telecom Infrastructure There was demand for single service, i.e. voice or data Wired connections were pulled to provide connectivity Layer 2 virtualization technologies like Frame Relay (FR) and the Asynchronous Transfer Mode (ATM) were implemented, which allowed the operators to deliver both voice and data over the same physical (layer 1) medium via a common physical infrastructure It resulted in reduced infrastructure cost Increased penetration of internet services by telecom operators led to price wars Proliferation of smart phones and internet-based services reduced the revenue from traditional services, i.e. voice/sms for telecom operators and increased demand for data services IP-based infrastructure earning them premium revenue had become just an infrastructure component Pre onwards Present Scenario Going Forward 1990 s Customers started demanding multiple services, i.e. voice and data, or video and data This resulted in increase in infrastructure cost as operators provided separate wires for voice and data services Later, this became an unviable proposition as the costs increased faster than the revenue Customers started demanding internet connectivity and IP data services These services came at a premium for the customers, as they required a new infrastructure that operated setups This led to growth of the common IP-based infrastructure Now the reduced network costs and new revenue streams for the telecom operators require advanced layer 4-7 intelligence in the network businesses are also transitioning their data centers, using the cloud computing technologies, for the last 4-5 years In the CSP industry, mobile operators are leading the design efforts to monetize services application and content aware and have necessary skills to manage network operating at higher application layers (L4-L7) 3

4 Sutherland Global Services According to Infonetics Research, the global service provider SDN and NFV market is expected to reach USD 11 Bn in 2018 (Refer to Figure 1). 68% Figure 1: SDN/NFV Revenue 20% 12% Market Size: USD 18 bn New Displaced Existing The SDN and NFV hardware and software market is I. Revenue from new SDN and NFV software is expected to be 20% of the total SDN and NFV market in II. Revenue from products that companies will buy instead of buying something else-what is displaced revenue, including NFV infrastructure (NFVI) hardware (servers, storage, switches) purchased instead of network expected to be 12% of the market in primarily the virtualized network functions (VNFs), and also ports on routers, switches, and optical gear that have become SDN capable is expected to be largest slice of the SDN and NFV market, 68% in NFV forms the largest part of the combined SDN and NFV market from 2014 to The value of NFV is in the VFN software rather than the orchestration and control. VNF accounts for over 90% of the NFV software segment. to compete with handset and over-the-top vendors. The network and network services were provided by linking hardware through communications channels and then making them work together using various management systems. This was successful when the traditional services were driving revenue growth for telecom operators, but now there is a need for innovation as the operators seek to bring down their infrastructure cost to offset lower revenue. Network functions virtualization (NFV) is emerging as one of NFV can help CSPs reduce setup costs and reliance on proprietary devices, by using a more agile software-based framework. In NFV, network functions provided by hardware devices are replaced with software. Processors and network adapters are optimized to support virtualization; they comprise multiple cores to spread the load across multiple virtual machines and applications. These adapters support multiple processor. NFV separates network functions from hardware, and consolidates and runs them as virtualized applications on a server. A huge cost is involved in the purchase and maintenance of the specialized network hardware, and hence the vendors working on NFV solutions are targeting big players like AT&T, Sprint, etc. These telecom operators telecom operators to innovate and customize their services, time to market. Handling the network through software helps the CSPs to cut down their CapEx on the physical network and also to develop their networks when required rather than budgeting for them in advance. CSPs having large networks carry a large inventory of network devices which remain largely unused. Advancement in technology makes most of these devices obsolete over time and they lesser number of one component but more of the other, the existing inventory becomes redundant. With changes in the software over the NFV platform, a server acting as a component can be made to operate as another component, which helps in managing inventory and eliminating the need to buy new devices. NFV also helps reduce the cost involved (OpEx) in storage and maintenance of the physical devices and also makes the management of these devices less cumbersome. the automated arrangement, coordination, and management of complex computer systems, middleware, and services within and between different services and components. Use it easier to add new applications and services. It requires minimal training and is easy to deploy without any disruption cost saving with this virtual network infrastructure and infrastructure. 4

5 Network Function Virtualization NFV s ability to update the software and make the changes to the server on a physical server reduces network downtime unlike that in case of a traditional network. It also provides increased options for services from software developers rather than relying on traditional hardware vendors. These software services can be very fast when compared to the hardware ones which help in quick implementation of ideas to make maximum out of them. It also opens up new avenues like open software communities, academia, or minimally-funded startups developing software. The newly-developed software can be quickly evaluated since testing does not require waiting for the next network vendor software update. It also provides an opportunity to the operators to have trials for software-based networking services based on the helps them to better plan their service launches, reduce their risks for failures with trials, and increase their return on investments. The software-based platform also helps them scale up or down services based on the ongoing demand at including AT&T, Sprint, BT, Deutsche Telekom, Telefonica, etc. NFV is driving the network design for operators and product planning for the vendors and is expected to impact enterprise networking going forward. NFV is helping the vendors to sell small and customized solutions to smaller enterprises that did not budget for the specialized network devices. CSPs need to have dedicated teams to manage server and hypervisor infrastructure, and support individual VAS solution teams. There is a need to have teams managing vendors and support functions as the vendors providing hardware and software solution will be different. CSPs should start with virtualization of a small part of the network and then addressing other operational, support, vendor and architectural issues arising due to the transition to new model. The challenges for the telecom operators include creating a shared services infrastructure where Gi LAN services such as video optimization, parental controls, services can run. (SDN) and the upcoming NFV are complementary technologies; however, their amalgamation can reduce the challenges of legacy networks. The virtual networks would be provisioned and managed using SDN. Use of network overlays in NFV may lead to a merging of these two technologies. With NFV accepting the cloudhosted virtual functions, it may adopt a software-overlay network model which will bring SDN into the picture. One of the biggest challenges faced by NFV is the network management. NFV should support current network management, network operations and operations & business support systems, it is as tedious as the actual resources hosting and connecting virtual functions are outside the functions, and may not be completely visible to current management apps. Working with the shared resources is another challenge as the management apps would not allow virtual function s any act to adversely impact other functions sharing some of the resources. Management changes must also take care of the network stability and security. There is a possibility that the virtual functions will be managed virtually, having external process relating virtual functions and their resources to management apps that can support both present and future activities. NFV and other related organizations seek to develop NFV using current standards rather than creating new ones. The architecture for the virtualization of network functions by 5

6 Sutherland Global Services Case Study Business Objective: Reduce the time-to-market for deploying new services The service delivery to customers across the globe included shipping the hardware equipment from the supplier to the company, and then to the end customer. Due to this, the lead time was very high which sometimes ran into months. The company was looking to reduce the lead time and make it more predictive, irrespective of customer location. Solution: The NFV from solution provider replaced specialized hardware equipment with a software appliance running on commodity hardware. It entailed a web portal through which customers could order new appliances. It generated a new service request with the virtualization management server. a) Download times of minutes/seconds replaced lead times of months or days for equipment delivery 2) Consolidation of customer premises equipment a) Single commodity server hosting multiple VNFs reduced operating costs 3) Ability to present new service models to their end a) Click-to-install network appliances b) Pay-as-you-grow c) Try-before-you-buy Successful development and implementation of NFV is expected to change the way the networks are built, managed and used. The virtual hosts will not totally replace the network devices completely; however a large part of the network may be transformed into components that are inter-operational and cloud-based. This will help the communication service and reduce time-to-market of their services. Copyright Sutherland Global Services Sutherland Global Services 1160 Pittsford-Victor Road Pittsford, NY Produced in the United States of America June 2015 This document is current as of the initial date of publication and may be changed by SGS at any time. Not all offerings are available in every country in which SGS operates About Sutherland Global Services Established in 1986, Sutherland Global Services is a global BPO and technology-enabled services company offering an integrated set of back- customer lifecycle. It is one of the largest, independent BPO companies in the world serving marquee clients in major industry verticals. Headquartered in Rochester, New York, United States, Sutherland employs over 36,000 professionals and has nearly 60 global delivery centers in the United States, Australia, Brazil, Bulgaria, Canada, China, Colombia, Egypt, Estonia, India, Jamaica, Malaysia, Mexico, Morocco, the Philippines, Slovakia, Sweden, the United Arab Emirates, and the United Kingdom. For more information, visit Please recycle. 6

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