U s i n g S D N - and NFV-based Servi c e s to M a x i m iz e C SP Reve n u e s a n d I n c r e ase

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1 I D C T E C H N O L O G Y S P O T L I G H T U s i n g S D N - and NFV-based Servi c e s to M a x i m iz e C SP Reve n u e s a n d I n c r e ase Operational Efficiency March 2013 Adapted from Will New SDN and Network Virtualization Technology Impact Telecom Networks by Nav Chander, IDC # Sponsored by Overture Networks Cloud services for connect, compute and storage represent a business opportunity for CSPs and will drive them towards service-enabling smart networks. Service delivery now requires a level of automation not possible with current proprietary network architectures. New solutions will be critical to enable service assurance and service creation. Two important new capabilities are the softwaredefined network (SDN) -- a new framework for open, programmable interfaces that can enable a high degree of automation in provisioning services and network function virtualization (NFV) a technique for creating network services using commercial off-the-shelf hardware rather than purposebuilt appliances. Intelligent hardware and software platforms can offer a range of new service opportunities for CSPs as well as dynamic capacity adjustment based on application requirements and policies. An open architecture that embraces SDN and NFV can also maximize operational efficiencies by reducing the time to provision services and significantly lower OPEX. This Technology Spotlight examines these trends and the role that Overture Networks' Ensemble OSA solution for the metro edge is playing in the new environment. Introduction Today's communications service providers (CSPs) face two dilemmas. First they are experiencing explosive bandwidth growth from enterprise, broadband and mobile data traffic. This has resulted in capex expansion that exceeds the necessary revenue growth projections from increased traffic across these networks. Second, the increase in over-the-top public cloud services that leverage the CSP network infrastructure and travel "for free" is not a sustainable business model and threatens to consume CSP network capacity at low margins. The rapid convergence of IT, communications, and network services in the cloud is redefining the way in which these services are delivered. Service delivery requires a level of automation not possible with today s proprietary networking equipment architectures deployed in CSP networks. These hardwired systems require software cycles of 6 to 18 months to support even minor changes. However the increasing enterprise demands on CSPs for private cloud service delivery will require: Service agility for rapid deployment of new technologies and services Service elasticity for on-demand, pay-per-use services Seamless integration into a new ecosystem of partners and customers How can CSP's reconcile the fact that new cloud service opportunities will require additional longerterm capex investment with the two most important tactical business priorities, namely reducing opex IDC 1470

2 and improving service agility and service creation? CSPs are seeking solutions that enable network virtualization and automate network service availability using cloud-based technologies such as software-defined networking (SDN), network function virtualization (NFV) and open standards-based platforms and ecosystems. Trends in Cloud Services According to IDC's 2012 WAN Survey of over 1200 enterprises, enterprises are either rapidly adopting or planning to consider public cloud services coupled with secure, predictable connection services. For example, 26% currently employ SaaS solutions and an additional 54% plan to use cloud services in the next months. The survey also confirms that 23% of these enterprises prefer to buy managed cloud services from tier 1 IT suppliers compared to only 22% who prefer a CSP. This represents a business opportunity for CSPs and will drive them towards the business model of service-enabling smart networks as opposed to just providing commoditized bandwidth. Cloud services can become an additional component of business-class services such as MPLS and VPNs and are emerging as a key component in many CSP's wireline strategies. Cloud and network virtualization that enables automated self-service offerings is the next step in an evolution where enterprises use a flexible combination of fixed and on-demand networking connections. In this context, IDC forecasts the CSP-based Virtual Private Cloud market to grow from $2.2 billion in 2012 to $8 billion in In this emerging environment, new management and orchestration solutions will be critical to enable both service assurance and service creation. Tools are needed to automate and optimize cloud service provisioning and the tight coupling between CSP and cloud service provider required to ensure expected quality of experience. There are strict SLA requirements for new services such as WAN communication between datacenters, compute resources, and storage resources that guarantee the performance and QoS of each cloud computing flow. Enterprises expect network performance policies in virtual private cloud equivalent to that of similar policies in private MPLS or IP VPNs. Enterprises are demanding increased operational agility for deploying new enterprise applications across networks. These same enterprises prefer to avoid the complexity of adding or changing class of service settings for every new security, voice, conferencing or collaboration cloud application change. CSPs need their networks to automatically adapt to new virtualized applications and cloud service schemes and virtual private cloud service deployments need to be agile and policy-compliant. Cloud Technology Trends Over the past five years, virtualization technology has dramatically altered server, compute and storage markets as enterprises have moved ahead to implement scalable, on-demand, virtualized pooled resources. Support for virtual machine (VM) mobility is independent of the physical network. If a VM changes location, the switches at the edge of the overlay network simply update their mapping tables to reflect the new location. The network for a new VM can be provisioned entirely at the edge of the network. The adoption of an open, programmable environment can be applied to the broader network to bring the same benefits to connection services for a completely new level of service agility. The telecom infrastructure will soon mirror IT infrastructure with complex functions moved out of complex proprietary hardware into commercial off the shelf (COTS) compute resources such as X86-based VMs, an important step for CSPs as they re-engineer their network infrastructure. Another important new cloud technology building block is SDN. SDN is a new network-centric framework that describes how open, programmable interfaces within a network infrastructure can IDC

3 enable a high degree of automation in provisioning network services. For example, orchestration of complex functions within a typical CSP such as provisioning a new service or adding bandwidth capacity often require many manual processes or even expensive truck rolls to upgrade hardware and software. With the advent of open SDN-like programmable interfaces and automation tools, a CSP can leverage "zero-touch" provisioning to greatly reduce opex. Policy-based traffic management that can enable multilayer service and network provisioning that automatically adapts to the enterprise application's policies is another significant opex benefit. This can improve the current situation where enterprise IT staff looking to connect a new office location to its networked VPN service has to go through several processes with a CSP: first, local access; then ordering a circuit/port; and then ordering a managed MPLS VPN service, which may also have a CoS and a security firewall service. New CSP Service Opportunities Open, programmable intelligent networking platforms can enable a range of new service opportunities for CSPs. For example, CSPs are trying to reduce the number of specialized hardwarebased network elements that require physical installation on each site. Consolidating several WAN functions into one physical x86 appliance to deliver a bundle of new managed and virtualized firewall, routing, and intrusion detection services can be more easily supported with dedicated networking software leveraging this appliance. This approach creates additional revenue opportunities to sell new, incremental managed services. Enterprises also prefer to select a single CSP that can manage several services such as VPN, firewall, Ethernet, and VoIP and provide application and performance data for these services in a single portal. Currently when an enterprise requests adjustments to service bandwidth, it can take weeks for the provider to make the necessary changes to network configuration and billing records. Using SDN, CSPs can offer dynamic capacity adjustment based on application requirements, policy and time. This type of dynamic capacity can even be self-provisioned within a policy, allowing enterprises to use self-service web portals to access more bandwidth and additional services on a pay-as-you-go basis. With this approach, the CSP can leverage unused network capacity and resources to make service bandwidth available for applications. Today, CSP-managed VPN service consists of customer premise equipment (CPE) routers that deliver managed router, VPN and security services. Often these are collocated with layer 2 equipment that provides underlying Ethernet transport services. By separating the data and control plane via SDN and employing the principles of NFV, CSPs can virtualize all of these functions at the metro edge. This approach leverages inexpensive Ethernet CPE technology to support a virtualized, service-aware routing and Ethernet capability at enterprise sites. Both public and private IP services, along with higher bandwidth Ethernet services and future cloud services can all be supported from a single intelligent Ethernet networking device. According to IDC's 2012 WAN Survey, 32% of enterprises depend on their service provider to provide application performance management data as part of their service offerings and will pay a premium for this type of service. Assuring performance in today s multi-vendor environment is costly and complex, and usually requires significant manual intervention by the CSP. CSPs that employ open software platforms can reduce the cost and complexity of performance assurance by leveraging new intelligent, automation tools that can also provide SDN orchestration software that controls, automates and unifies workflows according to customer-specific policies. This enables CSPs to apply policies across workloads and platforms for both fixed bandwidth services and on-demand service and also to differentiate on CoS, time of day, type of user and other factors IDC 3

4 The Benefits of an Open Service Creation, Activation, and Assurance Environment An open service architecture that embraces SDN and NFV can maximize operational efficiencies by reducing the time to provision services for application delivery. This type of architecture employs open southbound APIs to interface to network, compute and storage resources and is based on a standardized data, management and control plane with open APIs to support heterogeneous multivendor environments. In an SDN-based open service environment, elastic scaling of virtualized network services (private and public cloud) is easier and faster to deploy. CSPs can also offer self-service portals to enable enterprises to leverage dynamic bandwidth on-demand for selected services, QoS for a new application, or add a choice of additional software services to enterprise customers already accustomed to public cloud service delivery. This enables CSPs to tap a market that had been reluctant to move business workloads to cloud environments. An intelligent orchestration and control layer is a key part of this new open service architecture. Now a CSP can establish the application service profile, then automatically assign the right resources, policies, and duration for a given service session. With open APIs, CSPs are able to rapidly support new enterprise applications across a WAN and connect, compute, and storage resources can be quickly and efficiently implemented and managed across multiple layers of networking technology. CSPs can reap economic benefits from an open services architecture to significantly lower opex for service creation, activation and assurance, which can be as much as % of total opex. It is also important to note that the rapid turndown of an on-demand cloud service is just as important a requirement to a CSP as turning up the service in this open service architecture. Overture Networks' Approach to Using SDN at the Metro Edge Overture Networks is a private company that provides carrier-class intelligent Ethernet access and aggregation solutions to over 450 CSP customers in 45 countries. The company is a market leader in the intelligent network interface device market and also a leading technology contributor to developments related to Ethernet ENNI, OAM and service assurance. Overture Networks Ensemble Open Services Architecture (OSA) is one of the first open networking software and hardware architectures to incorporate emerging telecom standards such as SDN, NFV and open programmable software stacks into an intelligent metro edge for CSP networks. OSA is designed to optimize service creation, activation, and assurance by bringing the benefits of the cloud to the metro edge. The intent is to enable CSPs to maximize operational efficiencies and introduce new services faster and more easily. Today's CSPs have serious capex challenges in scaling their current generation of networks to handle the increased demand for more content, cloud services, and higher and more flexible bandwidth, while growing revenues. One of the most challenging areas is the metro edge, a key convergence point for combining transport, access and IP service functions. The metro edge is often deployed with 3 or 4 different product vendors (e.g. access switch, Ethernet switch, router, MSPP) and multiple access technologies (e.g. optical, copper and legacy TDM and SDH/SONET). The complexity of service creation and service activation is exacerbated with a multi-vendor proprietary network environment, impairing service agility. Ensemble OSA is designed to introduce flexibility, functional virtualization, programmability and intelligence into the metro edge to help reduce this cost and complexity. Ensemble OSA is also designed to leverage the benefits of open platforms, network virtualization and software-based orchestration, and apply those same benefits to the metro edge with the intent of transforming metro edge networks into dynamic, virtualized, and automated environments for service IDC

5 creation and delivery. The solution unifies connect, compute and storage resources, allowing CSPs to introduce pay-per-use and personalized Layer 2-7 services, increase capacity and add capabilities in real-time without investing in new infrastructure. The CSP can create, differentiate and provision services, then scale them on demand. Ensemble OSA is comprised of a three-layer open service framework (Figure 1) each of which may include Overture-developed components and those developed by service providers or third party vendors. This includes: Resources Elements that provide connect, compute, and storage functionality. They may consist of physical devices such as switches, servers and storage arrays, and/or software functions running on virtual machines. Orchestration and Control Software building block functions for data plane control, resource abstraction, and network management that provide the glue connecting resources to the applications. Network Applications Software packages that leverage one or more of the Orchestration and Control building blocks and tie into a service provider s back office systems and that of their business partners to create a service or network function. Communication among layers takes place across standards-based and open application programming interfaces (APIs). Challenges Overture Networks' business strategy is now focused around the Ensemble OSA. As product development continues, one challenge that the company will face is developing an eco-system of cloud, datacenter, network management software, networking partners and integrators that will participate in creating the components of the three-layer OSA framework that CSPs will adopt IDC 5

6 F i g u r e 1. Ensemble Architecture Conclusion With the rapid adoption of cloud technology by consumers, enterprises and carriers, open service architectures and platforms that embrace SDN, NFV, and open programmable software concepts for service creation, service activation and service assurance are taking shape. CSPs can maximize operational efficiencies by reducing the time to create and provision services for application delivery. An open,software-defined services architecture allows a CSP to easily interface the right-sized network, compute, and storage resources for a given network service application. It does this by IDC

7 leveraging intelligent orchestration and control that uses the management and control plane with open APIs to support multi-vendor heterogeneous environments. Overture Networks offers a solution that brings many of these capabilities to the metro edge of CSP networks. To the extent that the company can address the challenges described in this paper, IDC believes that the vendor is well positioned for success in this emerging market. A B O U T T H I S P U B L I C A T I ON This publication was produced by IDC Go-to-Market Services. The opinion, analysis, and research results presented herein are drawn from more detailed research and analysis independently conducted and published by IDC, unless specific vendor sponsorship is noted. IDC Go-to-Market Services makes IDC content available in a wide range of formats for distribution by various companies. A license to distribute IDC content does not imply endorsement of or opinion about the licensee. C O P Y R I G H T A N D R E S T R I C T I O N S Any IDC information or reference to IDC that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC. For permission requests contact the GMS information line at or Translation and/or localization of this document requires an additional license from IDC. For more information on IDC visit For more information on IDC GMS visit Global Headquarters: 5 Speen Street Framingham, MA USA P F IDC 7 Document number

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