OPTICAL AND HIGHER LAYERS ARE CONVERGING WITH SDN

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1 OPTICAL AND HIGHER LAYERS ARE CONVERGING WITH SDN New products link service provider networks with cloud-enabled data centers SUMMARY In a nutshell Ovum view New network infrastructure products based on software-defined networking (SDN) are being developed to extend network programmability to the optical layer. These products will help service providers adapt to the cloud era by delivering a flatter network architecture that is likely to first be employed to deliver better scalability, lower latency, and deterministic performance for data center interconnect. By integrating optical transport, a switching function (typically label switch routing), and network applications with management and control layer software, these new products provide an abstraction layer between the physical transport infrastructure and higher-layer software functions. With network control abstracted from physical devices, this programmable transport layer can connect to higher-level cloud and virtualization platforms, through application programming interfaces (APIs), for orchestration and network automation. Current data center interconnect (DCI) solutions based on traditional product architectures cannot readily adjust to accommodate dynamic and sporadic traffic flows. The new SDN converged optical platforms with virtual machine (VM) awareness will be aware of the communication needs of applications and enable applications to be aware of the capabilities and state of the network. Content providers, communication service providers, and enterprises increasingly rely on cloudenabled data centers for internal business functions and to deliver applications to customers. The wide area network (WAN) is a key component of cloud services, and network bandwidth constraints and latency can have a major impact on application performance in the cloud. As data centers take on more cloud services functions, server-to-server (East-West) traffic connectivity comes to dominate client-server (North-South) traffic. This inter data center traffic is bursty, supporting sporadic high-capacity data transfers, with traffic patterns that follow virtual machines Page 1

2 (VMs) as they migrate geographically between data centers. Current DCI solutions based on traditional product architectures are relatively static and cannot readily adjust traffic flows to accommodate application needs or VM migration. Ovum is seeing some equipment vendors extend SDN concepts into a programmable, converged optical layer in order to provide end-to-end services over a multi-layer network. These converged optical products typically integrate optical transmission, label switch routing (LSR), and network applications with management and control software to deliver a flatter network architecture capable of delivering scalability, low latency, and deterministic performance between network endpoints. An API abstracts network resources and provides programmable control, allowing network configuration to be automated. These products can work with SDN controllers to provide a network that can be dynamically configured, scaling up or down to match application needs. Key messages The old networking paradigm is no longer working. With cloud- and video-centric applications driving continuing IP traffic growth and competition from over-the-top (OTT) service providers, carriers are seeing continued pressure on revenues. For many carriers, a larger role in delivering cloud services presents the best opportunity to develop new revenue streams. Fortunately, they are evolving into IT services companies as they leverage their understanding of enterprise IT requirements along with their network, security, and professional services expertise. New products and services target data center interconnect. Ovum is seeing vendors and carriers begin to develop products and services targeted directly at supporting this emerging market for DCI, including new converged optical solutions that extend SDN concepts to the optical layer. The growth of inter data center traffic leads to new network requirements for low latency, security, virtualization, and automation marked the start of SDN commercial deployment. Ovum expects SDN to develop in phases around domain-specialized solutions. Google and NTT deployed the first SDN commercial networks in 2012 to support DCI services. The growing need to interconnect geographically dispersed data centers over the WAN will continue to evolve as a market for SDN-based solutions. Analytics and policy engines will support the automation of network operations. Analytics and policy engines will work with control plane and application layer intelligence to better optimize network resources and automate the changes required to match the operation of the network to the needs of applications. With SDN and more capable network platforms, near-real-time analytics will effectively close a feedback loop between how the network is handling data flows and what the policy engine wants to happen. Page 2

3 SERVICE PROVIDER NETWORK TRENDS WITH CLOUD SERVICES Cloud services transform data center traffic It s no secret that service providers have seen immense growth in the volume of network data traffic. Cisco s 2012 Visual Networking Index (VNI) report indicates that global IP traffic has increased eightfold over the past five years, and this growth trajectory is expected to continue with a further threefold increase in data traffic over the next five years. Unfortunately, this increase in traffic has not directly translated into an increase in service provider revenues. For many service providers, a larger role in delivering cloud services presents the best opportunity to develop new revenue streams. Service providers already have an established base of enterprise customers, and cloud services can be a natural extension of the communication services they already provide. They also have a direct relationship with mobile and broadband subscribers that are coming to rely on cloud-based services. Data center traffic is undergoing a fundamental transformation in scale and traffic characteristics as the deployment of cloud-based services expands. Cisco s Global Cloud Index shows a 44% CAGR for cloud-based traffic from 2011 to 2016, with two-thirds of data center traffic coming from cloud-based services by Ovum is seeing vendors and carriers begin to develop products and services targeted directly at supporting this emerging market for data center interconnect. Carrier networks evolve to link the data center and central office The days when the central office (CO) is the sole locus of control in service provider networks may be ending. The IT world and the communications world are coming together as carrier networks evolve to be more software-centric and network intelligence migrates to the data center. Today, carrier data centers largely support managed services for enterprise customers, and they are beginning to provide public and private cloud services. Tomorrow, data centers will play a key role in controlling the operation of carrier networks and in serving applications. The data center is becoming the strategic hub for the global carrier, as the wire center was for legacy local telecoms carriers. Software-centric SDN networks will take advantage of the compute power in general-purpose server blades, and advances in operating and managing virtual machines, to provide virtually centralized intelligence in networks. This intelligence will enable networks to be easily configured and controlled, respond quickly to changes, and rapidly deliver new services and applications. This massive addition of new computing requirements leads to a significant need for additional server capacity throughout the carriers footprint. With facilities spread throughout a service area, carriers can add IT infrastructure to distributed COs and bring the cloud much closer to customers, reducing latency and bandwidth costs. With control of the data center and the network, carriers can guarantee service quality and performance from the data center to the customer premises. The new role of data Page 3

4 centers in carrier networks also leads to additional requirements for inter data center connectivity that can be met by more flexible converged optical platforms. Carriers can tie the WAN to the cloud AT&T, British Telecom, CenturyLink, Chunghwa Telecom, KDDI, Tata, Telstra, Orange, and Verizon are among the carriers that have created cloud service businesses, although most carriers were slower than most IT service providers to catch on to the cloud opportunity. Now that they have embraced the possibilities, they have been a bit frustrated in positioning themselves against the IT and Internet players that dominate the cloud services market. However, carriers are in a good position to leverage their understanding of enterprise IT requirements along with their network, security, and professional services expertise in providing cloud-based services and are evolving into IT services companies. With control of the customer access and data center interconnect networks and their data center infrastructure, the carrier s complete network becomes part of their service offering, and they can differentiate their services with programmable network access and economies of scale. Application-aware software-centric networks can support the continued evolution of carriers in this direction and enable flexible delivery of applications and services. Data center evolution changes network traffic patterns Data centers are undergoing a transformation brought about by an evolution to cloud-based computing services, server virtualization, and distributed computing platforms such as Hadoop. The transition of computing workloads from traditional data centers to cloud data centers is bringing with it a change in network traffic patterns. The traditional client-server model results in a predominantly North-South traffic flow as traffic moves from servers in the data center to end users through the Internet or IP WAN. As data centers evolve to support new computing models, East-West traffic comes to dominate networks within the data center and between data centers, as storage replication, VM migration, and application service requests can generate intensive server-to-server and data transfer traffic. This rise in East-West traffic has led to flatter network architectures and virtualized overlay networks within data centers. It also produces a sharp increase in traffic between data centers to support storage synchronization, inter data center storage virtualization, and migration of virtual machines. As cloud services grow, service providers are allocating workloads across multiple data centers to handle variable demand requirements and operate multiple data centers as a virtualized shared pool of data centers. This growth of inter data center traffic leads to new network requirements for low latency, security, virtualization, and automation. Network solutions that effectively coordinate high-capacity bandwidth and are capable of rapid changes in network topology based on application needs will help service providers deliver effective solutions for these inter data center workloads. For more on how data Page 4

5 centers are changing network traffic patterns see Ovum s September 2012 report Data Centers: Defying Gravity. Network programmability enables automated delivery of new services Network programmability and emerging software-centric network architectures are the foundations for a new networking paradigm that will turn service provider networks into a dynamic system that continuously adapts to meet subscriber needs. Future networks will be aware of the applications and application data traversing the network. Analytics and policy engines will work with control plane and application layer intelligence to better optimize network resources and automate the changes required to match the operation of the network to the needs of applications. This automation of network provisioning will not only increase the value of communications networks to users, but will also change the economics of networks and reduce the opex necessary to operate and maintain the network. Network programmability will also support the rapid and efficient development of new network services and applications for users. In addition to the network being aware of applications, applications will be aware of the capabilities and state of the network. Ultimately, a programmable network will allow software to rapidly adapt the network to the needs of applications and provide an improved quality of experience to individual users. APIs will proliferate in future networks An application programming interface (API) is a software interface that abstracts details of underlying resources. APIs are well established in software systems and the IT environment and can take many forms, from the function calls in an operating system to the web-based interfaces that integrate Facebook with custom applications. As networks become more programmable, APIs will be widely employed at multiple network layers to enable software to readily access network resources. Today, in the cloud environment, APIs are available to make infrastructure, services, and application resources of the cloud data center available to application developers. However, there is no recognized API standard for cloud computing, and the number of APIs has multiplied as more vendors develop their own, although OpenStack, Amazon Web Services, and VMware s vcloud are moving toward becoming de facto standards. Fast-growing mobile networks are also generating interest in APIs to exploit the value inherent in network data. With network APIs, customers, suppliers, and third-party application developers can, for a fee, use a carrier s existing processes, platforms, and data to create new applications or services, Network APIs are available from tier-1 carriers such as AT&T, Telefonica, DT, and Verizon to support location information, payment and billing features, multimedia messaging service (MMS), and short message service (SMS) functions. Page 5

6 Network infrastructure APIs are being introduced into many equipment platforms to allow customers, partners, and third parties to build network applications that extend network functionality or modify the behavior of a network dynamically. Cisco s onepk API and the Junos XML API, for example, provide a representation of the configuration statements and operation mode commands that control their switches and routers to enable a programmable interface to networks. With SDN, controller software will have access to these APIs in addition to other interface protocols to access equipment resources. The controllers will provide their own Northbound API to higher-layer functions. Analytics will support SDN with visibility into network performance Operators have begun to mine network data using analytics tools to identify trends, patterns, and subscriber behaviors. These business intelligence and operational planning analytics tools collect information from active and passive network probes, sensors, deep packet inspection (DPI) tools, billing systems, subscriber records, and other data sources and process it offline. With analytics, service providers can better examine traffic statistics and network policy control data to gain insight for business decisions. For example, examining data on network performance, availability, and latency can support operational planning and ensure compliance with cloud services SLAs. To support a dynamic programmable network, the role of analytics will have to develop far beyond its use in an offline function. With SDN and more capable network platforms, near-real-time analytics will provide visibility into how the network is handling data flows. PACKET OPTICAL SYSTEMS EVOLVE TO SUPPORT DATA CENTER INTERCONNECT Converged optical platforms incorporate SDN concepts If service providers are going to extract maximum value from their network infrastructure, then they must look at all the layers including an emerging converged optical transport layer. SDN development was initially focused on use in university and research networks and later migrated to application in the intra data center network at Layer 2 and above. In 2012 SDN was deployed for data center interconnect in the WAN. Now some equipment vendors are beginning to demonstrate approaches that extend SDN concepts to the optical layer to provide a flatter architecture between data centers to deliver better scalability, lower latency, and deterministic performance at the lowest cost per bit. By integrating optical transmission with a switching function (typically label switch routing) in conjunction with management and control layer software, some vendors are supporting the development of a programmable transport layer. BTI s Intelligent Cloud Connect, Ciena s OPn network architecture, Cisco s Elastic Core, and Infinera s Optical Transport Switch are all examples of approaches to offering end-to-end services over multi-layer, and sometimes multi-vendor, networks. Page 6

7 These converged optical layer solutions provide an abstraction layer between the transport network resources and SDN controllers. With a global network view, and working in conjunction with analytics and policy engines, the controllers can provide end-to-end service management and automate the setup of network paths based on the needs of applications. Through integration with SDN controllers, applications will interact with the network to adapt network paths, capacity, latency, and other performance parameters to application needs. SDN IS REACHING THE DEPLOYMENT PHASE Networking reaches a critical juncture For years networking technology has been marching towards software-centric architectures. Service providers took steps to offer network APIs to developers to provide some access to network services, but these solutions are generally proprietary and implement a limited set of capabilities. Vendors began to support network programmability with the introduction of software development kits (SDKs) and APIs that allow access to some network resources. However, these approaches provide a limited range of features, do not scale well, and are typically restricted to proprietary solutions. Service providers are looking for a network infrastructure that will reduce costs, enable faster service, and support network monetization. Traditional network architectures provide no discernible exit from the unsustainable situation of bandwidth growing faster than revenues. With SDN, service providers can reap the benefits of resource sharing, programmability, and automation in network operations and will have the opportunity to be full participants in service and application delivery. Service providers deploy SDN to support specific needs Ovum believes SDN will be deployed as the best solution to deliver specific services or applications. We are already seeing this happen in initial deployments. Google and NTT deployed SDN in 2012 to support data center interconnect services. We expect additional service providers to join Google and NTT in announcing SDN deployments in their production networks over the next several years. AT&T, Verizon, Comcast, and Deutsche Telekom are known to be trialing SDN and are prime candidates for future production deployments. Google has a history of committing resources for internal development of technology that supports its business objectives, so it s not a surprise that the company would be the first to deploy SDN, but other Web 2.0 companies, such as Facebook and Amazon, as well as cloud service providers, such as Rackspace, can t be far behind. Initially service providers will be attracted to SDN for the cost savings it can provide in automating networks and improving utilization. Later they will begin to take advantage of the opportunities for SDN to monetize network resources. Page 7

8 SDN will be deployed first at the edge of data centers Ovum expects SDN to develop in phases around domain-specialized solutions. The first deployments of SDN in service provider networks, at Google and NTT, operate at the data center edge, interconnecting geographically dispersed data centers over the WAN. This use case will continue to evolve as a market for SDN solutions. Ovum believes the next domain to benefit from SDN will be mobile networks. The typical architecture of mobile core networks today includes long service chains, with packets passing through a series of appliances each performing an individual network function. Turning many of these functions into virtualized software functions will provide flexibility and resource utilization benefits that will allow mobile carriers to reduce capex and opex while improving their ability to deliver new services. As SDN matures, the business case for deployments will move from being based on cost reduction to increasing revenues as it is deployed to optimize application performance and support rapid delivery of new services. SDN architectural migration Over the next several years we expect vendors to continue introducing new SDN architectures and products. They will bring more programmable platforms to market including converged optical layer solutions. There will be growing availability of application software and an emphasis on integrating network service and application software into solution sets. The industry will start to coalesce around specific northbound APIs in advance of the development of standards for this interface. The large majority of controllers will operate with a number of equipment interfaces including OpenFlow, SNMP, NETCONF, and vendor-specific command-line interfaces (CLIs). Major vendors will attract (or acquire) an alliance of suppliers to offer turnkey solutions that address a particular network service or delivery of an application. Ovum s long-term SDN deployment view Ovum expects SDN deployment will be a decades-long process. Short term, there are immediate service provider benefits in enabling cloud services with more intelligent data center connectivity. In the medium term, service providers will continue to push vendors for open platforms to support multidomain, multi-vendor networks. Longer term, SDN will evolve from an alternative to traditional networks to become simply the standard architecture of service provider networks. Deployment will be a matter of survival, particularly for larger carriers, as it will be the architecture necessary for carriers to effectively monetize their network. Anything that derails the formation of strong ecosystems in support of particular solutions can affect the speed of SDN deployment. These ecosystems will be critical to offering service providers an Page 8

9 APPENDIX Methodology integrated solution. Ironically, the strongest threat to the development of such ecosystems is likely to come from rapid development of converged solutions from a few of the larger vendors. The information in this report comes from both primary and secondary sources. Primary sources include briefings, exchanges, and phone conversations with vendors and service providers covered in this report. Secondary sources include industry news articles, operator and vendor press and financial releases, and existing Ovum databases. Further reading Software-Defined Networking: Vendors and Product Landscape (October 2012) Data Centers: Defying Gravity (September 2012) Author David Krozier, Principal Analyst, Network Infrastructure Ovum Consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Ovum s consulting team may be able to help you. For more information about Ovum s consulting capabilities, please contact us directly at Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher, Ovum (an Informa business). The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions, and recommendations that Ovum delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Ovum can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. Page 9

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