There have been many benefits proposed for using Software Defined Networking (SDN) and Network Functions Virtualization (NFV) to modernize the datacenter and network. Many of these benefits are fairly near term and quantifiable. However, the biggest value for SDN and NFV is in the enablement of future innovation and services.

SDN and NFV Enable New Services ... and New Revenue

A number of sources have recognized the future value of SDN for creating new services.  One is the recent –  “SDN and NFV Strategies: Global Service Provider Survey” (Infonetics, July 8, 2013, reproduced with permission).  On page 4 it describes one of the biggest factors driving operator interest in SDN:

Service agility that results in quicker time to revenue: Service providers can quickly add, drop, and change the services and applications they offer by using SDN control software and NFV—virtualized network functions—on virtual machines (VMs) on standard physical servers rather than having to invest in new, specialized network hardware to deploy each new service. With these capabilities, they can cost-effectively test new services on a small group of customers before expanding for wider commercial availability, modify the service and give it another try, or simply scrap it without too great an investment if it’s not working out.

Margaret Chiosi of AT&T is a leader in the NFV space.  In a recent interview at SDN Central she cites the top three reasons for the AT&T interest in NFV, the first of which is related to new services:

AT&T sees three value propositions from virtualization. First is cycle time — reduced cycle time for introduction of new services as well as reduced cycle time to remove old or poor services. Next is composition: Since it is software only, the composition or decomposition of functions allows us to be more flexible in responding to the market place as well as allowing us to create APIs much more quickly.

There’s also cost — we want to reduce total cost of ownership.

Tom Nolle has written repeatedly on the need for service providers to use the principles of SDN and NFV to do more than cut costs.  For example in his blog “Earnings Show We Need Revolution Conservation!” he writes:

Applying this to our current technology revolution trio of cloud, SDN, and NFV, I think there are also two key points.  First, we are not going to fund three technology revolutions independently.  Somehow all this stuff has to be combined into one revolution, a revolution that can manage the costs of the trio by combinatory benefits, and one that can also aggregate the benefits into one use case. We’re anemic in this unanimity of revolutions department.  Second, the unified revolution has to be aimed at revenue in the long run and cost control as a short-term benefit.  That’s the polar opposite of how all three of our revolutions are seen today.  In my surveys, users were unable to articulate strategic benefits to any of the three technologies, only cost-reduction benefits.

So, How do SDN and NFV Enable New Services (and Revenue)?

There are several key aspects of SDN and NFV that position them to enable new services:

• Virtualization of complex network equipment and introduction of APIs and protocols for control – This is the first enabling step.  Virtualization hides much of the unnecessary detail and complexity.  APIs and protocols provide a programmatically-friendly means to control the network.  This leads to the next aspect,
• Ability to create new services without upgrading the network – Because the services are now built using interfaces into network elements in conjunction with software running in a datacenter, it is possible to define new services without having to change the software in the underlying network.  This removes a huge time/cost barrier for new services.
• Ability to compose and deploy services without a truck roll – The movement of network functions from an appliance to software provides the ability to turn up services without the need to deploy an appliance.  The decomposition of network services into smaller functional blocks then allows them to be re-composed into new and different user services.
• Ability to unite connect, compute and store functions – Much of the truly interesting recent service innovation is coming from mashups – the combination of previously separate apps or services to provide a valuable new service.  Likewise, the effective combination of connect, compute and store will help provide the basis for innovative new services.

Start Small Today but Lay the Groundwork for Tomorrow

SDN and NFV will probably roll out slowly based on their near-term benefits in reducing cost and improving automation. However, the real value will come when that foundation is used for the creation, activation and assurance of new services.

There have been many benefits proposed for using Software Defined Networking (SDN) and Network Functions Virtualization (NFV) to modernize the datacenter and network.  Many of these benefits are fairly near term and quantifiable. However, the biggest value for SDN and NFV is in the enablement of future innovation and services.