October 12, 2016

Everyone Agrees: It's Time to Make Money from Virtualization and Cloud

Service providers at SDN & OpenFlow World Congress discuss going beyond proofs of concept and generating revenue from virtual services.

The first full day of sessions, including presentations from some of the largest service providers in the world, at SDN & OpenFlow World Congress confirmed that service providers are eager to take software-defined networking (SDN) and network functions virtualization (NFV) out of hypothetical stages and into the real world in order to generate revenue.

As Axel Clauberg, Vice President of Aggregation, Transport, IP and Fixed Access at Deutsche Telekom, said, "The time for proofs of concept is over." Instead, he pointed to how service providers are going through the process of redesigning their core services to make them cloud-aware or cloud-native, which will make it a lot easier to onboard them and get them to customers quickly.

Clauberg added that in addition to shifting from a traditional waterfall methodology to the more agile DevOps method, service providers also need to bring in the required skillsets in order to really take full advantage of virtualization technologies—but it's not something that will happen overnight. "The young talent out there that we're looking at is also talking to Google, Facebook and others, and it's very hard to compete with them for their attention."

Many attendees at SDN & OpenFlow also agreed that while the introduction of SDN and NFV is a business transformation that involves technology, it is not really a technical issue at its heart, but more of evolution of people and processes. André Beijen, Head of Network Innovation at Dutch service provider KPN, for example, said, "We need to become smarter and learn from our mistakes." He added that creating an environment in which failing quickly and then immediately applying lessons learned is the norm. One option to go about this change is to establish small teams of volunteers who are willing to be part of such a monumental organizational shift.

"We're redefining processes and working together in agile and DevOps trial programs, changing our views on processes from the network and technology to customers," Beijen said. "KPN is putting customers first and becoming part of customer core processes. It's very challenging but also very exciting."

Matt Beal, Director of Technology Strategy and Architecture at Vodafone, described his organization's transformation journey as one with the goal of becoming cloud native, which he said will provide more agility and flexibility than virtualization alone. It'll also enable features like support for APIs and open source, continuous delivery, optimized DevOps, automation and machine learning.

Another service provider invoking the cloud native message is Verizon. Shawn Hakl, Vice President of Product and Business Innovation at Verizon, said that as his customers are digitizing their businesses, service providers need to keep up and scale both technically and commercially. "This will help us bring more apps to market faster and at a lower price point," he said.

As customers ask for services such as SD-WAN, bandwidth on demand, security and WAN optimization, it's imperative that service providers embrace more agile methodologies. As the move to "go digital" becomes increasingly important, however, it is critical that service providers begin making these transformation as soon as possible; the competition today is fierce. "We're delivering network as a service, including the app store and infrastructure while partners provide the apps themselves," Hakl said.

But it doesn’t end there. Hakl acknowledged that if service providers don't supply digital services to enterprise and other customers, someone else will swoop in and do it.

With the industry looking to get virtual services out the door and into the hands of customers, it seems service providers have finally turned the corner and are on their way to creating new business models that will allow them to move up the value chain and open new revenue potential.


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