Home Latin America 2015 Speeding up digital strategy with NFV and SDN

Speeding up digital strategy with NFV and SDN

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Janilson Bezerra & Co-Authors: Catarina Reuter, João Gabriel Aleixo, Washington CorreiaIssue:Latin America 2015
Article no.:3
Topic:Speeding up digital strategy with NFV and SDN
Author:Janilson Bezerra & Co-Authors: Catarina Reuter, João Gabriel Aleixo, Washington Correia
Title:Director Network Innovation & Governance
Organisation:TIM Brazil
PDF size:265KB

About author

Janilson Bezerra, Director of Innovation & Technology, TIM BRASIL

Telecommunication Engineer with a broad experience at Telco Industry over 15 years in several technology competence areas, including: Engineering, Network Planning, Strategic Planning, IT and Innovation.

Nowadays, he is a director of Network Innovation&Technology, in CTO Tim Brasil organization, acting on technical transformational programs, combining technical, finance and innovation skills.


Catarina Reuter, Electronic Engineer degree from Federal University of Bahia and MBA from IBMEC/BR, has more than 15 years in Telco Market. She is currently Manager of the Technology Centre Department at Tim Brasil.

João Gabriel Aleixo, B.Sc. in Computer Science and M.Sc in Electrical Engineering, has been working in the ICT research and technical fields for over ten years. Currently works as Senior Consultant in the Innovation Lab at TIM Brasil, testing and validating new products and innovative networking technologies.

Washington Correia, B.Sc. in Computer Science, with specialization in Advanced Distributed Systems and Information Security Management, has been working in IT/Telco industry over ten years. He is currently Senior Specialist at Innovation & Technology Department at TIM Brasil.

Article abstract

Network Functions Virtualization (NFV) and Software Defined Networking (SDN) are becoming increasingly essentials for the future of telecommunications to make networks and service provisioning more flexible and agile. In addition, aiming to provide significant operations cost savings and infrastructure improvement, telco operators must overcome technological and organizational challenges to get the expected return on investments and new revenue flows. This article provides a view into the NFV/SDN market trends and presents the main benefits, impacts and critical challenges to be tackled.

Full Article

Just a few years ago, there was only a small overlap between communications services (telephony, radio broadcasting, TV broadcasting) and IT World (data centres, storage personal computers and applications), but this dichotomy already became blurred. Traditional communications services, which previously were a matter of pure connectivity, simply transporting data from point A to point B and managing constraints (e.g., minimum bandwidth, maximal delay) and pursuing maximal efficiency (minimum cost, optimized investment), slowly advance through unknown terrains, that used to be only IT world.

Today, OTTs bring this ability of innovation and speed in service offerings, fast draining revenue from carriers, and challenging them to move forward towards new models. New communications services are combining connectivity and network functionalities, firewall, NAT, load balancing, content management, parental control, VoIP (Voice over IP), IoT (Internet of Things), etc. Such mix of services and ancillary needs further blur the IT / Communications distinction, and make service deployment and optimization more challenging. Making this scenario even more complex, personal devices (smartphones, tablets, and wearable) run their own heuristics, hidden from the users acknowledgement, becoming these portable small computers users most important partners in each and every situation.

SDN and NFV definitely come to support the creation of new network functionalities at the speed of software evolution, meanwhile allows TCO (total cost of ownership) transformation thanks to adoption of software costs models, allowing operators to explore new revenue streams. An inflection point, as defined in mathematics, is a point on a curve at which a change in the curvature behavior occurs. When we bring this concept to business, we can say that currently, the visionary Telco Operators find themselves exactly at an inflection point. Executives must evaluate how and when to do it, proving the benefits, and leading the organization to New Digital arena.

Virtualization starts with hardware and software new mindset, and ends in a corporate organization rethinking, through new processes definitions and a deep change in the concepts of network infrastructure and services delivery. In order to take fully advantage of a virtualized cloud environment, it is not a matter of simply porting your functions from purpose-built appliances to Virtual Machines (VMs). With the separation of Software and Hardware, the function needs to be rethought and designed with a focus on cloud and high availability.
As Telco acts as one ecosystem and industry, standardization bodies are coming together to prepare a propitious environment to cope with this need. In March 2014, ONF (Open Networking Foundation) and ETSI (European Telecommunication Standards Institute) announced strategic collaboration for SDN support to NFV. Both organizations have a shared commitment for supporting the needs of network operators, seeking to benefit from advancing through open and collaborative networking.

According to ONF, SDN is an emerging architecture that is dynamic, manageable, cost-effective, and adaptive, making it ideal for the high-bandwidth dynamics nature of today´s applications. This architecture decouples the network control and forwarding functions, enabling the network control to become directly programmable and the underlying infrastructure to be abstracted for applications and network services”. On the other hand, driven by ETSI, NFV proposes a new approach to the implementation and operation of network functions, and may inspire the development and deployment of new types of network functions.

Figure 1 shows the transformation journey that needs to be adopted by carriers. The most important aspects for speeding up the improvements of SDN/NFV (success factors) is rebuilding the organization model, creating a new dedicated area for virtualization, architecture remodeling and planning.

Figure 1: Towards fully programmable and real time networks

Software-driven approach offers opportunities for lowering operational expenses by automating processes, such as application deployment, maintenance and capacity planning. NFV can reduce equipment costs and energy consumption based on agnostic hardware-base and a software centric purchase model, but its ultimate benefits are to provide time to market and faster start-up of new services and features.

In terms of costs contention, network operator’s goal is to reduce CAPEX and OPEX, and despite introducing some mechanisms and concepts for achieving this target, these technologies need financial justification to move forward with business plans, field trials and commercial deployments. Besides, the difficulty of evaluating total costs impacts, the dilemma of right applications choices and incremental cost, the lack of maturity of management models and the prediction of associated revenues make this analysis even more complex.

SDN/NFV adoption represents a disruptive network transformation and, at the same time, an enabling step for new services and revenues streams. Several companies in telecom industry come up with different perspectives on how virtualization and the cloud approach could improve network infrastructure and operational efficiency, and find themselves puzzled in the financial measurements and quantification. These investments must take into account cost savings and return on investment (ROI) for each and every project. The challenge is about how to quantify the elasticity and agility that these technologies will enable, and how to manage business cases.

Clearly proven that virtualized network functions promote faster service provisioning, processes optimization, automatic and fast scaling, flexibility on changes adoption, and all these benefits directly impact on service operations, which good comprehension and fit are crucial for NFV and SDN success. In this sense, TCO transformation, which means operational reduction and contention, is a compelling topic to be addressed by operators in order to justify new infrastructure investments (CAPEX) and to keep EBITDA (Earnings before interests, taxes, depreciation and amortization) margins at fair levels. This financial issue reveals that, to get better results on operations efficiency (and as consequence significant savings to improve EBITDA), the investments should be done on a large scale, and that implies on taking and managing risks. The dilemma is to accept high risks associated to the impacts on Telco core business wide deployments, and then evaluating if the savings are attractive according the invested amount.

In the end, certainly, NFV and SDN will change the landscape of the Telco industry, fostering cost efficiencies, time-to-market improvements, whilst introducing innovative services. However, there is still no out-of-box SDN or NFV solution, no one-size-fits-all model for software centric network. Soon, before going forward, it is very important for Operators to understand their moment and evaluate the risk and opportunity, evaluating their model to adopt NFV and SDN. Taking in mind the adoption and success of these technologies depend on the maturity of management models and the high level commitment of the organization. The opportunity of transition to software-centric will be gradual, function by function; being sustainable by a multi-disciplinary and integrated governance model. Moving towards a common shared IP infrastructure with SDN and NFV that it will support vertical and horizontal convergence layer with a flat architecture where optical, IP, and higher layers, including the management, service, and orchestration functions, can operate more effectively together. When will be the inflection point for your company? Be ready to answer it.

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