INNOVATION SPECIAL REPORT: The service generation
28 October 2015 | Guy Matthews
Carriers are leveraging cloud, SDN and NFV in order to develop flexible network on demand solutions for their enterprise customers. But are these offers hitting the mark, and how much further do they have to go before they are the finished article?
The business of selling network services to enterprises is changing profoundly, creating openings for exciting new models and challenging service providers of a traditional and cautious disposition to step up to the mark or face being relegated to the sidelines.
New and innovative technologies are revitalising the enterprise network game - technologies such as SDN and NFV. These come with new capabilities that are enabling service providers to build custom networks for their customers that integrate private networks, VPNs, internet and cloud connectivity into hybrid networks that are as agile as they are automated and programmable. Offered as a network-as-a-service (NaaS), today’s networks are customisable in many different ways, helping to solve the continually shifting strategic business requirements of all type of enterprise.
Network offerings provided on-demand allow companies to deploy exactly the right technology for any given location, application requirement or performance demand. The network is no longer the rigid and static utility of history, but a key enabler of business and technology innovation.
We are, though, unquestionably still in the first phases of this revolution. By no means all carriers and service providers have embraced network on-demand, and even those that have done so enthusiastically have, by their own admission, still got some distance to travel before their offer is in its finished form. But the initial phases of tentative experimentation are over and the real battle is underway. “There are now, finally, multiple telcos actually delivering network on demand,” says Ben Parker, chief technologist, Guavus, a software development company specialising in Big Data analytics. “You’ve got AT&T and Verizon and others. How far are they down the road? That’s a good question, but they are active, and their customers are paying attention.”
Parker believes the prospect of 5G is acting as a crucial catalyst for a lot of telco names, driving them in a software-defined direction: “It’s a hot topic, with 5G designed for the industrial internet,” he says. “I see SDN and NFV as hand in hand with that. There’s lot of noise around all that at the moment. I’ve been to two or three conferences recently where that was the main point of discussion. There’s obviously a lot more work to do on service aware networks, but what was missing was an access network angle, and now with 5G, we’ve got it.”
Parker points out that in these early stages of network on-demand, there is at times a dubious correlation between what the carriers and services providers are talking about, and what the multinational enterprise customer actually wants. It is essential, he says, that the traditional telco keep focussed on real needs: “While we have this continuum of activity in the IoT space, the telco needs to be in on that,” he insists. “If they are not responding with the new services that customers want, those customers will go round them and get them elsewhere. That’s the real issue.”
Familiar and safe types of services will be making money for years to come for providers, says Parker, but believes that it is in newer more revolutionary on demand service areas where telcos risk getting disintermediated: “To avoid that, they must shift from a push to a pull mentality, which is a matter of discomfort for some. Things are moving faster than many are used to.”
Those carriers not in the network on demand market in any form might struggle to catch up now, believes Matthew Finnie, CTO with European carrier and cloud service provider Interoute: “They’re leaving the door open to a big OTT player,” he says.
Interoute, claims Finnie, has been into network on-demand by virtue of its cloud platform for the past three years: “The typical enterprise use case for us is a customer who comes along liking the idea of cloud services, and who doesn’t want to go to an Amazon or an Equinix but simply wants to plug their data centre into a cloud-like platform,” he says. “With our software-defined all-MPLS infrastructure, we’re talking to enterprises in sectors ranging from healthcare to recycling and serving their needs.”
He claims that his enterprise customers are responding very positively: “They’re loving it. It’s cheaper than building it yourself, and it matches what you’re paying for more closely with your needs.
It gives flexibility to manage your transformation more easily, and with us, it’s less hassle than with some of our competitors.” Finnie contends that Interoute’s approach is different to that of many carriers in that it has not sought to software-enable isolated functions and put a network between them: “It’s better to have a common plane and drop in what you want,” he says.
The flexibility to develop solutions that enterprise customers really want is, he believes, a dividend of being a company with big assets but a small number of people: “We haven’t got the complexity of a lot of our large incumbent brothers,” points out Finnie.
“Some that I’ve talked to are internally conflicted on what to do about network on demand, particularly the big US carriers. One said to me ‘What do you want to get into computing for? it’ll be a bloodbath’. But when exactly has selling network services not been a bloodbath? In Europe I think we’re more used to tough competition than the US. For us, it’s so complementary that it would have been bizarre not to do it.”
A contrasting approach is that of Telstra which, through its acquisition of Asian carrier Pacnet now operates the PEN platform, an SDN-based solution through which enterprises have been buying on-demand, self-provisioned Layer 2 Ethernet bandwidth since February 2014.
Ellie Sweeney, head of wholesale at Telstra, explains that it has based on-demand networking around the OpenFlow protocol and its ability to configure devices using APIs: “We see the OpenFlow protocol and SDN as the next stage of evolution for NaaS, and these technologies are already being deployed by major global telecom service providers like Telstra, AT&T, Verizon, Deutsche Telekom and NTT,” she says.
“For the carrier, NaaS will help to differentiate offerings in the market through providing bandwidth on demand to cater for growing cloud applications.”
Follow the leaders
The North American market is a mix of SDN first movers, like AT&T, and other more traditionally-minded ILECs embedded perhaps too deep in their unchallenged niche to want to change too fast.
Not so Texas-based cloud platform operator Masergy, says SVP John Dumbleton: “Over 10 years ago, Masergy implemented solutions that were programmable on-the-fly, underpinning the SDN and NFV concepts long before they’d been widely developed or deployed anywhere else.”
Dumbleton says he is finding that a lot of US enterprises haven’t updated or upgraded their networks for up to a decade, but believes it is quickly becoming one of the top spending priorities: “Legacy architectures are feeling the strain under new types of applications that are more demanding and need better performance,” he points out.
“These apps need a network that is able to increase or decrease bandwidth on the fly and deliver different classes of service. Video conferencing, for example, requires a higher level of throughput than an email application. IT departments need a nimble network that can sense and adapt to the needs of different applications and their users. Networks are evolving and the need for self-provisioning and bandwidth re-allocation on-the-fly are requirements that today’s businesses want and need.”
Although early in the evolution of network on demand, it is already time for carriers and service providers to be mindful of differentiating their offer from rivals, argues Ravi Palepu, senior director, global telco solutions with consulting and outsourcing provider Virtusa.
“Telcos need to look at trying to personalise their offer,” he says. “How can I customise my service to a particular enterprise customer? What does, for example, downtime mean to them? A minute of downtime will mean something different to a bank than a pharmaceutical.”
Far from being a multinational enterprise space, Palepu believes smaller enterprises, right down to SoHo level, are already a focus for many telcos and their network on demand offer: “Many are doing it in a big way, in Europe certainly,” he observes. “For the larger enterprise, it’s going to be about cross network integration and IoT as a service – maybe in a few years’ time. Some of course are barely thinking at all about what services they can put over the basic network. If they are not fast enough, then OTTs will leave them with just the pipe.”
Betting big on the future
The big future challenges for enterprises in the cloud revolve around security and availability, and service providers are very well positioned to satisfy those needs by delivering cloud connectivity using a resilient VPN-like solution, argues David Noguer Bau, head of telecoms and fixed vertical marketing with Juniper Networks: “This approach is making cloud-connectivity and cloud-brokerage services increasingly popular as data is kept secure and private between the cloud and the network, with all traffic remaining on the private network and not the internet,” he says.
SDN and NFV allows service providers to meet this need with fully automated, on-demand, self-provisioning services.
In this early adopter phase, no one carrier or service provider has all the answers. Service providers are just beginning to experiment with new services and trying to find new revenue and business models that work based on cloud, SDN and NFV.
Abel Tong, director, solutions marketing of the Blue Planet division at vendor Ciena, believes that providers uncertain of their next move should be looking, to begin with, at applications like vCPE: “vCPE takes functionality that was previously deployed in a customer-edge router, and now deploys it as virtualised network functionality, running in the cloud with SDN managing the end-to-end service automation across a network,” he says.
“Because the new vCPE based managed services can be turned up quickly and offered at a much lower cost point than their physical hardware based counterpart, a new group of users, namely small and medium enterprises can have access to high-end connectivity coupled with managed services.”
Tong sees a number of trends emerging down the line: “We will have more users, thanks to mobility and IoT, needing more data and connecting to content, applications and services predominantly in the cloud. This creates a growing need for dynamic and on-demand high-performance, highly reliable connectivity into the cloud with a mix of value-add, virtualised network functionality - vSecurity, vRouting, vLoadBalancing and so on. This is especially important to enterprises because as they outsource IT and move their data, applications, compute and storage into the cloud, the network becomes a critical piece of their business.”
Although early in its history, it is already plain that on-demand networking, fuelled by SDN and NFV, is the way for all service providers to help enterprise customers manage their service delivery needs and IT assets. There is simply no way back, but everything to gain from going forward.
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