NFV Economics and Business Case Discussion at Software Telco Congress 2014

THE IMPACT OF NFV ON SERVICE PROVIDER ECONOMICS

Jose de Francisco

IT EXPO / SOFTWARE TELCO CONGRESS - LAS VEGAS, AUGUST 12 2014

CICCLOUDBAND® INNOVATION CENTER

Director, Cloud Solutions Marketing, IP Platforms DivisionMember of the Technology Leadership Council

COPYRIGHT © 2014 ALCATEL-LUCENTALL RIGHTS RESERVED

CICALU COMMUNITY

CLOUD CLOUDBAND® INNOVATION CENTER NFV HUB

2 AUGUST 2014

leverage our company’s own cloud infrastructure and fly your own jets

let’s work together and move your apps and systems to innovate with a new breed of carrier cloud solutions


3 AUGUST 2014

industry events

NFV town hall meeting

CLOUDBAND® showcase

training

online community& collaboration tools

ecosystemconventions

customer workshops

know-how transfer

communityknowledge & exchange


3 AUGUST 2014 COPYRIGHT © 2014 ALCATEL-LUCENTALL RIGHTS RESERVED

“all things are numbers”Pythagoras

“there is no unique picture of reality” Stephen Hawking

2018 2020

$1B

$2B

$3B

$4B

$5B

1.3 NFVMind Commerce

$6B 5-6 Virtualized Telecom MarketABI Research

5 NFV & SDN for RANSNS Research

2.4 NFVAnalysis Mason

service provider investment “$B”sources: wp.me/p2EKuv-dK

4 AUGUST 2014

maturity levels the journey

valuation considerations business case sample

agenda


NFV HUB

5 AUGUST 2014

knowledge transfer

early cloud technology adoption

pilot application prototypes

virtualizationmanually deployed

early automationdeploy, monitor, API

life cycle mgmtscaling, self-healingupgrades, patches

multi-tenancysoftware defined

environments

“plot your journey”


6 AUGUST 2014

virtualizationmanually deployed

early automationdeploy, monitor, API

life cycle mgmtscaling, self-healingupgrades, patches

multi-tenancysoftware defined

environments

accelerated Lead timeS

Unprecedented Capex reduction

COTS -Commercial off the shelf (hardware)

Flexible planning & ease of pivoting

FOSS -Free open source software

Distributed systems(Cloud x network loads x sla)

Lean operations

Agile project managementIterative development

Devops –development & operations

Economies of scale

Economies of scope

Network effects

“value whiteboarding”


7 AUGUST 2014

Hardware

End to End

ManagementAutomation

Applications

Dedicated

COTS

Multitenant

Environment

Networked

Clouds

EMS

EMF

Orchestration

Service

Chaining

OSS/BSS

For Cloud

Manual &

Application

Network

Measurements

& QoS

End to End

Analytics

Predictive

Analytics

Early

Virtualization

Native

Virtual Network

Functions

Lifecycle

Automation

vNF Mashup

Networking

“manage dependenciesand externalities”


“Toto, I have the feeling we’re not in Kansas anymore”

Dorothy - Wizard of Ozpicture source: wp.me/p2EKuv-dK

8 AUGUST 2014

behavioral economics

green field lite deployment lifecycle replacement regulatory considerations lean operations agile development cap and expand network as a service enterprise market enterprise verticals

legacy’s last power gasp culture and org shift conventional engineering budget and accountability workstyle (lean, agile, devops)

marketing myopia disruption unmet demand disintermediation value migration equity erosion

opportunity cost

strategy

technology maturity


9 AUGUST 2014

behavioral economics

green field lite deployment lifecycle replacement regulatory considerations lean operations agile development cap and expand network as a service enterprise market enterprise verticals

ecosystem dependencies open source community vertical vs. horizontal architecture control and data planes optimization reliability, availability, serviceability performance security

legacy’s last power gasp culture and org shift conventional engineering budget and accountability workstyle (lean, agile, devops)

feature parity modular configuration standardization, plug & play programmable dynamic and elastic behavior open, extensible automated, zero touch manual override multi-vendor, commodity transparent full visibility, analytics, one glass coexist with legacy and conventional future proof

marketing myopia disruption unmet demand disintermediation value migration equity erosion

opportunity cost

strategy

technology maturity


OPTION A (PMO): New COTS X.86 servers

OPTION B (FMO): 11 CloudBand Nodes3 and CBMS

(orchestration) licenses

Alternatives

analyzed

SCOPETCO analysis of replacing current DNS servers with new infrastructure for a Service Provider

OUTPUTS

OPEX

Capacity Growth Process

Software Upgrading Process

Healing Process

DC: Floor Space, Power & Cooling

SW Licenses & Maintenance

Service Provider DNS operations

Servers type A1

44 old COTS servers

(Cache Resolvers)

Servers type B2

60 old COTS servers

(ANS & Cache Resolver)

DNS Operations Overview

CAPEX

HW Infrastructure

(1) Servers type A are all the same(2) Servers type B are all different, some are old legacy infrastructure coming from company

acquisitions(3) 11 CB nodes is the minimum CB node infrastructure due to requirement of presence in 11 sites


- 86%

PMO

1.79 $M

FMO

0.25 $M

- 58%

PMO

1.50 $M

FMO

0.63 $M

NO MULTI TENANCY. TOTAL 5-YEAR COSTS: 14.03 $M 7.19 $M [-49%]

FLOOR SPACE,

POWER & COOLING

HEALING

PROCESS

SOFTWARE UPGRADING

PROCESS

CAPACITY GROWTH

PROCESS

- 83%

PMO

0.69 $M

FMO

0.12 $M

- 48 %

PMO

0.66 $M

FMO

0.34 $M

HARDWARE

INFRASTRUCTURE

- 56%

PMO

4.12 $M

FMO

1.81 $M

SOFTWARE LICENSES &

MAINTENANCE (HW & SW)

- 23%

PMO

5.27 $M

FMO

4.04 $M

11 27 JULY 2014

(1) Only includes operational costs attached to the process of replacing and growing new capacity. Hardware, licenses & maintenance costs are accounted for separately

OPEX CAPEX


- 86%

PMO

1.79 $M

FMO

0.25 $M

- 58%

PMO

1.50 $M

FMO

0.63 $M

NO MULTI TENANCY. TOTAL 5-YEAR COSTS: 14.03 $M 7.19 $M [-49%]

FLOOR SPACE,

POWER & COOLING

HEALING

PROCESS

SOFTWARE UPGRADING

PROCESS

CAPACITY GROWTH

PROCESS1

MULTI TENANCY. DNS CONSUMPTION: 4.17 $M [-70%]

FLOOR SPACE,

POWER & COOLING

- 83%

PMO

0.69 $M

FMO

0.12 $M

- 48 %

PMO

0.66 $M

FMO

0.34 $M - 89%

FMO

0.17 $M

HARDWARE

INFRASTRUCTURE

- 56%

PMO

4.12 $M

FMO

1.81 $M

HARDWARE

INFRASTRUCTURE

- 88%

FMO

0.49 $M

SOFTWARE LICENSES &


- 47%

FMO

2.80 $M

SOFTWARE LICENSES &


- 23%

PMO

5.27 $M

FMO

4.04 $M


Value created by CloudBand to a Service Provider DNS operations

CLOUDBAND

0 $M

6.8 $M

9.8 $M

Service Provider

Additional value captured

through Multi tenancy

MULTI TENANCY

Initial value captured by

Cloud-based DNS

CLOUD DNS


14 AUGUST 2014

maturity levels the journey

valuation considerations business case sample

recap


innovarista.org

alcatel-lucent.com/cloud

@innovarista

@ALU_Cloud

more information:

follow up discussion:

wp.me/p2EKuv-ee

wp.me/p2EKuv-dK

flic.kr/s/aHsk26xXom

softwaretelco.com

Jose de Francisco Director, Cloud Solutions Marketing, IP Platforms DivisionMember of the Technology Leadership Council

thanks!
