SDN and NFV – the benefits and drivers behind

As Software Defined Networking (SDN) and Network Functions Virtualization (NFV) are moving from hype to reality, there is a need to better understand and to quantify the benefits that operators can expect to achieve. When we speak to European operators, we find that most of them have not yet done the business case analysis for deploying SDN and NFV; there are expectations for benefits, yet the spontaneous estimates for the size of cost savings are cautious and conservative.

SDN and NFV developments are largely driven by the vendor community – with the vast majority of operators relying on the vendors to lead the way and present their products and roadmaps. At the same time, the priority of use cases, roadmap and timing for adopting SDN and NFV will vary across operators as investments will be made on case-by-case basis in conjunction with modernization of legacy systems that reach end of life.

To realize the full benefits of SDN and NFV, operators will need in addition to solve not only technology barriers but also overcome challenges in processes, staffing, culture, service design etc. as a shift to software has profound implications on the way of working. Not to forget also the issue of vendor interoperability – unless progress with interoperability and further standardization is achieved, the outlook for SDN/NFV benefits across operator networks looks bleak. Unlike data center service providers that can choose to build solutions around architectures of few vendors, operators’ networks involve a greater number of vendors. As a result of the above factors, the migration will be a gradual process and will likely take up to 10 years until it is completed by a significant part of the operators.

SDN and NFV should be also put in the context of the larger trends of site consolidation and convergence of domains. Many operators are consolidating and reducing the number of data centers in order to increase efficiency and extract cost savings. At the same time there is also a trend of convergence of mobile and fixed domains as operators are embarking on the strategy of offering quad (and even quint) play services; as well as convergence of telco and IT domains towards one CTIO organization. It is clear that it is the convergence/consolidation itself that will offer the biggest cost saving potential. SDN and NFV should therefore not be credited as the sole source of all savings but they play a key role as enablers that can speed up the process and bring the full benefits of convergence. Consequently, it will not be until this overall transformation and migration is needed, executed and completed that we will see the full benefits and savings.

The benefits of SDN are mainly about automation, shorter lead times and better network programmability and control, and I support the hypothesis that the main cost saving impact will be on the OPEX side (in areas such as personnel cost) rather than in CAPEX. The benefits of NFV are primarily about flexibility to scale-up and down services; shorter lead times as one can fast deploy virtual machines rather than proprietary hardware, reducing the need to overprovision and enabling more service innovation. NFV can lead to some CAPEX savings but operators should not expect a major impact as savings from reduced hardware CAPEX will likely be diluted by increased spending on software. SDN and NFV will also enable new business models and shorter lead times, yet it remains to be seen whether operators can translate this into an increase in top-line revenue.

As the discussion on the benefits of SDN and NFV continues, there is no doubt that they are part of the natural evolution in network architecture and will bring benefits. Although operators should be cautious in expecting large cost savings, SDN and NFV will play important roles as enablers in the larger trends of consolidation, convergence and network modernization.


Galina Garpenståhl is a Manager at Northstream

Published February 16, 2015 in: . Tagged: ,

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