As usual, it is a week where operators and vendors jostle to show off their progress since last year and highlight the challenges ahead. before I speak about the new and cool developments in terms of stateless VNFs, open source orchestration, containers, kubernetes and unikernels, I felt the need to share some observations regarding diverging expectations from traditional telecoms vendors, VNF vendors, systems integrators and operators.
While a large part of the presentations showed a renewed focus on operations in NFV, a picture started to emerge in my mind in terms of expectations between vendors, systems integrators and operators at the show.
Essentially, everyone expects that the hardware bill for a virtualized network will reduce, due to the transition to x86 hardware. While this transition might mean less efficiency in the short term, all players seem to think that it will resolve itself over the next few years. In the meantime, DPDK and SR-IOV are used to address the performance gap between virtualization and traditional appliance, even at the cost of agility. By my estimate, the hardware cost reduction demonstrated by VNF vendors and systems integrators still falls short of operators expectations. Current figure places them around a 30% cost reduction vs. traditional model, whereas operators' expectations hover between 50 to 66%.
This is an area where we see sharp expectations variations between all actors in the value chain.
VNF vendors expect to be able to somehow capture some of the hardware savings and translate them into additional license fees. This thinking is boosted by the need for internal business case to transition from appliance to software, to virtualized and eventually to orchestrated VNF. We are still very early in the market and software licensing models for VNFs are all over the place, in many case simply translated from the appliance model in other cases built from scratch but with little understanding of he value of specific functions in the overall service chain. Increased competition and market entering from non-traditional telco vendors will level the licensing structure over time.
Systems integrators are increasingly looking at VNFs as disposable. Operators tell them that they want to be able to have little dependency on vendors and to replace VNFs and vendors as needed, even running different vendors for the same function in different settings or slices. Systems integrator are buying into the rationale and are privileging their own VNFs, putting emphasis (and price premium) on their NFVI (infrastructure) and VNFM (management). Of course this leads also to the conclusion that while VNFs (and VNF vendors) should be interchangeable, the NFV MANO (management and orchestration) function will be very sticky and will likely stay a single vendor proposition in a given network. As a result, some are predicted the era of orchestrators war, which certainly feels timely, after the SDN management war (winner OpenStack), southbound interface war (winner OpenFlow), hypervisor war winner (KVM)...
I have spoken at length about the danger operators expose themselves if they vacate the orchestration field and leave systems integrators to rule it. It seems to have gained some traction with open source orchestration projects being pushed in standards. In any case, VNF vendors expect a growth in software licensing vs. appliance model, whereas integrators and operators expect a reduction.
This is the area where everyone sees to agrees that an increase is inevitable. SDN and NFV provide layers upon layers of abstraction and while standards and open source are not fully defined, there is much integration and "enhancements" necessary to make a service on NFV work.
VNF vendors and operators who do not want to perform integration themselves usually expect a 50% increase vs. appliance projects, whereas integrators budget a robust 100% increase in average. This, of course, increases even further if the integrator is managing the infrastructure / service itself.
Maintenance and support
Vendors and integrators expect the ratio of these to be essentially comparable to appliance models, whereas operators expect a sharp reduction, in light of all professional services being extended for integration and automation.
VNF vendors behind closed doors will usually admit that, in the short term, the cost of rolling out a new VNF function /service might be a little higher than appliance, due to the performance gap and increase in professional services. There are sharp variations between traditional vendors that are porting their solutions to NFV and new vendors that cloud-native and have designed their solution for a software defined virtualized environment.
Systems integrator can show an overall cost reduction but usually because of proprietary "enhancements and optimization".
All are confident, though that automation and orchestration makes operation of existing services much cheaper and ramping up of new ones much faster. Expectations are that VNF architecture will be much more cost effective than appliance on a 3 to 5 years TCO model. Operators, on their end expect a NFV architecture to yield savings from day one, compared to appliance and to further increase this gap over a 3 years period.