Vendors’ Value-Driven Solutions Define Success for Service Providers’ Business
Three mega trends in deployment of network infrastructure have been moving in the same direction for some time: virtualization of network infrastructures, network automation and cloudification of services and applications. These trends promise:
- Increase in capital efficiency, that is, squeezing more of a potentially underutilized asset (hardware or software).
- Reduce operational cost for a hybrid infrastructure (virtualized and traditional) using Intent-Driven Network (IDN) or software-defined networking (SDN) offering network automation and simpler network operations.
- Provide network automation with modernized OSS/BSS product and solutions to accelerate service agility, customer care and network configuration to move away from many slow and manual operations. For example, services can be defined using the standardized YANG modeling language. The main objectives are to extend the capabilities of automation to configure every network device, service creation/modification and withdrawal.
Vendors submitting their solutions and proposal usually are faced with little resistance in convincing their customers (communication service providers, MNOs, MSO, etc.) on the technical merits of these concepts and their own solutions to their customers’ CTOs, VP of engineering, and IT teams. What is just as important, if not more, is to convince their customers’ CFOs, or VP of finance. The main question clients want answered is what metrics will make their business successful and profitable, for example, ROI, payback period, and IRR. To fulfill the requirements of the CFOs, vendors need to clearly demonstrate the financial metrics superiority of their solutions. A critical concept that has a great influence on the financial metrics is agility, which can potentially increase the revenue streams for a service provider.
ACG has identified four basic principles for agility: customer agility, business agility, infrastructure agility and service agility. All have been defined in the market. Combined, they enable the service provider to lower cost of operation and increase revenue. It is the latter that requires increased attention, that is, increased revenue streams and levels. Therefore, service agility becomes a critical factor in increasing revenue levels.
If the life cycle of a new service can be shortened for a faster time-to-market for all the variables in the operations life cycle, a vendor can clearly demonstrate the potential increase in revenue streams and levels. This maps into service agility that creates, modifies and removes a new or an existing service in a fraction of the time and cost versus employing traditional tools and methodologies. This is possible via modernized service orchestration products and solutions that support a hybrid (traditional and virtualized) infrastructure using common data models and policy framework. One of the main offerings of an agile service creation cycle is to ensure service responsiveness to satisfy customers’ high expectations of immediate response when consuming their services. Service creation cycle includes:The advantages of offering solutions with greater service agility can be demonstrated:
- Ability to offer more services for the same period relative to manual, traditional methodologies.
- Reduction of risks in offering new services that may not have been in line with the service provider’s business expectations. Withdrawing a service that went through much initial vetting by a service provider using traditional, manual operation can be very costly.
- Quick withdrawal of unsuccessful services, Order of minutes or days instead of weeks or months.
The graph shows the advantages of faster TTM for new service creation between an automated service creation approach versus the traditional methodologies. The lag time directly translates to capturing market share and larger revenue streams over the same period. The graph can also be seen as the opportunity cost for the vendor using traditional service creation tools. During this timeframe, the service provider with automated service provisioning and creation can bring to market an order of magnitude in the number of services relative to the traditional methodologies, leading to higher revenue levels.
There are many established vendors in the market that have a good portfolio of products and services that can satisfy their customers’ requirements. The portfolio primarily consists of SDN/NFV hardware and software products plus automated life-cycle management for network configuration, provisioning and service creation. What can set a vendor apart is the ability to quantify the technical benefits of its solution before the customer makes the decision to select a vendor.
One such vendor is Huawei, which advocates, value-oriented network construction and operations as an upgrade to an investment-based approach. The company’s portfolio includes solutions for cloud computing, SDN, NFV and network and life-cycle automation software in construction of an autonomous All Cloud Network or Intent-Driven Network. Huawei accomplishes this with its CloudXXX series of solutions of hardware and its Network Cloud Engine (NCE), touted as the brain of the cloud network system. Huawei’s All-Cloud Network has been updated in the Intent-Driven Network for better network automation; there are two new modules which have been added in the NCE, namely an intent engine and a statistics engine. Although this portfolio directly addresses the concepts and requirements for agility, what sets Huawei apart is its willingness to clearly quantify its solutions by offering Huawei SmartCapex, an all-encompassing business tool (total cost of ownership, ROI, breakeven, etc.). It achieves valuable area identification, network gap analysis, scenario-based network planning and ROI evaluation. It has been promoted for business development for 20+ operators in broadband, private line and mobile service. This class of tools is what differentiates solutions and products from one vendor from the next. The SmartCap was developed by a neutral third-party; this is important since customers may be skeptical when they get a tool that was developed in-house by the vendor.
The SmartCapex has been used successfully with several customers and was a major factor in winning various accounts. It has continuously been refined and evolved to reflect the customers’ needs and requirements.