Time for telcos to win with virtualization in 2017

Amol Phadke/Accenture
04 Jan 2017

The disaggregation that occurred in IT a decade ago - from mainframes to desktop to cloud - is now set to happen to the network. Here, once again, software has disrupted the traditional integrated value chain. Enterprise network functions that previously were delivered on the NEPs’ equipment, over connectivity supplied by operators, can now be delivered directly “as a service” by almost anyone, using standardized, virtual/software functions.

While some in the telecoms industry have been resistant to the notion that enterprise clients are seeking to pursue this virtual option, our research on the enterprise market suggests otherwise and 2017 and beyond is shaping up to be a big boom period for adoption. Nearly all respondents (95%) believe that network services will be virtualized and in fact, 33% are already using such solutions.

The SDN goldmine

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Businesses are setting aside 20% to 30% of their IT budget to fund network virtualization services, and they are expecting operators to deliver those services. This is both a big opportunity and challenge for operators as they transition their services to a software-defined network (SDN) model.

On the plus side are the enormous revenue channels this opens up. Operators can offer more services that can be bundled and provided from the cloud, such as security services (firewall), mobility, video services (video conferencing, security cameras, content delivery network) and unified communications services - covering a larger expanse of their client’s business, and in the process achieve cost and operational efficiencies that come with operating software-defined network services.

Estimates say SDN can cut a third out of capex and opex and triple operators’ service agility. The opportunities are ripe for the taking but the challenge for operators in 2017 will be laying the groundwork to offer virtualized services.

Reaping the benefits

To take advantage of this opportunity and reap the potential financial gains, operators will need to undergo a major transformation - embracing people, operations, process, customer experience, products and the technology ecosystem.

When it comes to the actual network, operators will need to migrate their legacy setup and establish comprehensive network functionality using software running on a cloud-based, virtualized infrastructure. They will have to do that across different network layers and overhaul their current OSS/BSS systems to properly bill for a new range of services rather than network products.

Operators will also have to manage a very large ecosystem of small suppliers instead of the handful that used to provide vertically integrated solutions. Regarding people, IT and network groups will need to coalesce into a single technology organization while upskilling engineers from hardware to software development.

The complexity of this digital transformation will require taking an ecosystem view as operators work with transformation partners to realign their business model to meet the demands of the next generation enterprise. The sooner an operator can rotate to the new, the bigger the slice they will be able to carve out of the enterprise network market.

Amol Phadke is managing director for Global Network Virtualization and Transformation at Accenture

This article was first appeared on Telecom Asia Vision 2017 Supplement

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