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NFV Economics and Business Case Discussion at Software Telco Congress 2014

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NFV Economics and Business Case Discussion at Software Telco Congress 2014

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Presentation addressing NFV (Network Functions Virtualization) economics and business case at ITEXPO / Software Telco Congress 2014 in Las Vegas, August 2014. This talk discusses the correlation between the journey, technology readiness, maturity levels and business case implications.

Presentation addressing NFV (Network Functions Virtualization) economics and business case at ITEXPO / Software Telco Congress 2014 in Las Vegas, August 2014. This talk discusses the correlation between the journey, technology readiness, maturity levels and business case implications.

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NFV Economics and Business Case Discussion at Software Telco Congress 2014

  1. 1. THE IMPACT OF NFV ON SERVICE PROVIDER ECONOMICS Jose de Francisco IT EXPO / SOFTWARE TELCO CONGRESS - LAS VEGAS, AUGUST 12 2014 CIC CLOUDBAND® INNOVATION CENTER Director, Cloud Solutions Marketing, IP Platforms Division Member of the Technology Leadership Council COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  2. 2. 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 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  3. 3. 3 AUGUST 2014 industry events NFV town hall meeting CLOUDBAND® showcase training online community & collaboration tools ecosystem conventions customer workshops know-how transfer community knowledge & exchange COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  4. 4. 3 AUGUST 2014 COPYRIGHT © 2014 ALCATEL-LUCENT ALL 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 NFV Mind Commerce $6B 5-6 Virtualized Telecom Market ABI Research 5 NFV & SDN for RAN SNS Research 2.4 NFV Analysis Mason service provider investment “$B” sources: wp.me/p2EKuv-dK
  5. 5. 4 AUGUST 2014 maturity levels the journey valuation considerations business case sample agenda COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  6. 6. NFV HUB 5 AUGUST 2014 knowledge transfer early cloud technology adoption pilot application prototypes virtualization manually deployed early automation deploy, monitor, API life cycle mgmt scaling, self-healing upgrades, patches multi-tenancy software defined environments “plot your journey” COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  7. 7. 6 AUGUST 2014 virtualization manually deployed early automation deploy, monitor, API life cycle mgmt scaling, self-healing upgrades, patches multi-tenancy software 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 management Iterative development Devops –development & operations Economies of scale Economies of scope Network effects “value whiteboarding” COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  8. 8. 7 AUGUST 2014 Hardware End to End Management Automation 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 dependencies and externalities” COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED “Toto, I have the feeling we’re not in Kansas anymore” Dorothy - Wizard of Oz picture source: wp.me/p2EKuv-dK
  9. 9. 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 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  10. 10. 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 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  11. 11.  OPTION A (PMO): New COTS X.86 servers  OPTION B (FMO): 11 CloudBand Nodes3 and CBMS (orchestration) licenses Alternatives analyzed SCOPE TCO 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 10 AUGUST 2014 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  12. 12. - 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 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  13. 13. - 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 & MAINTENANCE (HW & SW) - 47% FMO 2.80 $M SOFTWARE LICENSES & MAINTENANCE (HW & SW) - 23% PMO 5.27 $M FMO 4.04 $M 12 AUGUST 2014 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  14. 14. 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 13 AUGUST 2014 COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  15. 15. 14 AUGUST 2014 maturity levels the journey valuation considerations business case sample recap COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED
  16. 16. 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 Division Member of the Technology Leadership Council thanks! COPYRIGHT © 2014 ALCATEL-LUCENT ALL RIGHTS RESERVED

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