The art of self-disruption: How to transform your business with SDN

The Vision and the Reality
The art of self-disruption: How to transform your
business with SDN
by Paolo Campoli, Head of EMEAR SP Architectures & CTO, Cisco
Is SDN the new Holy Grail? It is shrouded in myths. The white label myth is that great savings
on hardware will be realized, but in fact CAPEX savings are far lower than OPEX with SDN.
The myth that bandwidth is expensive no longer holds true, where the economy-of-scale has
changed things. The main benefits are not there. They are in the modularization of operations,
for agile assembly of new services with fulfilment and service assurance capabilities, so that
‘fast failure’ can be tolerated, and spiky success can be exploited, as for internet applications.
No two operators will make the same journey towards SDN. They may approach it as a greenfield expansion deployment or migrate to it on a service-by-service basis.
Paolo Campoli is Head of EMEAR SP Architectures & CTO in Cisco. His responsibilities include overlay sales prime of IP Routing,
Optical, OSS and Service Provider Datacentre, where he leads network and process transformation projects for key accounts in EMEAR.
Paolo is also the spokesperson of Cisco at key Industry events and with Regulatory Bodies. He joined Cisco Systems in 1998, as
EMEA Consulting Engineer, involved in architecture design of DOCSIS, Broadband Access and Mobility solutions with major European
carriers. From 2001 as Senior Manager of the Central Marketing organization of Cisco Europe, Paolo led development and packaging of
Vertical industry solutions for the Enterprise market as well as triple play and Fibre-to-the-Home (FTTH) solutions for Service Providers.
In 2004 he moved to Sales as Director of SP Business Development and was also appointed to lead Service Providers CTO interaction,
SP architectures and technical operations. In 2010 the Consumer Video vertical unit, resulting from the acquisition of Scientific Atlanta
and Kiss, was moved to report to Paolo, to create the Cisco’s first integrated business and technical team linking Network, Devices and
Cloud. In 2011 his responsibilities were expanded to cover both Europe and Emerging Markets, as head of the SP Architectural play and
regional CTO for the EMEAR Service Provider region.
Previously, from 1992 to 1998 Paolo was at Siemens-Italtel, authoring ETSI technical standards, heading the ATM project office and
leading market development for the DVB Cable and Satellite digital Set Top Boxes.
Paolo graduated in 1990 with full marks and honours (100/100 cum laude) as Doctor in Electronics and Telecommunications, at the
University “Politecnico of Milan” where he also developed one of the first comprehensive mathematical models of ATM network traffic,
under the mentorship of IEEE fellow Professor Decina.
There are very few of us who possess the
natural ability to challenge the norm, to look
at a problem as an opportunity to innovate, or
to disrupt what seems to work, or at least isn’t
broken. The fact is even more evident in our
industry, where there is a lot of organization,
process and infrastructure legacy. It is an
industry where there are many customers
who are reliant on an ‘always on’ experience,
and more worrying where a dropped ball can
result in consumer outrage expressed over
social networks, which can have a direct
impact on the bottom line.
The telecom industry has been going
through several major transitions - cloud,
mobility, applications, big data, internet
of things - all of these market disruptions
have put major stresses on the infrastructure
and the business models, as well as having
a seemingly irreversibly eroding effect on
revenues. Now, there may be a Holy Grail
within reach, something that will ensure the
sustainable future of the industry. If only we
can quantify the actual benefits and mitigate
the risks that could result in the selfdisrupting effects of SDN.
SDN - Hype or Holy Grail?
There are a number of assumptions in
telecoms that stop us from innovating in the
way we need to. They are in most cases quite
easy to address.
The white label router myth: SDN promised
cheaper networking hardware. By separating
the control and data planes, you can run
a network using commodity, white label
hardware. A nice reduction in CAPEX, but
is that too short-sighted? When we started
looking into what having a programmable
Europe II 2014
n
7
The Vision and the Reality
network means for operators, and combine
it with Virtualization of the network and
network functions, we discovered that the real
benefits of SDN comes from other areas:
Firstly, being able to automate what were
very manual, laborious operations. When
you consider that 80% or more of a telco’s
spend is Opex (based on Gartner’s study
of traditional service provider expenditure,
2013), then a 10% reduction in Opex would
have an 8% impact on costs, compared to a
10% reduction in Capex, which would only
deliver a 2% reduction.
Secondly, network capacity that is elastic and
can flex according to loading demands. The
key to creating a software-defined network
with highly automated capabilities is to have
a data plane that appears to have infinite
capacity. We know this isn’t achievable, but
having an elastic network fits the bill. Which
leads us to exposing the second myth.
The expensive bandwidth myth: Network
operators are focused on bandwidth
optimization and traffic management.
Bandwidth has always been an expensive
commodity, but not anymore. Today, it’s
cheaper to deploy a 100Gbit/s link than it is
to maintain a 10Gbit/s one or to upgrade to
40G. Even more so when Optical WDM is
integrated in IP routers New technologies
drive improved economies of scale and
radically better economics.
There has been a lot of hype around softwaredefined networking (SDN) and Network
Function Virtualization (NFV). However,
now that we are working with operators on
real use cases, the potential benefits for the
industry to be more innovative, increase
efficiencies and reduce operational expenses
are much more tangible.
Disrupting business models
The legacy way of creating and launching
services required time, energy and money
which did not create an environment for
innovation, where fast failures are part of the
process. Currently, for a new service to make
a return on investment, the service requires
30-40% adoption rates.
For telcos to compete at the pace of change
that the broader technology industry is
capable of, agility, ease of experimentation
and fast failure are needed to make it possible
to innovate at speeds that pure Internet
players do. To do so, the architecture of their
networks needs to be very different.
8
n
Europe II 2014
The ideal scenario is one in which telcos can
provision, launch and test new application
or services in a matter of days or weeks (in
comparison to months or years at present)
in a highly automated way, using a set of
software building blocks with far less strain
on resources. If the services stick - great,
if they don’t - the investment was minimal
and they can move on and try something
else. Success also starts to look different.
The margin to profitability becomes much
smaller with profit realized with only 10% of
subscribers taking up a new service.
The operator’s business justification for
adopting SDN and NFV now takes into
account an expanded set of KPIs (Key
Performance Indicators). No longer is it
just the reduction in CAPEX, we can add
OPEX optimization, speed of access to new
revenues and new markets and creation
of new business models such as pay on
demand. This is the ultimate benefit of SDN
and Virtualization. When the focus shifts
to the applications and services and what
they need from the network, not whether
the network is built with enough capacity to
support them. It is at this point that the telco
becomes a real enabler.
Setting the network up for success
An operator’s network is a large, complex
system, but we can simplify our view of the
system by describing it in three layers. At the
base is the programmable infrastructure layer,
which comprises the computing, storage and
network functions that can exist as physical
and virtual elements. The applications layer
sits at the top, and the management and
orchestration layer in the middle. This middle
layer is effectively a powerful software
platform that simplifies and automates the
control and orchestration of the network
infrastructure and resources across all
domains - wired, wireless, cloud and video and across all layers.
Modularization of operations, a practice
that relies on the notion of creating modules
that can be reassembled for quicker service
creation in the fulfilment and assurance
domains, is an integral part of the new
network set-up. There is limited benefit to
NFV if operations are not modularized, so
these things are two sides of the same coin.
Mastering the art of self-disruption
We’re already seeing the application of SDN
and NFV in our customers’ networks. Some
are lab set-ups like the JOLNET at Telecom
Italia, but there are also live production
networks such as Hrvatski Telekom in
Croatia. We can see the benefits from a real
use case with the deployment of a cloud
video service for Hrvatski Telekom in
only 50 days. Based on the approach taken
by Hrvatski Telekom to build an all IPv6
software defined network with virtualized
functionality, they were able to utilize
functions that already existed and apply a
logic to create an orchestrated workflow that
greatly reduced time to market and reduced
the expense that would usually be associated
with building such a service.
How does the operator get their infrastructure
from the current state towards this new
software-defined state, while keeping all their
existing customers happy? If you are thinking
about redesigning an aeroplane while it is still
in flight, it’s not going to happen.
No two operators will make the SDN journey
in the same way. One may approach it from
the network up as a green-field deployment,
as Hrvatski Telekom has done. Another will
do it from the service down, migrating on a
service-by-service basis.
Operators will have to strike a balance
between the business benefits and the
exposure to risk of transforming their
network in such a profound way. Unlike
the quest for the Holy Grail, the strive by
operators to be more agile, more innovative
and to return to a sustainable business model
is now very tangible. l