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SDN and NFV: Transforming the Service Provider Organization

White Paper1 SDN and NFV: Transforming the Service Provider OrganizationProviders that embrace a holistic approach to their business transformation will be best positioned to capture future value for their shareholders 2 White PaperSDN and NFV: Transforming the Service Provider Organization 2016, Juniper Networks, of ContentsExecutive Summary ..3 Introduction ..3 business Processes ..4 Roles and Responsibilities ..5 New Software Skills ..5 Culture ..6 Conclusion ..7 Bibliographic Citations ..7 About Juniper Networks ..73 White PaperSDN and NFV: Transforming the Service Provider Organization 2016, Juniper Networks, SummaryWith agile competitors entering the market, traditional telecommunications Service providers must be able to respond quickly to competitive pressures and rapidly evolving customer demands.

To assess this impact, we use the Business Process Framework (eTOM) published by the TM Forum (tmForum, 2014). This framework acts as a blueprint, and, while actual implementations will vary by each carrier, the framework

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Transcription of SDN and NFV: Transforming the Service Provider Organization

1 White Paper1 SDN and NFV: Transforming the Service Provider OrganizationProviders that embrace a holistic approach to their business transformation will be best positioned to capture future value for their shareholders 2 White PaperSDN and NFV: Transforming the Service Provider Organization 2016, Juniper Networks, of ContentsExecutive Summary ..3 Introduction ..3 business Processes ..4 Roles and Responsibilities ..5 New Software Skills ..5 Culture ..6 Conclusion ..7 Bibliographic Citations ..7 About Juniper Networks ..73 White PaperSDN and NFV: Transforming the Service Provider Organization 2016, Juniper Networks, SummaryWith agile competitors entering the market, traditional telecommunications Service providers must be able to respond quickly to competitive pressures and rapidly evolving customer demands.

2 This quick response will enable sustained competitive advantage, continued customer relevance, and higher quality of earnings. Service providers who do not embrace this transformation now risk being marginalized in the industry, resulting in the loss of customer relevance and lower profitability. History has demonstrated that the evolution of technology can have significant influence, both positive and negative, on the future success of companies that operate within an industry or a segment. At times, a new technology is so impactful that it forces current operating and business models to transform for future survival and growth.

3 Successful transformation requires that companies not only adopt the new technology, but also evolve related business processes, organizational structure, skill sets, and culture to reflect the shift and reorientation of the company. Traditional telecommunications Service providers face this challenge today. The technologies driving this transformation are Network Functions Virtualization (NFV) and software-defined networking (SDN). With these technologies in particular, the need to embrace them as part of the fabric of the Organization has never been more important.

4 In fact, the potential impact to traditional telecommunications Service providers will be unlike any other in recent history. As web-based technologies, services delivery platforms, smart devices, and automation become more prevalent, the very structure of the industry1 will continue to shift, reducing barriers to entry and enabling new competitors to enter into the market. IntroductionLong-term capital investment in network infrastructure and the complexities of related operational processes create the traditional barriers to entry in telecom. Peak traffic load2, traffic type, breadth of applications and services , number of users, and geographic footprint all drive network infrastructure costs.

5 The degree and complexity of manual processes associated with customer provisioning, network management, customer care, network maintenance, Service delivery, and engineering create operational costs. The current mode of operations typically sees services deployed in individual silos, with complicated and highly technical processes required to run combination of NFV and SDN breaks the Service silo model and lowers the relative cost of capital assets through the use of commercial-off-the-shelf hardware and software, resource pooling, network visibility, and analytics.

6 Additionally, simplification, automation, and analytics achieve operational benefits by reducing the costs associated with manual and complex processes. As the costs and complexities of offering network-based services are reduced, new competitors will enter the market seeking to cherry-pick the highest margin and most lucrative customers. It is likely that they will marginalize the connectivity portion of the network (as has already been seen for many consumer services ) and retain control of the cloud-based services that are most strategic to the higher value enterprise customer.

7 The profound effect this will have on telecommunications cannot be overstated. If Service providers fail to act quickly, customers will rapidly adapt to the availability of new competitive services . One obvious example is the rise of over-the-top (OTT) messaging applications that have impacted SMS revenue. Disruption has come virtually out of the blue, with start-ups attracting huge enterprise valuations based on the value they have captured from traditional telecom Service providers, and the perceived future potential of these new business models.

8 Future growth, and in some cases even survival, therefore, hinges on the Service Provider being able to create two fundamental proficiencies: 1) the ability to respond quickly to customer demands; and 2) the ability to build sustained and deep customer relationships. The first proficiency translates to agility, while the second is about creating and sustaining customer relevance. To enable these proficiencies, we see impacts to four highly interrelated organizational elements: business processes Roles and responsibilities New software skills CultureWhile there are many challenges to any organizational transformation, these are the elements of the Organization s operating model that necessitate the most careful consideration.

9 This paper discusses these factors in the context of the current transformations required to embrace and realize the benefits that SDN and NFV technologies promise. In the end, it is how operators manage the risk of this transition, and maintain optionality as they evolve, that will allow them to embrace innovations that provide additional strategic benefits. This ultimately creates a recipe for sustainable competitive Referring, in general, to the level of capital Static networks are built to capacity to carry peak traffic load and cannot easily scale up or down to optimize PaperSDN and NFV: Transforming the Service Provider Organization 2016, Juniper Networks, ProcessesThe changes to traditional business processes primarily result from the abstraction of the network, which allows software processes to provide functions previously delivered by dedicated or proprietary hardware.

10 SDN enables automated orchestration of the underlying network for user applications, and NFV enables deployment of network services when needed on virtual machines (VMs). These virtual services can be chained together by policies so that a packet flow is directed based on factors such as the source address, destination address, application type, and so on via a process known as Service is a new equipment architecture, while SDN is a new network architecture. With NFV, Service creation and product teams can now quickly build new services using virtual functions, because the virtualization of network functions simplifies the task of building complex and higher value services .


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