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Gartner: Why Software-Defined Networking and Network Function Virtualization Will Cause Disruption in the Communication Service Provider and Cloud Markets


Software-defined networking (SDN) and network function virtualization (NFV) will enable communication service providers (CSPs) to create a more agile and flexible communications infrastructure.

We asked Martina Kurth, research director at Gartner how this technology disruption will enable CSPs to create and deliver cloud based-services to organizations, where, when and how they need them. Consequently, CSPs should become better positioned to challenge the service models of over-the-top cloud players such as Amazon or Microsoft.

Investments to date have been exploratory — in discrete areas and at limited scale. Today, competitive pressure is creating an urgency to operationalize and monetize SDN/NFV.

“The initial focus on the technical challenges of SDN and NFV is currently shifting toward the business case and the opportunities to create new revenue,” said Ms Kurth.

To build the business case, CSPs are asking questions such as “Which new virtualized services will disrupt the marketplace most, and help us gain an early mover advantage?” “Where should we invest?” “What is the revenue potential?” and “How long will it take to realize this new income?”

Q: What new services and revenue streams will SDN/NFV enable and how long will it take for benefits to emerge?A: Figure 1 charts the impact of key technologies against the expected time to realize the benefits. Services such as virtual customer premises equipment (CPE) represent high revenue potential and can be swiftly leveraged. The low-hanging fruit — in terms of return on SDN/NFV investments — are those that help improve business agility, operational efficiency and service modelling capabilities. Examples include virtualized security or unified communications services on demand. Other service areas, like the Internet of Things (IoT), represent high long-term revenue potential but the time to benefit is also long.

Figure 1. Impact Level and Time to Benefit for SDN/NFV Technologies

Source: Gartner (September 2017)

Q: How can CSPs commercialize their SDN/NFV deployments at wider enterprise scale?

A: It is vital to link the required technology investments with a desired business outcome. This requires multifaceted strategic planning:

  1. Understand the go-to-market impact of SDN/NFV from a commercial perspective: SDN/NFV will allow CSPs to tap into the digital value chain, enabling new business models in partnership with third-party ecosystem players. Capitalizing on this, however, will be difficult without a diligent business strategy, revenue and go-to-market planning.
  2. Expand the footprint in discrete areas, then scale the successes in SDN/NFV quickly and efficiently: Start on a smaller scale and gradually leverage lessons learned across wider operational instances, domains and entities. Don’t ignore investment in customer-facing digital IT, which enables monetization of new business models, such as IoT or network slicing.

  3. Focus on a few critical operational best practices and agile tools to accelerate adoption of SDN/NFV: Focus on the operational aspects and make incremental investments in the new SDN/NFV orchestration architecture, in tandem with operational tools like predictive analytics, service modelling or artificial intelligence (AI), as well as standards and templates to standardize SDN/NFV transformation.
  4. Start implementing organizational change and leadership management at an early stage: Create a comprehensive organizational and talent review to fully utilize your SDN/NFV technology investments together with the introduction of agile, DevOps-style service creation and testing processes spanning across architecture, development and operations for network and IT.

Gartner clients can learn more about building a multi-faceted planning strategy for SDN/NFV in “CSPs Require Multifaceted Strategic Planning to Realize Full Revenue Potential of SDN/NFV”.

Gartner analysts will provide additional analysis on networking, infrastructure, data center and IT operations trends at the Gartner IT Infrastructure, Operations Management & Data Center Conferences taking place 27-28 November inLondonand 4-7 December inLas Vegas.

Follow news and updates from these events on Twitter using#GartnerIO.

About Gartner

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an “as-is” basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.

Gartner Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 8,300 associates, including more than 1,800 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.

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