THE GLOBAL VOICE OF TELECOMS IT
VANILLAPLUS DIGITAL TRANSFORMATION INSIGHT JULY 2017
HOW TO KEEP YOUR CSP TO DSP TRANSFORMATION ON TRACK T H E
G L O B A L
V O I C E NOKIA
O F
T E L E C O M S
I T
VanillaPlus Digital Transformation Insight I JULY 2017
3
3
ANALYST REPORT Our specially-commissioned analyst report, authored by Karl Whitelock, director for Global Strategy, and Troy Morley, strategy analyst, for Operations, Orchestration, Data Analytics and Monetization (ODAM) at Stratecast | Frost & Sullivan
11
COMPANY PROFILE: Nokia
12
TELCO CLOUD Nokia details how a logical and structured process can enable CSPs to deploy a telco cloud successfully
ANALYST REPORT
11 COMPANY PROFILE
12 TELCO CLOUD
2
VANILLAPLUS DIGITAL TRANSFORMATION INSIGHT I JULY 2017
ANALYST REPORT
Karl Whitelock, director for Global Strategy, and Troy Morley, strategy analyst, for Operations, Orchestration, Data Analytics & Monetization (ODAM) at Stratecast | Frost & Sullivan
Digital services transformation – are we there yet? Before the phrase digital service provider (DSP) gained popularity and before digital transformation was touted as a crucial necessity to long-term business survival, a variety of market dynamics were causing communication service providers (CSPs) to make essential changes in the way they address evolving customer needs
F
or example, shown in Figure 1, data usage volumes for mobile customers have steadily risen over the last ten years. Globally, the number of mobile customers consuming more than 2GB of data per month has risen from 13% at the end of 2012 to 65% by the end of 2016. As a result, CSPs designed tiered data service plans as a means to align customer usage and willingness to pay. Then, competitive forces in some regions caused CSPs to rethink their data strategies and revert back to unlimited usage offers. Figure 1: Rising consumer usage data volumes
VANILLAPLUS DIGITAL TRANSFORMATION INSIGHT I JULY 2017
From another perspective, Internet of Things (IoT) consumer devices – high-end cameras, drones and connected cars – now consume 500MB per hour or higher of data capacity. While some of this is over fixedline Wi-Fi networks, the volume of mobile video data created by these devices continues to grow. Adding to the equation is accelerated customer use of over the top (OTT) provided digital services. CSPs can no longer ignore the global change in customer attitudes and internet competitor focus on new digital services. These combined factors are especially challenging since digital services depend on ubiquitous broadband coverage and reliable network connectivity. Striking a balance between network services and the evolving digital services world is inevitable. But, what
▲
Source: Cisco Visual Network Index 2012-2017, Stratecast
How long will it be before the current unlimited data plans, which all have capped usage limits, no longer bring customer satisfaction? If measured data usage offerings are eliminated – as some prognostications imply through use of network technology that can support faster speeds, lower latency, and even higher data volumes – what will the next wave of CSP business strategy involve? How will digital services play a role and what kinds of operations and monetisation support will digital services need for business success?
3
ANALYST REPORT Figure 2: Global communications market is at the centre of new business strategy
Source: Stratecast
does this mean for CSPs today? More specifically: • Will the market for network access services continue as presently defined? • To remain competitive and attractive to their core customers, must CSPs offer network access combined with digital services from an ecosystem of partners? If so, is there a proven set of industry best practices that can be followed? • How will digital services fit into the long-term strategies that CSPs are now creating? • Can existing processes work in parallel with new business solutions? • Is an economic approach to DSP enablement possible given today's regulatory restrictions, network technology evolution, competitive forces, and changing business models? IoT data and streaming video, combined with declining growth of voice services, places pressure on CSPs to operationalise network technology that better aligns usage demand with what the market is willing to pay for network access.
Network connectivity: the centre of new business strategy Looking beyond the CSP industry, as noted by Figure 2, advances in communications technology are playing a major role in the transformation of every industry in the world: taking them from a something-to-sell model to a digital services-to-buy model – also known as Anything-as-a-Service or XaaS.
4
Emerging market dynamics: customer demand is evolving and expanding Combined with the push of the market realities described above, emerging customer dynamics are providing the pull for business transformation. Shown in Figure 3, the traditional market segments addressed by CSPs include consumers, small-medium businesses (SMB), large businesses, and enterprises. CSPs sell services to these customer groups through retail business-to-consumer (B2C) and wholesale business-to-business (B2B) models. The opportunities for growth within each segment are significant but also require different tool sets for business success. While the details concerning each customer group cannot be addressed in an article such as this, there are some high points well worth considering, especially as virtual network functions (VNFs) go mainstream over the next 18 months. Large businesses and enterprises are using communication services, in particular mobile services, to enhance their previously delivered products and solution offerings. The addition of partner-provided capabilities is increasing the customer value proposition. The looming explosion of a connectedeverything world, with IoT services, is designed to address both business and consumer needs, and is applicable to an increasing number of opportunities in nearly every industry. The use of mobility services to help large businesses and enterprises offer traditional goods as XaaS offerings, are in full swing. Figure 3 also shows the two newest customer segments: Virtual Network Enablers (VNEs) and Virtual Business Enablers (VBEs). VNEs facilitate the provisioning, activation, operations and monetisation of
▲
This change in business strategy is possible through near-ubiquitous connectivity supported by enhanced processes that enable new ways to track, ship, facilitate and monetise goods. These processes increase security, embrace adaptable configurability, and are embodied with an intense focus on wholesale/retail financial accountability. Examples of this level of transformational change can be found within industries such as healthcare, transportation logistics, agriculture, air travel, government services, hospitality, financial services, public transportation, product delivery, and even the retail labelling market using NFC (near field communications).
At the centre of business change is a critical assumption; nearubiquitous network access and a reliable network connection. For people with a smartphone, survival in this digital age is defined by total dependence on a fast data connection with internet access, usually via a mobile device or some combination of mobile and a fixed-line connection. They expect 24 X 7 service availability, high throughput capacity, personal security, total reliability, and dependability of the apps used to keep their digital lifestyle current.
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
Figure 3: The demand challenge, complexity is winning
Source: Stratecast
wholesale network capacity for enterprises. VBEs have been discussed by Stratecast for more than five years now. The VBE marketplace enables partners to sell goods and services in a B2B2X manner, through the concept of digital partner ecosystem management. VNEs are not new, as they supported the first generation of mobile virtual network operators (MVNOs) beginning more than ten years ago, with many successful MVNOs from this era remaining. However, a second generation of MVNO, including the occasional fixed-line virtual operator, is now rising. This new-generation of virtual network operator (VNO) focuses on connected business opportunities in multiple industries, rather than a branded package of voice and text services for end-user customers. In this light, the VNE can be the enabling mechanism for enterprise-based MVNO and IoT initiatives, rather than requiring enterprises to directly engage with the CSP via its traditional systems and processes. VNEs will continue to transform as virtual network functions gain prominence. A VBE allows ecosystem partners to sell goods and services to a global economy. This enablement applies to what each partner brings to the market individually; but also provides the means for partners to assemble their service contributions with those from other partners, to yield new, never before established, virtual services. The ultimate business scenario for a VBE comes forward in this environment as each partner begins to use its natural assets and capabilities to adapt and adopt platform-based business models that involve other partners in the creation of new services. These new services could incorporate the original offering, combined with added capabilities of one or more partners. To address the business needs of the rapidly-evolving VBE marketplace, a CSP must be well on the path to becoming a DSP. Perhaps this is why there are so many different views of a DSP and the role it must play to meet the needs of market change.
CSP to DSP transformation – filling a tall order
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
Digital transformation is less about specific services, however, and more about how the DSP operates its business, and creates customer value. A DSP is a CSP that has transformed the way it does business, which can be characterized by a number of key traits as shown in Figure 4. Figure 4: Key traits of a digital service provider
Source: Stratecast
The key traits encompassed through digital transformation involve: • Becoming data driven. Data, and more particularly data analytics, have become increasingly important. However, the road to becoming a DSP takes analytics to a new level. CSPs often use purpose-built analytics to improve specific functions, such as billing or service assurance, which will continue to be important. However, DSPs require more, including a view across functional areas, customer insights, and intelligence that span silos heretofore
▲
Digital transformation is a tall order: asking companies, which in some cases have roots that go back decades, to now become more agile and change how they do business, especially when most remain profitable. Yet, the tides of change are here. For a CSP to transform to
a DSP, the CSP needs to continue providing communications services – the network connection – and then provide added customer value to that connection in the form of digital services.
5
ANALYST REPORT
invisible to purpose-built applications. Perhaps most importantly, DSPs need to monetise this data to its fullest extent, which means providing insight to partners, at a price, as is now done for any other network asset. The DSP is a data-driven business, requiring high levels of automation, fuelled by the insights from both purpose-built and customer-level analytics. • Addressing everything in human-level real-time. A real-time response to market demand is a reflection of the instant gratification culture that is today’s business reality. In the past, a CSP’s post-paid customers received an invoice at the end of each billing cycle. Today, with tiered plans, even post-paid customers demand visibility as to how their usage compares with their subscribed data tier commitment. In addition, part of the appeal of digital services is their immediacy. When purchasing a digital good or service, the expectation is that once the purchase is complete, the product or service is immediately enjoyed, and the price for it acknowledged • Providing omni-channel customer interaction, with an eye on digital channels. Omni-channel has also become a popular concept. The term omni-channel refers to all customer contact and fulfilment channels looking, acting, and performing the same. This applies to a retail store visit, a web portal, an app on a mobile device, engagement with an authorised dealer, or a call to a customer service agent. Customers should be able to change between channels without losing information or needing to start a transaction again. While many CSPs are currently moving in this direction, for a DSP, the primary channel is digital. For example, 80% or more of the time, OTT providers engage in digital channel interaction with their customers. In addition, self-service is a concept that is affecting many industries. For a DSP, the entire shopping, ordering, delivery, installation, turn-up, and billing process must be automated and must be customer-driven.
6
• Integrated platform that combines key strengths with the strengths of others. A DSP must provide an integrated platform that combines its key strengths with others, to create more value for whatever customer it chooses to serve. This, is the key lesson that CSPs can take from their OTT competitors. For example, Google was a search engine company that transformed into an advertising platform provider. Facebook was a social network that dramatically increased its value by morphing into a platform for launching other applications. Apple is a consumer electronics device company; but without its application and digital store platforms, it would be far less successful. And, much of Microsoft’s success stems from the ecosystem surrounding the programs that now run on its Windows platform. CSPs already have the main ingredients to become platform providers. They have established relationships with various customer segments. They provide highly-needed connectivity. They have established systems to operate and monetise their customer relationships. They just need to engage with the right partner enablement platform to orchestrate these multiple relationships in their move to becoming a DSP. • A business model and framework that is flexible, agile, and fast. The OTT suppliers are agile and willing to try fast, fail fast and change fast. CSPs, in general, are not known for any of these traits – which makes this the hardest piece of the puzzle, and one that will take the longest to transform. The move by CSPs toward virtual networks, utilising some combination of network function virtualisation (NFV) and software defined networks (SDN) has largely been driven with the goal of making CSP networks more flexible and agile. So, if a CSP moves to incorporate virtual network functionality, is it immediately a DSP?
▲
• Service focused. CSPs have long been focused on the network
connection, often to the detriment of what is delivered over that connection. However, DSPs focus on the content or services that ride across a network connection – while their customers assume that the connection just works.
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
Stratecast believes that virtual networks will be an important tool to assist CSPs on their journey towards becoming DSPs, but by themselves are not sufficient. In fact, some CSPs will continue to be the best CSPs they can be, and utilise virtual networks with no goal of becoming a DSP. In addition, some CSPs may make the transition to becoming a DSP prior to enabling any level of network virtualisation. • Putting the customer first. With an eye on selling network connections and basic services in the past, it is not surprising that CSPs have focused more on the network than on the customer. While the network remains essential, in general, network connectivity is assumed in the DSP value proposition. To provide advanced services that deliver high customer value, DSPs must move from a network-centric to a customer-centric business focus. The customer will be different for different DSPs. The customer may be a consumer, an enterprise, another CSP, a different DSP, a supplier partner, or something else entirely. To be effective, the DSP must understand who its customers are and focus on providing value to those customers. • An extensive partner ecosystem, which can provide a constantly changing array of digital services. Different vertical skill sets are required to offer a spectrum of quality digital services. In most cases, digital services involve an ecosystem of partners, which take on many forms. The key aspect of a partner ecosystem is an understanding by each participating organisation that no single group can do it all. Also, there must be a commitment that usage and customer revenue allocation will be managed effectively. A platform approach is the only way in which retail and wholesale transactions can simultaneously receive the right level of attention and accountability.
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
Survey on the importance of monetisation to CSP digital transformation Stratecast annually assesses the global CSP monetisation supplier marketplace. Due to the ubiquity of digital transformation discussions in marketing, and industry coverage, we included questions in our recently conducted 2017 survey concerning digital transformation strategy. The survey partitioned the ten largest suppliers of monetisation solutions, by revenue, from the rest of the supplier field. By inference, Stratecast believes that the CSP customers of these suppliers constitute the larger CSPs throughout the global marketplace, which are noted as the leaders category within the following discussion.
Is digital transformation necessary? Questions were asked to the global monetisation supplier market. Each respondent was asked to reply representing a composite view of their service provider customers. The first two questions to this audience were: • How important is support for digital transformation? • How important is the role of the monetisation functions in the digital transformation process? Every respondent agreed – the largest CSPs to the smallest – that support for digital transformation is essential today, and that the monetisation functions play an essential role in this process. A unanimous response, as noted for each of the questions is rare. In fact, of the 105 requirements asked within the 2017 Stratecast monetisation market survey, only these two garnered the same answer from every respondent.
▲
The digital business enablement platform creates a dynamic marketplace that enables the role of producer, provider, owner, and customer to be interchangeable. For example, a producer could supply its own services, but also use the ecosystem to buy and
resell different services, and/or bundle them with its own. So, this model offers multi-sided opportunities to all parties. The platform model recognises the importance of B2B activities such as repackaging, re-pricing, and reselling as part of co-innovation and co-investment. Hence, the supporting digital business enablement platform must be able to account for each partner’s contributions to the service offering and keep track of the revenue split, based on contract-defined agreements, going to each partner.
7
ANALYST REPORT
Figure 5: Importance of the monetisation functions in digital transformation
Source: Stratecast
Stratecast views these findings as a confirmation that digital transformation is real, and not just continued marketing hype. We also believe this is a global movement – though there will be regions that will advance faster than others – and that digital transformation is not confined to a particular size of service provider. What monetisation functions are the most important for CSP digital transformation? Stratecast next asked the survey respondents about the importance of various monetisation functions pertaining to digital transformation. The survey specifically asked about the importance of such functions as: billing mediation, rating and charging, customer notifications, self-care, policy management, partner management and analytics as noted in Figure 5. The leading suppliers, which represent the largest CSPs, reported rating & charging, customer self-care, customer notification, analytics, and partner management as Essential monetisation functions for enabling digital transformation. Suppliers in the Others category stated that their customers also place a high level of importance on these same functions. Stratecast believes two additional functions are essential regarding digital transformation: policy management and billing mediation. Policy management is currently a key enabler of a range of services; and Stratecast believes this will continue in the DSP world. Also, in this era of ever-increasing data volumes – in all industries – mediation has become a key tool in managing and utilising the flood of data that all organisations face. In the CSP monetisation world, mediation plays a major role; and within a DSP, Stratecast believes mediation will continue to be critically important.
8
Source: Stratecast
Stratecast next asked the four-option question: What monetisation solution approach(s) are your customers engaging in to address their needs for digital transformation? • Cloud-enabled software, private cloud model • Traditional on-premises software licence model • Managed services model • Cloud-enabled software, public cloud model, Software-as-a-Service (SaaS) While there was complete agreement on the importance of digital transformation for CSPs, and on the role of monetisation in that transformation, Figure 6 illustrates that there is much less agreement when assessing the solution approach to digital transformation. All respondents agreed that solutions need to be cloud-enabled; but the leading suppliers/large CSPs are not convinced that engaging with the needed operations and monetisation solutions for digital transformation using a public cloud SaaS model is the right approach. These industry leaders believe that managed services are as important as private cloud, but also believe that traditional on-premises software licensing models are equally important to at least a substantial number of service providers. Stratecast believes cloud-enabled business management and monetisation solutions are critical for any digital transformation strategy. From our perspective, public versus private is a choice that is dictated by preference, by the size of the CSP/DSP, and even sometimes by regulation. If a business management or monetisation solution is truly cloud-enabled, then the application software could be delivered through a more economical public cloud option, while customer and process logic data is placed in a private cloud environment. Stratecast believes that this hybrid cloud approach to solution deployment is quickly becoming the preferred means for digital transformation solutions. We expect the results of our next industry survey to reflect this line of positioning.
▲
What is the best solution approach to achieve digital transformation?
Figure 6: Importance of solution approach to digital transformation strategy
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
Figure 7: Strategic focus of CSPs’ transformation strategies
Source: Stratecast
Strategically, where are CSPs focusing in their transformation? Finally, Stratecast asked: Digital Transformation, or the transformation from CSP to DSP, has different meanings to different organisations. What is most important in your digital transformation strategy? • Support for partner ecosystems (horizontal orchestration) • Enterprise business enablement • Monetizing IoT service offerings • Enable and charge for virtualised network functions (VNFs) Figure 7 shows that partner ecosystems, enterprise business enablement, and monetising IoT offerings are all reasonably important to the transformation strategies of both large and small CSPs. Stratecast believes the CSP priority focus for each of these strategy components is as follows: • Partner ecosystems. To provide the most value to both consumer and business customers, a DSP will need to engage with a large ecosystem of partners. A DSP will need to be agile; with the ability to fail fast as business needs evolve. Digital services need to be offered quickly; and if they do not resonate with the customer base, they need to be removed quickly. DSPs will not have the luxury of months or years to roll out new services; hence, the need for partners. New digital services in the not-too-distant future will need to be introduced in hours – or days, at worst. • Enterprise business enablement. Enterprise business enablement has multiple flavours. These may be new digital services, perhaps from a new partner ecosystem that serves the enterprise market in a business-to-business (B2B) model. These may be a combination of digital services from multiple sources in a B2B2X model. Or perhaps this may be a DSP helping an enterprise to offer its products in a service model (XaaS). All forms of enterprise business enablement will be essential in the future DSP landscape.
• Monetising IoT. Most agree that the IoT will have a significant impact in the coming years. However, there is currently not a lot of discussion about how to monetise the millions or billions of devices that will someday soon make up the IoT. If a future DSP wants to benefit from this quickly growing market, its digital transformation strategy must tackle IoT monetisation. • Charging for VNFs. As virtual networks move from the planning stages into reality, network functions that are now a dedicated piece of hardware will become virtual, or VNFs. These VNFs are software that can come from multiple sources. Software that can be spun up and spun down. This creates new ways to compensate the creators of the VNF, new licensing challenges, and new usage to monitor and monetise. Monetising VNFs will become an interesting proposition in the next few years. Stratecast is impressed that the leading suppliers/large CSPs/DSPs (where this will first become an issue) are thinking about how to address this challenge now.
The last word CSPs have been at a crossroads of sorts many times over the last two decades, as they have decided how to face down one form of competition after another. They mostly learned a few technology tricks that helped them win the day, and then went back to business as usual. Now, we are again at a crossroads; only, this time, the surrounding fields have sprouted enormous new competitors armed with lots of cash, better business models, more flexible and responsive technologies, and even more recognizable – and might we say hipper – company brands. Some CSPs may indeed sell their souls this time in order to transform into the one thing that will help them compete in the new internetinspired communications marketplace: a digital services provider.
▲
Every industry experiences occasional flurries of marketing hype. Often these squalls are short-lived and do not amount to much. There is lots of wind, but little accumulation. Digital transformation in the
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
9
ANALYST REPORT
communications industry has moved beyond the marketing department and is now a global storm, affecting every region of the world and every size of CSP. Every monetisation supplier reports that its customers view digital transformation, and the role of monetisation within that transformation, as essential. The road to becoming a DSP is not necessarily long. However, it is paved with persistent operational obstacles tied to agility, which CSPs have been trying to overcome for decades. The problem all along has been the measured, or tempered, approach to clearing those obstacles taken by both CSPs, and their hardware and software suppliers.
Transformation efforts so far have been qualified, curtailed by somewhat understandable protectionist tendencies, and an unwillingness to tamper with a working, profitable business model. So, it appears that to move ahead with the journey toward becoming a profitable DSP, CSPs simply have to do wholeheartedly what they have been doing half-heartedly all along. They must commit to going all in by opening their networks and systems, and enabling agile, real-time support systems. Only then can they form ecosystems with new market players that were born that way, and operate from the perspective of equal partners.
About ODAM The processes and tools that communications service providers (CSPs) have utilised to run their businesses have changed over time. More than a half-century ago, CSP network and business management processes were manual (OAM&P). As CSPs evolved over the years, so did the operations support systems (OSS) and business support systems (BSS) that address CSP business and network management needs. In recent years, the lines between OSS and BSS have become less clear, with much overlap. In addition, the roles in which OSS and BSS operate have expanded beyond traditional boundaries. As such, Stratecast now uses the term Operations, Orchestration, Data Analytics & Monetization (ODAM) to encompass both the traditional OSS and BSS functions and the new areas in which business and operations management must now work together, including virtualised networks and telecom data analysis.
About Stratecast Stratecast collaborates with our clients to reach smart business decisions in the rapidly evolving and hyper-competitive Information and Communications Technology markets. Utilising a mix of action-oriented subscription research and customised consulting engagements, Stratecast delivers knowledge and perspective that is only attainable through years of real-world experience in an industry where customers are collaborators; today’s partners are tomorrow’s competitors; and agility and innovation are essential elements for success. Contact your Stratecast account executive to engage our experience to assist you in attaining your growth objectives. For more information, visit www.stratecast.com or email inquiries@stratecast.com.
About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to use visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants. For more than 50 years, we have been developing growth strategies for the Global 1,000, emerging businesses, the public sector and the investment community. Is your organisation prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? For more information about Frost & Sullivan’s Growth Partnership Services, visit http://www.frost.com.
10
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
COMPANY PROFILES
Matthew Dove is the head of Nokia's cloud transformation consulting practice. Noted below, are Matthew's views concerning his company's focus on CSP digital transformation. This interview was conducted by Karl Whitelock, Global Director Operations and Monetization Strategy at Stratecast | Frost & Sullivan
Karl Whitelock: Gaining intelligence about the customer experience is a dynamic process and a richly rewarding business opportunity. How does intelligence – insight gained from customer experience and network operations data – impact the strategy of a CSP's digital transformation journey? Matthew Dove: If you look at the difference between a CSP and a webscale, cloud native company, the attitude towards analytics and data are on a totally different level. CSPs have often seen data as a byproduct, to be analysed and exploited where possible, often using people based processes. Whereas, the cloud native organisation is fundamentally data driven and has built their entire business around data – from customer insight, to operations. As networks evolve and virtualise, there will be more decisions to make, and more of those decisions will be automated – driven by analytics. Nokia’s Future X vision for a network is one in which it evolves towards a cognitive network, that learns and adapts in order to deliver the best possible experience to end users. CSPs need to ensure that at every step of their digital transformation journey, they are asking themselves what data they can collect, and what data they can use to drive themselves forward. This is something that Nokia has been working on since the introduction of the customer experience management concept around a decade ago. It’s the role of technology vendors to make that process easier for the CSP. KW: In the quest to help CSPs become more effective in a digitally transformed world, what makes your organisation's digital transformation approach different from others in the competitive solution supplier marketplace? MD: Nokia’s primary business focus is on the network domain and we are a supplier that many CSPs rely on for the technology that underpins their business. Our transformation approach is to help the CSP understand how to exploit that technology for greatest benefit. It’s the classic triangle of people, process and tools wrapped around the technology. With something like NFV, there is a basic level of change that it forces – well-established processes and approaches have to work differently, or they will not function – but there is also the question of what the technology enables, and that is a more open conversation about how far the CSP wants to go.
Our transformation approach can start right at the beginning, helping the CSP understand what is possible and what they want to achieve, and leads all the way through the execution phase, helping them implement that vision. Because of Nokia’s reach, we can do that work for global players, across multiple regions. And if the scope goes beyond the network, we have partners that we can bring in to tackle the areas that are not our core focus. KW: Transformation can take on many forms. What should CSPs consider when defining their digital transformation strategy and in what priority order? MD: Priority definitely depends on the current situation the operator is in, and their existing capabilities. The key entry point should be for the CSP to have clarity on what digital transformation means for them, the business outcomes they want to drive, and the capabilities that will be needed to support their strategy. Then, use this combination as the yardstick against which each step can be aligned. Nokia’s view is that a powerful, flexible network is a basic requirement for delivering a good customer experience. Data volumes that customers continue to consume relentlessly increase, and the benchmarks for what constitutes a good experience are also rising. In the end, network functions virtualisation (NFV) and software defined networks (SDN) are critical technologies that will help a CSP to meet these requirements. KW: While virtual network transformation is often mentioned with digital business transformation, is it imperative for a CSP to do both? MD: In the end, yes. If a service provider cannot deliver the experience and the content that consumers need, or the platforms and connectivity that partners or enterprises want to use, then the service provider will eventually be sidelined. Future demands on the network need the capability that NFV brings – whether that is the ability to trial and introduce new services quickly, adapt to changing traffic flows in a network to maintain an experience level, or meet partner needs for computing at the edge of the network, to be closer to the consumer – all of these require both NFV technology, and the matching mindset to use it.
About Nokia We create the technology to connect the world. Powered by the research and innovation of Nokia Bell Labs, we serve communications service providers, governments, large enterprises and consumers, with the industry's most complete, end-to-end portfolio of products, services and licensing. From the enabling infrastructure for 5G and the Internet of Things, to emerging applications in virtual reality and digital health, we are shaping the future of technology to transform the human experience. www.nokia.com
IN ASSOCIATION WITH NOKIA
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
11
TELCO CLOUD
The step-by-step approach to planning a telco cloud A logical and structured process that enables a communications service provider (CSP) to help ensure it can deploy a telco cloud with the resources required and plan its data centre investments accurately is the best way forward. It’s a proven process that could help CSPs everywhere as they begin their telco cloud transformation journey
C
loud technologies have been deployed widely in the IT world for many years. But the high demands of the telecoms world in terms of extreme responsiveness and ultra-reliability have made the adoption of the cloud more challenging for many communications service providers (CSPs). There is a pressing need. As the number of applications, services and devices explodes and multiple access networks emerge, CSPs face new challenges as well as fresh opportunities. Uncontrolled and unpredictable traffic growth calls for continuous investment in new network capacity. New devices and apps mean that CSPs are confronted by web players who can launch new services very rapidly. Efficient networks are required to improve profitability by driving down costs. Creating excellent customer experiences is critical to safeguard revenue. Telco cloud transformation addresses all these issues. Cloud technology is needed to drive efficiency and allow competition or integration with over-the-top (OTT) application providers. While network functions virtualisation (NFV) and software defined networking (SDN) have been deployed in many telecoms networks, these are typically small scale and focused on virtualisation rather than large scale centralised cloud deployments. To gain the real benefits of cloud technology, CSPs need to look beyond virtualisation and implement full telco cloud transformation.
Answer the basic questions
12
• When should current and future network applications be taken into the telco cloud? • How many data centres need to be built? • What cloud resources will be needed for the telco cloud? • How can capex for cloud data centres be calculated for the next few years? It was exactly these kinds of question that one Middle Eastern CSP faced when it approached Nokia to help it map out its own telco cloud transformation plans. The CSP had already virtualised around 90% of its IT applications, but wanted to move its direct telco operations into the cloud. To do this, it planned to build multiple data centres to host its telco cloud but had little relevant expertise to help it devise a cost-effective transformation strategy. In simple terms, the CSP needed to understand its data centre requirements such as floorspace needed, how much compute and storage resources required, what power supply and cooling investments would be needed and more. To help, the CSP approached Nokia’s consulting experts to help with its telco cloud evolution strategy and data centre environment planning. Why Nokia? Well, while conventional management consulting firms can offer services that focus on strategy, processes and organisational aspects, they lack in-depth expertise in telco requirements and demands. Nokia has been at the forefront of telco cloud developments and is perfectly positioned to offer telco cloud related transformation consulting. Telco cloud transformation aims to move the physical network functions, virtual network functions (VNFs) and associated connectivity domains to a layered service and network architecture which supports end-to-end service orchestration.
▲
Telco cloud is built for short-term gains, but to enable widespread operational efficiency and to create a platform that enables innovative new services to be created and deployed rapidly. Using large data centres allows CSPs to improve their total cost of ownership (TCO) through centralisation, automation and efficiency. Furthermore, cloud technology allows significantly fastertime-to-revenue for new services. Cloud computing, NFV and SDN will all be key to implementing 5G networks. Yet starting the telco cloud transformation journey can
be a challenge for CSPs as they strive to answer fundamental questions such as:
VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
TELCO CLOUD Cloud evolution strategy and data centre dimensioning services
A tailored service In a recent project, Nokia aimed to help a CSP first map out its telco cloud transformation strategy and then to support the dimensioning of the active components for its cloud infrastructure and passive components for its data centre. One of the key pain points facing the CSP’s IT department was ad hoc, last-minute requests from other stakeholders for virtualisation capacity to host new applications. Nokia wanted to provide the IT team with a comprehensive two-year demand plan to allow proper planning for the required cloud resources. To achieve these targets Nokia devised a ten-week project plan that first assessed the traffic model based on subscriber capacity, traffic per subscriber and other predictions, and concluded with a Bill of Quantity (BoQ) of all the hardware required. This workflow was built on a step-by-step, three-stage process: 1. Based on the installed base and the CSP’s services roadmap, the required application resources, such as virtual machines, were determined 2. Applying Nokia engineering tools, the applications’ resource requirements were then used to determine the required virtual resources such as virtual CPUs and RAM 3. The third step was to dimension the physical resources, such as servers and switches, needed to support the virtual resources
Adding value throughout the consultation Nokia designed a set of tailored service modules or work packages that implemented each of the three consultation stages and delivered immediate and tangible value to the CSP. • Determine as-is core applications landscape: Obtain a clear understanding of the current installed base of core applications within the CSP’s network • Develop cloud evolution strategy for as-is core applications: Identify which of the as-is core applications should be virtualised and develop a cloud evolution strategy for a two-year period
At each step, Nokia and the CSP implemented a re-assessment of the planning and provisioning of deployed resources with monitoring of their utilisation to determine any re-dimensioning needed to address increasing demand.
• Develop cloud evolution strategy for new core applications: Identify which new VNFs are required, over the two-year period, to address the CSP’s future services roadmap
Data centre mapped out in solid numbers
• Determine cloud resources requirements: Determine the total virtualised infrastructure needs by factoring the requirements of both the VNFs and the cloud infrastructure itself
At the end of the entire process, which was delivered on time and within budget, the CSP gained an effective plan to embark on its telco cloud transformation, with a realistic forecast of the capex required for the next two years. To put some numbers in place, the cloud infrastructure dimensioning called for nine racks supporting 200+ servers and 27 switches taking up around 20 square meters of floorspace and consuming just over 100 kW of power. With precise numbers such as these to hand, the CSP is now wellpositioned to move onto the next phase of its transformation confident that there is a solid foundation for its strategy.
For more information, visit: www.nokia.com VANILLAPLUS MAGAZINE DIGITAL TRANSFORMATION INSIGHT REPORT JULY 2017
• Translate virtualisation requirements to physical requirements: Determine the total active components (servers, storage, switches) required to address the NFVI requirements. • Determine space, power and cooling requirements for all active components: Determine the space, power and cooling requirements for all the components forecasted.
IN ASSOCIATION WITH NOKIA
13