Nokia’s Nuage Networks breaks down opportunities for operators and enterprises moving towards SD-WAN deployments.
In acquiring Alcatel-Lucent last year for $16.5 billion, Nokia garnered a significant number of telecommunications software-based assets, including the firms Nuage Networks division.
Alcatel-Lucent launched Nuage in early 2013, with a focus on software-defined networking. Nuage’s first product was virtualization for data centers, although the company also announced plans to target SDN solutions for health care, banking, utilities and other enterprise verticals, as well as large internet-based companies and telecom service providers.
Nuage has since scored a number of SDN and network functions virtualization-based deals that have been rolled over into the Nokia operations, with the combined operations cited last year by IHS Markit as one of the telecom market’s top SDN vendors based on a survey of global services providers that had deployed or planned to deploy SDN and NFV platforms. The vendor was singled out as having the greatest brand awareness in terms of SDN orchestration software.
More recently, Nuage scored a deal with Vodafone Group to supply a SDN platform for the carrier’s data centers and to power its VPN+ pilot of software-defined wide area network services. Nokia noted the Nuage Networks Virtualized Service Platform provides a single framework for policy based automation across the data center and WAN deployment, which can help telecom operators synchronize their multiprotocol label switching virtual private network, hybrid WAN and hosted cloud services. The platform is also said to support cloud orchestration platforms based on open source standards like OpenStack and CloudStack.
IDC last year forecast the SD-WAN space to reach $6 billion in technology and service sales by 2020, with a compound annual growth rate of more than 90% over the next five years.
Sunil Khandekar, Nuage Networks CEO and founder, recently provided some insight into its views on the SD-WAN space and challenges facing the market.
RCR Wireless News: What’s Nokia’s view on the current pace of development and deployment of SD-WAN platforms?
Sunil Khandekar: SD-WAN has seen a lot of interest in recent years with many new offerings over the past couple of years and we believe that will continue to be the case as more telcos and enterprises roll out SD-WAN based services.
However, it is also a crowded market with many products/solutions that address different aspects of the WAN connectivity, and this is making it more difficult for telcos and enterprises to make a decision. On the one hand you have legacy products with incremental changes that are rebranded as SD-WAN solutions, which may address short-term challenges, but not sufficient in the longer term. On the other hand you have innovative “pure-play” solutions designed to solve WAN specific cases that assume greenfield deployments and may lack the maturity to be deployed at scale in a telco’s environment.
We believe that the right mix of mature technology with innovative solutions that address as many challenges that telcos/enterprises face in the DC, WAN and cloud is what our customers are looking for. They are looking for end-to-end solutions from well known vendors that will partner with them to help address their business challenges in the near-term and offer them the agility needed to evolve to whatever the future holds.
In many ways, the market evolution of SD-WAN is replaying the history of SDN and private cloud. SDN for cloud networks received enormous hype and market projections, but many organizations accelerated the move to public cloud rather than set up their own private cloud platforms. The growth of public cloud adoption took some of the projected market growth from on-premises SDN cloud solutions. We are definitely seeing the same trend in SD-WAN, after initial explosive growth based on a clear [return on investment], we are seeing organizations looking to their telco and cloud provider to deliver the benefits of WAN automation rather than setting up and managing the infrastructure themselves.
With analyst organizations projecting SD-WAN to be a $6 billion market by 2020, I think we are surprised at the rapid adoption and growth that will really be coming through the telecommunication operators rather than enterprise sales (particularly [small- and mid-sized business]), mirroring what we have seen in the SDN cloud space.
RCRWN: What’s Nokia’s view on why the SD-WAN space has been gaining traction from telecom operators?
Khandekar: SD-WAN offers a clear immediate ROI to enterprises in terms of optimizing networking costs and ensuring network efficiency, but also in terms of reduced operational overhead, which translates to business agility very easily. In the highly competitive industry of network service providers, this is an obvious value proposition that the telcos have to deliver on to maintain and grow market share. For most businesses, the telecom operator is removing the key obstacle of setting up the SDN infrastructure and the initial learning curve, and offering a turn-key solution makes this a no-brainer ROI for the operator and the enterprise customer. And it also helps to protect their current customer base of WAN services.
Telcos have been under pressure to improve profitability and grow their top line. Furthermore, enterprises are trying to reduce their [operating expense] and venturing on the path to either public clouds and/or building their own VPN services over the top.
SD-WAN also gives telco operators a clear strategy and platform to offering NFV services down the line as a key revenue driver. SD-WAN enables telcos to speed up turning up new VPN services for existing customers from months to days, at a much lower operational complexity and cost.
SD-WAN also offers them the ability to grow their revenues beyond their reach (network) and attract new business customers globally (remote branches for current customers or total new customers). It also offers them the ability to up-sell these customers on services such as cloud connectivity, private cloud hosting for enterprises that want to get rid of their own data centers as well as provide them with an on-demand service order model where they can request a FW or WAN-Opt virtual instance on demand, when and wherever they need it. These are additional revenue services that can be offered with minimal effort and in a fully automated way.
Most importantly … they can augment MPLS VPN networks with greater efficiency, connecting sites that are on legacy VPN to new sites on the SD-WAN overlay. It is not a completely new network that is isolated, it can co-exist and the telco can migrate customers from/to, add on or migrate customers at their own pace. It also provides a path for NFV across WAN sites.
Cloud is also becoming increasingly part of any IT strategy and SD-WAN allows for application services to be delivered seamlessly and consistently to remote users from private cloud or hosted public cloud servers. This idea of treating public cloud as another branch site is an answer to eliminating “shadow IT” by offering enterprises a secure and monitored way to connect to their workloads and [software-as-a-service] services.
RCRWN: What sort of mix is Nokia seeing in terms of customer wins/deployments between the telecom space and the enterprise space?
Khandekar: While virtual networking initially gained traction in the data center and cloud, extending the benefits to the enterprise WAN is now projected to be a much larger growth market through 2020, by most industry analysts.
For SD-WAN, with many of our recent wins coming from Telus, BT, Sonera (Telia Finland) and among others that are not public yet, we see an equal amount of interest among large enterprises in the financial and retail sectors to deploy SD-WAN solutions. In fact, some of the financials started with data center transformation projects that are now expanding to include the WAN.
Nokia’s and Nuage Networks’ great success in the telecom space may, however, be largely a reflection of that being our traditional market where we have longstanding relationships, and an existing sales force and channel that addresses that market. We view that telecom space as an important channel to reach a vast majority of enterprise markets that we would not typically address, particularly SMB customers. The direct enterprise market will continue to grow as the market and technology matures, particularly among enterprises that are large enough to have multiple communication providers in various regions and need a common infrastructure to manage policies globally. Nokia is leveraging key go-to-market partners to expand this market (e.g., Fortune 500) such as HPE, Accenture and more.
RCRWN: What sort of challenges or surprises has Nokia seen in terms of integrating its SD-WAN product into telecom operations?
Khandekar: Given our long history working with telcos and understanding their business, challenges and processes, we have built our SD-WAN solution based on that and enabled it to act as a bridge towards true secure, “boundaryless” and on-demand service delivery platforms. From a technology standpoint, our SD-WAN solution offers a new service model that can connect to legacy networks and VPN customers on telcos current networks as well as off their network. However, one of the main challenges is perhaps more on the business and people/process side and on how to roll out/go live with these new services.
Since we have been delivering traditional MPLS VPN infrastructure to telecom operators for decades, Nokia really has an enormous advantage in seamlessly fitting into next-generation SD-WAN offerings that augment existing MPLS and hybrid WAN services. So this is really a non-issue. Not really a challenge, but the main integration work is to customize the end-customer portal that reflects the service provider’s VPN offerings to the SD-WAN policies and infrastructure. The SD-WAN offering still has to mirror the provider’s service offerings and integrate with back-office applications.
In order to help our customers address these challenges, we offer a [build – operate – transfer] model to our customers in order to help them address that specific challenge. We view these customers are long-term partnerships to serve the end-users and provide them with a true dynamic and on-demand service that meets their own business needs.
RCRWN: How important is collaboration in terms of SD-WAN platforms among the vendor community, and what’s Nokia’s view on that level of collaboration?
Khandekar: Nokia as a whole has multiple business groups that address a broad range of network related activities, from analytics and orchestration to physical switches/routers and wireless radios. If you look at the WAN, and our vision of boundryless connectivity between the datacenter, cloud and the branch, there is no single vendor that can address all of them and all of them well. We believe that an open ecosystem of technology partners is essential if an SD-WAN deployment is going to successfully meet our customer’s objectives. Therefore, we have worked with close to 32 technology partners to ensure that our customers are able to build a service using best of breed solutions from all these vendors. To name a few examples, we have integrations with the key security vendors – our own Nokia NetGuard, as well as Check Point, Fortinet and Palo Alto Networks to deploy and service chain traffic to their appliance in the data center as well as branch locations. We also have worked with the key service orchestrators – our own Nokia CloudBand, as well as Amdocs, Ciena Blue Planet and NetCracker so that they are able to provision our SD-WAN solution.
We have built a strong ecosystem of partners and will continue to do so that we can offer our customers the freedom of choice between what they currently have in their network and what would best meet their future needs. Working together with everyone in the industry is the only way to ensure that this wave will continue to deliver on its promise
RCRWN: What are some of the bigger challenges still facing the SD-WAN space in terms of continuing to gain traction among telecom operators?
Khandekar: There aren’t many. The traction and business motivation is there, and telecom operators that lag behind or delay are going to lose customers and market share. Telecom operators are already seeing pent-up demand for next-generation VPN and hybrid WAN services backed up with SD-WAN offerings, so it’s really a matter of how quickly they can get them rolled out before customers either turn to an alternative or roll their own.
Enterprise organizations that don’t go to cloud automation across the WAN know they are going to be left behind and be less competitive in their own markets. It’s really a land rush by carriers and vendors to get that projected $6 billion in annual revenue by 2020.
Perhaps one issue that needs to be grappled with is the fact that a major value proposition of SD-WAN is the ability to optimize and reduce WAN networking costs. This alone is not something that telecom operators are particularly interested in seeing, but a key driver for enterprise adoption. So, how do telecom operators continue to grow revenue while helping their customers drive down costs? Operators need to be a bit savvy here, but it will come in the form of more value-added service offerings, such as NFV and hybrid cloud integration, as well as enterprises paying premiums for accelerated service delivery and reduced overhead.
There will be opportunities for telcos to continue to differentiate their end-user offerings and the value of their underlying networks as usual for sure, but each will have to determine their own vision and strategy and execute accordingly.
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