Throughout 2013, I’ve had the opportunity to meet with services provider leaders from around the globe. Whether they are large or small, focused on consumer services or business, or engaged in video or mobility, their ambitions are very much in line with our strategy: To help them monetize and optimize their networks, while accelerating their ability to deliver their services.
- Monetize: From innovative new managed security services, to video, cloud and new machine driven (M2M) services to enable the Internet of Everything (IoE), there are a number of new incremental revenue opportunities for service providers which sit at the very center of these trends estimated at over $2.9 Trillion over the next 10 years.
- Optimize: Delivery of these new services has to be less than the cost to deploy and operate them. At the end of the day, the SP is a business, and, as all businesses, they need to be profitable. New ways to deliver these services as economically as possible are key to their success.
- Accelerate: In this dynamic marketplace, service providers need to move quickly to seize these new opportunities. Gone are the days when service rollouts can take months or quarters Instead, they need to operate at “web speed” shortening the time to provision new services from months to minutes and do it in a cost-effective way.
As service providers are deploying new technologies to help achieve these goals, “virtualization” is often touted as the answer, and, in part, that is correct. However, at Cisco, we believe it is important to frame the discussion properly in order to reap the full benefits of what’s possible in networking.
The network is increasingly becoming virtualized, and virtualization is increasingly becoming networked. Virtualizing applications is an initial step that can provide some advantages. However, there are ways to get even greater value by virtualizing network functions but then to automate and orchestrate the applications and network elements into profitable services. In the end, it is this holistic approach that enables service providers to offer networking itself “as a service” – that’s where the true value is. This is why Cisco has pursued virtualization in all of these different levels. In fact, by our recent estimates, we have virtualized 6 times more network functions and applications than our major networking competitors combined. Whether it be a virtualized firewall to a virtualized Edge router, we have pursued it and are delivering it today.
And we’re not going to stop there. In fact, in 2014, we intend to continue to aggressively pursue this strategy and outpace our competition by delivering twice their rate of virtualization, orchestration and automation capabilities in 2014.
Virtualized elements need to work as an integrated extension of the physical infrastructure. Too many in the industry look at virtualization in contrast to physical infrastructure. While virtualization can assist in many ways, it may not always reach the level of scale at the desired cost points required in service provider networks. In addition, service providers have invested billions upon billions on their very robust and scalable network infrastructure. Leveraging that investment would simply be good business for so many service providers. As a result, at Cisco, our development strategy is to enable virtualized and physical elements to work better together with each part of this hybrid deployment model providing distinct benefits that result in a sum that is greater than the whole.
Virtualization shouldn’t be limited to part of the network but rather placed throughout the whole architecture based on business needs. Too many of our competitors are looking at virtualizing just one part of the network – perhaps in the data center or just in a router. This is simply too narrow in scope and not focused on the real business needs of the provider which are to deliver services quickly and efficiently. Advantages of virtualization should extend throughout the entire architecture. This is why the more than 26,000 engineers at Cisco are pursuing virtualization projects not just in data center or routing but also in video, security, mobility and so much more.
Simply put, 2014 will be a year of industry transforming innovations for Cisco. We intend to not only increase the pace of virtualization into the marketplace but to increase the scope of it as well. Only then will service providers be able to achieve the levels of business agility and cost of service that they need to thrive in this marketplace, and for us to further execute on our strategy to help them monetize, optimize and accelerate.
Our next major proofpoint in this in our service provider strategy is only weeks away, and I look forward to showcasing that with some of the most prominent service providers in the industry to you then.
I remember back when Cisco first introduced the concept of an “Experience Provider” as a vision of how legacy service providers could potentially move up the value-chain and thereby become a source of new value — for all their stakeholders in the marketplace.
When that forward-looking view of their business model evolution failed to materialize, much of the SP market analysis seems to have returned back to physical infrastructure — building better networks, rather than creating better business opportunities for new growth.
I agree with your assessment; the common view today is somewhat myopic. Therefore, I’m wondering, will any SP dare to pursue a broader business development agenda in 2014?
The Year Ahead in Networking