Digital Evolution is virtually a step away
For years, the enterprise has been realigning entire IT ecosystems to take advantage of cloud technologies. The move away from heavily customised, on-premise enterprise solutions to flexible, cloud-based SaaS offerings allows IT departments to become more nimble and align themselves with today’s dynamic business environment. Overheads are lower, change can happen faster, and new functionality becomes available on a regular basis, requiring little IT involvement.
Telcos are now envisaging similar benefits through Network Functions Virtualisation (NFV). In a bid to catch up with other sectors – which have taken leaps in their approach to digital – operators are keen to break free from the shackles of legacy infrastructures and become digital brands. Not only are these infrastructures costing telcos up to 50% of their annual IT spend (the equivalent of 3% of annual revenues), they also make it hard for operators to monetise and realign for next generation, data-centric services, such as LTE. Despite the high level of investment, these same IT systems are often the biggest barriers to innovation, says Jennifer Kyriakakis, founder and VP Marketing, MATRIXX Software.
Virtualisation for Innovation
The genesis of NFV was about operational efficiency, cost reduction and the shift from proprietary equipment to the deployment of standards-based, commodity hardware. All of these benefits are clear – but can NFV really help with innovation? And how can virtualisation of Business Support Systems (BSS) components such as policy, charging and billing help operators become more innovative? The answer does not comes from any set of use cases or fancy new services, but rather from the sheer agility that virtualisation can afford the average telco.
Through virtualisation, the amount of CAPEX and OPEX needed to deploy and operate a modern BSS is greatly reduced. Cost saving is a vital benefit, but NFV offers more than that – it allows telcos to shift focus away from boxes, infrastructure and heavy operational processes, and instead focus on customer experience, packaging and pricing creativity, and partner service enablement.
While this might seem counterintuitive to a telco’s standard offering, it makes sense as operators evaluate their digital strategies and deploy mass market IoT platforms. This is especially true if you look at their strategies for bringing these new offerings to market. A traditional market trial can be years in the making and legacy BSS can cause a bottleneck in the innovation process, as they are costly to develop and inherently inflexible. Through virtualisation of these components, the days of BSS long-haul projects are over. Services can be planned, launched and billed for on a rapid timeline, with little additional investment in infrastructure or resources. Test the water, see what works, and then launch commercially without having to invest ahead of potential success.
If a service is successful, operations can scale at a pace that is economically on par with revenue generation versus having to invest upfront. On the other hand, if a product launch fails, then retooling or abandonment does not have such a detrimental effect on budgets and timelines.
NFV, the IoT and the Millennial Brand
One of the areas where a virtualised BSS offers the strongest potential is in enabling IoT platforms. As operators invest in specific verticals and play with various models for IoT monetisation, deploying a virtualised BSS platform seems a natural fit. Its flexible, scalable nature will enable operators to develop and refine business models that can be built on success.
The other key area where virtualisation will thrive is by enabling digital brand initiatives. Many operators are opting for a second brand – in the form of an MVNO – to capture the millennial market and its expanding buying power. Bringing up a separate virtual BSS stack enables telcos to compete with other digital brands on a more level playing field by giving them agility, cost efficiency and the means to innovate.
Issues around security, data privacy, and the impact of latency on customer experience need careful consideration when deploying BSS components in a non-traditional environment. For this reason, mainstream deployments to cater for existing customers are not necessarily imminent. In the near future operators can expect to deploy BSS via a private cloud. This method is much more effective for use cases which are not demanding from a latency perspective and do not deal with sensitive data sets. This makes profitable fields such as IoT and millennial brands a great starting point for operators to gain the agility they need for these new markets without taking on massive IT transformation projects or the spiralling costs that go with them.
In this new digital world, it is critical to drive operational efficiencies, time-to-market and deliver innovation in order to compete. The virtualisation of BSS can make operators more agile, cost efficient businesses that can truly cater to today’s data-centric subscriber. Many operators are already implementing virtualisation into their core networks, and others must follow suit or risk being left behind.
The author of this blog is Jennifer Kyriakakis, founder and VP Marketing, MATRIXX Software.
Comment on this article below or via Twitter: @ VanillaPlusMag OR @jcvplus