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SDN to boost cloud service profit margins over coming years

Software defined networking and network function virtualisation present UK Infrastructure Services suppliers with a huge opportunity, according to new report

The provisioning of software defined networking (SDN) and network function virtualisation (NFV) present a huge opportunity for UK infrastructure suppliers, according to a new report from TechMarketView.

The analyst firm says that software defined technologies could ‘radically alter’ the way IS firms provide cloud services to their public and private sector customers and help them to reduce provisioning operations, thereby improving margins.

According to the IDC, the global market for enterprise and cloud service provider segments enabled by SDN will grow from $960m in 2014 to more than $8bn by 2018. TechMarketView estimates that provisioning within the IS sector is set to expand at a compound annual growth rate (CAGR) of 11.8% over the same timeframe.

“We expect to see both public and private sector organisations move more of their on-premise applications and services into centrally hosted cloud services, a migration that SDN/NFV supports through automated, self-service provisioning and centralised management,” said the report.

“Additionally, network virtualisation enhances IS suppliers’ ability to satisfy private/hybrid cloud or managed service requirements by hosting virtualised applications and services within CPE and x86 servers.”

However, the analyst house said despite its potential, SDN/NFV ecosystems remained ‘immature and little understood’, with very few live commercial services on offer.

The report pointed to a handful of infrastructure suppliers such as NTT Com, AT&T, Deutsche Telekom and Colt as being progressive in the area. In the UK, BT, HPE and HCL were all seen to be moving steadily forward.

However, TMV said that many of top IS suppliers were ‘lagging very much behind’. The list included Accenture, Capgemini, Capita, CGI and CSC.

“They are not engaged in any SDN/NFV testing or deployment activity at all, opting to sit back and wait for the technology to mature before evaluating any future implementation,” the report said.

TechMarketView’s findings are backed up by a similar report published last week. The SDN, NFV & Network Virtualization Ecosystem: 2015 - 2030 - Opportunities, Challenges, Strategies & Forecasts report from SNS Research estimated that service provider SDN and NFV investments would grow at a CAGR of 54% between 2015 and 2020.

“As service providers seek to reduce costs and virtualise their networks, these investments will eventually account for over $20bn in revenue by the end of 2020,” the report estimated.

 

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