NETWORK ORCHESTRATION AND MANAGEMENT SYSTEMS: WORLDWIDE FORECAST

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1 RESEARCH FORECAST REPORT NETWORK ORCHESTRATION AND MANAGEMENT SYSTEMS: WORLDWIDE FORECAST SHANTHI RAVINDRAN and GORKEM YIGIT Analysys Mason Limited 2015 analysysmason.com

2 CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS FORECAST MARKET DRIVERS AND INHIBITORS BUSINESS ENVIRONMENT MARKET DEFINITION ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited

3 vngn-nms Network orchestration and management systems: worldwide forecast The network management layer is evolving to include network control and orchestration functionality to manage hybrid networks Figure 1: Changes to the network management systems segment NETWORK MANAGEMENT SYSTEMS MOBILE RESIDENTIAL BROADBAND BUSINESS DATA SYSTEMS PSTN PRESENT 1 For more details, see Analysys Mason s vngn-oss: an architectural framework for virtual network management and orchestration. NETWORK ORCHESTRATION AND MANAGEMENT SYSTEMS EMS/NMS (formerly the Network Management Systems segment) NETWORK ORCHESTRATORS SDN CONTROLLERS VIRTUAL INFRASTRUCTURE MANAGERS FUTURE Source: Analysys Mason Virtualisation opens up the control layer so that the network may be programmed and orchestrated by the higher application layers. The service and control layers, including the OSS, must evolve to abstract the platform and network information through controllers and orchestrators, so the network can be tuned in near real time in response to dynamic service demands. The evolved network s management and control layers must orchestrate the virtual and physical infrastructure to create a robust end-user service. To reflect this market shift, we expect to move to a new segmentation of the telecoms software market. However, in this transitional report, we will identify the vngn-nms as a single subsegment alongside the existing network management systems (NMS) sub-segments. We will move to a new segmentation in next year s network orchestration and management systems (NOMS) market share and forecast report. We will consolidate the four NMS segments into one element management system (EMS)/NMS segment comprising the existing single-vendor systems with the changes required to support hybrid network orchestration. However, the main new functionality will reside in the network orchestrators, software-defined network (SDN) controllers and the virtual infrastructure managers (VIM), which we include in the vngn-nms sub-segment. 2 Analysys Mason defines vngn as hybrid (physical and virtual) network components because we do not expect 100% virtualised networks to be possible. Network virtualisation includes network function virtualisation (NFV), software-defined networking (SDN) and cloud computing. Analysys Mason Limited

4 Revenue (USD million) MARKET GROWTH: CAGR Network orchestration and management systems: worldwide forecast Dashboard: Network orchestration and management systems worldwide forecast with new vngn-nms forecast Figure 2: Network orchestration and management systems revenue, worldwide, KEY MARKET TRENDS FOR Revenue for traditional mobile NMS will slow and decline after 2017 in most developed and large emerging markets because most deployments will be complete. Video traffic and data centre interconnect traffic will account for moderate revenue growth in the business data services and residential broadband sub-segments, but revenue the vngn-nms sub-segment will have the highest revenue growth rate Traditional NMS vngn-nms Figure 3: Network orchestration and management systems revenue 2014 and CAGR , by region REVENUE NA CAGR 0.9% REVENUE Figure 4: Network orchestration and management systems revenue 2014 and CAGR , by sub-segment 90% 70% 50% 30% 10% -10% -30% USD1.2 BILLION LATAM CAGR 0.4% USD315 MILLION vngn NMS Overall CAGR 2.6% PSTN Residential Broadband CAGR COMPARISON WITH WORLDWIDE AVERAGE LOW HIGH Business data services REVENUE Mobile MARKET SIZE: Revenue (USD million) EMEA CAGR 0.6% REVENUE USD1.4 BILLION APAC CAGR 1.7% USD1.8 BILLION Source: Analysys Mason Analysys Mason Limited

5 Recommendations for CSPs 1 Ensure that the NMS layer is used as a central point for analytics, security and policy enforcement, so that it can be built into the automation processes. The NMS holds valuable configuration, fault and performance data that will be very important for automation and for managing hybrid physical virtual networks. CSPs should ensure that the NMS is inserted in the order-to-cash, plan-to-provision and trouble-to-resolve processes, by connecting to the customer-facing layers through the service fulfilment and service assurance systems as a necessary first step towards vngn-nms implementation. 2 CSPs will need to ensure that their current network management systems are upgraded to work with network orchestrators to support management of hybrid physical virtual networks. Many software-controlled networking (SCN) implementations will be lifecycle upgrades or capacity upgrades and will need to co-exist with existing physical network elements to provide a single network service. These NMS will need to be upgraded to interface with, and share information with, the new network orchestrators so that the overall objective of scaling to suit customer services may be achieved. 3 CSPs will need to deploy network orchestrators in concert with the virtual infrastructure, as part of their SCN transformation plans. We forecast vngn transformations to start from 2016 onwards, and CSPs need to deploy network orchestrators along with the virtual infrastructure managers and SDN controllers, and integrate these orchestrators, controllers and managers into an overall OSS rationalisation strategy to implement vngn-oss across systems, processes and the organisation. Analysys Mason Limited

6 Recommendations for vendors 1 Vendors should evolve their NMS towards supporting hybrid next-generation infrastructure in concert with the network orchestrators, or they risk giving away this functionality to other software systems. The NMS layer is the first interface to the physical network elements. There are many legacy network management systems that are deployed along with the physical network elements. Vendors need to enable these legacy platforms with improved data modelling and interfacing capabilities so that they can retain their place within evolving operations processes for virtual networks. 2 Vendors should create network orchestrators using next-generation software technologies in order to support complex virtual networks while hiding this complexity from the higher layers. Network orchestrators must enable multi-vendor networks, flexibly insert themselves into CSPs operations processes and provide the automation capabilities for these processes to provide the scaling for customer service demands. These capabilities can be provided only through a model-driven architecture based on TOSCA / NETCONF/YANG or similar protocols and data models. 3 Vendors should create network orchestrators that can support multi-vendor, hybrid networks through the use of open-source and industry-standard frameworks a lack of solutions can inhibit take-up of NFV/SDN. Vendor product immaturity is inhibiting NFV/SDN spend. Robust, multi-vendor, open-source-based COTS solutions that help CSPs to avoid vendor lock-in will encourage take-up of NFV/SDN and will help CSPs to insert the orchestrators into their OSS and into their existing operations processes. Avoiding lock-in is key for the success of orchestrator solutions, because they have to enable management of multi-vendor hybrid networks. Analysys Mason Limited

7 CONTENTS EXECUTIVE SUMMARY RECOMMENDATIONS FORECAST MARKET DRIVERS AND INHIBITORS BUSINESS ENVIRONMENT MARKET DEFINITION ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited

8 About the authors Shanthi Ravindran (Senior Analyst) is a member of Analysys Mason s Telecoms Software research team, focusing on OSS, BSS and SDP for Asia Pacific customers. Shanthi has more than 20 years experience at Tier 1 infrastructure vendors, working on design, deployment and operations of wireless and broadband networks for operators across the Asia Pacific region, starting with the first GSM and CDMA networks in Malaysia and Singapore, and continuing through to 3G and 4G networks. She is an expert in designing optimised, end-to-end network solutions and has a strong understanding of the applicable telecoms and network evolution standards. She also has extensive experience in working with many independent software vendors for sourcing and building complete solutions. Gorkem Yigit (Research Analyst) is part of the Telecoms Software research team, contributing to the Software-Controlled Networking, Service Delivery Platforms, Network Orchestration and Service Assurance programmes. He started his career in the telecoms industry with a graduate role at a leading telecoms operator, before joining Analysys Mason in late He has also written an academic paper about market acceptance of cloud enterprise resource planning (ERP) software and he earned a cum laude MSc degree in Economics and Management of Innovation and Technology from Bocconi University (Milan, Italy). Analysys Mason Limited

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12 PUBLISHED BY ANALYSYS MASON LIMITED IN NOVEMBER 2015 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0) Fax: +44 (0) Registered in England No Analysys Mason Limited All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited 2015