Market Briefing: Software Defined Networking and Network Functions Virtualization

Global demand for ubiquitous access to high speed bandwidth, increased adoption of cloud computing and IT convergence, desktop and service virtualisation, and increased competition have pushed legacy networks to their limits. As a result, communication services providers (CSPs) are looking for ways to achieve greater utilisation of existing infrastructure, faster time to- market of innovative services, greater agility and flexibility, new revenue streams, as well as cost reductions (ETSI, 2012; Wind River, 2013; HP. 2014; Frost & Sullivan, 2015; CommScope, 2018).  Software-defined networking (SDN) and network functions virtualisation (NFV) together are seen as the key enabling technologies that will transform CSPs by providing a lower-cost, agile, and scalable means to address markets characterised by dynamic and rapid change.

Traditionally, CSPs deployed special purpose, network-specific, fixed-function hardware with standardized protocols. The rapid emergence and widespread adoption of mobile technology, cloud computing, big data analytics and social media by both enterprises and consumers has resulted in dramatic shifts in bandwidth, network infrastructure requirements and associated economic models that the traditional network operator approach cannot scale or adapt to easily. SDN and NFV abstract the implementation of new network functions and decouple them from the hardware infrastructure and associated topological constraints thus making communications networks programmable and as a result much more flexible and agile. As a result, CSPs benefit from reduced total cost of ownership and operational complexity, real-time bandwidth and network scalability, reduce time to market, increased security, and improved visibility and integration (Frost & Sullivan, 2015, SDxCentral, 2017). The SDN/NFV market is a large and rapidly growing market. It is estimated to grow from US$2bn in 2015 to US$45.6bn in 2020, a compound annual growth rate (CAGR) of 86% (CapGemini Consulting, 2016). BY 2021, HIS Markit estimate that the market value for SDN and NFV a t US$39.8bn and US$37bn respectively.

This market briefing provides an overview of the market for SDN and NFV, primarily from the perspective of industry reports. The following sections provide a summary of SDN and NFV and their benefits. Major trends and drivers for SDN and NFV adoption are discussed and an overview of the SDN and NFV market is presented including major segments, vendors and standards development organisations. Barriers to SDN/NFV adoption and future challenges arising out of the Internet for Everything and 5G networks are then briefly discussed. The briefing paper concludes with an overview of how the European Union Horizon 2020 project RECAP is profiling and simulating network infrastructure so that network function and service function characteristics can be automated to ensure required quality of service and mitigate failure risk in a variety of cloud, fog and edge computing use cases.