In a recent RCR Wireless News article, NFV and SDN investment looks strong, though service assurance remains crux, they cite from the recent IHS Markit report, that the network functions virtualization (NFV) market will surge from $2.7B in 2015 to $15.5B by 2020. They also noted that 80% would come from NFV software. That’s roughly $4 out of every $5 spent on NFV. This illustrates a tremendous opportunity for networking equipment manufacturers to capitalize on this trend by moving towards software-centric models and offering virtual network functions.
In the last two years we have worked with many network equipment manufacturers to help define their software strategy and to implement software monetization technology to drive more software-driven revenue within their businesses. For many networking companies the days of a complex device being defined, designed, manufactured, shipped, installed, and living its entire life until obsolescence without any further changes or upgrades are over. With the explosion of connected, intelligent devices, the lifetime is much longer and more complex. Today devices are renewed, refreshed and updated through the use of software to extend a product’s life over a longer period of time. And for many device manufacturers, the majority of their intellectual property is now based in software, rather than in hardware.
Software Defined Networking (SDN) and Network Functions Virtualization (NFV) trends are pushing network manufacturers to move to virtual versions of their traditional hardware appliances. To survive and thrive networking equipment manufacturers must move to hybrid software and hardware business models and supply chains that support both their physical and digital offerings. This shift for many can’t happen fast enough.
In our experience, throughout this physical to digital journey, manufacturers may experience various levels of maturity as illustrated below. Flexera Software created this maturity framework to help network equipment manufacturers navigate through this transition from hardware to software to capitalize on NFV.
We would love to hear about where you fall on the maturity framework,where you hope to get and your strategy to get there. Send us your feedback.