Network functions virtualization (NfV) is the use of virtualization technologies in order to manage core networking functions using software rather than hardware. The use of NfV to separate functions such as routing, firewalls, address translation and domain name services allows CSPs to streamline processes, improving system flexibility and agility while controlling costs.

Interest in NfV is on the rise – with the market growing from $1.2 billion in 2014, to an estimated $19.1 billion by 2020[1]. A study from McKinsey[2] found that telecom customer satisfaction is directly related to digitization: the more digitized the journey, the more satisfied the customer. This, and other demands, are compelling CSPs to adopt and access the benefits that NfV can offer. Some of these demands include:

1. Market globalization.

Globalization is driving competition, and as competition grows more intense, businesses are pressured to be lean and control costs – virtualizing network functions can help a company to accomplish that. NfV helps companies to control costs and improve ROI by reducing the need to purchase and maintain network hardware equipment. In planning NfV, a telecom provider must analyze their functions to identify those that can be virtualized – providing an opportunity to streamline processes and become more efficient.

2. Rapidly changing business environment.

The business environment is changing at a more rapid pace than ever. To make the best decisions to support long-term success, an organization must be agile in response to rapidly changing business conditions. NfV supports organizational agility by providing the ability to commission and decommission network functions at a moment’s notice. The use of NfV can also lower the risk and time taken for the development and testing of new products and services for a business.

3. Customer quality of service and availability.

With more and more competition and the ease for customers to change service providers, quality of service (QoS) has and will continue to be a major influencer on businesses. Being able to provide reliable QoS to customers is key to gaining new customers and to reduce customers churn. This becomes more of a challenge as the number of customers, their QoS demands and their usage grows. The use of NfV can help increase service availability by providing management and orchestration (MANO) to perform automated actions on virtual functions, reducing to time taken to resolve service issues.

4. 5G adoption.

The race to provide 5G service is on with the market expected to grow[3] from approximately $500 million in 2018 to $26 billion in 2022. NfV is a key enabler of 5G systems, allowing operators the flexibility to change capacity, speed and coverage across the network according to rapidly changing application needs.

5. Increased security concerns.

The increasing threat of malicious attacks on critical infrastructure, including communications, means that protecting the network is of utmost concern. Virtualizing security functions has the advantage of being able to provide real-time monitoring and control across the whole network. Using artificial intelligence techniques such as machine learning to detect anomalies in data, the dynamic management of security functions allows exposure to attacks to be minimized, risks to be reduced and security to be maintained.

NfV adoption is growing, offering telecom companies the chance to control costs, improve service offerings, and increase customer satisfaction, improving chances for long-term success. Moreover, NfV is critical to the effective application of new technologies such as 5G and offers a CSP the opportunity to review and re-evaluate processes to improve streamlining and efficiency throughout the organization.

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References:
https://www.statista.com/statistics/890847/nfv-market-size-worldwide/
https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/how-telecom-companies-can-win-in-the-digital-revolution
https://www.statista.com/statistics/955366/5g-network-infrastructure-market-size-worldwide/