Network Functions Virtualization Is a Monster Channel Opportunity

Ask about portability of the specific virtual appliances you plan to resell across various vendors’ hardware and different hypervisors. Ask about use of northbound APIs from the controller to get the full picture before suggesting an option to customers.

Ask potential providers how they orchestrate and manage VNFs to cope with the expected huge growth in this market predicted by Infonetics and other analysts. The key is automation — without the ability to automate common tasks, scalability will be elusive.

Develop TCO worksheets. This is a major shift, especially for smaller companies with little experience with cloud services. The driver will be cost reductions and much more well-maintained services, so be prepared to demonstrate exactly how much savings are possible for various services by shifting from OpEx to CapEx over the expected lifespan of a conventional hardware appliance. The software is going to cost less overall, says Michael Howard, Infonetics’ co-founder and principal analyst, but there’s not enough history to peg the level. Include ancillary savings to be had by eliminating hardware and site visits. At least some of those savings can be passed along to customers. As we’ve learned from server virtualization, abstracting IT services as software can significantly reduce the time and overhead required to provision new resources or applications.

Think about your own cash flow.  For resellers, the biggest adjustment will be around the revenue model. “Instead of selling hardware with a 7 to 10 percent profit margin, you can now go sell services and take a recurring revenue stream at a higher profit margin,” says Greg Ferro, a network engineer and architect, host on the Packet Pushers Podcast, and blogger at EtherealMind.com. “You can sell a Check Point firewall appliance once, with margins that get tighter all the time and significant overhead to deliver and install the gear, or you can sell a firewall as a service that a provider can spin up in minutes. If you take 10 percent of a million-dollar deal, that’s $100,000. Taking 10 percent of services, sure, it takes longer to get to that number. But your costs are a lot lower — you’ve got no warehousing assets, no distribution, no shipping.” From a reseller perspective, it lessens your dependence on incumbent network gear vendors. That can spell opportunity.

Keep a close eye on bundling.  Delivering services via NFV moves complexity to the carrier, which must have advanced SDN and cloud chops to maintain uptime. That level of expertise is expensive, and carriers will want to recoup some of the investment. We have seen, over time, carriers and cloud providers like AWS bundle basic services like firewalls and load balancers into their base offerings for small “incremental fees” that can add up.

Don’t be territorial. Smart resellers will look to untapped markets. The nature of NFV, and cloud in general, means you can easily service clients in far-flung locations. “I’ve worked with companies that had 3,000 branches, where expensive routers were reduced to dumb input/output,” says Ferro. Moves, adds and changes could take six weeks. “Let’s say you’ve got a 10 Mbps Internet connection to a branch office in Idaho. Before, you had to put in an order to upgrade the connection, organize a cutover date, ship hardware, fly out an engineer. Now, all I do is call the carrier and ask for what I need.”