Virtualization is the creation of a virtual – as opposed to an actual – version of something. The IT world has been turned on its head by our ability and desire to buy virtual things – most notably servers – because they are less expensive, easier to operate, typically pre-deployed, and more easily scaled to meet growing customer demand. Currently, the concept of virtualization is taking the next step to include virtualizing purpose-built network hardware – called network functions virtualization, or NFV – and the deployment of network capacity itself (as paths through the network devices) – called software defined networking, or SDN. Both of these innovations provide the hallmarks of virtualization – faster, cheaper, and easier. The goal of this article is to describe these innovations and to frame them from the perspective of hosted PBX (News - Alert) service providers. How should you react to these new developments strategically and tactically?  How are they likely to impact your business over the coming months and years? Where do they fit into the merging landscape of telephony and information technology?

NFV allows an operator to take many of the components commonly found on an enterprise network – firewalls, routers, WAN accelerators, session border controllers, deep packet inspectors, quality of service monitors, and more – and to virtualize them onto commodity server hardware so they are less expensive to buy, quicker to deploy, and easier to manage. These network devices are now, using NFV, network functions on commodity server infrastructure. 

SDN works hand in hand with network devices and functions that support standardized forms of communication by separating the work of the network components – i.e. handling data in different ways – from the control of the components – i.e. how much data is allowed, by whom, governed by what admission control rules, etc. OpenFlow is the open source project software that is used by the majority of SDN adherents and has rapidly become the control standard that network component manufacturers are starting to support natively in firmware. Exerting control over a network with software affords service providers the ability to more rapidly adjust to changing enterprise capacity needs – whether they are temporary or permanent – and to avoid challenging manual device configuration work which, in turn, reduces the complexity and human errors too often related to network management.

Information Technology and Hosted PBX = Peanut Butter and Chocolate

If you look around the market you will find that many IT companies are offering their version of telephony. From the desktop, you have Microsoft’s Skype for Business server complementing Office 365. From the core network, you have Cisco (News - Alert) Unified Communications integrating cleanly with Cisco’s data management infrastructure. So what’s a hosted PBX service provider to do?  Fortunately, NFV reduces the complexity of offering advanced network capabilities. In addition, many of the newer unified communications clients offer integration with desktop applications and collaboration between computer users. Taken together, these accessible features allow a service provider to package an offering that spans telephony and IT and allows them to compete for enterprise accounts with the largest industry players.

Smart Pipes

Hosted PBX service providers often sell IP circuits because VoIP needs MPLS or other forms of managed IP. I hear these circuits often referred to as dumb pipes – just a circuit delivering the Internet to the enterprise (and hopefully prioritizing real-time voice packets). Adding NFV to these circuits makes them a lot smarter – now they can provide access control, security, and other network functions. Layering on dynamic control of these functions via SDN makes then really smart pipes. Masergy recently announced its launch of NFV to enterprise customers – laying claim to be among the first IT/hosted PBX service providers to take this step. 

Customize

Enterprises of all sizes like flexibility and control to set their requirements and to optimize for efficient use of their resources. Phone (News - Alert) services and network functions have overlap in that there are many features; one-size does not fit all. With the ability to manage settings, include or exclude features, functions and network capacities for individual users (one person in telephony or one enterprise/department in networking) with much less complexity, it makes sense to be thoughtful to the needs of the customer – and these technology innovations offered by NFV and SDN make it all possible.

Conclusion

The market is telling us through consolidation, new offerings, and the direction of technological innovation that business communications and business IT are colliding. This is a tremendous opportunity for hosted PBX operators to pursue a larger revenue market without straying from their primary target market nor from their core competencies.

Micah Singer (News - Alert) is CEO with VoIP Logic