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White Paper

June 2014Copyright Cohesive Networks

Cloud Service Providers: Offer Customer-Focused Cloud Solutions with Overlay Networks

Cloud service providers (CSPs) and telecommunication firms are now beginning to offer more cloud computing features to compete with current industry leaders like Amazon Web Services, Google, and Microsoft.

The market is growing and more competitive for telco and CSP entries:

• Infrastructure as a Service (IaaS) is expected to grow at a rate of 47.3% in 2013 to nearly $9 billion,

• The public cloud market is currently worth $15.1 billion,

• Spending in the public cloud will reach $207 billion by 2016,

• Global telco operators will pour over $130 billion into cloud services annually by 2015

IT architects and business leaders are wary of security risks and vendor lock-in, yet cloud adoption is a clear enterprise need. Adding to the complexity, cloud providers of all sizes and pedigree do not always offer the control and security needed for specific customer use cases such as US HIPPA regulations.

What can CSPs offer to separate themselves from industry-leading clouds, new entrants and even cloud washers? Telco and CSPs must differentiate in order to to attract customers. With added control and network security, CSP network features and value will get noticed in the market.

Telcos with massive infrastructure can become heavy hitters overnight when overlay networks transform data centers into cloud-enabled compute capacity using NFV and overlay networks. Overlay networks can improve interoperability, attract more enterprise customers, and enhance CSP market position.

Enterprise customers win when CSPs offer cloud networking capabilities that allow customers to confidently migrate to the cloud. Added to the scale, cost savings, and resources of cloud infrastructure, overlay and NFV based cloud networking make cloud adoption a no-brainer for enterprises.

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Summary

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Traditional voice and data providers are looking to cloud solutions for revenues and customer retention. Reports cited by Ericsson estimate that global telecommunications operators will pour over $130 billion into cloud services annually by 2015. Yet rebuilding networks, data centers, and systems to fit the cloud model can be a drain on time to market and resources.

Cloud service providers (CSPs) and telco firms are now beginning to offer more compute, storage, and capacity at on-demand, flexible pricing. The new cloud-powered services will help telco firms compete with cloud offerings such as Amazon AWS, Rackspace, Microsoft Azure, and European firms including Interoute, GreenQloud, and ElasticHosts.

Cloud computing is growing, in market size and competition. The cloud computing industry is currently dominated by non-telco giants such as Amazon, CSC, Rackspace, VMware, and Microsoft. Gartner Research estimates that enterprise spending on public cloud services grew by 15 percent to $109 billion in 2012, and public cloud spending will reach $207 billion by 2016.

The opportunity for massive cloud-focused growth is there for telco operators. In a separate report, Gartner predicts the Infrastructure as a Service (IaaS) segment of cloud computing will continue to lead the cloud services market, growing 42.4 precent in 2012. Infrastructure as a

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Push to Offer Cloud Services

June 2014Copyright Cohesive Networks

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Service (IaaS) is expected to grow at a rate of 47.3 precent in 2013 to nearly $9 billion. Security is still a primary concern in cloud computing, especially in public and hybrid environments. The IDG Enterprise Cloud Computing Study from January 2012 found that 70 percent of respondents cite security as a barrier to implementing cloud strategies. Worries over accessing information (40 percent) and concerns about information governance (37 percent) also ranked highly.

IT architects and business leaders are wary of security risks and vendor lock-in, yet cloud adoption is a clear enterprise need. A reported two-thirds of organizations in an IDG study believing that “cloud computing is a very / somewhat important enabler of business innovation.” A Technology Business Review report found the broader public cloud market (beyond just the top 50 vendors) grew 25 percent from the fourth quarter of 2012 to the fourth quarter of 2013. The report estimates the market to be worth $15.1 billion, and the pace of cloud acceptance gaining rapidly with enterprise IT.

In a larger, more competitive public cloud IaaS market, telco and CSPs must differentiate in order to to attract customers. Services based in real world use cases can fight enterprise fears of security and lock-in to boost cloud adoption. CSPs can stand out by creating robust networking features that add security and flexibility for customers and enterprise-friendly pricing comparisons models.

Adding to the complexity, cloud providers of all sizes and pedigrees do not always have the control and security needed for specific customer use cases. For example, healthcare applications require strict data sharing standards to meet US HIPPA regulations. Cloud offerings alone not secure enough.

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Security Fears Don’t Slow Demand

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As part of an IaaS offering, some providers have added networking capabilities to provide more security. Google GCE and Amazon Web Services (AWS) stand out for their networking and security offerings. Yet even providers’ in-cloud Virtual Private Clouds (VPCs) have limits on the degree of accessibility and control enterprise IT architects need to comply with security regulations.

Enterprise customers will flock to the first vendors to offer greater security and interoperability between geographies and cloud providers. What technologies can providers offer to differentiate from industry leaders, new entrants, and especially from cloud washers?

What if there was a way for telcos and CSPs to offer lock-in proof services? Along with on-demand compute, storage, and flexible capacity, CSPs can offer, dynamic networking features can be critical to compete in the growing cloud IaaS market. CSPs can offer enhanced cloud networking based in software, rather than at the hardware-heavy IaaS layer. Software-based networking technologies include overlay networks built with network function virtualization, or NFV.Overlay networks free cloud users to deploy practically any hybrid resource across hardware vendors, geographic locations, and cloud environments. Telcos and CSPs can use overlay networks to connect and extend data center networks to make any compute resource into a cloud-powered data center. By offering expanded cloud networking features, CSPs can attract customers and ease cloud on-boarding.

Overlay networks build on top of existing network infrastructure. Overlay networks use Network Function Virtualization (NFV) appliances to deploy a cloud network over top of any existing CSP network.

Cloud users can create overlays to control routing, firewalls, and network end points within a shared public cloud environment. Controlling network features with NFV allows both CSPs and their customers to to connect data centers and cloud servers into a secure hybrid cloud network.

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Overlay network benefits explained

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NFV virtualizes network functions previously found only in proprietary, physical hardware. While traditional network hardware vendors install physical appliances inside corporate data centers, a software instance-based NFV appliance provides all the same functionality without the hardware rack or ethernet cables.

Newly federated data centers can instantly become cloud resources unlike anything a single enterprise customer could build, and at much lower costs. Large telcos with massive infrastructure can become heavy hitters overnight when overlay networks transform data centers into cloud-enabled compute capacity using NFV and overlay networks.

Overlay networks can replace hardware-based network devices such as routers, firewalls, and security appliances. Unlike hardware, the software versions of networking appliances are capable of running on top of any virtual environment. Because it is software, CSP customers can easily deploy NFV appliances in the application or virtual layer in any public, private, or hybrid clouds.

With applications freed from the constraints of underlying hardware and middlemen, CSP customers can bridge their data centers and cloud-based resources without changing everything. Customers can also benefit from overlay networking by adding security features such as IPsec and SSL/TCP connections to meet compliance and industry regulations.

Overlay networks with NFV add more user control. Public cloud IaaS with interoperable overlay networks are larger and more scalable than individual companies’ networks. Added to the scale, cost savings, and resources of cloud infrastructure, cloud networking features make cloud adoption a no-brainer for enterprises.

Providers unwittingly limit public cloud adoption and frustrate potential customers by disabling features that share control with customers. Public cloud customers are not allowed to view or access lower network layers in a shared environment, which ensures the broader cloud network but harms individual cloud users. For example, CSPs often disable UDP multicast without an option to re-enable.

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Multicast is one of the most popular and efficient ways to do one-to-many communication over secure network infrastructure. The most common transport layer multicast protocol is UDP multicast. Enterprise data centers, stock exchanges, and multimedia content delivery networks all use multicast to deliver information to a group of computers simultaneously in a single transmission.

Why do cloud providers disable multicast? Providers themselves use broadcast and multicast to offer services such as server motion and IP failover. Additionally, multicast and broadcast are difficult to manage in multi-tenant cloud environments. Multicast is considered “chatty” and can crowd public cloud networks.

With NFV-based overlay networks, CSPs can enable otherwise restricted protocols for customers. Overlay networks simply create a private, sealed network on top of an existing cloud network. Customers can use the overlay network to control network features, including UDP multicast. Overlay networks can improve interoperability, attract more enterprise customers, and enhance CSP market position.

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Differentiate with user-centric cloud networking

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NFV can also enable CSPs to offer automated service chaining, or dynamic network provisioning to support applications. Before NFV, network operators had to manually build firewalls and load balancers for each application. Now, NFV technology lets CSPs make specific network functions available as needed. Automated service chaining lets CSPs charge for on-demand specialized network services, while application owners will no longer have to struggle to deploy and re-deploy cloud applications.

In summary, enterprise customers win when CSPs offer cloud networking capabilities that allow customers to confidently migrate to the cloud. With added control and network security, CSP pricing and value can stand out against competitors. By offering cloud resources with superior networking technology, customers can easily use and understand the offering. Overlay networks’ broadened capabilities and interoperability solve vendor lock-in paralysis and create truly on-demand, customer-focused cloud systems.

Africa has over 700 million mobile phone users and according to Jamal Saghir, the World Bank Director for Sustainable Development in the Africa Region. He writes, "the Internet and mobile phones are transforming the development landscape in Africa." Yet, African end users must negotiate a telco market segmented by a patchwork of national and trans-national carriers. The fragmented market also makes SMS advertising error-prone and less cost effective for brands.

An SMS bridge operator based in West Africa saw an opportunity to put cloud networks to use. The company needed to integrate the SMS infrastructure of multiple national carriers throughout Africa, but without the large capital costs of data centers and network hardware.

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NFV use case: African telco market

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The company created their own overlay network using public cloud infrastructure based in the British Isles. The overlay network instantly made the SMS operator into a global player.

The company now has full visibility and control over their cloud-based network. They in turn meet the security and integration their customers and partners require to connect to Africa’s 700 million mobile users. 

Overlay networks and flexible infrastructure allow the SMS bridge operator to offer a remarkably cost effective SMS integration service to developing markets across Africa.

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Offer customer-focused cloud solutions with overlay networks CSPs can easily transform data centers into cloud-enabled compute capacity by using NFV and overlay networks. Overlay networks improve interoperability, attract more enterprise customers, and enhance CSP market position.

CSPs can use VNS3 to offer customers the ability to deliver application-centric networks to connect offices, customers, and partners globally. VNS3 has delivered close to 200M device hours of over the top, application networking in the public clouds since 2008.

VNS3 is a patented approach to NFV and overlay networks that gives end customers control in the cloud.

To learn more, contact Cohesive Networks.

June 2014Copyright Cohesive Networks

VNS3 Provider Edition

Resources:For more on the VNS3 for Provider Edition, see cohesive.net/products/vns3/provider-edition

Subscribe to our blog for the latest on NFV and cloud computing cohesive.net/blog

For details and specifications for VNS3, see cohesive.net/support/product-resources

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Patrick Kerpan, CEO and co-founder Mr. Kerpan is responsible for directing product, technology and sales strategy. Mr. Kerpan brings more than 20 years of software experience to the role of CEO and was one of Cohesive Networks's founders in 2006. Previously he was the CTO of Borland Software Corp which he joined in 2000 through the acquisition of Bedouin, Inc., a company that he founded. Mr. Kerpan was also the vice president and general manager of the Developer Services Platform group at Borland, where he was instrumental in leading the Borland acquisition of StarBase in 2003. Before founding Bedouin, Inc., Mr. Kerpan was a managing director responsible for derivatives technology at multiple global investment banks. 

Chris Swan, CTO Chris Swan is CTO at Cohesive Networks, where he focuses on product development and product delivery. Chris was previously at UBS where he was CTO for Client Experience working on strategy and architecture for web and mobile offerings across all regions and business divisions. At UBS Chris was co-head of Security CTO focussing on identity management, access control and data security. Chris represented UBS as Director on the Steering Committee of Open Data Center Alliance (ODCA), an industry association focussed on enterprise cloud adoption.

Before joining UBS he was CTO at a London based technology investment banking boutique. Chris previously held various senior R&D, architecture and engineering positions at Credit Suisse, which included networks, security, data centre automation and introduction of new application

platforms. Before moving to the world of financial services Chris was a Combat Systems Engineering Officer in the Royal Navy. He has an MBA from OUBS and a BEng from the University of York.

Sam Mitchell, Senior Cloud Solutions Architect As Senior Cloud Solutions Architect, Sam Mitchell leads all technical elements of the global sales cycle. Mitchell runs demos, technical qualification, technical account management, proof of concepts, technical and competitive positioning, RFI/RFP responses and proposals.Before Cohesive Networks, Mitchell was a Cloud Solution Architect at Platform Computing, which was recently acquired by IBM. He was also a Lead Architect at SITA, where he headed up OSS BSS Architecture, Design and Deployment activities on SITA's cloud offerings.

June 2014Copyright Cohesive Networks

About the Authors

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