How Service Providers Realize ROI With Service Orchestration

C97-645059-00 | © 2011 Cisco and/or its affiliates. All rights reserved. 1

How Service Providers Realize ROI with Service Orchestration

Ranjit Nayak Marketing Manager, WW SP Marketing

January, 2011


•  Background

•  Orchestration – What is it?

•  Orchestration ROI

•  Metrics to measure ROI

•  Summary


•  Automation comes in three related forms of tools

Task execution Process flow Decision trigger

•  Service orchestration encompasses all of them

•  The keys are integration and service definition


•  Patch management

•  Software distribution

•  Server provisioning

•  Virtual server migration

•  Network configuration change management


•  Technology Process and Business Process will merge •  Difficulties, implications, and opportunities are huge!


•  Monitoring with root cause analytics

•  Application performance management

•  Configuration policy analysis

•  Capacity management/planning

•  Security analytics

•  Policies in many forms drive decisions


ROI = Gain Pain

Cos

ts

•  Productivity •  Revenue •  Quality •  CapEx reduction •  etc.

Benefits

•  Labor •  Hardware •  Software •  Facilities •  etc.

Costs


•  Productivity Labor: Units of work per person increase

•  Quality Errors decline

•  Adaptability Time to provision new services reduces

Three main categories are pursued:

All three are factors in competitive advantage


Correct Incorrect Probably ^

•  Repetitive tasks

•  Little variation

Examples:

•  Provisioning

•  Testing

•  Diagnostics

•  Workload migration

•  Infrequently executed tasks

•  Significant variation

Examples:

•  Design

•  Troubleshooting

•  Overly complex tasks (e.g., database re-org)

Some of these will quickly shift


Do more with less

The New Reality The “Good Old Days”

•  Key metric: Number of work units per person (e.g., servers per admin) •  Correlate work units to revenue and divide by staff costs •  Demand is increasing exponentially, but staff is shrinking •  Beyond a Demand Threshold, automation is mandatory

Staff Level

Staff Demands

Time

Orchestration Value is High

Orchestration Value is Medium

Orchestration is Mandatory

Dem

and

Thre

shol

d

Hug

e R

OI


Cost Savings via Productivity

•  Productivity benefits will result in an efficient state of equilibrium •  Changes along the way will require short surges, but the resulting

new equilibrium will be even more efficient than before •  Surge levels depend on how aggressive work will be (seek 3rd party help) •  Staff can shrink even as demand increases (more bang for less bucks) •  Automation will shift staff from automated to automator

# of

FTE

Time

Ramp-up Surge

Initial Strategy Spike

to Adapt

New Equilibrium

Begin Realizing Productivity Benefits Equilibrium

Ramp-up Surge Results in Big Reductions


NCE = Number of Errors times Lost Profit per Error

Source: jdpower.com/autos/car-ratings/

Reduce Errors that Increase Cost or Kill Revenue

•  Quality = consistency

•  Consistency is measured in deviations from normal (i.e., errors)

•  Quality leads to good reputation and more business

•  Typical telecom quality metrics: Dropped calls (minimize = fewer errors) Call setup success rate (maximize = fewer errors) Number of wireless bars (largely irrelevant) Call quality (maximize = fewer errors)

•  Key metric: Net cost of errors (NCE)


•  Bad social media exposure: Heather Armstrong (bestselling author/mom)

> 1,000,000 Twitter followers

Ranted about her Maytag experience

Changed Whirlpool/Maytag’s customer service

•  Good(?) social media exposure: Josh Korin (iPhone customer)

Bad experience at BestBuy store

Tweet immediately seen by Best Buy’s Geek Squad support

Josh had his new phone the next day (Sunday)!

Josh tweeted his delight to his (now many more) followers!

Customers are newly empowered communicators

Automation minimizes human error, but people remain the most powerful interaction force


•  Customers share their experiences

•  Providers measure this sentiment

•  Orchestration enhances the experience

•  Which BlackBerry battery do YOU want?

Why?

Source: RadioShack.com


•  Automated orchestration ensures consistency of execution, but the tighter linkage between sensing conditions and adapting enables trustworthy tightening of tolerances

•  Tweak the right metrics and know when to stop tweaking

Qua

lity

Tole

ranc

e Error

Implement Improvement

Implement Improvement

Improving ROI


•  Key metric: Time to provision a new service

•  Automated orchestration continually checks on conditions and takes action based on policies

•  Reaction is quick

•  Services can adapt to changing demand yielding:

Quick time to market Service quality

•  Introducing new services is also faster

Action Condition Detected

What should be done about it? Do it!

Verify Capitalize on market opportunities


Typical Sluggish Response to Change:

Better, but Still a Lag:

Change Demands of the [not too distant] Future:

Lag Lag

Lag Lag

React Sense


Cus

tom

er V

alue

Time

Value Limit

Network-Oriented Services

Hosting Services

IaaS

SaaS

Response Expectations

Depends on

Depends on

Depends on


Cus

tom

er V

alue

Time


Hosting Services

IaaS

SaaS

Embe

dded

Inte

llige

nce

Low

High

Service Orchestration Must Control Embedded Intelligence as Services Evolve to Higher Levels

Expanded Network Services


Cus

tom

er V

alue

Time


Hosting Services

IaaS

SaaS

Low

High

Expanded Network Services

Build New Services Upon Lower Foundations

Expand Infrastructure

Focus

Expand Automation

Focus

Expand Application

Focus


•  No clear definition of services causes chaotic request response •  Monitoring represents the only automation •  Virtualization in test/dev and early trials in production

1 Technology

•  Recognized need for service management initiates process refinement •  Process execution is manual; some tasks are automated •  Virtualization is the norm for production

•  Experimenting with basic service catalog (no integration, little fiscal detail) •  Process automation is in early stages, though processes still unrefined •  Live migration of virtual workloads is common

•  Good service portfolio management, but not yet triggering orchestration •  Processes are robust and integrated across the complete service lifecycle •  Resource balancing of VM workloads based on technology policies

•  Full financial transparency ties into broader business operations •  Service catalog is a primary integrated trigger for service orchestration •  Resource balancing of VM workloads based on business policies

2 Process

3 Service

4 Lifecycle

5 Business

Typical Enterprise

Best Enterprises

Best Service Providers


1 2 3 4 5

Service Orchestration Maturity Stage

ROI starts slow because

of cultural inertia

ROI gains quickly as

inertia begins to break down

Big opportunity to improve =

big ROI

ROI levels off a bit as the org

prepares for the next wave of automation

Humans are almost totally absent from

execution, so ROI begins accelerating

again

ROI accelerates rapidly as

many service improvements feed upon one

another.


•  Orchestration needs to communicate with managed devices to control their behavior

•  Those devices must be instrumented properly to understand and act

•  Internal complexity becomes hidden (Cisco’s Extracting the Complexity)

Complex Inside but

Simple Outside

Device Controller Intelligent Device


Intelligent Device

Intelligent Device

•  Controller-Device pairs get daisy-chained in a large orchestration

•  Each link is independently controlled, usually oblivious to other links

•  A controller appears as an intelligent device to the next controller

•  The protocols for each link are important to distinguish What is being requested and therefore fulfilled?

Intelligent Device Controller Controller Controller

Distributed intelligence evolves from embedded intelligence


Automated Orchestration

Valu

e


Hard Value Soft Value Easy to quantify and measure

Require more analysis

•  Brand reputation

•  Competitive differentiation

•  Agility

•  Mostly top line increase

•  Pursue business changes

•  Labor reduction

•  Reduced cost of errors

•  Revenue effects

•  Mostly bottom line reduction

•  Pursue OpEx cost reductions

Focus first on hard value but the most potent benefits will lie in soft value improvements


Operations Business Enhancement Bottom Line Top Line

•  # of customers

•  MRR/customer

•  Market share

•  Revenue

•  Margin

•  Time to market

•  CapEx reduction

•  Software license reductions

•  # of FTEs

•  # of problems/incidents

•  # of outages

•  MTTR

Only a few metrics can tell the whole story


•  Too many metrics complicate efforts (reduces ROI)

•  Stick to the basics: Productivity Quality Adaptability

•  A newly empowered world amplifies reputation

•  Build service with higher ROI upon existing services

•  Embedded intelligence improves ROI But mainly when combined with automation

THIS is how your customers compete!

Thank you.

How Service Providers Realize ROI With Service Orchestration

Technology

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