Value Creation with SDN

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I believe we may have surprised the networking world today with what can be described as an “oh wow” moment.  It is a 4 step plan that we believe will revolutionize how networks are built and managed for years to come based on the 6 principles of software defined networking (SDN) and the corresponding customer benefits which are:

1. Cleanly separate networking software into four layers (or planes) – management, services, control, and forwarding – providing the architectural underpinning to optimize each plane within the network.
2. Centralize the appropriate aspects of the management, services and control software to simplify network design and lower operating costs.
3. Use the cloud for elastic scale and flexible deployment, enabling usage-based pricing to reduce time-to-service and correlate cost based on value.
4. Create a platform for network applications, services and integration into management systems, enabling new business solutions.

Standardize protocols for interoperable, heterogeneous support across vendors, providing choice and lowering cost. Broadly apply SDN principles to all networking and network services including security - from the data center and enterprise campus to the mobile and wireline networks used by service providers.

The Opportunity

Now, as we thought through the technology ramifications and requirements of our plan, it became clear to us that a significant new opportunity is developing in the networking market.  An opportunity based on the “S” of SDN.  By separating out and “un-tying” the software services from the underlying hardware  a marketplace of new networking applications, likely packaged in VM’s and hosted in various locations throughout the network, is about to be unleashed. 

The Challenge

But the business challenge was also clear to us.  A software app business model is just not how our customers that build networks think of buying the value they get from networking companies like Juniper.  They buy a thing usually in the shape of a metal box; you can call it a router, switch, firewall, line card, or appliance, among other “things”. The point is, the way the networking business model works for the most part has always been about building and buying a box with software already in it, that a customer buys and integrates into their network.  

Now, all of-the sudden, Juniper has embraced a future networking model in which the value from management applications, service applications and some control applications will be increasingly found running around the network outside the box.  Granted this is not a new concept.  While PC’s, tablets, gaming consoles, and mobile phones still predominately come pre-loaded with software and are sold as a complete system, enterprise applications transcended their physical ties for the most part over a decade ago with the adoption of server virtualization, this trend was eventually accelerated with the coming of “The Clouds.”

The outcome, as we all now know, is that the sever hardware quickly became commoditized. Massive value destruction ensued on the hardware side, and all the subsequent value creation moved rapidly towards the software gals and guys making the software platform, the apps, the virtualization or the stuff that orchestrates it all. 

Some that recall this period, erroneously jump to one of what we call at Juniper, “The 7 Myths of SDN.”

      #2.  It’s all about reducing CAPEX

The underlying assumption they have made is that all hardware in the network will become the same commoditized, undifferentiated x86 servers that struck down the computer server industry.  Because of the nature of networking and the need to distribute capabilities, as well as the continuing need for innovation in embedding functionality in the ASICs and design of the forwarding plane on high performance devices—it’s just not going to happen that way in the SDN network transformation.  Juniper will continue to innovate and drive a great business in this traditional model.   But that’s a whole series of different blog’s and if you are really interested about that discussion go to Bob Muglia’s blog, “Decoding SDN” on the 6 principles of SDN and read the part on Step 4 and the value of hardware optimization.  

What is true is that this is new for us all in the networking industry. The potential for value creation in this brave new world of “Network Software Apps” is upon us, and Juniper is ALL IN.

The Transformation Begins

“Good artist borrow, great artists steal.” – Pablo Picasso

One of the benefits of not going first is that if you pay attention you can learn from those that have, and better yet, learn from their mistakes.  We are using the example of what the server and enterprise app industry went through in the last decade and will blatantly re-use many of their practices with a “networking industry” twist to launch a new software licensing model at Juniper.

The “software” licenses of today’s networking industry generally have 4 common and unfortunate customer unfriendly characteristics.

1. The software is embedded as part of the hardware device and many times the software is not even called out separately. Therefore, the value of the application or service is just “included” in the price of the hardware itself and not well understood by the customer as to what the hardware value is vs. the software value. 
2. The software is restricted.  A customer can’t copy and run the application with all the same configurations on a new piece of hardware, they have to buy it with each appliance and configure it individually.
3. If the software is identifiable on the device, in most cases it’s not transferable.  The software license is bound to a specific hardware device by license rights and many times even needs the hardware serial number to unlock the software to allow it to run.
4. It has a limited lifetime that is bound to the network device it is running on.  When a customer is ready to rip and replace a networking device, the software goes with it and the customer pays for it again (or more likely a newer version of the software application) with the new replacement hardware.

We think that with our new strategy and following the 6 principles of SDN we can do something MUCH more valuable for the customer, while at the same time creating a new long term business opportunity for Juniper.  We call this new model the Juniper Software Advantage. 

To start, this approach has the following attributes at its core;

Simple: Simple for the customer to understand the value the software provides as well as simple to buy, use and manage rights by our customers.

Repeatable: License models which facilitate repeatable use among multiple software offerings and usage scenarios.

Measurable:  Licenses that charge based on customer needs and are easy to measure.

This new license model will provide the following customer benefits:

1. Boundless.  Network software applications and services will be offered in a licensing model that “un-ties” the software from the underlying hardware
2. Transferrable. License rights that provide the flexibility to transition the software application VM license to different x86 and cloud SDN models across the customers network, dynamically with no penalty and one licensing measurement. This allows customers to migrate to new models faster without fear of losing their investment or the established service chain that is already operating on their network.  They can move a Juniper app across their network from service blade embedded in a Juniper router, to an X86 blade within that same router, to a tethered rack of industry-standard x86 servers, to their private cloud, or to a cloud provider, as they choose, when they choose. 
3. Elastic.  As a network service demand picks up and more application instances or capability is required, a customer can “turn it on” and start running more of the Juniper software capability without requiring a “lock key” to start.  They pay as they use more with no fear of paying a “true up” penalty later. 
4. Perpetual Lifetime.   With Juniper Software Advantage license and maintenance, the software will always be current and supported.  No more software expiring with underlying hardware, all updates, bug fixes, version upgrades are included.

These new benefits are precisely aligned to facilitate our customer’s transition to Juniper’s new SDN architecture in their networks; but we did not want to just stop here, because we do believe that more benefits + more simple = more customer value.

What’s Next

As we continue to define the roadmap for new management, service and control applications that will be built as part of our SDN strategy; we will roll out the network applications and services licenses in a coherent way.  You will see a new software products naming convention from Juniper to correspond with these new software applications and services products. 

The first of these new Juniper Software Advantage application licenses will appear in the first half of 2013, with more to come as applications are built for this exciting new world of SDN networking. 

You can expect to hear more from us, and me specifically, in future blog posts over the coming few months. I will expand upon our license model framework, our concept of “fair deal” value pricing, a new simplified approach to software license packages targeted to run the customer network vs. software to host and provide as a managed service offering to others on a customer’s network, the perils of “Free-mium” software models in a mission critical network, and more.

You can also expect to read how customers later this year will be able to convert current software licenses they have purchased previously from Juniper to the new Juniper Software Advantage model as they look to Juniper to help them transform to an SDN network future. 

It’s exciting times here at Juniper as we build new value for our customers with SDN!