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The networking industry is currently undergoing a major transformation that is invisible to most people outside the industry. Physical networks are transforming to virtual networks where network functions run as software on standard servers in the cloud.

This is an extension of the enterprise cloud transformation that has been occurring throughout the last decade. This will be a massive change in the major telecom and enterprise networks throughout the world, and it is creating many business opportunities for both large companies and start-ups. The key technologies in this transformation are Network Function Virtualization (NFV), Software Defined Network (SDN), Software-Defined Wide Area Network (SD-WAN), and hybrid cloud. For the last several years vendors, service providers, and enterprises have tried to shift their focus from technology to business outcomes. However, quantifying business outcomes is a complex problem and the industry has had limited success. As the network becomes virtualized the problem of measuring and optimizing business outcomes increases by an order of magnitude.

Cloud applications are elastic; applications spin up or down on virtual machines located in centralized or distributed data centers. Services can be instantiated by applications in multiple locations: CPE devices, distributed central office data centers or in regional data centers. Furthermore, many services use hybrid approaches with some applications residing in CPE and other applications residing in cloud data centers. Expenses, revenue, and profitability vary based on regions, market segments, and services. Expenses vary based on application configurations and data center architectures.

Consider Walmart’s business model. Walmart knows the cost of every item on every shelf. The cost includes the wholesale price, the shipping and distribution expenses, and the cost of inventory. Using this information, Walmart can offer everyday low prices while maintaining acceptable margins. Today, major service providers do not understand the detailed micro expenses associated with their services. While they know the macro expenses (labor, cost of data centers, etc.) they cannot allocate micro expenses to specific services, regions, and market segments. This means they don’t have visibility into the profitability of individual services in specific regions and market segments. As service providers virtualize their network this problem becomes more complex. The mission of ACG Business Analytics is to solve this problem and give service providers and enterprises visibility similar to Walmart.