Evolving Your Data Center into the Cloud

Evolving Your

Data Center

into the Cloud

The End of the Traditional

Data Center Era

FOREWORD

CSPs inCREaSingly uSE nEtWORk aSSEtS tO taRgEt

Data CEntER SERviCE OPPORtunitiES

author: Dana Cooperson

Summary

As communications service providers (CSPs) see slowing in their traditional services businesses, they are naturally looking at adjacent areas, for example IT and cloud services, for growth. As this occurs, data center infrastructure becomes increasingly important to CSPs’ business strategies and revenue expansion. Ovum Telecoms’ recent data center research highlights that an essential part of CSPs’ data center strategy is interconnecting these assets and using these networks to differentiate. As noted at Verizon’s April 17–18 analyst event, packet–optical connectivity is a critical CSP differentiator for a resilient, high-capacity, and flexible network of data centers. This competition will place greater pressure on independent data center operators.

CSPs are growing their data center–related service revenues

The challenges faced by wireline CSPs include fixed-to-mobile substitution, the commoditization of voice services, and unfavorable regulatory decisions in many countries regarding local loop unbundling. In 2010, CSP wireline revenues were flat. They grew 3% in 2011, but through 2017 Ovum predicts that wireline revenue will increase at a compound annual growth rate (CAGR) of less than 1%. While things look better on the mobile side (6% growth in 2010, 10% growth in 2011, and a 2011–17 CAGR of just over 3%), many markets are saturating. To compensate, CSPs are looking to use their considerable assets to expand further into adjacent markets, including enterprise IT services. Data center infrastructure investment to support these advanced services, therefore, is becoming as important to multiservice CSPs (e.g. AT&T, NTT, Orange, Verizon, and Colt) as it has been to focused data center players. CSPs’ difference in these advanced offerings is the centrality of the network to their value proposition.

For multiservice CSPs, expansion of data center–enabled services is part of a broad strategy to complement their enterprise communications services. Expanded offerings include traditional colocation and hosting services as well as cloud services, application services, IT professional services, and security services.

Ovum forecasts the public cloud computing infrastructure-as-a-service (IaaS) opportunity at $1.6bn in 2011, growing to $15.0bn in 2016. Of the $1.6bn in 2011 revenues, no more than 10% was earned by communications service providers (CSPs). Using their data center and WAN infrastructure assets, CSPs have a significant new opportunity to compete against their IT rivals, including data center specialists, and capture more of this growing revenue source. Whereas 18 months ago Ovum counseled CSPs to learn from competitive suppliers (“Independent data center trends: what they mean for global carriers,” October 2010), their competitors can now learn a thing or two from CSPs.

Data centers are becoming a much more critical piece of

‘telecom’ infrastructure

CSPs are already major users of data centers, for their own internal purposes as well as in support of hosting and cloud services. The role of the data center has become ever more central as services have expanded. In fact, Paul Savill of Level 3’s Global Core Product Management group, at OFC/NFOEC in March 2012, noted that data centers are the “central office of the future.” Recent research by Ovum into the rise of data centers within CSP network infrastructure highlights the following: • Data centers have become key network aggregation and confluence points for highbandwidth

traffic, through which terabits of traffic pass.

• Data centers are increasingly determining where and how networks are being built, to and between data centers.

• Market power is moving to carriers with data center access. Competitive CSPs have designed their networks to reach key data centers and have optimized their networks to minimize latency. • Data centers in trading hotspots (e.g. London, Frankfurt, New York, Hong Kong) are “running

hot.” Due to space-power limitations, real estate costs, and physical diversity needs, data center capacity, which was often co-located with downtown financial centers, is increasingly dispersed to places where real estate and power are more plentiful and cheaper, creating a greater need for interconnection.

Data center interconnection is a key part of full-service

CSPs’ differentiation strategies

As CSPs increasingly woo MNCs with data center services, interconnection requirement are amplified. Whereas some dark fiber providers and specialist data center operators persist in a “just good enough” LAN extension strategy, the CSP approach is typically carrier-class, with all that implies regarding security, resilience, reliability, and data integrity. Supporting network investments, using Verizon as an example, might include deploying a 100G/MPLS network core to enable more 10G client traffic and enhance performance. Fiber routes might be optimized and diversified to differentiate on a combination of lower latency, resiliency, regulatory compliance (e.g. for disaster recovery), and siting proximity. One operator recently told Ovum that

“enterprise clients won’t compromise on resilience for data center efficiency.” As Kerry Bailey, Verizon Enterprise Solutions’ CMO, noted at the analyst conference, “It gets interesting when you can tie the data center to the network end to end.” Ovum heartily agrees. Data center specialists will need to respond to CSPs’ network differentiation strategy.

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introduction

It seems like it was only yesterday that most in the IT industry agreed that data centers were the newest and hottest trend for everyone. Enterprise users flocked to the closest data centers to lease space and power and to attempt to gain better control of their IT assets. They located their servers and storage and acquired network from one of the many service providers within the data center. It worked, at least for a while. Over time, their demands for performance, global ubiquity and lower costs forced them to rethink their data center decisions and the evolution of their usage.

One could argue that data centers became victims of their own success and evolved into commodities that were easily replicated, thus reducing the opportunity for growth. In fact, once it became clear that owning multiple data centers with connectivity between them helped drive more revenue per square foot, the data center era as we know it ended.

By contrast, large internet content providers, who own and operate their own network of data centers, never considered the data center as a stand-alone entity. Instead it was this network of data centers that created a vehicle to delivering limitless services, capabilities and content globally. Thus began the era of the cloud.

Evolution to the Cloud (aka the Networked Data Center)

The cloud, like data centers, is a place to store and manage IT assets. Unlike data centers, however, the cloud eliminates the limits and boundaries while offering endless opportunities for new revenue streams. Enterprise users looking for more flexibility see the cloud as an opportunity to further outsource their IT assets beyond just space and power to include virtual services accessible from anywhere. They are drawn to the efficiency of virtual computing and storage and are evolving their IT outsourcing plans accordingly, as shown in Figure 1 below. The key, however, is the network behind the cloud, and its ability to keep up with their needs.

Scope of Outsourcing Storage & BC/DR Compute/Network Outsourcing Server/Hosting & Colocation Server Virtualization, High-Performance Network Data Center Interconnect IT Outsourcing

XaaS, VM, Storage Network becomes critical

Space/Power/Hosting Small networks Little/No Network Required Network to Differentiate Network Is Critical

Figure 1: As enterprise users look to outsource more of their IT assets beyond just space and power, including virtual computing and storage resources, the network becomes a critical requirement.

In fact, the cloud is enabling a generation of enterprise customers connected at one end of the globe to offer ubiquitous connectivity and performance for their users at the other end. An example of how consumers benefit from the cloud includes Apple’s new iCloud service, which allows users to synchronize music and software for their iPhone, iPod and iPad anywhere they can access the internet, unlike in the past, when data had to be stored on their computer. It’s not only faster, but also seamless across the world. Enterprise users visualize this power and flexibility as the ability to deliver a consistent, high performance IT environment on a global scale. An example of a business targeted cloud service is Amazon CloudFront, which is a content delivery service allowing a business to place internet web content closer to the end-user to enable faster downloads and an improved web experience.

Large-scale Internet content providers, like Microsoft and Google, were well prepared for the cloud, and interconnected their data centers with high speed optical networks to deliver the high value services their customers needed. Traditional data center operators, conversely, built their business on the “service provider-neutral” model. Service provider-neutral data centers offer enterprise users a choice in networking providers, but also create potential competition for data center operators as enterprise users begin to value the network more than the space and power. Small data center operators need to partner to expand their networked offerings, but larger data center networks should consider a network strategy to optimize their market coverage and networking costs.

Why you need to Build your Own Cloud

Maximizing revenue and margin per square foot of a data center is the single most important reason data center operators are migrating to a cloud infrastructure. The ability to sell high value enterprise services, including virtual machines and robust storage services, expands the data center’s addressable market. How many data centers make up your cloud and how large they need to be depends upon your customer requirements. Clouds vary in size from as small as three data centers in a single region or country, to 25 or more to cover customer needs around the world. More importantly, the cloud infrastructure supports the ability to sell computing and storage services with room to grow, offering a basis for customer retention and plenty of high margin services opportunities.

A key to success is targeting the trend that many enterprise users do not want or need dedicated resources, but rather they desire flexible resources as shown in Figure 2. The ability of right-sizing with available scale enables enterprise users to migrate to a shared cloud model without needing to invest in costly dedicated resources at their local data center. While the two models are not mutually exclusive, it is clear that this approach expands the cloud service providers’ addressable market to include new users that prefer the ability to pay as they grow.

Building the Optimal Cloud network infrastructure

The key to the optimal cloud infrastructure is to offer the trifecta of computing, storage and network technologies that are cost and performance optimized. In this paper we will limit our focus to the critical role of the network. A robust and flexible network will allow scale of services from as small as 1 Gb/s to as large as 100 Gb/s quickly and easily, while maintaining stringent service level agreements. The challenge to data center owners is how to build this infrastructure in a way that maximizes bandwidth utilization and minimizes operational costs.

A common approach to building large-scale cloud networks includes deployment of several large, geographically dispersed data centers or warehouses, interconnected by a partial mesh of Wide Area Network (WAN) connections usually made up of Ethernet trunks, from 1 GbE to 100 GbE. This approach provides a balance between meeting redundancy and high-availability requirements along with providing the economic benefits of data center consolidation.

The partial mesh connectivity between data centers combined with a resilient and reconfigurable optical transport layer creates a self-healing network and ensures data centers can continue to communicate, even in the event of network failures. With the operational costs of the data centers and network being of significant concern to cloud operators, it is not surprising that

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Customer Cage A

Customer Cage B

Customer Cage C

Traditional Model

Dedicated Servers/Customer Cloud Model Shared ServersEnable Enterprise Scale

SP

WAN

SP

WAN

Figure 2: Data centers embracing cloud models benefit from selling high value ‘cloud services’, which offer less risk and more room for enterprise growth than shared infrastructure.

primary data centers powering large-scale clouds can be found in locales where many operational costs, including space and power, are cost effective.

In addition to the large data centers driving the cloud, some cloud networks extend their reach to smaller data centers for high-performance end-user access. Smaller data centers located closer to the end-users may be leveraged for caching user-accessible time- or jitter-sensitive content or data, bringing information closer to the end-user and enhancing the cloud experience. The key to success in any of these is to build flexible resources so that even customer-centric small data centers can offer the reach and scale of the larger host data center. This has become a common strategy in large metro regions, for example, a large data center in downtown Tokyo, Japan, with smaller data centers dispersed throughout the Tokyo metro region, all interconnected to act like a single data center.

the need for Elastic, On-Demand Bandwidth within the Cloud

The dynamic nature of cloud networks creates a bandwidth profile between data centers that can differ vastly from conventional telecom networks. Cloud and data center virtualization have largely turned applications and services into utilities that can be scaled up and down rapidly and paid for based on usage. Additionally, bandwidth-intense data migration and replication functions in the cloud are central to supporting the virtualization concept, supporting scalable cloud solutions at expected performance levels and meeting expectations for high availability and resiliency against failures. Hence, compared to traditional data centers that simply needed a point to point connection to a central site, cloud-based data centers with fewer core network sites, bandwidth-hungry data networking operations and real-time capacity shifts create the need for an elastic on-demand infrastructure in the optical transport layer, as shown in Figure 3 below.

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Resource consolidation & virtualization

Virtualized Bandwidth

Distributes the Load

The Fixed Cloud

Data Center 95% CPU usage Data Center 55% CPU usage Data Center 55% CPU usage Data Center 45% CPU usage Data Center 45% CPU usage Data Center 25% CPU usage

Fixed Bandwidth traffic profileOn-demand Virtualized Bandwidth

• Server utilization managed per site

• Fixed bandwidth limits offload (limits revenue) • Limited upsell (Complex bandwidth management) • Especially retail and financial customers

• Elastic scale (on-demand resources)

• Supports fixed and variable bandwidth needs • Route any service, anywhere on-demand • Future: API controlled L1 Bandwidth Figure 3: Unlike fixed bandwidth networks, a virtualized cloud requires

In fact, as the physical boundaries of data centers eventually disappear and network-level Bandwidth Virtualization emerges, enabling virtual machine migration to anywhere within the network demands virtualized bandwidth. This is where resources can be most efficiently marshaled, and machine-to-machine interactions involving large amounts of data moving across physical boundaries (but within the cloud abstraction) can proliferate, creating more dynamic and bursty bandwidth requirements. This demands a network that can accommodate the virtualized environment.

key technologies for Supporting Elastic Bandwidth Demands

Flexible, high performance WAN infrastructure is typically an oxymoron. While an optimized underlying optical layer is the most efficient approach, conventional approaches that rely on simple point to point optical connections tend to make flexibility challenging. Bandwidth upgrade timelines of 45 days are typical and usually demand an optical engineer for activation. Further, conventional practice for building the network places an emphasis on the IP layer to perform “flexible” bandwidth management, at considerable expense and complexity. In this approach, data center operators are paying anywhere from four to six times the cost for IP router interfaces to offer flexibility, compared with the cost of interfaces in a flexible optical layer. Coupled with the common practice of deploying 1+1 router interfaces to protect against fiber cuts, this approach can lead to excessively high network infrastructure costs, impacting the ultimate profitability of the cloud.

However recent innovations in the optical landscape have combined the high performance optical layer with the bandwidth flexibility of the packet layer to create a new best practice. This best practice is based upon deployed large-scale cloud networks that show that networks that exhibit a significant need for transient, dynamic bandwidth on an on-demand basis require three key technologies:

1. Converged WDM and Optical OTN Switching: The economics and reliability of optical systems that integrate WDM optics with optical switching are field-proven in carrier networks, delivering unparalleled flexibility and speed in delivering on-demand bandwidth.

2. Bandwidth Virtualization: Unlike fixed optical systems where services were tied to optical wavelengths and complex optical engineering, Bandwidth Virtualization creates a flexible

pool of bandwidth that can be actively and rapidly provisioned anywhere in the network, on-demand, and independent of the physical engineering of the optical layer resources. See Figure 4.

3. GMPLS intelligence for automated, real-time provisioning: Key to operational scale is a network that thinks for itself. Onerous and time-consuming tasks such as provisioning optical circuits must be automated in order for bandwidth to become a utility. Historically, long provisioning cycles for turning up services in the optical layer have prevented the optical layer from ever serving as a dynamic, responsive network layer. Integrated digital switching of services over a pool of optical bandwidth changes this paradigm, and GMPLS control plane intelligence empowers the optical layer with integrated digital switching to support dynamic provisioning and real-time restoration in a scalable fashion.

Where to Start in Migrating from Data Center to Cloud infrastructure:

The first step to building your cloud requires some strategic thinking on your part, but begins with a few key needs:

1. An optimized mesh of WAN connections using a converged WDM/OTN platform: This enables simple, rapid implementation of your network while optimizing network capacity and protection, using ITU standards-based OTN protocol.

Page 9 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 1G Ethernet 10G Ethernet 40G Ethernet Number of λs ODU1s per λ 100G Ethernet

Optical Node

Figure 4: Bandwidth Virtualization allows client resources to be dynamically allocated with a pool of optical resources for optimal network utilization.

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2. Enablement of on-demand capacity: On-demand capacity is critical to delivering value added services and customer retention. Network virtualization and Bandwidth Virtualization are essential for long term efficiencies and high value solutions that that drive customer retention.

3. Low long term total network costs: While relatively easy to build the network itself, the long term cost implications of the network, including power consumption, network automation and speed of deployment, are just a few things that can have a dramatic impact on keeping your customers happy.

Conclusion

Similar to energy, demand for bandwidth seems endless. The cloud is a natural progression for enterprise users and offers value beyond space and power for their data center needs. Already large enterprises are integrating data center requirements with their cloud requirements and implementing efficiencies where they see fit. Indeed, some large enterprises will utilize both solutions for the short term, but it is clear that mid-sized enterprises see the cloud as a solution to optimizing their IT assets from a cost center with limited flexibility and scale to a strategic advantage.

The cloud demands high performance optical solutions as well as the flexibility that can be achieved using Bandwidth Virtualization and Digital Optical Networks because they improve the economics over traditional fixed optical networks while also offering significant economic advantages over IP or router-based networks. Digital Optical Networks create flexibility and robustness at significantly better cost points than router-based networks ever could, while also maintaining the performance and flexibility required to adapt to dynamic network traffic changes. In the end, it is a combination of these technologies in a network of data centers that reduces both cost and risk to data center owners as well as to their most important assets, their customers.

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Specifications subject to change without notice. Document Number: WP-DC-07-2013

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