Adtran Talks SDN, NFV And How Next-Gen Networking Fits Into The Evolving VAR Business Model

Telecommunications networking equipment provider Adtran has historically worked with traditional VARs. But as these partners start to evolve their business strategy to include recurring revenue streams from services-based offerings, Huntsville, Ala.-based Adtran has been rethinking its own product set and partner strategy.

The provider recently launched its own software-defined networking (SDN) and network functions virtualization (NFV) strategy, which plays into the new ways partners want to sell to end customers.

Adtran conducts nearly 40 percent of its business through channel partners, so helping them understand SDN and NFV is critical.

Here, we present excerpts from that conversation:

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Tell us about Adtran's current partner strategy.

It's gotten more diversified in recent years. We work with the traditional VAR partner that may have been just focused on voice or data. More and more, we are seeing them trying to evolve and almost get to a point where they would characterize themselves as a managed services provider [MSP], so you're seeing this evolution emerging. It’s a different business model that they are embracing and we have to think about it differently.

How is Adtran helping VARs with the transition toward MSP?

It's a business model change for them, financially. Moving to this [model] is a different cash flow. A lot of this is the result of buying habits and demand from the end user changing, and I think some of things we [can do] is bring best practices into awareness.

Where we've seen [a VAR] make the transition from a regular VAR into an MSP, or a partner with an increasing percentage of recurring revenue, we get into discussions with them to understand how they did it and what they did differently, and we are sharing those best practices with our other partners. Some partners just need to train their salespeople in a different way and protect their financial interests by not pricing [services] in such a way that puts themselves in financial distress.

How are you helping partners with this sales training piece?

We have a partner advisory forum where we select [partners] and request participation from those who have been successful. Then, we have partner summits fairly regularly where we put these partners on stage to talk about their best practices. We almost make these "best practices summits."

We also have Camp Adtran. This [event] isn't just about training partners on our products and [learning about] the speeds and feeds. It's also training them on understanding the selling process and how the business model should work, so it's about ultimately cultivating an environment where they share with each other. We'd like to offer even more of that than what we are today.

Can you tell us about Adtran's new NFV and SDN strategy?

This has been some time in the making -- the SDN and NFV movement makes all the sense in the world. About four years ago, to get ready, Adtran made a strong shift in the way we go about developing solutions and products and we moved to the Agile development process. This [process] breaks your development backlog into a 10-week development window, [each of which has] five, two-week iterations. ... The goal is to create something that could be deliverable to the customer every two weeks.

The second thing is, it's important to have a software architecture that allows you to break [functionality] into pieces, … so we [broke] our software code bases into modules so we could be in a better position to break things into virtual functions. Now, we are taking any marketable function that would normally be seen as a feature on one of our devices and virtualize it, and we don't have to rewrite the software.

We are figuring out how [customers] want to consume SDN -- [for example,] do they want to consume it as an a la carte menu item, or consume it as a bundle of virtual functions and effectively buy a virtual router instead of a physical router?

We've got a long list of things we have already virtualized and are in the process of rolling out our price list and licensing guidance for our partner community.

We are starting to see the strategy coming to a head as partners and end users see the potential that NFV brings.

Can partners wrap their own services around Adtran's SDN and NFV products?

It's still early days and remains to be seen. What we are proposing to partners is just like they have done with our physical devices before, that they try to wrap value add around those components, virtual or otherwise. It probably makes it easier [to achieve] recurring revenue than in the past when these capabilities were only available in a physical device, so I certainly expect them to maybe even have more flexibility to creatively add value around virtual functions.

Are partners viewing SDN as a challenge, and if so, how is Adtran helping them understand next-gen networking?

I do think that many look at SDN and NFV as a challenge or threat, and we are trying to get partners to see it as an opportunity. I'd like partners to know that is change is opportunity to reimagine buying decisions.

Where you might not have been successful before with selling a particular solution, you might get another go at it now. We have a proven portfolio of [session border controllers, or SBCs], call routing and voice over IP [VoIP], and a lot of capabilities can be virtualized, so it gives you more flexibility in terms of how you would monetize that or how an end user would consume it. That allows you some flexibility to make sure you get the business model right in a monthly recurring environment.

Now there's choice between physical and virtual devices and how [partners] can package those together. I think there is a lot we can still do to educate [partners] on that opportunity.