NFV decouples network functions from dedicated hardware devices and moves them to virtual servers, which consolidates multiple functions into a single physical server. This approach reduces costs and minimizes the need for truck rolls and hands-on maintenance, because the virtual appliances replace dedicated, hardware-based network appliances.

Network admins handle orchestration and administration functions through an operating system that coordinates the virtual appliances running on a network. Like virtual machines, virtual appliances can be selected and deployed based on the needs of the network.

NFV replaces expensive dedicated network hardware with simple software appliances.

If a customer needs to add a new network function, the service provider can simply spin up a new virtual machine to perform that function. And just as easily it was spun up, the network function can be spun down when it is no longer needed.

For example, instead of deploying a new hardware appliance across the network to enable encryption, a provider can deploy encryption software on a standardized server or switch already in the network.

This virtualization of network functions reduces dependence on dedicated hardware appliances for network operators. It also improves scalability, resource utilization (because a virtual machine can be freed up for use by some other application when a software appliance that was running on that Virtual Machine (VM) is no longer needed), and customization across the entire network. NFV shouldn’t be confused with a virtualized network, because NFV, as a technology concept, seeks to offload only network functions, rather than the entire network. It is also important to note that NFV is different from a Virtual Network Function (VNF), a term commonly used to describe a network function that is running in software on a VM as described earlier.

NFV has a number of important advantages, including:

  • Less space needed for network hardware
  • Lower network power consumption
  • Reduced network maintenance cost
  • Simpler and faster network upgrades

IT infrastructure has been virtualizing for years. Networking is the next step as operators look to keep pace with technological change. Applications are taxing networks for bandwidth, flexibility, and speed, but overbuilding networks to accommodate peak traffic loads is beyond the reach of most operators because it is simply too expensive. At the same time, buying application-specific hardware for a single application then engineering, configuring, and expecting it to be in-service for eight to 10 years or more (to ensure the ROI is reasonable) is not realistic. NFV, with programmability using software control, provides greater agility and control of the network and its core functions.
Thanks to Moore's Law, network functions that were previously only possible via highly customized hardware and software can now be implemented completely in software—drastically changing the network landscape for carriers, service providers, and operators.

Consider a bank with numerous branches. NFV immediately reduces capital expenses because the bank requires fewer, cheaper, and less frequent hardware purchases. At the same time, NFV reduces operational expenses because of lower physical space and energy requirements.
In place of hardware capital costs, the bank pays simple license fees for the branch locations’ virtual appliances. Then, as the needs of their business change—maybe as a result of changes in customer habits, locations of bank branches, or the addition of new banking services—the bank can easily scale its network up or down by deploying the precise network services needed at any time.

NFV is part of a sea change in the way networking hardware and software operate and interact. Along with SDN, NFV creates an environment rich in automation and programmability capabilities. NFV also presents carriers and service providers an opportunity to implement a more customer-centric network infrastructure that can adapt dynamically to customer needs and requirements. Large network operators are turning to NFV because of its programmability and open standards. Plus, it frees them from proprietary network vendor frameworks.