Ciena followed through on its previously announced plan to split out its Blue Planet software stack as a more independent division.
During Ciena's fourth-quarter earnings call in December, CEO Gary Smith said that Blue Planet would operate as its own division within Ciena separate from its hardware business.
"This formation enhances our ability to support a range of consumption models by allowing the software business to operate independently of our hardware business where it makes sense," Smith said on the earnings call, according to a Seeking Alpha transcript. "Along with this change, we will further break down the revenue in this operating segment to provide greater clarity into the performance of our automation business.
Blue Planet, which Ciena bought in 2015, is becoming more of a standalone business in order to focus on "intelligent automation." Blue Planet's software and network architecture include software-defined networking (SDN) and network functions virtualization (NFV).
With the proliferation of cloud-based services, along with the advent of 5G and IoT deployments, software-based network automation is becoming crucial to service providers of all stripes as well as for enterprises and data centers.
“I believe that this is a sign that network automation software is evolving as a discrete market, which is a long time coming," said Scott Raynovich, founder and chief analyst of Futuriom. "It’s good to see that Ciena sees the value in developing a software division that can focus on automation.”
In order to build up its automation capabilities, Ciena bought inventory management vendor DonRiver last September for an undisclosed sum to enable unified OSS inventory federation. DonRiver's software is being used by AT&T, Comcast, Rogers Communications, and Telstra, according to DonRiver's website.
In May of last year, Ciena nabbed Packet Design, also for an undisclosed sum, to bring Layer 3 route optimization and assurance capabilities into its software suite. Both DonRiver and Packet Design were folded into Blue Planet.
At the same time, Blue Planet's analytics was evolving to better provide insights into IT performance and network optimization.
"The result is a holistic approach to closed-loop automation that is unique in our industry by leveraging analytics, multi-domain orchestration, federated inventory management, and route optimization and assurance to achieve intelligent automation and close the gap between IT and the network," said Rick Hamilton, senior vice president of Blue Planet Software, in a blog post on Wednesday.
"Blue Planet’s holistic approach to closed-loop automation allows service providers to leverage a dynamic view of network and service resources to derive business insights that shape network control policies and inform IT systems with real-time information."
Hamilton wrote that closed-loop automation "is a must-do or don't survive tipping point" for service providers. Closed-loop automation allows carriers to leverage network virtualization while orchestrating and automating network slices that can serve enterprise customers.
There's more to closed-loop automation that just the technology, according to Hamilton.
"The challenge today isn't about technology; it’s a business-model challenge," he said. "How are service providers going to continue to monetize what they deliver to the world, differently, given how people are consuming their services today? It's a fundamental business model shift, and the cemeteries of business are filled with the logos of companies that didn't know how to make the switch."
During the fourth-quarter earnings call, Ciena said it would split software revenue segments into Platform Software and Services, and Blue Planet Automation Software and Services. For Blue Planet Automation Software and Services, Ciena is targeting $100 million to $120 million in annual revenue in 2021, beginning with approximately $50 million to $60 million in fiscal 2019.
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CenturyLink, Verizon and AT&T are among the telcos that are actively building out closed-loop service assurance in their networks. In order to speed up the deployment of closed-loops, they were included in Open Network Automation Platform's Beijing software release last year under the auspices of "CLAMP," which stands for Control Loop Automation Management Platform.
Last year, Ciena announced that Blue Planet was using the Open Network Automation Platform (ONAP) to support advanced closed-loop automation use cases.
Blue Planet's customer roster includes Hawaiki, Gigaclear, Southern Cross, Deutsche Telekom Global Carrier and Colt.