Network Functions Virtualisation (NFV): Complete guide & benefits

Key takeaways

• NFV runs network functions as software on standard servers, replacing appliances bought and refreshed one function at a time.
• ETSI's framework splits NFV into three domains: the virtualised functions, the infrastructure beneath them, and the management layer that orchestrates both.
• The saving is mostly a shift from capital to operating expenditure, not a straight reduction, so the business case depends on utilisation.
• NFV and SDN solve different problems. NFV moves functions off dedicated hardware; SDN separates network control from forwarding.
• Containers are displacing virtual machines as the packaging for network functions, which changes density and start-up time.

A firewall used to be a box. So did a router, a load balancer and a session border controller, and each one arrived with its own procurement cycle, rack space and refresh schedule.

Network functions virtualisation breaks that link. The function becomes software, the hardware becomes a standard server, and adding a capability stops being a purchase order. This guide covers what NFV is, the architecture ETSI defined for it, what it costs and saves, how it differs from software-defined networking, and where it is heading.

What is Network Functions Virtualisation (NFV)?

NFV takes functions that used to run on purpose-built appliances, such as firewalls, routers and load balancers, and runs them as software on general-purpose servers. The problem it addresses is procurement, not performance. Under the appliance model, each function arrives as its own device with its own lifecycle. Capacity gets bought ahead of demand, upgrades need physical visits, and adding a service means adding a box. Decoupling the function from the hardware changes that. Operators can run several functions on one server, provision new ones from a catalogue, and scale them against actual demand rather than a three-year forecast.

What are network functions? (VNF full form)

A network function is any discrete job the network performs on traffic: routing it, filtering it, encrypting it, balancing it across servers, or inspecting it for threats. VNF stands for virtualised network function. It is the same job, delivered as software running on a virtual machine rather than on dedicated hardware. A vRouter is a router, and a virtual firewall applies the same rules the appliance did. What changes is where the function runs and how quickly you can instantiate another one. You may also see CNF, meaning cloud-native network function. That refers to a function packaged in containers rather than virtual machines, which is where most new development now sits.

How NFV works

Three layers stack up. Standard servers, storage and switches provide the physical resources. A virtualisation layer, historically a hypervisor and now often a container platform, divides those resources into isolated environments. Network functions run inside them as software.

A management layer sits across the top. It instantiates functions, monitors their health, scales them against load and removes them when a service ends.

Functions are then chained. Traffic passes through a defined sequence, perhaps a firewall then a load balancer then an encryption function, with the chain defined in software rather than in cabling. The protocols carrying traffic between clouds determine what that chain can span. Changing the order becomes a configuration change.

Key components of NFV

ETSI, the standards body that defined NFV, splits the architecture into three working domains. The management domain contains three further blocks, which is where most of the terminology sits.

Benefits of Network Functions Virtualisation

• Faster service introduction: Launching a function becomes a software deployment rather than a hardware order, which compresses lead times from months to hours.
• Elastic capacity: Functions scale with demand instead of being sized for peak and idle the rest of the time.
• Hardware consolidation: Several functions share one server, reducing rack space, power draw and cooling load.
• Vendor flexibility: Standardised interfaces make it easier to run functions from different suppliers on the same infrastructure.
• Simpler testing: New services can be trialled on a subset of traffic and withdrawn without stranded hardware.

The honest caveat is that these gains depend on operational maturity. An NFV estate managed with appliance-era processes tends to produce appliance-era timelines.

How virtual network functions reduce network costs

The savings come from three mechanisms, and only one of them is a straight reduction.

• Capital to operating expenditure: Appliances are bought up front and depreciated. VNFs are licensed and consumed. That improves cash flow and removes the risk of buying capacity you never use, though total spend over an asset's life may not fall.
• Consolidation: Running six functions on shared servers costs less in hardware, space, power and maintenance contracts than six separate appliances. This is the genuine reduction.
• Elasticity: Capacity that scales down during quiet periods stops you paying for peak provisioning around the clock. The savings are real but depend on traffic actually varying.
  
  

NFV vs traditional network architectures

Appliances still win where raw throughput matters most and traffic is stable, which is one of several differences between cloud networking and traditional connectivity. Purpose-built silicon remains faster per watt than software on general-purpose processors.

NFV vs SDN

The two are complementary and frequently confused. NFV changes where network functions run. Software-defined networking (SDN) changes how traffic is directed by separating the control plane that decides routing from the data plane that forwards packets.

You can deploy either without the other. In practice, they pair well: SDN steers traffic through a service chain, and NFV provides the functions in that chain. Software-defined wide-area networking (SD-WAN) is the most widely deployed example of both working together, and the difference between SDN and NFV is worth separating clearly before choosing between them.

Implementing NFV: Best practices and common challenges

Sequencing matters more than tooling: building the orchestration layer before scaling functions avoids a rebuild later. This is the same case for settling orchestration and automation early.

Future trends in NFV

• Containers over virtual machines: Cloud-native network functions start faster and pack more densely than VM-based ones, and Kubernetes has become the common substrate.
• Edge deployment: Placing functions closer to users cuts latency, which matters for secure connectivity at the edge and for applications that cannot tolerate a round trip to a central site.
• 5G and network slicing: Slicing depends on instantiating isolated network services on demand, which is an NFV capability by definition.
• Automation and open standards: Orchestration is moving from reacting to threshold breaches towards predicting demand, as ETSI's framework and parallel open-source work continue to converge.

How Tata Communications uses virtualised network functions

Virtualised functions are easier to justify when they sit close to the traffic they act on, which is one of the ways to connect a multi-cloud estate. The Flex variant of IZO™+ Multi Cloud Connect hosts network functions inside the cloud fabric itself, including virtual routers, firewalls, SD-WAN and load balancers, so the function runs on the connectivity path rather than in a separate estate you operate.

That removes the hardware at branch and cloud edge without adding a platform to manage.

Schedule A Conversation now.

See how IZO+ Multi Cloud Connect Flex hosts network functions inside the cloud fabric. View Multi Cloud Connect

Discuss which functions to virtualise and where they should sit with our network specialists. Schedule A Conversation

Walk through the Multi Cloud Connect fabric and see VNF hosting in action. Watch The Demo