Telecom operators are in a period of rapid transformation while facing many risks. In a sample of annual reports by telecom operators globally, declining revenues is the number one issue of concern, followed by threats from global vendors, IT downsizing and rationalization, and data regulations:
- “…declining revenues in Global Enterprise and Global Wholesale…”
- “The global economy is showing signs of slow recovery, although the overall picture remains fragile. Uncertainty about the economic climate continues, partly because of growing global geopolitical turbulence during 2014.”
- “Global competition: digitization and the spread of Internet-based communication services are creating international markets. Worldwide competitors benefit from global economies of scale and are changing business models in the telecoms market. Technical feasibility and changes in user behavior are driving mobility. At the same time, the demands placed on our infrastructure with respect to availability, performance and security continue to rise.”
- “Regulation, both at European and national level, continues to have a strong impact on our industry.”
Frank Gens, Senior Vice President and Chief Analyst at IDC said, “Many of these [cloud-based] solutions will become more strategic than traditional IT has ever been. At the same time, there will be unprecedented competition and consolidation among the leading cloud providers. This combination of explosive innovation and intense competition will make the next several years a pivotal period for current and aspiring IT market leaders.”
Declining revenues, slow economy growth, global competition and regulations are all huge risk factors for telecom operators. The great news though, is that it is a period of transformation and market growth is available for the taking. Competition will ensure that only the strong survive, so delivering a service that is innovative and meets the demands of cloud consumers will be vital.
A Light at the End of the Tunnel
For telecom operators there is an increasing demand for collaboration, cloud and security solutions. SMEs are seeking cloud services from trusted telecoms; there are opportunities for differentiation through geographic expertise, industry-specific solutions and expertise and quality.
All of this is evident in the predictions for cloud consumption growth. “Public IT cloud services spending will reach $56.6 billion in 2014 and grow to more than $127 billion in 2018, according to IDC. This represents a five-year compound annual growth rate (CAGR) of 22.8%, which is about six times the rate of growth for the overall IT market. In 2018, public IT cloud services will account for more than half of worldwide software, server, and storage spending growth.”
The enterprise market has been a lucrative business for telecoms and while some telecom operators have felt a dip in revenue from this line of business, the cloud represents a chance to change all that. Telecom operators benefit from established relationships within enterprises that can be leveraged to provide cloud services.
So What’s Next for Telecom Operators and Cloud Services?
Download our latest whitepaper, ‘Cloud Risks and Opportunities Every Telecom Operator Needs to Know’ that looks at both risks and cloud demands, offers some advice on the cloud transformation, what’s needed to transform and how technology, available today, can help automate some of the cloud transformation.