Just last week, Vodafone Ireland announced its €7M investment in the development of new datacenter services for enterprise and public sector customers according to the Irish Times. The group plans to offer new services including co-location, managed hosting, private cloud and infrastructure as a service (IaaS).
Vodafone Ireland head of enterprise product management Liam O’Brien said:
As companies look to transform themselves and become more agile and flexible, trying to manage traditional IT is becoming more complex and harder than expected. The world is changing quickly. Companies need to adapt and change quickly. They might do it themselves but it’s difficult when they’re not experts.
This move follows the rapidly increasing trend that telecom operators are following – get to the cloud to offer bundles for both traditional and cloud services. This transformation Vodafone is undergoing, as well as others in the industry, requires as O’Brien puts it “high-quality networks, whether it’s high-bandwidth data services that are fixed, or high bandwidth for mobile… providing the data-center services in the middle is a no-brainer.”
Telecom Operators Positioned Spectacularly
Cloud computing is revolutionizing the way we provision ICT resources and is seen as an important source of expansion for telecom operators faced with slowing revenue growth in traditional services. Through investments in software (SaaS), platform (PaaS) and IaaS as well as payment and e-commerce services, the global cloud services market is expected to reach US$130 billion by the end of 2015 according to an Ericsson discussion paper.
The combination of providing both the network infrastructure as well as the data center infrastructure means telecom operators are positioned spectacularly. So as companies like Vodafone, BT, AT&T and Verizon change their trajectory towards providing end-to-end traditional and cloud services, how to manage the hosting, public and private cloud services and IaaS becomes essential for success.
Positioned Well, but Behind in Exploiting it
In a paper by Arthur D. Little on Cloud from Telcos, it says that “Despite enabling the Internet, telecom operators are far behind in exploiting it. More focus is required on a broad range of key success factors to make Cloud services from telecom operators sufficiently attractive – from strategic positioning to service design to Go-To-Market approaches.” The report suggests:
Telco Cloud strategies need to build upon aspects of cloud that usefully differentiate themselves from the global internet players, that focus on the value of integrating networks with computing, exploit the end-to-end solution performance possible with such integration and exploit local (national) assets. These strategic themes point to a number of levers for Telco success in the Cloud.
- Bring telco services and cloud together online and gathered around functional anchors for cloud services
- Develop or acquire functional content to deliver more valuable products and services from telcos
- Make the network count from basic bundling to technical enhancement
- Exploit local assets with smart Go-To-Market models and online automation”
Telecom Cloud Requires Cloud Orchestration
The above four suggestions leads to the inevitable requirement as to how to manage the convergence of telco and cloud services, how to deliver valuable products and services, extend the technical enhancements and make the cloud automated. That’s where cloud orchestration comes into play.
We believe that managing the cloud is essential to the success of a telecom cloud provider because management doesn’t stop internally; it is an external functionality that if used properly can help differentiate. Better yet, integrating cloud management within existing systems from metering and billing the customer to self-provisioning and planning services to value-adds on top becomes the bread and butter to differentiation and securing the customer relationship.
Options for getting the cloud management functionality required include:
- Buy – the quickest route is to buy a product that is ready to deploy and has all the required flexibility to let you implement your cloud business strategy. Of course, you’ll have to compromise on a few things to adapt your business to the product and not vice versa. If you go for this option, make sure you choose a product that is as extensible as possible so that you’ll still be able to customize it and extend it in the future as your business evolves.
- Build – this will get you what really matches your requirements, but with a significant impact on timing and budget. By the time you’ll be able to release something, the requirements might already have changed. Make sure that you don’t start from scratch, but select a solid baseline to start.
- Acquire – look for smaller companies that may have already achieved a lot in this space, maybe given their smaller size, talented individuals and the agility that derives from that. Don’t exclude M&A as a path to get to the cloud faster with a product with a proven market fit (CenturyLink did just this). Of course, make sure the acquired technology can be adapted to your chosen target market and is easily integrated into your business and existing assets.
Whatever path you decide to take, there are a number of considerations when selecting the technology you need to succeed in the cloud. Read our whitepaper on What Every Telecom Operator Should Know about the Cloud. With competitors like Vodafone upping the ante, you need to have a comprehensive approach.