In spite of recent high-profile outages, hype surrounding cloud computing has continued to grow. Consumer-focused cloud-based music services have been launched by Amazon, Apple and Google with extensive press coverage, and this will continue to bring the cloud into focus for day-to-day users, potentially playing an important part in increasing confidence among business users and accelerating the migration of business systems and services to the cloud.
A 2010 survey conducted by Savvis1 indicated that 63% of organisations in the UK, the USA and Singapore use some form of cloud computing (primarily storage and non-mission-critical applications). Global cloud service providers such as Fujitsu, salesforce.com, HP, Microsoft and IBM are positioning themselves to take advantage of this trend, and telecoms operators face a challenge in establishing themselves as credible cloud service providers and avoiding being marginalised as connectivity providers in an increasingly commoditised data world. Forecasts prepared by Analysys Mason show an overall market size for Enterprise cloud-based services of USD35.6 billion by 2015 (see Figure 1).
Figure 1: Enterprise cloud-based services: revenues by sales channel (2015) [Source: Analysys Mason]
![Figure 1: Enterprise cloud-based services: revenues by sales channel (2015) [Source: Analysys Mason]](/PageFiles/18338/Comm_June-2011-Paul%20Sumner.jpg "Figure 1: Enterprise cloud-based services: revenues by sales channel (2015) [Source: Analysys Mason]")
Existing assets of telecoms operators include the network itself, servers, centralised data centres, network management services, service assurance, service level agreements (SLAs), and so on. These can be leveraged and combined with an operator’s historically strong ability to manage networks and infrastructure, as well as their existing customer relationships and brand strength, to enable them to compete in offering IaaS (infrastructure as a service) solutions to corporates and small and medium-sized enterprises (SMEs).
However, moving up the value chain to higher-margin SaaS (software as a service) solutions requires a telecoms operator to move away from its traditional core skillset and focus on a solution-led approach to developing and selling products rather than a technology-led approach. This requires a range of skills that are not typically strong within telecoms operators, including IT support, skills and knowledge, device security, integration services and application development and maintenance.2
To effectively address these gaps, telecoms operators should consider collaborating with a variety of partners to ensure that they have the right mix of channel and technology partnerships to meet customer requirements. Unless the operator has an extensive global network and strong brand in offering ICT services, it is unlikely that it can take a lead role in selling cloud services to large corporates and multinationals. It is more likely that it will be better positioned to sell to SMEs (potentially with a small number of overseas offices) where it can leverage its existing customer relationship, brand and sales channels to provide a route to market for itself and its key partners. This approach will also position the operator as a value-added service provider rather than simply a ‘bit pipe’ provider.
In identifying a strategy for cloud services, telecoms operators should assess a number of key questions:
- What is the overall market size for cloud services by customer segment, service and vertical?
- What are the main enablers for telecoms operators to offer cloud-based services?
- What will be the value proposition and key differentiators for a telecoms operator?
- Which customer segments, services and verticals should telecoms operators target based on market potential and addressability?
- Which partnerships and collaborations should telecoms operators consider to improve their ability to address the target sectors, and what will a telecoms operator bring to the partnership?
- What are the main challenges and risks for telecoms operators in offering cloud-based services, and how can these be mitigated?
The answer to many of these questions is, inevitably, “it depends”. Market factors (e.g. availability and pricing of broadband, PCs and other devices) and operator factors (e.g. national and international network footprint, access technology (fixed vs. mobile) and positioning in the enterprise market) will combine to mean that what is appropriate for one operator is unlikely to be for another. In spite of this, operators have an opportunity to act as a cloud service broker, bringing together services from a wide range of independent service vendors (ISVs) and packaging these services together with connectivity and a robust set of SLAs, but will need to develop a focused strategy to maximise the opportunity.
Analysys Mason has extensive experience of working with telecoms operators across the globe helping them develop go-to-market strategies and enterprise propositions to gain competitive advantage. Our Research division has completed a global enterprise cloud forecast that provides a unique breakdown between telecoms operators and communication service providers. In addition, we have investigated the security issues associated with cloud services – one of the major stumbling blocks to enterprise cloud adoption.
1 2010 Global IT Leadership Report: Strategies for Success.
2 The lack of success among telecoms operators in offering successful mobile application stores demonstrates the difficulties operators will face in filling this skill gap.