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Cloud vs Telco

Submitted by saloob on Wed, 05/27/2015 - 15:03

This is an informal report written to show how the landscape of a Telco might look in the context of the Cloud..

Business leaders know they must improve their ability to deliver software because, more and more, software is embedded within their business, products, and services, helping them compete. To better deliver software to customers, they need to manage software development more like the internet leaders—moving through the holy cycle faster, at greater scale, and at a lower cost.

Internet giants like Google, Facebook, and Twitter have created some serious CIO envy. With much of their plumbing derived from open source software, they have created elaborate development platforms that allow them to pump out innovation in a near continuous stream.  PaaS is a cornerstone of these modern software development shops, powering their achievements in agile development. Pivotal CEO, Paul Maritz, refers to this agility in a recent Economist article as the “holy cycle” of applications, data, and analytics—build the first, extract the second, apply the third, improve the first, and so forth.

http://blog.pivotal.io/pivotal/p-o-v/10-key-paas-statistics-you-need-to-know

The blue text represents statistics and supporting data.

 

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Key Takeaways

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Most Telcos work with the following services in one way or another, in various levels of scale.

  • Domestic Data

  • International Data

  • On-net & DCISP

  • IT Services

  • Collocation

  • Voice Services

 

Key services that must be kept at the front of your mind while reading this report are; "Cloudsultancy," which refers to Cloud Consultancy, and “SDaaS+AMS,” which refers to Service Desk as a Service plus Advanced Managed Services. It is believed that it will be crucial for Telcos and Cloud providers to master these two services - as products - to gain real advantage in the market. Having a tightly integrated Service Desk with the back-end engineering provided by AMS, piloted by a true Cloudsultant, will be key to bridging the clunky old ways with the coming PaaS, IaaS and SaaS worlds. It also creates a more cloud-type human resources model.

Below is a simple and quick numbers overview…

  • Domestic Data   – on average reducing over time and will reduce more

    • Reasons

      • Churn from proximity-based requirements – expect a lot more

      • Telcos do not prepare well for this move due to lack of vision and  investment in next generation requirements of customers

      • As standalone services, customers can not use circuits as much – they want Cloud and ISP-based services

    • Opportunities

      • Provide customers with value-added services they wish to consume and connect to

  • International Data – greater than previous years, but will flatten out and reduce over time

    • Reasons

      • Traffic will migrate to Service Providers – not individual businesses as they themselves migrate to Cloud within the Service Providers

      • Service Providers are increasingly investing in their own networks

      • Other telcos are also Service Providers of Clouds and have their own network – and will not need to compete with their own resellers

    • Opportunities

      • Set up central services that can be used by large, niche customers over international lines (Storage, VoIP)

      • Provide higher levels of speed of service delivery on Cloud (CDNs with Fastly, DNS Cache with Nominum, TCP Engines for throughput)

      • Provide global cloud instance migrations and transportations (GreenMeadow)

    • On-net & DCISP – reducing over time

      • o   Reasons

        • Normal ISP consumption is replacing data circuits usage

        • Normal ISP is increasingly being used to access services from Clouds and SaaS (i.e. not own DC/Racks)

        • No control or access to the end-users (see mobile discussion at end)

      • Opportunities

        • Give customers a REASON to stay with you and consume more!!

        • Provide value-added services with partners (SaaS, Standalone Apps, etc.)

          • Enterprise Dropbox with OwnCloud

        • Offer VDI which centralizes customers’ ISP needs – bundle DC ISP with VDI

          • Provide nice 1G circuits from offices to VDI and other services

    • IT Services – On average growing slightly, though dropping from last year

      • Reasons

        • Slightly supported by SDaaS+AMS and a few very niche Private Cloud deals

        • Will reduce in correlation with other services that rely on traditional services – if no new services are offered

          • Telcos Private Cloud will have to compete with Public Cloud and other Private Clouds

      • Opportunities

        • Bundle Advanced Managed Services with Private Cloud and Partner Public Cloud

    • Collocation – On average reducing and should reduce more

      • Reasons

        • Customers don’t want to manage their own gear – they want to outsource

        • The Cloud offerings are competition in terms of offers, features, speed of delivery and pricing

      • Opportunities

        • Partner with a GOOD Cloud Provider and shift the racks to their platform and maintain ownership of the customers

    • Voice Services – On average reducing over time and will reduce more if left as they are

      • Reasons

        • Customers are moving to VoIP-based services

      • Opportunities

        • Offer VoIP Services and up-sell to all existing and new customers

          • Resell down the channel

 

Here are the key takeaways for those who don’t wish to read more than four layers of bullet points;

 

Infra is commodity with low margins and can be done better by your competition who are supported more by their own shareholders and also tie in their own cloud

  • Telcos will lose their real proximity niche and churn will result

  • Low-latency is a niche play, but no competitive IP is in their favour to stop others doing similar if they cared enough to

    • Telcos only own a couple DCs – the rest are vendors’ (Competitors?)

    • Telcos only own some fiber in most areas - unless they are from the original monopoly – the rest is owned by other vendors (Competitors?)

  • Built before Cloud and access to cloud was understood by Telco Management

  • Connects businesses’ office buildings = based on past business models

 

Telcos should decide their clear strategy – investment and actions/decisions will change based upon which of the 3 approaches are taken;

  • Sell to whales only

  • Offer intricate, transactional services (ITMS/Cloud)

  • Both

 

Management and employees should be able to recite their company’s clear strategy and if you ask anyone and a blank face looks back at you, imagine what your customers must be thinking...

 

Investment in IT/Cloud depends on the chosen strategy;

  • If less than 30% focus and investment is placed on ITMS/Cloud;

    • It means that continuing it is a waste of time and money – and clear that management should only sell to whales

      • Doing it half-hearted just to appear to be doing something looks pathetic and customers get bad service

    • Completely get rid of the cloud IT team and the current approach to offering cloud

      • Find a very good Cloud Partner (or not if no desire to replace this removed component)

    • Without true focus, this will simply result in inadequate services that will burn money and will not satisfy customers

    • Don’t bother about bundling anything – hand everything off to vendors as leads

  • If 30% or more focus and investment is placed into ITMS/Cloud;

    • Revamp the ITMS/Cloud teams – management is usually out of touch and stale

    • HIRE MORE DEVELOPERS QUICKLY and RETAIN EXISTING ONES!!!

    • Weave and integrate into every aspect of your business

    • Bundle everything all the time – you must up-sell to your existing customer base to reduce churn and give you time to build what they really want

    • Stop thinking of suppliers as vendors and convert them to partners (and think of them as partners!)

      • DC and Network vendors are not really treated as partners – but they should be – they should feel the Telcos pain and joy

      • Partner Reseller Channel are not really treated as partners – don’t just sell them chunks of colo and network at a discount

      • Many of them have great engineering power, software and services – get hold of them and bring them into your Ecosystem

 

Partner strategically – looking at the market in 3 years from now and what is needed – can work with Whale or Transactional strategies

  • Get a real good, solid Cloud Partner in immediately that can work in your DCs as well to grow together

  • Build a software Partner community around the Ecosystem

  • Find synergies between partners to keep them intertwined with as much as they do around you

 

Now for some more details...

 

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Infrastructure is a commodity…

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Infrastructure is a commodity – this includes Data Centre, Network, Hardware – and now even Virtualisation and Operating Systems!

It won’t be long before some certain applications and default services also become a commodity – such as email.

(It already is in the SMB world (Gmail/Office 365) – Enterprise just takes longer to reach full-scale efficiency)

 

The only area of differentiation left is in the application layer and the WAY all the above components are bundled together.

Software is really where the secret sauce is and will finally be (even integrations of multiple software/services).

 

But can Telcos really play in this area? It is highly transactional, although it can handle whale deals, it does require much more in-depth strategy and integration – and plenty of software.

 

Where to invest? In large chunks of food for whales or in intricate software components and engineers to offer to Enterprise sitting on the whale clouds?

Or both – sell large blocks to the whales and then up-sell intricate services within their cloudy worlds?

 

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Existing Cloud Targets

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Cloud providers (AWS, Softlayer, Century, etc.,) are targeting all the remaining enterprise left in DCs around the world.

 

AWS has a great start, but they mostly only have the top sliver of the market for shared, low-security, marketing sites and content.

Hard-core enterprise Cloud services are worth trillions and are still a largely untapped market – but that will change in the next few years.

 

McKinsey & Company projects that the total economic impact of cloud technology could be $1.7 trillion to $6.2 trillion annually in 2025.

Of this total, $1.2 trillion to $5.5 trillion could be in the form of surplus from use of cloud-enabled Internet services

$500 billion to $700 billion could come through productivity improvements for enterprise IT

 

Interconnected DCs, like the Equinix Marketplace, will have a mixture of the different residents -  some wishing to go to the Cloud, some staying in their colo/private worlds.

 

Simple Structure of usual Cloud offerings;

 

  • DC & Network

    • Private Cloud (Includes traditional dedicated Colo and Servers/Storage)

      • VDI

      • Voice or VoIP

      • Apps

        • SDaaS+AMS

    • IaaS

      • Apps & SDaaS+AMS

      • SaaS/DaaS/VoIP

        • SDaaS+AMS

 

Notice that even SaaS must reside upon IaaS – except for some major players like SFDC, Facebook, Google, Office 365 – which are also actually on IaaS – but on self-managed IaaS that is integrated finely to the SaaS above it.

 

Enterprise need enterprise applications that can be agile and keep pace with the speed with which they must move their business and strategies in the ever-changing dynamic economy.

 

Gartner predicts that the bulk of new IT spending by 2016 will be for cloud computing platforms and applications with nearly half of large enterprises having cloud deployments by the end of 2017.

 

Simple overview of the players out there;

 

  • IBM Softlayer is positioned well. Softlayer needs to build more SaaS. They have partnered with Apple for devices – which they sold off to Lenovo.

  • Oracle is excellently positioned – as they have the HW/SW and SaaS. They will grow more SaaS and less HW/SW over time.

  • AWS is well positioned but they must bolster their Support partners and add more integrated SaaS. They now offer DaaS!

  • Parallels-based providers are well positioned with both IaaS and SaaS – but they need to integrate better with their Network assets – legacy systems needing SDN up to the application layer.

    • 40+ Telecoms around the world use Parallels, including some of your competitors.

  • Apple + IBM is a sound partnership (although it is believed to be more of a PR stunt than anything as Apple will never lock itself into any  one company - especially IBM) which benefits IBM more as they largely gave up their devices and can now leverage (as others also can) Apple devices to get users access to their services (more SaaS, Watson, etc.).

  • Google is well positioned as a great SaaS platform and must integrate better with Enterprise-class SaaS players – a marriage between them and Oracle would be exciting.

  • MS Azure is faulty, but strong due to the Windows hold, but will not last as Windows gets removed from the landscape (Office is still the main reason why enterprise use Windows on PCs, and AD/SharePoint/Exchange for servers – but these are vulnerable to SaaS plays such as Google and others)

  • Telcos – NTT, KDDI, Softbank, Ericsson, Deutsche Telekom, Korea Telecom, Australia Telecom, Verizon, Vodaphone, etc., etc., they ALL do Cloud – mostly with Parallels and mostly doing IaaS and SaaS

 

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Cloud Players and DC Interconnectivity

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DC Interconnectivity provides a perfect entry point for Cloud providers to get access to all the businesses within these DCs – to EXTRACT them OUT!

That is their goal – that is what they will do and it will happen more rapidly as the competitive nature of Cloud ramps up and the pool of targets gets thinner.

 

From 2012 to 2017, data center workloads will grow 2.3-fold; cloud workloads will grow 3.7-fold

Cloud includes DC = DCs that have Cloud will grow…

 

2014 is the first year the majority of workloads will be on the cloud as 51% will be processed in the cloud versus 49% in the traditional IT space

 

545 cloud services are in use by a large organization on average

 

Customers and Providers will jump to another network or DC provider at a whim – and it will become easier and easier for them to do exactly that as Telcos gear up with better SDN-based services and workloads can be moved around faster and more efficiently (RiverMeadow)..

 

When they extract the businesses out of the DCs in DC Interconnectivity, the following will result;

 

  • There will be few, if any, businesses left in the DCs = no businesses to connect to DC Interconnectivity (ie. No ports to sell)

    • Once the Cloud providers have vacuumed the businesses out, they will no longer have need to be connected to the DCs

    • DC Interconnectivity will, at most, provide a service to only a very niche layer of enterprise– 2-3 companies per DC at most – before they, too, migrate to the cloud

      • They will likely only connect to one other DC – and it will be very lucky if both their existing DCs are within DC Interconnectivity

    • DC Interconnectivity will at best be used only by Cloud providers wishing to inexpensively connect their Cloud infrastructures = few customers

      • If they do migrate businesses OUT of the DC Interconnectivity DCs into their clouds, then there is no recurring business them there – and subsequently with you…

  • The DC prices will drop even further due to the increasingly lower demand = bad business to get into

    • Better, more scalable cloud disrupts colo and makes it cheaper

    • It puts more pressure on Private Cloud solutions to be better and cheaper – there is a fine line between those who can do public and those who can’t

      • Banks will go eventually - many are now testing even Public Clouds

 

But will there be any use of DC Interconnection after the businesses have been sucked out?

That really depends on how much Cloud is left in the DCs and how much traffic BETWEEN the clouds Telcos have running over their DC Interconnectivity.

As enterprise migrate OUT of colo or current DC, fewer targets are left thereand thus the value of that DC reduces correspondingly.

Global data center traffic will grow threefold (a 25 percent CAGR) from 2012 to 2017, while global cloud traffic will grow 4.5-fold (a 35 percent CAGR) over the same period

This means that cloud traffic will include non-DC-based traffic and will be over the ISP pathways (Businesses connecting directly to the cloud over ISP = not over DC Interconnectivity or circuits)

Capturing ISP traffic requires a mobile and VDI strategy to be in place.

 

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Areas where Telcos are weak or vulnerable;

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Management

  • Is network driven, then DC driven – both fast becoming a marginal commodity play - thus making them marginal players with corresponding mentality

  • Their network is being upgraded, which adds a slight edge, but they are up against monsters in the same game with endless funds - must be the best at this fundamental level

  • Their SDN initiative is late and may be only slightly effective when combining the ballooning needs beyond just network and DC

    • Some are doing a great job of integrating their network SDN assets into their Cloud portal of IaaS and apps

 

Not enough DC space

  • Then you can’t offer the Cloud Providers anywhere to reside – and using Partner DC is a low margin, commodity future that simply acts as a smokescreen if nothing else is at play

  • Stakeholders and owners must come to the party to provide the land and actually fund the building of them with at least 7-10 years pay-off required

    • The risk of DC providers increases as the mobility of cloud instances becomes greater

      • Zadara Storage and RiverMeadow make a fantastic couple to have in a Telco’s ecosystem – http://www.rivermeadow.com/

      • Unfortunately, the future value of RiverMeadow is not fully recognised by most Telco Management

 

Do not have a competitive Public or Private Cloud solution to entice the businesses (to join your network or DC Interconnectivity service to come to you)

Thus customers will have to go elsewhere – and they will do so with the subsequent failure of any poor-performing services

  • ITMS usually flounders in delivering a stable Cloud strategy and service and is often based around the old System Integrator model of the past. The reasons are;

    • Telecom-centric management’s lack of understanding of relative importance of Cloud as opposed to infrastructure

      • This creates a continuous tunnel vision which amplifies the resulting problems further as time goes forward

      • Competitors are advancing while you may be withdrawing

    • Also lack of understanding of what Cloud actually is means management will accept as dogma what current “Cloud Advisors” put forward

      • Current ITMS Product Management is outdated in thinking and knowledge of latest cloud and trends

        • Decisions seem to be made to keep jobs in place more than provide adequate solutions to the company

      • Technology are way too involved in the Product Management decisions and thus block forward-thinking approaches from people outside their clingy, close-knit groups

        • Information to top management is filtered and flavoured by this grey area group

    • There exists Top Management and Shareholder lack of attention (ignorance?) of Cloud and actual market situation

      • Partly due to lack of understanding of the Japanese market and misinformation coming from local stakeholders

      • Partly due to external appointment of (incorrect?) advisors working in the middle with little required knowledge of the services, market and technology

        • These advisors also must look after their own security (jobs) and end up painting a pretty picture when required

          • Who doesn’t enjoy traveling for business?

        • Further compounding the problem as they rely on the grey areas below them to provide sound information

          • The grey areas below them know this and ride on this for many years to continue the hazy wall of fog to their benefit

          • It doesn’t go un-noticed by the employees in the company

    • Legacy, unfinished, non-supported, non-updated “Cloud” systems and services kept alive on a drip system

      • Partially the legacy of the inept, black-box approach of the previous IT management

      • Partially the inept resolution of previous or existing issues (Capacity, Storage and Licensing)

      • Partially the ineptness of clearing the rubbish and moving forward with modern, fresh approaches

        • Also some catch-22 related to incumbent management not understanding things and feeling high risk and thus not providing required funding

    • Poor performance has resulted in less investment which results in even poorer performance – cyclical downward spiral trap

      • Management did not understand Cloud when they signed-off on it under previous IT Management and Cloud espousers

        • Although responsible for allowing poorly designed Cloud to proceed, and subsequently realizing the mistake, no members of the top management who signed-off on it have taken responsibility for this

        • Top Management still do not understand it and the grey areas below are not providing a sound argument nor sound results – thus compounding the fear of risk

      • Just shoot it in the head and put it out of its misery and stop wasting time and money on it if not taking this stuff seriously!

    • May 2, 2014 - Cloud Foundry announced the addition of eight new members this week; Accenture, GE, Capgemini, BNY Mellon, Intel, Ericsson, NTT and Verizon..

      • One of many simple examples to show how other players are very serious about this and get fully involved – and put their money on the line

Company Assets

  • If you only own some or no fiber in metro areas – you are vulnerable to your providers’ pricing and competitive pressure as they can do – and are doing – exactly the same things as DC Interconnectivity. There is no differentiation you can offer that your competitors cannot.

  • NOTE: You should NOT release your DC Interconnectivity strategy in the public domain before you have it ready – it only gives valuable information and ideas to your competitors who have since begun releasing their own versions of this – but who will actually own the network upon which it will reside

    • March, 2014 - NTT Com struck a deal with Toshiba to jointly deliver the latter’s cloud services from NTT’s DCs and use its network and interconnection services

    • APRIL 9, 2014 - Verizon Unveils Secure Cloud Interconnect and Multi-Cloud Services

  • They will also deny you access to many of the targeted DCs you want to enter for DC Interconnectivity = vendor control at any time is not only possible, but a reality…

    • Best approach is to simply take up racks as a normal Customer

    • There is must be a strategy in place to tie these DCs to you – and the customers within as this is what will create the network traffic one way or another.

 

Your Service Offerings

  • Are very fragmented – not smoothly bundled

  • It has taken years for your management and product teams to finally accept that Advanced Managed Services (AMS) are key to getting deals..

    • AMS is the bridge between in-house managed systems and SaaS

    • 90% of the market will end up in IaaS and SaaS with SDaaS+AMS supporting it

    • By 2017, IDC expects public IT cloud services will drive 17% of IT product spending and nearly half of all growth across five technology categories: applications, system infrastructure software, platform as a service (PaaS), servers, and basic storage.

    • Software as a service (SaaS) will remain the largest public IT cloud services category throughout the forecast, capturing 59.7% of revenues in 2017.

    • The fastest growing categories will be PaaS and Infrastructure as a service (IaaS), with CAGRs of 29.7% and 27.2%, respectively.

    • Boston Consulting Group writes that SaaS is a $15B market, growing at three times that rate of traditional software.

    • BCG estimates that SaaS is 12% of global spending on IT applications.

    • BCG interviewed 80 CIOs and found they were willing to consider SaaS solutions for 35% to 60% of their application spending.

  • SaaS will reside on IaaS

  • 10% of the market will be in Private Clouds with SDaaS+AMS supporting it

    • This very fine niche will be VERY demanding of the Private Cloud or IaaS infra

  • SDaaS+AMS should be bundled with every deal that gets offered to a Customer – it simply makes sense

    • 14% of companies downsized their IT after cloud adoption

 

Your IT Implementation

  • Is under-resourced, thus non-competitive and being telecom-centric, management lacks proper knowledge and understanding of the requirements for the future Cloud needs for a company like yours

  • The IT and Cloud team needs to be refreshed immediately and substantially or let it go and focus elsewhere

    • Follow only whales with large chunks of offerings and/or

    • Invest in more differentiated and higher margin areas such as software development and the Customer Portal

      • Hire more developers or get out of this business!!!

        • 3, 5 or 7 engineers just doesn’t cut it in the world of cloud and telecom – think more like 30-50 to have a reasonable chance…

    • You are dragging your feet and getting only some mildly attractive results…

      • Your Customer portal – great move to advance it and use most of your resources as a focused push forward – but it needs MORE

        • Retain great developers – give them a future to work towards

        • Build a development community around the Service Portal – you need smart develop partners working WITH us

        • Hire more great developers – soon – and ramp this thing up – it could be a key differentiator

        • Leverage Partner solutions and integrations more – you can’t do everything immediately – you have the world around you running at full speed, too!!

    • You have failing IaaS, VPS and other assets have been like this for 2-3 years now

      • Fix it - or dump it and stay away from it!

  • OpenStack for Multiple Private Clouds fully supported by an Open Stack vendor

    • This is a disaster waiting to happen!

    • OpenStack is designed to be a Public Cloud platform – for scale

    • Carriers typically require commercial support from vendors and OpenStack doesn't provide that

      • Telcos interested in OpenStack must reconcile this by working with a vendor

        • Vendors will provide Telcos with not only support, but also with a complete handling of the lifecycle of the platform.

        • The evolution of OpenStack provides a new version every six months

        • Keeping the platform up to date is a key requirement – and cost

      • This will create massive lock-in and huge expense for every little tweak required forever

      • Mirantis on OpenStack: Look, we do telcos – their customers have LOTS of MONEY

        • Mirantis has helped build and deploy what it claims are some of the largest OpenStack clouds at companies such as Cisco WebEx, Comcast, Symantec, Ericsson, Expedia, Samsung, NASA, NTT Docomo, Workday, PayPal and Red Hat.

          • Orange is one of the most recognizable telecommunications companies in Europe with millions of customers across the Continent.

          • Pacnet possesses the most extensive privately-owned submarine cable system, with connectivity to interconnected data centers across 14 cities in the Asia-Pacific region.

          • Huawei serves 45 of the world’s 50 largest telecoms operators.

          • Ericsson is the world leader in the 2G/3G/4G mobile network infrastructure market with 35 percent market share in 2012.

    • Will you really invest enough in this to become a key player and compete with the above players?

 

You have ignored any kind of Mobile strategy completely

  • All employees and customers’ employees and end-users use mobile in one way or another

    • Devices = Apps = Servers = Private Cloud/IaaS

  • Mobile can be offered very easily

    • Resell Data

  • Mobile includes most devices = the end-point of ISP and Cloud consumption

  • Mobile is a no-brainer

    • The number of mobile-broadband subscriptions reaches 2.3 billion

      • 55% of them in developing countries (APAC)

    • Globally, mobile-broadband penetration will reach 32% by end 2014

      • Almost double the penetration rate just three years earlier (2011) and four times as high as five years earlier (2009).

    • In developed countries, mobile-broadband penetration will reach 84%

      • Four times as high as in developing countries (21%)

    • Mobile broadband remains the fastest growing market segment, with continuous double-digit growth rates in 2014

    • Mobile broadband is growing fastest in developing countries, where 2013/2014 growth rates are expected to be twice as high as in developed countries (26% compared with 11.5%).

    • By end 2014, the number of mobile-broadband subscriptions will reach 2.3 billion globally, almost 5 times as many as just six years earlier (in 2008).

    • Although by the end of 2014 Asia-Pacific will be home to close to 1 billion mobile-broadband subscriptions, the region’s penetration rate lags behind other regions, including the Arab States and CIS.

 

The trend is absolutely guaranteed that 90%+ of the world’s businesses will migrate to a cloud somewhere – and only a niche section will remain in their own clunky worlds. These remaining enterprise are targets for Private Clouds – but only now and for the next few years – and the Private Cloud offering MUST be top-notch to be competitive.

 

Throughout the next five years, a 44% annual growth in workloads for the public cloud versus an 8.9% growth for “on-premise” computing workloads is expected

 

82% of companies reportedly saved money by moving to the cloud

 

ALMOST 3 BILLION PEOPLE — 40% OF THE WORLD’S POPULATION — ARE USING THE INTERNET

Close to one out of three people in the developing countries are online

 

One third of the population in Asia-Pacific will be online by end 2014 and around 45% of the world’s Internet users will be from the Asia-Pacific region

 

As businesses move to the Cloud – more ISP is consumed to get to the Cloud (such as SaaS) and less via circuits.

Circuits are more useful when businesses connect to their own stacks in DCs – which will be replaced by Cloud services.

Your Sales Strategy resembles that of orange pickers - where you think that if you put more orange pickers out in the field, you will increase your sales. Well, sadly for telcos, if you don’t have the products that are in demand and expect only to sell circuits, then you could put a million orange pickers out there and have the same result. Un-skilled, new-graduate or inexpensive, disposable sales teams will not win your customers over - nor will they bring in the goodies.

The future Telco and Service Provider sales person will be a Cloudsultant. Customers will have to rely on the Cloudsultant as their most trusted counterpart - and they know only smart Telco and Service Provider management will be deploying them. Sales will gravitate towards the company with Cloudsultants for the following reasons;

  • Cloudsultants know their stuff

  • A company who nurtures Cloudsultants is on their game and have value-added services to offer

  • Customers know they can trust the Cloudsultant as they will be responsive, knowledgeable and honest

  • Larger enterprises will have their own Cloudsultants and will expect or demand that the Service Provider offers a Cloudsultant for their own to deliberate with on equal terms for greater efficiency.

 

More on Cloudsultancy will be provided by Saloob, Inc., in the coming weeks.

 

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Can anything be done?

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76% of enterprises have a formal cloud strategy!

74% of those currently using Cloud will increase their cloud spend by more than 20%

Unless you want to change to a strategy of ONLY hunting whales - and this might just make sense for your management - you need to get more Cloudy and application-minded..

 

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Whale hunting strategy

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  • Pros

    • Non-transactional

      • No need for software

      • No need to worry about Public/Private Cloud – and no problems partnering with them

    • Reduced Sales Team

    • Reduced administration

    • Focus is purely on traditional services of network and DC

    • Strategy is very simple

  • Cons

    • Requires huge funding to be able to offer the infra at scale

    • They are commodity services and thus margins are not so high

    • Very limited room for differentiation = all competitors have the same and can offer the same

      • All Competitors are also working on other non-traditional services, such as cloud, mobile, etc.

    • Opportunities are very few

    • Requires management to better understand the thinking and needs of the whales

      • Whales usually offer non-traditional services like cloud that management don’t understand well

 

 

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What else can you do?

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If you are only to be a Network and DC provider, then you will perish if you are not funded to support this as it is a marginal play of commodity services in which you are vastly weaker than the real competition out there. Using Partner DCs is a short-term play to cover some minor orders and/or provide only slight margins.

 

You must play a different game than the other Telcos who have money and more assets – you must be strategic on all levels, not just circuits and racks – you must intertwine all the great people, assets, services and partners you can in a blinding assault on the market – and think more holistically.

 

Lifetime employment will only benefit you and your employees if the company can survive – one wrong investment could implode and cause serious problems...

 

  • Partner with one very strong enterprise Cloud player – it is suggested to select one with strength in software, consulting and experience with large Enterprise

    • Place the Partner in your DC Interconnectivity mesh initially within your DC

    • Bolster your Network services with higher security, caching and CDN

    • Work with them to extract the businesses out of the DCs in DC Interconnectivity  – instead of AWS alone

    • Once extracted out of a DC and the demand is low, push the DC for low-priced floor-space and move your Partner in

    • Continue to extract all other DC Interconnectivity DCs’ businesses the same way and continue to grow the Cloud Partner together

  • Install Cloud Transporters/Migrators with Central Storage

  • Offer Other Partner Solutions and Services

  • Work closer with Stakeholders – they need infra and advisors

 

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The problem with Voice Services

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It is not a growing area for most Telcos in itself, nor a strategic concern exactly because of the following reasons;

  • Other carriers shifted to offering VoIP instead of just Voice – and thus their Voice and VoIP grew

  • Customers are demanding more VoIP-based services as opposed to traditional Voice and thus are ordering less now as a standalone service

  • If you have NOT offered VoIP, the demand for traditional Voice services will not grow – and thus further drives it to become less significant strategically

  • Voice on its own is not so exciting, nor can it be expanded nor does it provide up-sell opportunities

  • VoIP, on the other hand, CAN be expanded with multiple up-sell opportunities – such as mobile softphones, eFax, IVR, etc.

 

Like an email address, the phone number is a critical communication point.

MS Lync, as you may use in your company, is good for internal communications between employees or between a network of connected companies and their employees – this IS VoIP.

 

How does VoIP relate to your core strategic areas of business?

 

  • VoIP requires;

    • IP Transit = network

    • Voice lines and numbers = Traditional Voice service

    • Servers for the compute = IaaS

    • Storage for the data (audio, video, text, etc.)

  • More services are integrating with VoIP and other UCS components – such as MS 365, Google Business, Apple, etc.

    • They integrate at the APPLICATION layer in every possible way (click to chat from CRM, new callers IDs as new contacts in SFDC)

  • Provide VoIP and UCS…

    • Is EASY!!!

    • Completes the holistic vision of every service provider and fulfils the real requirements of any enterprise (KDDI and Twillio!)

    • Enables the provider to have that final integration  point at the application and service layer that is a must now and will be a must in the future

    • Increases stickiness as it is real difficult to move from your VoIP provider – especially with so many integration points glued in

    • Allows for greater network consumption when video is introduced with UCS as an up-sell

    • Increases storage and compute sales as more audio, video and communication data must be stored for the Customer

    • Provides a networked ecosystem of members (Customers, partners and employees) – which makes the ecosystem communication faster, more efficient and higher value.

    • Works well with a mobile strategy (think Skype and Line for Consumers)

      • Simply resell with VMNP, or

      • Do your own ISP/Data Wireless Service with NTT Docomo or Softbank or KDDI – and other global players…

 

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Conclusion

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Finally, it requires you to really understand what your existing and target customers want as well as understanding what your competitors are offering. As we move forward, the world of cloud services makes it much easier to switch providers for various services, and thus building a trusting relationship that offers value-added services and solutions will be one of the key strategic points that will reduce churn and allow for increased up-sell to a wider available customer base.