Could Telcos Soon Disrupt the Cloud Space?

    May 2, 2016

    By Bill Andruss

    In an interesting twist, the disruptors who originally brought us cloud computing may soon themselves be disrupted by enterprise telco providers. The opportunity is there — do telcos have the tools needed to capitalize?

    Enterprise telco providers have been under constant threat from disruptive cloud platforms in recent years. It may be the cloud providers, however, who have reason for concern. Reports from Computer Weekly indicate that telco companies have a significant opportunity to assert themselves in the cloud space — indeed, some have already made the move and are offering lower prices than cloud leaders themselves.

    It’s been a “eureka” moment for the telco industry, and it’s come at a time when operators desperately need to diversify their services and hang on to increasingly fickle B2B customers. While development could be a saving grace for many, there are still significant barriers between most telco players and the cloud — namely, the massive migration and reorientation required by IT. Effective monitoring tools, however, may provide just the lift that operators need to become cloud forces to contend with.

    Plugging in the Cloud

    Many telco providers already maintain the base infrastructure necessary for cloud services, and the switch may not longer be kept waiting. The key is their small and mid-sized enterprise (SME) customers, who are increasingly looking to telco for cloud solutions.

    According to BCSG research, almost half of SMEs are now open to purchasing cloud options from their telco operators, and in the next few years, their doing so could generate an unbelievable $22 billion in new revenue. It’s a sensible choice for SMEs, many of which already receive hosting and application consulting from telco companies.

    This would be a win-win for telecom organizations, because SMEs are now their biggest customers to lose. Currently, 52% of SMEs are considering a provider switch within the next two years, and 58% say they absolutely will if offered a greater diversity of service options — cloud service would certainly fit that bill. And fortunately for operators, their existing trust with customers, end-to-end Quality of Service (QoS), customer expertise, and local knowledge uniquely qualify them to meet the challenge, as IBM notes.

    One large player that’s already stepped up to the plate is Frankfurt-based T-Systems (owned, like T-Mobile by, Deutsche Telekom), according to Computer Weekly. They recently rolled an infrastructure-as-a-service (IaaS) product that is not only 15% cheaper than Amazon’s competing AWS, but hosts clients’ data within German borders, where privacy laws are the strictest in the EU.

    CERN, famous for its headline-making particle accelerators, has reserved 1,000 virtual machines and 500 terabytes of storage as their first customer. Another telco giant, Verizon, has announced that they will upgrade their cloud offerings, adding 16 cloud-dedicated data centers to their current fleet of five, according to sdx central.

    Despite these developments, we shouldn’t expect telco companies to dislodge current cloud providers overnight; they’ll have to solve internal IT difficulties first.

    Cloud Haziness Requires Concrete Modeling

    As Ernst & Young observes, while the cloud offers telco a tantalizing investment, making the switch while maintaining profitable margins is a significant challenge. They cite highly fragmented data and a lack of performance-measurement strategies as two key barriers. While telco companies have a lot of data, they don’t yet have many tools that would make it sufficiently useful.

    Migrating an IT infrastructure to support cloud services is a massive undertaking, and must be informed by rigorous monitoring tools to guarantee a high level of success. With the help of IT management products like TeamQuest’s Vityl Suite, operators can accurately determine optimal configurations for their new cloud servers, allocating resources dynamically as client and organizational needs change.

    Moreover, with our intuitive Vityl Dashboard, IT teams can comprehensively monitor service quality, performance and risk, across the entire sweep of IT through infographic-like displays of data. This not only applies unprecedented analytical sophistication to cloud management, but makes running those services as easy as checking a thermometer.

    We fully expect telco providers to capitalize on this exciting market opening, disrupting the very firms who initially shook up the industry. And just as SMEs will look to new cloud vendors, telco operators should seek out help from capacity management experts to guarantee a profitable transition.

    (Main image credit: Wikimedia)

    Category: cloud-computing