Fire-fighting on several fronts simultaneously is the norm for today’s telecom operators. On one hand, the traditional voice business has all but declined. On the other, data-centric services are in the spotlight. While operators have jumped onto the data bandwagon, a degree of caution still remains. Why? Well, analysts emphasise that revenue generated from data traffic could compensate for the monies voice-based services were supposed to bring in. The catch, however, is that the networks required to support such services are expensive to build and maintain. To make matters worse, the mobile broadband market is, doubtless, flourishing, but operators aren’t laughing all the way to the bank. Instead, they’re contending with strains on network capacity which ultimately adversely impact their bottomlines.
Understandably, then, rooting out new revenue streams is at the top of every operator’s to-do list. After all, shutting shop isn’t an option, especially in a sector where the competition is cut-throat and the profit margins are razor-thin. This is why operators are turning their attention elsewhere.
Shifting Focus
The crux of the argument is this-telecom operators are beginning to wake up to the potential of enterprise information and communications technology (ICT) solutions to give their flailing profit a shot in the arm. To be more precise, operators are betting all their money on cloud computing. Of course, the degree and purpose of deployment differs vastly for tier one operators and their smaller counterparts. For the former, cloud computing provides a golden opportunity to tier one operators to monetize their existing network assets more efficiently. How? Simply by synergizing their resource and capacity utilizations across multiple enterprise and/or residential customers spread across different geographical locations. At the same time, the cloud helps tier 2 and 3 operators to scale their capex and opex spends, along with the growth of their business.
So, why is the cloud in the spotlight? First off, today’s digitally converged marketplace has ensured that the lines between telecom operators and IT have blurred. In this context, placing technologies like cloud computing at the centre of one’s strategy makes sense. Why? Well, because not only will it help improve bottomlines but will also ensure that operators move out of their comfort zone of providing simple connectivity solutions.
Next, let’s take a look at the market itself. According to Gartner, the global public cloud services market is projected to grow by 16.5 per cent in 2016 to total $204 billion, up from $175 billion in 2015. The highest growth is expected to be attributed to cloud system infrastructure services (infrastructure as a service [IaaS]), which is projected to grow by 38.4 per cent in 2016. No small opportunity, this!
Besides, as per industry analysts, this segment actually plays up a telecom operator’s key strengths. Here’s how-businesses like telecom and cloud IT typically deploy a highly-centralised delivery model. This implies the entire show requires scalable core infrastructure and wide-reaching networks to run. Luckily though, operating in asset-heavy and centralised delivery businesses is what these players have been doing since time immemorial. Thus, telecom operators are very well positioned to compete in the cloud space, as compared to other premise-based IT markets.
So, what approach have telecom operators been adopting so far? In terms of services, the operator’s repertoire typically comprises of the basic flavours, i.e.-software-as-a-service, platform-as-a-service and infrastructure-as-a-service. It isn’t confined to that, of course. Other offerings include unified communications, managed services for fixed and mobile networks, security services and business applications. These are usually offered as bundled services or in collaboration with a third party-i.e.-a managed service provider (MSP).
How an MSP can Help
Now, where does the MSP fit into this scenario? To start, permit me to state that the role played by an MSP is purely complimentary to any operator’s cloud strategy. How? Here’s a short laundry list of what an MSP can do to ensure cloud-based services work in favour of the operator:
- Operators can retain control over the infrastructure and application services. The MSP permits operators to outsource a select few or all enterprise IT operations. On their part, the MSP brings to the table their best practices and processes. Of course, strict adherence to stringent service level agreements for applications hosted on the cloud is an added bonus.
- MSPs offer a management layer between the operator and the public cloud. This creates a three-layer architecture (the operator, the MSP and the public cloud) which is easy to maintain. In addition, the MSP functions as a single point of contact to manage all these applications. Additional services like security and backup management are a part of the package as well.
- Last but not the least, apart from technical operations, an MSP can also provide support for business operations. This entails offering premium services, such as examining the customer’s data for irregularities or inconsistencies. They then take appropriate action without getting the operator involved. The latter is thus free to focus on their core business.
The Challenges and Benefits of Cloud Services
There is very little doubt that the pro’s the cloud platform offers outweighs the cons substantially. Nevertheless, for the sake of presenting a balanced view, let’s quickly take a look at both:
The Challenges
- Operators ought to know where they stand in the value chain.
- A clear go-to-market strategy needs to be implemented.
- An optimal product portfolio mix needs to be identified.
The Benefits
- Greater cost agility, especially with IaaS
- Reduced opportunity costs
- Increased retained cash as cloud/on-demand services ensure that the operator doesn’t have to invest upfront in IT infrastructure.
Net, net, challenges notwithstanding, cloud computing may finally have its moment in the spotlight. There is a catch, though-to leverage this technology to the fullest, operators require overcoming their fears about security or lack of cohesiveness with their current infrastructure. And this is where an MSP can help. After all, the role an MSP can play in this scenario isn’t an either/or, it’s for sure!
