A recent study of providers across the globe concluded that traditional carrier and Telco providers are not ready or not able to offer cloud alternatives. Even those providers that have acquired cloud companies still are challenged to find the right sales force to migrate enterprise subsystems to the cloud.
Approximately 70 percent of 600 CIOs surveyed indicated that they spend 13 percent of their budgets on service provider public cloud as an infrastructure in a managed offer, and they estimate their demand will grow to more than 40 percent in three years. This development is forcing enterprises to evaluate their business processes across all departments and identify how cloud can support them.
The decisions are not clear cut. For example, a company may need higher security on premise managed by local or onsite resources owned by the company, but for communication and collaboration the company needs public cloud offers. For back-up and recovery a relationship with a provider or MSP may provide a solution that makes the cloud attractive for reducing resources and access to data. Before selecting which cloud solution is right, each process should have identified requirements and risk rate, and the solution should meet those demands by process or client.
Providers, therefore, must address the obstacles they face when dealing with enterprise customers. Cloud offers from such companies as Amazon, Microsoft and Google can almost fully support the small-medium business self-service customers, but their models are completely inadequate for enterprises, which have often relied on traditional providers for SLAs for connectivity. It is not certain that these providers can manage the cloud SLAs. To effectively meet enterprises’ requirements, providers will have to initiate major restructuring of their go-to–market, sales and delivery systems.
Some providers have already filled their gaps in cloud offers: OpSource, Terramark and Savvis and other providers have purchased other companies to acquire cloud offers. But it still remains to be seen if they can they sell their cloud offers. Only NTT, which purchased Dimension Data and OpSource, has the system integration skills to sell the offer in a consultative fashion. Even if each of these companies have cloud offers, getting the offer to market and selling it will still take several years. To fill their cloud gaps, Telcos must acquire, partner or build to meet the demand.
Which companies will be the winners in off-premise cloud? How will the market evolve between SPs (Verizon), asset-heavy system integrators (SI) (CSC), over the top players (Amazon, Google), cloud pure plays (Rackspace)? It is unlikely that Rackspace’s, Amazon’s or Google’s offers would be considered an enterprise infrastructure offer as they have limited ability to address the SLAs of enterprises. Service providers address SLAs for connectivity; however, they will need to develop the consulting skills to enable migration of subsystems to public or private cloud.
Obstacles preventing companies from delivering vary. Verizon has more than 300 SIs or professional service staff that must be trained, and the company must deal with changes in leadership, alignment with Terramark, and lack of processes. Savvis/Centurylink has the same challenges. NTT is quickly retooling DiData to sell cloud offers. This company is the only one with the SI, cloud and connectivity of SLAs for enterprises. Some outsourcers such as CSC have good white label vBlock (VCE) stacks that will be a standard offer in the cloud. Just as Ericsson, IBM and HP do with different infrastructure technologies, some just as these Sis do will also manage infrastructure as an outsourcer.
As it currently stands, partner-to-partner partnering with vendors is the primary strategy that would really change the cloud market, because it is the quickest way for providers to move from connectivity providers to full offers of cloud enablement. Vendors have deep relationships with system integrators and have created loyalty and preference with top-level integrators, for example, Accenture, IBM and HP. Service providers, Tier 2 and cable operators that create partnerships with low-end vendors, which have SI Lite VAR partners, will be able to target the mid- to low-end market with loyalty, incentives, training and partnering offers. Partnering for risk-adverse Telcos enables them to change, invest and move to new technologies. Partnering 1) allows for white labels for cloud offers and the acquisition of go-to-market sales skills; 2) reduces investment up front for cloud-based offers (if white label is leveraged); 3) reduces sales staff training; and 4) derisks the cloud for the provider’s sales team, which is generally focused on connectivity.
Providers need to refine the lifecycle of their offers to increase their chances of offering targeted cloud services. They need to really understand their subscribers, for example, are they wireless or wire line (they know which but not what the business is)? Service providers must identify connectivity requirements, for example, size, and most importantly, understand their customers’ business IT processes, needs and systems. Once these factors are fully understood, providers can develop consulting and migration strategies and successfully deliver cloud to enterprises.
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