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NSN Ben Verwaayen. MANAGEMENT WORLD MANAGEMENT MANAGEM WORL MAY 23-26. visit www. AT&T Rajeev Suri. 2011 | THE CONVENTION CENTER DUBLIN. O2 Ireland To register..org . CMO. CEO.tmforum. CEO. IRELAND Industry heavy-hitters to speak at Management World 2011 Join them and other key players as they unwrap the who.cLoUd Join us SerViceS for.tmforum. Deutsche Telekom David Gurle. CTO. NetCo Member of the Board.org/mw2011 2 QUICK InSIght www. KPN International Steffen Roehn. CIO. Deutsche Telekom Kevin Peters.. GM & VP Skype Enterprise. Alcatel-Lucent Stephen Shurrock. Skype Erik Hoving. Speakers include: MANAGEM WORLD WORL Olivier Baujard. what and how of communications enabling digital life. CEO. CEO.

logos.org Report Design: the Page Design Consultancy Ltd Head of Research and Publications: Rebecca henderson rhenderson@tmforum. While every effort has been made to ensure that articles. 10th Floor Morristown.tmforum. no part of this publication may be reproduced.org Marketing: Corporate Marketing Director.org Publisher: Katy gambino kgambino@tmforum. sponsored features.org Creative Director: David Andrews dandrews@tmforum.org Advisors: Keith Willetts. tM Forum Martin Creaner. the views and opinions expressed by independent authors and contributors in this publication are provided in the writers’ personal capacities and are their sole responsibility.org Commercial Sales Consultant: Mark Bradbury mbradbury@tmforum. Senior Vice President of Communications Published by: tM Forum 240 headquarters Plaza East tower.org Client Services: Caroline taylor ctaylor@tmforum. tM Forum cannot accept responsibility for any loss or damage caused directly or indirectly by the contents of this publication. the reproduction of advertisements and sponsored features in this publication does not in any way imply endorsement by tM Forum or of products or services referred to therein.org Managing Director. tM Forum. without the prior permission of the publisher. nJ 07960-6628 USA www. recording or otherwise. and trademarks appear correctly. or transmitted in any form or by any means: electronic. their publication does not imply that they represent the views or opinions of tM Forum and must neither be regarded as constituting advice on any matter whatsoever. Lacey Caldwell Senko lsenko@tmforum.cloud: Successful strategies for providing services this publication is free to tM forum members MENT LD Report author: Annie turner Publications Managing Editor aturner@tmforum. the entire contents of this publication are protected by copyright. nor be interpreted as such. President and Chief Operating Officer. All rights reserved. tM Forum nik Willetts. TM Forum Insights Research: Rob Rich rrich@tmforum.org QUICK InSIghtS 3 . www. stored in a retrieval system.org Phone: +1 973-944-5100 Fax: +1 973-944-5110 MENT LD Page 4 Executive summary Page 6 Section 1 Is cloud game-changing and fundamentally disruptive? Page 10 Section 2 Following the leaders: Are service providers in trouble? Page 13 Section 3 What advantages do communications service providers have? Page 16 Section 4 how can service providers make money from cloud services? Page 18 Sponsor huawei ©teleManagement Forum 2011. photocopying.tmforum. mechanical. Chairman and Chief Executive Officer.

a hot debate and unusual perspectives. rather than driving the whole thing. “We believe multi-tenancy is a fundamental requirement to achieve economies of scale. Strategic networks group. Randy Bias. held at Management World Americas in Orlando. and 4 suggests they should look at monetizing their assets in the short term by offering Platform as a Service to cloud service providers while they consider their longer term cloud options.org QUICK InSIghtS . such as Amazon. whereby small and medium-sized businesses (SMBs) in emerging economies will. are taking huge steps. says recent primary research conducted by Saugatuck technology found that potential business users of cloud services ranked CSPs 13th overall out of 15 as potential providers. chaired the session and got the participants to break into very small groups to discuss the following questions.” Some point out that operators simply haven’t got the necessary It resources and skills necessary to compete with the cloud pioneers. CEO.com and Amazon – are service providers as a group in trouble? how do CSPs compete against them? how do operators add value that they can’t? What can carriers learn from what the pioneers have achieved and take it forward? Again it is argued that small companies in emerging markets are the most likely to outinnovate and under cut the cloud pioneers’ prices. while others feel cloud is just a different name for what CSPs do already. yet the vast majority of solutions I see It vendors bringing to operators are a repackaging of virtualization and hosting technologies. Cloudscaling. Many communications service providers (CSPs) are wondering how that promise can be fulfilled when there are so many barriers? Others are anxious that CSPs are making what looks like slow progress while newer.cLoUd SerViceS executive summary the promise of cloud computing is creating great excitement. be able to attack the large through connectivity and cloud.tmforum. but also considerable confusion and concern in the communications industry. this has big implications about how operators see themselves and what they perceive they need to do to succeed. president. for the first time.’ An attendee from a software solutions and enterprise cloud computing provider says. Section 2 tackles the question that if new players are leading – the likes of salesforce. Are they really rivals to the CSPs anyway. Some argue that Amazon Web Services’ (AWS) success demonstrates a new use case. then report back. some of which are outlined here. Lisa Pierce. or should operators be addressing different market sectors? this Quick Insights report is based on the executive roundtable discussion called Strategic approach for implementing a successful cloud business model. there appears to be general agreement that the biggest hurdle operators face in the short term is finding and working with partners so they can offer value added services themselves. their role is more likely to be offering a ‘shopping mall for those offering solutions at the transportation layer. but cloud is just one aspect of this revolution. and www. Florida in november 2010. Cloud is also viewed as part of a wider phenomenon. and that the assumption that CSPs are somehow automatically going to become cloud service providers is dangerous. Be prepared for some strong opinions. Section 1 deals with the first question: Is cloud game-changing and fundamentally disruptive or not? Is it just another business model rather than a new paradigm? turns out there is considerable disagreement about the very nature of cloud services and whether or not they are the biggest disruptive force to hit communications for 20 years or simply an extension of what operators do already. not CSPs. more agile players.

In particular we would like to thank Randy Bias for moderating the session and Robert Minnear. everyone understands the nature of the partnership and that if you agree to let the joint venture use your data.” www. Partnerships with the likes of google are mooted. complexity. there was considerable disagreement about how this might be done and what would be needed to make it possible. tM Forum would like to thank all the senior executives who participated for their time and input.tmforum. and a willingness to invest sufficient money and effort. whereby the operators make money by sharing subscribers’ data with the search engine company under a different brand name (such as Verizon-google one delegate playfully suggests) to ensure that the main brand remains separate and keeps its integrity. however. with Platform as a Service offering far more lucrative and sustainable opportunities. with many variations on the sorts of services that CSPs offer now obviously being far more acceptable to the majority. Charter Communications.org that the biggest opportunities for them are in emerging markets in the SMB sector. the group tends to prefer. At the same time. and challenges of the collection of possible products and services that we refer to as cloud. held the week before Management World Americas. for example. VP. this demands that CSPs have a far better understanding of how they are perceived by their target groups of customers so that they can better address their needs and concerns. In the wake of the World Economic Forum. widespread change in the way operators work. providing a one-stop services shop for SMBs and exposing network and other assets to third parties. Although the debate outlined in this report reaches few. to the need for radical. QUICK InSIghtS 5 . firm conclusions. Internap network Services. for acting as provocateurs. Infrastructure as a Service is commonly seen as a ‘race to the bottom’. and whether or not radical action was required. you get services free of charge. treating mobile phones like PBX extensions. they have no chance at all of succeeding in the cloud services market. and Jim Matthews. this did not meet with general approval. which is how Amazon started off its Web Services division.it must all begin with an understanding of the customer “Unless CSPs are willing to make that commitment and able to embrace change. Section 4 looks at possible ways that operators can monetize their assets and strengths through the provision of cloud services. if any. VP. It is also an interesting window onto what key players in the industry are thinking. it does indeed provide a quick guide and insights into the variety. Again. Enterprise Architecture and Strategy. they are very clear about what they want to hear and see to get things moving – and it all has to begin with an understanding of the customer. Several delegates feel that unless CSPs are willing to make that commitment and able to embrace change. Opinion on how to do this varied from just doing what CSPs do now under a marketing banner of cloud. Perhaps the best way to make this cultural change would be through a small subsidiary that is not constrained by the corporate way of doing things. potential. it was apparent that some of the world’s most senior executives and several governments see network operators as having the most important attributes needed to provide cloud services to public and private enterprises – control of data and its traceability. however. Engineering. a senior architect from a large financial institution states that so far they have seen and heard nothing from any operator to encourage the company to take that step. Section 3 sets out to look at what CSPs’ natural assets and strengths are and how they can be best exploited to provide cloud services. they will have no chance of succeeding in the cloud services market.

but that virtual backbone that lives in the Internet. ‘Why not?’. I have two data centers. saying.” he continues. to shove it onto someone else’s infrastructure and get an immediate return on investment. Amazon is proven. president. “[Cloud is a] distraction. but then don’t use it themselves internally. Many of these cloud service providers are no more than service bureaus – large CRM service providers to me are service bureaus. Strategic networks group.” Lisa Pierce. thinks CSPs’ advantages stretch www. but I am seriously thinking of dumping my online backups onto the Internet rather than burning up my own bandwidth. not outsourcing. not a disruption.tmforum. to a million virtual machines. so why not use it? that’s the whole business case.com and Amazon operate – they are true cloud pioneers. [CSPs] could always provide the on/off ramp to a backbone service.000 servers in four years and is growing at 100 percent a year.cLoUd SerViceS section 1 is cloud game-changing and fundamentally disruptive? the question of whether cloud is a new paradigm or just a new business model turned out to be one on which people could not agree. and the Internet is a backbone service. Moderator Randy Bias of Cloudscaling set the ball rolling by suggesting that the arrival of cloud computing was similar to the move from mainframe computing to enterprise computing. “Everybody’s doing it and no one wants to pay for it.org QUICK InSIghtS . It will double up again next year. I don’t pay for it. it’s about looking at top line revenue opportunities and new apps.” the last point is widely agreed upon. “When people talk of cloud services they are talking about leveraging the relatively free Internet – that backbone. but it’s almost all new use cases. there are many enterprise customers on AWS. “Amazon [Web Services – AWS] went from zero to 80. and whether is it disruptive or not has some big implications for communications service providers (CSPs). 160. Infrastructure as a Service (IaaS) and all the rest. lock stock and barrel. he argues. the question for me is. how does this all play to core carrier strengths? [Enterprise cloud offerings] looks more like a defensive move for operators to keep hold of their customers to me. I have my drain at each end. they do their own stuff. one is in St. Louis and the other is in South Carolina. It’s interesting to me that vendors of such services will promote and provide Software as a Service (SaaS). I don’t know who pays for it. “Cloud isn’t about enterprises getting rid of infrastructure. We have a strong backbone in place and believe we need it to assure our customer service.000 servers – and there’s no sign of it stopping. “We are at the beginning of another 20-year transition and we are just seeing the very beginnings of how things are changing. by looking at how salesforce. most don’t outsource. with one participant noting.” 6 Provocateur Jim Matthews of Charter Communications has little personal sympathy with this view. if I can figure out how to do it to our reliability and security standards.

g. networks.” this is underlined by the findings shown in Figure 1-1 below. host firewalls). they should monetize their strengths in terms of Platform as a Service (PaaS) to offer it to their cloud service providers of choice. Europe.com/ Browse-Research/798MKt-to-Competetelcos-need-to-Shape-Cloud-It-SalesStrategies-643/View-details.org QUICK InSIghtS 7 .S.html Source: TM Forum executive roundtable survey. storage. “traditional carriers are only looking at the cloud opportunity through the retail lens. national Institute of Standards and technology (nISt): Software as a Service (SaaS). Cloud service models As defined by the U. 2010 Infrastructure as a Service www. web-based email). the capability provided to the consumer is to deploy onto the cloud infrastructure consumercreated or acquired applications created using programming languages and tools supported by the provider. the consumer does not manage or control the underlying cloud infrastructure. operating systems. including network. operating systems. including network. and possibly limited control of select networking components (e. storage. or even individual application capabilities. I’ve just finished analyzing primary research* and the data shows that if you look at the top 15 choices business customers are looking to use as their cloud service provider in north America. figure 1-1: if your company is deploying cloud services already please indicate in which area. but has control over operating systems. or storage..Business customers put operators 13th out of 15 potential cloud service providers beyond IaaS and she is also concerned that. It is very important that carriers grasp this. and other fundamental computing resources where the consumer is able to deploy and run arbitrary software. others do not. and Asia. 70% 60% 50% 40% 30% 20% 10% 0% Business as a service (cloud-enabled business process outsourcing) Software as a Service Platform as a Service *http://saugatucktechnology. the consumer does not manage or control the underlying cloud infrastructure. with the possible exception of limited user-specific application configuration settings.g. Platform as a Service (PaaS). deployed applications. Infrastructure as a Service (IaaS). and possibly application hosting environment configurations. the capability provided to the consumer is to provision processing. carriers came 13th out of 15. servers. storage. but has control over the deployed applications. which can include operating systems and applications.tmforum. Some recognize this and are taking action.. “While carriers are thinking about what they need to do to take advantage of the retail opportunity. Nov. servers. the consumer does not manage or control the underlying cloud infrastructure. the capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. the applications are accessible from various client devices through a thin client interface such as a web browser (e.

8 this means the CSP is playing the role of an applications broker. exploiting the power of the network in terms of its attributes.cLoUd SerViceS Why are telcos so low on the list of potential cloud service providers for business customers? Is it an issue of trust? Pierce says. now the customer consumes it as a service and either uses it as it is or until it eventually becomes economically unviable because it doesn’t meet their needs. too. if you used Salesforce for Customer X you customized it because you could. “Ultimately yes. “Carriers do have a lot of strengths that are important to becoming successful cloud providers. “We think cloud is disruptive if the vast majority of what used to be on-premises. Once the technology is outside the customer’s domain and managed by someone else. It depends on how the carrier involves itself in the application and the service provider offering it. in terms of It. it doesn’t have to be this way. like managed wide area or local area networks. according to one delegate.org QUICK InSIghtS . If a CSP makes its network assets available through a service delivery platform-type (SDP) solution that application builders can use to offer their apps as a service. they define the relationship between user www. such as redundancy. it makes the conversation about shifting the stacks kind of pointless. saying. So cloud will bring about a massive shift in the It domain. Sometimes it’s the data center director who will go. rather the core competence resides with the managed services’ provider. and availability key. but I’ve been doing enterprise marketing and product development for a long time. and security. Sometimes it’s the VP of sales. as well as providing the pipe. it might be that the CSP builds in guaranteed connectivity and priority to an app provided by. typically for those sorts of services. and fighting customers’ perception is a really difficult thing. they get up to [the top] five or six out of 15. and control competency to a governance environment. internal competence diminishes. While so far the amazing proliferation of mobile apps has seen the network operators playing the role of dumb pipes. even for overtly network-centric applications. Cloud is having another potentially disruptive effect on applications too. impacting the way a company runs its business.” She adds.” how can operators do this? Applications could be the answer. so carriers don’t have the sorts of relationships they need to move into the top four potential suppliers. this is a fundamental shift from a system administration. say. If you can fulfill 70 to 85 percent of most enterprises’ functional demands with SaaS or PaaS.” Put another way. on the grounds that previously. For instance. it’s not the people who buy networks. location.tmforum. So cloud could cause a serious disconnect through enforced standardization. standardization. with whom he knows and trusts. of course. Yet another type of disruption this could pave the way towards another level of disruption too. and it’s partially the fact that when you look at who the buyers of cloud services are in most companies. and so on. then the CSP can benefit from sharing the revenue stream the application generates. Another delegates agrees. stack It management is being moved from your data center to an Amazon data center. SaaS is a workflow or transaction-based service where service level agreements are crucial. Mobile apps are not the only game in town. a healthcare monitoring service provider. taking advantage of it is a much better avenue to growth. there is no more home-grown expertise. or managed mobility.

the ciO didn’t know about 200 cloud apps in use within an operator and supplier – a relationship that could usurp internal arrangements and discipline. VP – CtO. but this is not the case here. it was the mighty that had the power to buy. Orange Business Services. It turns out that employees had been using their credit cards to pay for three or five or ten licenses. for example. rather than cloud will sweep all before it. and core customers. in the past. air travel – and their adoption rates. depending on where a company sits in the value chain and which segment you want to operate in – lots of nuance. “to me. it was the mighty that had the power to buy. then we’ll get specialized service providers whose competence is to run that monetized resource. Marc Monnard.” there are different degrees of disruption.” “The barrier to entry into these cloud apps is very low. core revenues. rail. through access and innovation. It is a sobering thought that one delegate reported a conversation they had had with a CSP earlier in the year in which the CSP admitted to finding 200 cloud-based apps within the organization that the CIO didn’t know about. an SMB suddenly can access services that would have been way beyond it. at the beginning of business-enabling infrastructures – roads. he argues. if I’m the CIO of a big company. but not just through cloud. just to do a small segment of business processing. As that delegate comments. and they adjust to it. Ubiquity is the next stop. there are huge changes to how we work. the world is changing. thought this was looking at the issue from far too narrow a perspective. whether it’s programming languages or programming paradigms or compute paradigms – this is a natural process and doesn’t unseat them. at the beginning of a business-enabling infrastructure – roads. and half disagreed. it is not driving it all. in the past. this line ran. every five years there’s a major change in the technology they deploy. whether it’s electricity or communications.” www. now small is in a position to attack large. to compete in a way it could never have done at all.org QUICK InSIghtS 9 . For example. cloud is only an aspect of it. that’s massively disruptive. rail and air travel – and their adoption rates. monetized hardware market. it greatly changes the game for software companies regarding their software licensing and maintenance. “there are massive changes underway beyond the scope of cloud.” In conclusion About half the delegates thought cloud is a disruptive force. there seemed to be some consensus that how disruptive it is and will be depends where you start from.tmforum. there are huge opportunities for SMBs in emerging economies. Large Projects. Perhaps. but this is not the case here. but not a radical move away from their core activities. For a telco it was seen by some as a fundamental change in how they do things. the barrier to entry into these cloud apps is very low. whereas it was felt that hardware vendors “haven’t been able to penetrate this low cost.

cheap. 2010 CloudFront Price Reduction Jun. 12. It does it best. 30. Bias observes.tmforum. 25. 2010 Data transfer Feb. 26. 7. 2010 Free tier and Increased SQS Limits Jun.” the major question is should a tier 1 carrier be trying to compete with salesforce. cheap. 2009 Reserve Instances Mar. “If anyone 10 figure 2-1: amazon Web Services’ pace of innovation is increasing 60 50 40 30 20 10 0 2004 2005 2006 2007 2008 2009 2010 Product feature releases of note Amazon Web Services’ major price announcements EC2 Price Reduced Oct.com or Amazon or google in cloud services? As one attendee states. first. In October 2010 Facebook signed a deal with Skype through which Skype will make VoIP calls easily available to Facebook users. google is doing googleVoice and googleApps.com and Amazon and so on – are communications service providers (CSPs) as a group in trouble? how can they compete against new players? how do CSPs add value that they can’t? What can operators learn from what the cloud pioneers have achieved and take it forward? the world is changing at a dizzying pace. because of the culture it’s built. [cloud is] a value proposition and customers expect values from a CSP. that’s its model.org . 1. then there’s Amazon Web Services (AWS). while Apple is disintermediating operators through its handsets. 2011 QUICK InSIghtS www. “It shouldn’t always just be about cheap. and at the lowest price – and that’s hard to compete against. shows how many product releases it’s had since it started. not decreasing. it’s ruthlessly reducing its prices – it has probably had more since we put this together. At the same time. 19. 2009 Lower Reserve Instance Price Aug.cLoUd SerViceS section 2 following the leaders: are service providers in trouble? If the new players are leading – salesforce. and suddenly Facebook is providing phone calls. Jan. 1.“Its pace of innovation is increasing. It’s a kind of a race to the bottom. 2010 Combined Bandwidth Mar. 2010 Spot Instances Dec. 2009 March 2009 January 2010 September 2010 Source: Graph and schematic provided by Cloudscaling. but it’s always been a low margin retailer. saying. 2010 high Memory Price Reduced Sept. 12.” Another participant agrees. Figure 2-1. 2009 Lower S3 & EU Windows Dec. 13. provided by Cloudscaling’s Randy Bias.

it will be a younger. but our It department does not: I don’t have the guys who can build it. they are all multi-tenant.” Matthews raises another difficulty operators face if they are to attempt to compete against the pioneers in cloud services: “Carriers don’t have the specialist It and programming people that google has because we – generally speaking in terms of my prior telco. by others. service providers need to focus on what they can do. For instance. the trick is to get the user as close as www. I won’t use raw Open Source within Charter. in many cases. and monetize the demand being generated. the big question remains how to avoid being a dumb pipe provider? Charter Communications’ Jim Matthews states that in his view there are more fundamental questions than that: “generally speaking we always assume you can get access to some available Internet capacity and that your customers can reach it to use it – everyone takes the network for granted. now emerging countries suddenly have access to all this stuff through mobile and this will lead to a massive disruption – they could then compete with established players in terms of price. as yet. and as we all know. We believe multi-tenancy is a fundamental requirement to achieve economies of scale. but unforecasted demand?” Indeed. “If you put everything in the cloud.there is no point trying to duplicate what specialists excel at already is to compete. It was suggested that “the opportunity is for CSPs to provide a shopping mall for those offering solutions at the transportation layer” on the grounds that no one was. yet the vast majority of solutions I see It vendors bringing to operators are a repackaging of virtualization and hosting technologies.” The importance of multi-tenancy An attendee from a software solutions and enterprise cloud computing provider comments. you don’t have that big transport expense and although you still have to access it.” there was general agreement that it is no use trying to duplicate what others do when the others specialize in a particular area. yet the vast majority of solutions I see IT vendors bringing to operators are repackaging of virtualization and hosting technologies.tmforum.” 11 QUICK InSIghtS . stimulate. fix it. keep it intact [since] we swallowed the outsourcing pill in the form of packaged software and service providers for many of our key systems. slicker pioneer from the street. this argument was countered by the assertion that. access is neither ubiquitous nor guaranteed. challenging their dominance in network provision. “there’s a philosophical approach that’s inherent – look at all those leading companies. the CSP challenge is to be able to serve. and how will it sustain the anticipated. and so on. better utilization of the cluster “We believe multitenancy is a fundamental requirement to achieve economies of scale. the wild card is in who maintains the Internet backbone. even in built-up areas in developed economies. operational improvements. and current multi-service operator experience – outsourced all that stuff in the 1980s and 1990s. speed. although some of our partners do. “they bring tremendous advantages in relation to things like provisioning. so lost much of the core talent.org possible to the app and only ship data you need as you need it.

as one observer suggests. there are a high number of possibilities. but radically different from what we are doing with multi-tenancy. “Disruptive or not. those that do will be very powerful in their domain. Service providers can sit between the users and software companies as a broker. the idea that network operators will naturally progress to become cloud service providers is a dangerous one. these are two very different dimensions. Amazon offers high-scale. the CSPs biggest challenge is not trying to compete with the leading cloud service providers. and wonder if they are different in the infrastructure layer. as one observer suggests. ‘We are very very good in retail and we want to make it possible for other companies to become part of our value chain’. handling thousands of software applications over time.” In conclusion CSPs are not direct competitors to the likes of Amazon and salesforce.org .” It seems that people are in very different places regarding the threats they perceive and opportunities they face. All these things are good. There is nothing automatic or guaranteed about it. A number of delegates felt there are a lot more opportunities for CSPs in emerging economies. there will be few people playing in that space. in the short term at least. nothing has yet been proven.tmforum. high-volume. low-cost services like storage or a virtual machine-type environment. but interworking with partners to offer services themselves. from the platform and software layers.com right now. there is nothing automatic or guaranteed about it.” 12 QUICK InSIghtS www. although against whom they are competing depends what sector you’re talking about. right up to very large companies.cLoUd SerViceS and whether I go from 10 to 15 percent utilization to 60 or 70 percent. something of the herd mentality about them. Disruptive or not. something of the herd mentality about them. from the emerging remote company somewhere in Africa with very limited means. In this vertical segmentation. “there are two different models. In all circumstances there seemed to be general agreement that the key to success is figuring out what are core competencies. and a number of delegates argued that. the idea that network operators will naturally progress to become cloud service providers is a dangerous one. rather there are lots of assumptions that have. although they are complementary and use the same approach. Marc Monnard of Orange Business Services says. rather there are a lot of assumptions that have. “then there is the vertical model where a service provider can say.

and technology suppliers that collaborate to define a range of common approaches. SVP.html www. Ing. Enabling Cloud Services Initiative at medwards@ tmforum. McCann Worldgroup.org. the Enterprise Cloud Leadership Council (ECLC) represents the users of cloud services within the Initiative. For more about the Initiative. commercial marketplace for cloudbased services. and scalable. Do I allow data to cross borders? Who owns the data? TM Forum Enabling Cloud Services Initiative the primary objective of tM Forum’s Enabling Cloud Services Initiative is to help industries overcome barriers to adoption and encourage a vibrant. for example? Marc Monnard of Orange Business Services had attended a Cloud Computing Workshop organized by the World Economic Forum the week before Management World Americas and says. tM Forum corporate members are welcome to join the Initiative and take an active role by contacting Matthew Edwards.tmforum. and large enterprise users such as Deutsche Bank.org/EnablingCloudServices/8006/home.Operators’ challenges are not technical so much as about where data resides section 3 What advantages do communications service providers have? What are the opportunities? Are service providers’ big advantages in the networks? And if we are moving towards a standardized.org.tmforum. and State Street Financial. Dell. do telcos have some natural advantages due to their attributes being standardized. Members of the Enabling Cloud Services Initiative include some of the world’s biggest technology companies. and telstra. “this was a group of senior industry and government representatives at CEO level who gathered to discuss the worldwide cloud computing opportunity. director. please contact Apostolos Kallis. and other key service enablers. Intel. Bt. commoditized. the wake up call is that the problems discussed are not technical. leading service providers such as At&t. If your company is not a member. utility model for It. Cisco. cloud service providers. Account Management and Sales. the Commonwealth Bank of Australia. IBM. Microsoft and northrop-grumman. Dassault Systemès. please go to http://www. the centerpiece of this initiative is an ecosystem of enterprise customers. Department of Defense.org QUICK InSIghtS 13 . CA. processes. metrics. they are about where the data resides.S. Defense Information Services Agency (DISA) of the U. hP. akallis@tmforum. SWIFt. It consists of a group of enterprise customers and serves as the anchor for this ecosystem. carrier-grade. including Boeing.

we had 210. There’s more to it than assets Yet they comment. “It takes the same level of [It] skill [within the financial institution] as it does to run an organization like google – to give you an example. and you aren’t going to make a single penny unless you are delivering a service that the customer is prepared to pay for. “traceability and control of data are key… one of the assets of telecoms providers is tracing when there are problems and redirecting traffic.cLoUd SerViceS how can I ensure the traceability of data?” he says.001 percent difference is the thing at the bottom. formally.org QUICK InSIghtS .000 changes in our operating environment last year. having a high degree of integration already with all large corporate data centers (as providers of local area. What I’m saying is. Physical location. A formidable array of assets on the face of it. regardless of what the supply chain is. but it is a difficult transition to make to go from fully internal to an external public solution. the big piece is where the value add is. Control of the pipes to www. the level of skill in our shops is unbelievable. let’s agree that cloud itself is good and let’s work out where the value is for and from all those players inside that space. “I think there is the case for high-end customers to use external public cloud solutions.” A senior architect from a large financial institution agrees that network operators have huge advantages in terms of owning the switching nodes on the Internet. that the critical systems we are running are safe and secure. why would an enterprise have 10 times the cost of an external solution? Because 9. these are big things and on top of that. so meeting the rules of about 130 regulators. and the proven ability to execute in complex environments that handle millions of transactions every single day. Also. I don’t see much discussion of who the customer is and what their needs are. Furthermore.999 times that cost is specific to the business case and the 0. not the other way round. service integrators. Physical security of the premises. they have access to a lot of data about their users and in the past they didn’t disclose it or use it for revenue. rather than having that debate. because there are different opportunities for software vendors. wide area and metropolitan area networks).tmforum. the secure and reliable treatment of data by telecom service providers [is well understood]. hardware suppliers.” The big piece is the value add they add. 10 billion transactions are coming in from the market every day and every single one of those has to be held forever. and then let’s see where this thing moves. and every single one of those marked forever against all kinds of demands out there – the regulatory demands means you have to do a huge number of risk calculations and we’re operating in 72 countries around the world. that is a big concern. each of which wants multiple reports a day and we get X million dollar transaction fines if you don’t deliver them. and all cloud customers too – we all want to bring value to our own corporations. “You start to think. “We have to be able to assert. “this is not the only way of looking at it. So service providers can be realistically considered as cloud providers in the minds of governments and large enterprises. telcos. these assets were very clear in the discussion we had and I think there is a good way for us to partner at this level. 14 “We’re making tens of millions of trades in those markets every single day. Who is that customer? What are you trying to compete for?” they continue.

“What services can you add that make sense for your customers and for you? For instance. In the same way that cloud challenges the enterprise.org QUICK InSIghtS 15 . the problem I see is telcos are good at being telcos and. because if you’re going to create something from your culture. “What services can you add that make sense for your customers and for you? For instance. lots of air con. coupled with agility of the transport infrastructure.999 reliability of the core network. You need to isolate a team and let them behave like a start-up. there are no opportunities for them. “the challenge is. you have to be good and willing to put money and effort into it.tmforum.” www. with “lots of ducts. the real questions are ‘Are you ready for a change?’ ‘Are you ready to offer infrastructure in a more flexible way. but they need change and how can we change?” Amazon Web Service was developed as an almost external project by a dedicated team in South Africa. could you add email services via cloud on top of your broadband? that would be a natural progression. to offer it as a test bed. it won’t be from within. would I see a lot of consternated faces on my customers if I offer them infrastructure on demand from us? What qualifies us to offer that. which should be a massive advantage for CSPs. to provide new blades for your servers?” Which led us to the final question – monetization. perhaps. rather than going for the expensive 99. Do you really want to change? there are so many ideas for new business. One service provider participant puts it bluntly. it also challenges the telco – you have to think about how you use what you’ve got differently if you’re going to make money out of it. On the other hand. there are changes that may make sense in the transport infrastructure. rather than the core. if you want to be a world leader in this space. Cloud is a different thing. “You often need to get away from the mother ship to be successful. have built large-scale pipes and understand how to do tens of millions of connections. to put up tens of new services in the next two years?’ this is a tremendous change in the culture. “If carriers continue to behave like they do today. and attack it.” What is the new ingredient that service providers could bring to ‘create a new culture?’ One delegate says. perhaps.” In conclusion Clearly CSPs need to become much more customer-centric if they are to succeed in the enterprise market.” It is suggested that resilience at the edge of the network could be provided by having flexibility and being able to move applications around. at less cost get in and out of that space. but they should consider a joint venture or subsidiary or something. I don’t know if telcos can do it. by definition. could you add email services via cloud on top of your broadband? That would be a natural progression. and lots of buildings where you can put computing resources in place. this could be a situation where silos are a good thing. who suggests that to implement change or big new ideas in a large organization.resilience could be provided at the edge. according to another attendee.

provide me with voice lines and help me with my business processes. It’s an interoperability issue from a physical perspective. “We need to get CSPs in the value chain – to figure out how to extend your assets on your network to your customer base. and so on. he says. you provide my Yellow Books [business 16 directories. to compete. director. communication. operate them for me.” Jim Matthews of Charter Communications says. Product Management.org QUICK InSIghtS . and they could add to that. [CSPs] have lots of models to look at from Amazon. A B2B [business-to-business] interface is something they are already familiar with. Solutions Engineering.” the idea behind this was that it would allow communications service providers (CSPs) to use subscriber data to make money in partnership with google. “Maybe it’s better to separate the transport from the services and to develop 100 percent owned subsidiaries called Verizon-google. ad-funded google model. say. In the U. VP. while maintaining the integrity of the carrier’s brand – yet making it clear to consumers that their data is being used in exchange for a lot of services provided to them free of charge. “Disruption is just an extremely accelerated form of change and we need to embrace that rather than try to slow it down. offering onestop brokerage. personally. that’s all.” this is underlined by Joseph Martin. I just hate the term cloud. Sprint Business Systems. and technology solutions that I need to run my business. for example. they already do premium security. it’s not a problem to commercialize them. google.tmforum. known in some other countries as Yellow Pages] for my advertising. “I agree. and keep it simple. and PBX services. via search. the access. It’s the network we have already. Can we extend that to include the mobile network so your handset is your extension? Who else can do it apart from service providers? What about location-based services – accuracy within 200 meters is normal. the past model was.S. Yet such radical action seemed out of tune with the group overall. location-based services. it’s just a question of deciding to do it. via the well-understood. A delegate from a tier 1 service provider says. what if we could sell you 50 meters’ accuracy to enable a third party to sell a service over it? Who else can do that? Where should we invest our money?” Russell Wurth. and premium value added services. says. they have the flexibility to do that already with their systems. Verecloud. such as for small and medium-sized businesses. “Most companies have PBXs today. We’ve just announced Sprint Services Framework for our wireless network [in October 2010] and we want everybody to be www.” Not rocket science Others agree: “Monetization isn’t rocket science. Select them for me. they need to provide offers that are simple and easy to use.cLoUd SerViceS section 4 How can service providers make money from cloud services? One delegate suggests. in bundles. the network can do all that today. and so on. It could be the same thing today – give me all of the information. Cloud is a marketing term.

“We do have to apply a certain level of governance. just as importantly.tmforum. how they and their assets are perceived in the market by customers if they want to progress.” In conclusion there is a huge spectrum of opinion about what service providers need to do to make money from cloud services. how they and their assets are perceived in the market by customers if they want to progress. among other things. just as importantly. and that Platform as a Service (PaaS) offers far greater opportunities.” www.org QUICK InSIghtS 17 . certify. any of them. billing. but we think that enterprises. given the scale. “the approach is first to developers.Opinions vary radically concerning how to monetize cloud services empowered to use our network. and so on. It is probable that CSPs could enjoy success through a whole range of approaches to meet different business needs in different sectors. to those who think radical change is needed. and complexity of the many issues surrounding them. We’ll work with developers and customers to build the application layer that protects how the network works. From the debate. but market it under the cloud banner. Sprint’s OPEn-ecosystem approach is all about helping developers and enterprises rapidly develop. from those who think that they simply need to continue what they are doing already. and launch new devices and applications. “Service providers do need to develop a better understanding of their actual strengths and. it seems that Infrastructure as a Service (IaaS) is seen as a ‘race to the bottom’. scope. A vibrant market in cloud services is not going to be achieved overnight. When we provide value-added network services. call control. In our view. MMS. but service providers do need to develop a better understanding of their actual strengths and. we’ll monetize as appropriate. can benefit from Sprint’s OPEn application program with interfaces to location-based services – for example. SMS. we are acting as a cloud utility.