Telcos keep the noise down at Cloud World Forum

David Molony, Principal Analyst, Enterprise

Telcos have launched a series of credible cloud services offers, and there is a perception in the market that they can now compete with global systems integrators in the converged ICT space. But telco noise levels are set low. There’s a tentativeness in their marketing (which may be deliberate) but, more importantly, they are not getting the direct advocacy they deserve from their global MNC customers.

Tier-2 telcos ramp up cloud services

Telco cloud service providers were heavily outnumbered by cloud technology vendors at the recent Cloud World Forum in London. That’s normal at trade exhibitions, but still we wanted to hear more from the network and data center operators in the shadow of the Google megabooth.

The event was well attended; it featured mostly vendors, but also some network operators who seem to be setting themselves up as European cloud service providers; Savvis, Interoute, and Adapt among them. Telstra has announced that it is making its cloud services for enterprises (marketed as NAS in Australia) available to MNCs globally, with access from data centers in London, Singapore, and Hong Kong, so there was some noise from telcos, but their presence was otherwise low key.

Elsewhere, only gradually are we hearing more from the tier-1 telcos that have kicked off the cloud services market for corporate managed services customers. It seems big telcos are getting commercial uptake for core IaaS and associated applications such as virtual data centers. At the annual summit for T-Systems also in London last week, we saw financial targets for cloud revenues. The numbers can’t be disclosed yet, but they confirm that cloud services will be making a significant impact as a business model for suppliers and end users over the next two to three years.

Corporate cloud user enthusiasm is muted

The big buyers of cloud services are even more restrained in their enthusiasm about cloud services. Of course, they do not want to give too much away about expected cost savings, in case that should lead service providers to rethink their price rates for transactions. At the same time, not all of them can say how effective their cloud adoption has been; it is early days for many.

At last week’s forum, Dana Deasy, group CIO at BP, said global MNCs don’t just move to the cloud in one go. When you have a large IT department in a global company that’s been doing IT on a large scale for many years, and has well established ways of doing things, you have to find a way to bridge to the cloud first.

So BP, one of the biggest oil companies in the world, has its ICT operations in at least three stages of “cloud migration”, which in any case looks a lot like old-fashioned consolidation, and so far has enlisted nine cloud service providers to help. Deasy cited two major examples of successful cloud application, one of which is the global email service it has entrusted to T-Systems.

Yet despite the success of the cloud email deployment, Deasy managed not to mention his global network service provider.

Telcos should get users to speak up

Telcos cannot afford to be over-confident about their cloud service capabilities, particularly as in some cases novating contracts into the cloud could compromise their established outsourcing business. Last year, T-Systems signed contracts with Generalitat de Catalunya, including network and data center infrastructures. Last week, HP Enterprise Services (HPES) stepped up with a 10-year contract to migrate the Catalan regional administration’s data center infrastructure to a secure cloud environment. That doesn’t exclude T-Systems from the equation, but HPES will supply and manage the virtual private cloud solution.

Right now, all the telco cloud news is coming from the wholesale end of the operation. Adapt is using Level 3 for its global network carrier to deliver its UK-hosted services into customer endpoints in Asia-Pacific. We also keep hearing the name of Masergy as the carrier of choice for enterprises enlisting cloud operations across Europe and into the Middle East and Asia.

These carriers are offering secure networking, and data sovereignty solutions, and this points to one of the key opportunities for global network operators, especially those with data hosting infrastructures of their own. NTT Communications’ announcement that it is to consolidate its regional managed security services into a single, networked, global security operation is a powerful indication of how the security requirement is going to light up telco capabilities compared to global SI players.

AT&T (Internet Protect), BT Global Services (BT Assure) and Verizon Enterprise Solutions (Identity & Access Management) will be the champions here, but are too quiet overall. There’s an explanation: tier-1 cloud telcos are prepping their next-generation cloud platforms and will be presenting them soon. In the meantime, our message for Deasy and others: please speak up.

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