JOURNEY TO THE CLOUD
The telecom industry in the Middle East is expanding at an unprecedented pace.
The growth experienced by the Middle East region's telecom industry is unprecedented due to the high demand for smart personal devices, and also mobile data services gaining prominence in the business models of Middle East operators as many transform from voice-centric to data-centric.
Driven increasingly by the high demand for smart personal devices to a previously under-served market, we are also witnessing mobile data services gaining prominence in the business models of Middle East operators as many transform from voice-centric to data-centric. They realise that in order to protect margins and to increase data profitability, they have to expand across the value chain and move from volume-based to value-based data offerings.
The Qatari government is further set to support information technology (IT) with many initiatives and projects. An example of these initiatives is the launch of a government data centre by the Ministry of Information and Communications Technology in Qatar to host sensitive IT systems and infrastructure in the government sector. This provides solutions to increase work efficiency in institutions, ensure the security of information, and contribute to the unification of procedures leading to reduced costs. According to the Ministry of Information and Communications Technology, the telecom sector alone is expected to witness a remarkable growth rate of 9% to 12% in the next five years.
In this context, investing in cloud services and technologies becomes impera- tive. According to Gartner, the public cloud services market, for example in MENA alone, is on pace to grow 23% in 2014 to total $629 million (QR2.29 billion). So where do regional operators stand today and what do they need to do to succeed in their cloud transformation? IBM believes that there are three core areas on which operators will need to focus in the short to mid-term in order to truly win on cloud.
From commodities to cloud ecosystems
Both mobile and fixed broadband networks as well as data centres – in which telecommunication providers in the region have strong capabilities – will play a major role in the shift to cloud. For telecom providers, their brand value and customer ownership put them in a strong position to shift their revenue models into the digital services territory, and indeed the cloud is the most efficient and effective way for telecommunication providers to move from just offering commodities to delivering digital services to their customers.
For example, Software as a Service (SaaS) offerings today face few entry-level barriers and that has spurred competition. From gaming development platforms to IT management and mobile solutions, SaaS offerings can be rapidly deployed and
scaled to test demand at negligible cost. Many of these innovators have seamlessly integrated technology, sales, and customer support to develop not just services but entire ecosystems that cater to a customer's needs. That does, however, mean local telecommunication providers will face increasing competition from other technology innovators whose expertise lies in service delivery.
Knowing your customer
To provide a differentiated user experience and create new data revenues through personalised cloud offerings, many telecom providers are striving to better understand their customers in the data era. Voice services are a well-understood, profitable and low-risk business. Usage patterns are rather predictable and market segmentation is straightforward.
Data business is fundamentally different. Users of broadband-enabled mobile devices gain ubiquitous access to a huge number of online services and mobile apps. Every smart device is highly personalized to meet the exact needs of its owner. In the “Data Era”, replicating voice market strategies does not work anymore.
The wealth of customer and service usage data that operators possess is one of their greatest assets. By applying Big Data and Analytics to this data, they can gain better insight into their customers' needs and usage patterns. This enables creation of cloud services that resonate with specific customer groups and micro segments. The most effective cloud offerings in the Middle East so far have typically involved analysing users' location, quality-of-service, and usage preferences to deliver tailored digital services and applications to a “customer of one”.
All of this requires providers to rapidly understand how cloud as a new delivery and business model can be applied to address the wishes and needs of individuals, small businesses, enterprises, and the public sector.
The complexity and scale of the Middle East's telecom market require service providers to approach cloud as far more than just an IT play. To create and monetise the mobile data services enabled by the cloud, telecommunication providers must bring together all internal departments of the business, from finance to marketing and customer service. Unifying different departments around cloud will result in business plans that avoid many of the early pitfalls in Middle Eastern deployments, including a lack of clear key performance indicators and revenue targets for cloud adoption. It will also help providers more objectively assess impediments to cloud services, like data sovereignty, and their actual impact on proposed offerings.
Adapting processes from global IT service providers – and learning from successes and failures in overseas markets – will also help local operators to ensure their cloud offerings are first and foremost viable business products. For example, the issues surrounding cross-border data transfers are sometimes detailed in the national legislation. Yet even in highly-regulated countries like Saudi Arabia and Morocco, these laws typically relate more to the protection and privacy of customer information than to its movement between countries.
Advanced cyber-security measures now available can be applied to data centres, networks and even end users, thereby mitigating these fears of non-compliance. When coupled with robust policies and breach monitoring, data sovereignty need not limit the potential of cloud services to reach untapped and geographically diverse markets. With an emphasis on visibility, control and automation, IBM cloud security solutions help meet regulatory compliance efficiently and defend against the latest threats. With IBM, telecommunication providers can have a robust, security-rich cloud tuned to their customers' specific needs. Establishing a clear security roadmap with the right mix of capabilities to secure foundational technologies lays the groundwork for cloud success.
The region's leaders and decision-makers should look towards cloud as a platform of the future, using infrastructure as a foundation for creating a digital ecosystem rather than a commodity in itself. These new cloud-based services must be informed by a deep understanding of customer behaviours and addressed in a unified manner within the operator's organisation across different departments and even multiple geographies. Partnering with cloud technology leaders and adopting these best practices will put regional telecommunication providers in good stead to move their revenue models from products to services, and to create attractive cloud-based offerings that will allow them to compete effectively with global Internet players
BY AMHED MAROUF Global Technology Services Leader IBM Middle East, Saudi and Levant