The Lure of the Cloud

Cap­i­tal­iz­ing on mar­ket op­por­tu­nity, new apps and projects, cloud can cre­ate a range of rev­enue streams for the tel­cos with­out wait­ing for capex

Voice&Data - - COVER STORY -

Name a tech­nol­ogy which is syn­ony­mous with op­ti­miza­tion of re­sources, re­duced TCO, cost-ef­fec­tive, that brings flex­i­bil­ity, agility, scal­a­bil­ity and speed-to-mar­ket ben­e­fits to all ver­ti­cals of busi­nesses, isn’t it the Cloud Com­put­ing?

As known, cloud is nor­mally adopted to re­duce the bot­tom­line spent be­cause by us­ing cloud com­pa­nies are op­ti­miz­ing the ca­pac­ity and also the man­age­ment re­quired to man­age IT. It re­duces the spend on bot­tom­line and to­pline. They can have a new rev­enue chan­nel and in­crease to­pline rev­enues by of­fer­ing qual­i­ta­tive ser­vices. Cloud can dra­mat­i­cally re­duce time-to-mar­ket for an en­ter­prise, it al­lows for scal­ing the or­ga­ni­za­tion to cap­i­tal­ize on mar­ket op­por­tu­nity, launch new ap­pli­ca­tion and projects with­out wait­ing for capex.

Cloud com­put­ing tech­nol­ogy pro­vides im­mense op­por­tu­ni­ties to telecom­mu­ni­ca­tion in­dus­try, the other ver­ti­cals could ei­ther avail cloud com­put­ing ser­vices or host cloud com­put­ing ser­vices at dif­fer­ent lev­els such as In­fra­struc­ture-as-aSer­vice (Iaas), Plat­form-as-a-ser­vice or Soft­ware-as-a-ser­vice (Saas). But the telecom­mu­ni­ca­tions sec­tor is poised at a dif­fer­ent level as it can ex­tract both the rev­enue streams. Cloud can cre­ate a range of rev­enue streams for the op­er­a­tor; from the base level com­pute and stor­age, the cre­ation of plat­forms to en­able new mar­kets and on to ac­tual end user ap­pli­ca­tions. Ad­di­tion­ally, pro­vid­ing cloud ser­vices as part of a bun­dle to enterprise­s would in­crease the stick­i­ness of the en­tire bun­dle of ser­vices.

Cloud in Tele­com

Cloud is gain­ing more sig­nif­i­cance in telecom­mu­ni­ca­tions these days. In­dus­try pre­dic­tions has said that there would be 15 bn de­vices by 2015. And there are around 2 bn plus peo­ple ac­cess in­ter­net; they pri­mar­ily use tra­di­tional PCS, lap­tops and net­books, now the trend has changed to smart­phones, tablets. Hence all of us are con­sum­ing con­tent and ser­vices from in­ter­net which will be be fur­ther ac­cel­er­ated go­ing for­ward as smart­phones, smart TV and em­bed­ded de­vices are also con­nected to in­ter­net. Vikram Sharma, VP, sales, ser­vice provider, Cisco In­dia & Saarc ob­serves, “The rate of cloud adop­tion in telecom­mu­ni­ca­tions cur­rently is around 4 to 5 on a scale of 1-10, but within next cou­ple of years it would rise to 8 as ma­jor­ity of cus­tomers are plan­ning to adopt cloud tech­nol­ogy in some way or other. Sev­eral other SPS are tar­get­ting to of­fer cloud ser­vices as well due to the ad­van­tage it brings.” Cloud pro­vides a great op­por­tu­nity to tele­com, it en­ables them to trans­form from be­ing an Iaas provider to data pipe provider to VAS provider.

R Ravichan­dran, di­rec­tor, sales, In­tel South Asia rightly points out, “Now con­sumers’ in­ter­est is not lim­ited to in­for­ma­tion, it has moved to­wards the util­ity phase ie, about online trans­ac­tions, e-com­merce. Sud­denly there is a huge ex­po­nen­tial growth of de­vices which are hav­ing im­pact on in­ter­net per­cep­tion. This means that back-end in­fra­struc­ture also needs to scale, so that peo­ple can get in­for­ma­tion when­ever and wher­ever they want. So the server in­fra­struc­ture which is rid­ing on the back-end should also scale up.” He added, “For ev­ery 120-150 peo­ple who con­nect on in­ter­net should be sup­ported with a new server and for ev­ery 600 peo­ple who con­nect over smart­phone to the in­ter­net, it needs a new server. Hence mam­moth in­fra­struc­ture needs to be cre­ated. There are chal­lenges in do­ing this in the tra­di­tional form in terms of power, cool­ing be­cause they need to build these data cen­ters and each of them should be em­pow­ered by lot of things. We need to cre­ate in­fra­struc­ture that de­liv­ers what the con­sumers need.” There­fore cloud adop­tion could ease the process to a large ex­tent.

Vam­sicha­ran Mu­diam, strat­egy leader, cloud com­put­ing ser­vice, IBM In­dia/ South Asia ex­plains about the cloud ap­proaches that a telco could opt for, “Tel­cos are ap­proach­ing cloud from 3 modes, first is, as a consumer of cloud from in­ter­nal per­spec­tive. Sec­ond is, us­ing the cloud to en­hance rev­enue by of­fer­ing ser­vices on cloud plat­form. Third is, to use the com­bi­na­tion of the above two in or­der to in­crease the cus­tomer stick­i­ness and of­fer some­thing deeper than voice and data, as the true an­gle of mo­bil­ity is com­ing into pic­ture. And thereby en­hance cus­tomer ex­pe­ri­ence.”

On be­ing a cloud user, In­dian tel­cos have slowly but steadily in­creased the adop­tion of cloud based ser­vices as they look to cut costs and im­prove agility. “We ex­pect to see wider adop­tion from an ap­pli­ca­tions de­vel­op­ment plat­form in 2012. As cloud plat­forms ma­ture, more and more ap­pli­ca­tions are get­ting built in a man­ner that lever­ages the cloud model. En­ter­prise ap­pli­ca­tions, both of the com­mer­cial off-the-shelf kind and the be­spoke type, are now be­ing de­signed to work seam­lessly on a va­ri­ety of cloud plat­forms in­clud­ing pri­vate, pub­lic and hy­brid,” men­tions Samvit Raina, SVP, IGATE Patni.

Cloud in tele­com is very com­ple­men­tary. Cloud in­her­ently is a net­work based so­lu­tions and en­ables to add more ca­pa­bil­i­ties to net­work to pro­vide more value added ser­vices for cus­tomers.

Be­ing a Sub­scriber of Cloud

In the ini­tial days of tele­com in­dus­try, it catered only to the needs of voice ser­vices, slowly it moved to data ser­vices as tech­nolo­gies evolved. But now telcom is at a tran­si­tional phase. The in­dus­try is be­com­ing in­stru­men­tal in em­pow­er­ing the peo­ple through tech­no­log­i­cal ad­vance­ments. Voice and data ser­vices are play­ing a cru­cial role in the over­all so­cio-eco­nomic de­vel­op­ment as well. Cloud com­put­ing en­ables tele­com com­pa­nies to tap new busi­ness ar­eas by lever­ag­ing on cloud based of­fer­ing of ser­vices be­yond tra­di­tional cus­tomer base. Tel­cos could de­ploy some of the ser­vices on stan­dard, large scale com­put­ing en­vi­ron­ments. Cloud also en­ables larger scale out­sourc­ing of busi­ness process and net­work man­age­ment tasks. It also im­proves the ef­fi­ciency and flex­i­bil­ity of tra­di­tional ser­vice de­liv­ery. Tel­cos can dif­fer­en­ti­ate them­selves and of­fer a bet­ter ser­vice to their cus­tomers. Cloud ser­vices will com­modi­tize and they can add more value to the ser­vices which are al­ready de­ployed.

“Cloud also gives them an op­por­tu­nity to lever­age 3G band­width from mo­bil­ity per­spec­tive. They can get more and more peo­ple to use these ser­vices from dif­fer­ent de­vices and voice model, they can also ac­cel­er­ate the us­age of the band­width they have ac­quired,” states Vam­sicha­ran Mu­diam. Op­er­a­tors can har­ness cloud tech­nol­ogy to ac­cess new cus­tomers and mar­kets, en­hance their de­ploy­ment time, lower cost and de­velop new rev­enue streams.

Be­ing an En­abler of Cloud

Cloud gives an ad­van­tage to tele­com com­pa­nies to host cloud ser­vices. As it is al­ready in­fra­struc­ture heavy in­dus­try, they can make the best of ex­ist­ing in­fra­struc­ture and also the ex­ist­ing cus­tomers. Ser­vice providers are pri­mar­ily of­fer­ing In­fra­struc­ture-as-a-ser­vice which of­fers cus­tomers the abil­ity to pur­chase com­pute power based on con­sump­tion. They use vir­tu­al­iza­tion tech­nolo­gies and sup­port a va­ri­ety of op­er­at­ing sys­tems and ap­pli­ca­tions. Vir­tual servers could be al­lo­cated dy­nam­i­cally and as­signed to cloud sub­scribers.

Quite a few tel­cos are of­fer­ing cloud com­put­ing ser­vices to their en­ter­prise and pri­vate cus­tomers. “Tele­com com­pa­nies who have data cen­ter busi­ness have been ad­dress­ing one ma­jor seg­ment that

Ser­vice providers are pri­mar­ily of­fer­ing In­fra­struc­ture-as-aSer­vice which of­fers cus­tomers the abil­ity to pur­chase com­pute power based on con­sump­tion

is en­ter­prise seg­ment, ei­ther they are do­ing co-lo­ca­tion ser­vices or they are host­ing some ser­vice for both fi­nan­cial and other flex­i­bil­ity ser­vices. They are of­fer­ing ser­vices on a shared model,” says Vam­sicha­ran Mu­diam. They can reach out to SMBS which is a huge mar­ket in In­dia. Tel­cos can lever­age on their ex­ist­ing con­nec­tiv­ity or ex­ist­ing re­la­tion­ship in the mar­ket. They can sell some small and medium rel­e­vant ap­pli­ca­tions or ERP or col­lab­o­ra­tion plat­form to SMBS ini­tially. It is a wise move for tel­cos to fo­cus on SME seg­ment. Be­cause it is very huge and also they do not have enough in­vest­ments but are in dire need of in­fra­struc­ture, band­width, ap­pli­ca­tions and plat­form. And the huge ad­van­tage is that they are al­ready ser­vic­ing the SME mar­ket; it is much eas­ier to sell to the ex­ist­ing clients to bring them on these ser­vices.

“Ser­vice providers not only host data cen­ters and vir­tu­al­iza­tion as­sets but also host net­work. As they have huge strengths in both net­work and band­width, if they em­bark on of­fer­ing ser­vices dili­gently they could go far ahead of tra­di­tional cloud ser­vice provider,” men­tions Vikram Sharma, VP, sales, ser­vice provider, Cisco In­dia and Saarc. The ad­van­tages of cloud com­put­ing/host­ing in­clude speed for im­ple­men­ta­tion, economies of scale, elas­tic­ity, scal­a­bil­ity and cost ef­fi­cacy. Ser­vice providers have the op­por­tu­nity to in­te­grate with the macro-eco­nomic evolv­ing ecosys­tem, and be­come a key player in the new world of com­put­ing and com­mu­ni­ca­tions.

ROI Traits

The grow­ing com­pe­ti­tion and de­plet­ing AR­PUS has pushed the tele­com play­ers to con­stantly ex­pand their port­fo­lio of ser­vices to cater to the needs of di­verse consumer seg­ments. The op­er­a­tors are re­quired to bal­ance in­vest­ments in new in­no­va­tion with po­ten­tial rev­enue gen­er­a­tion op­por­tu­ni­ties in or­der to ad­dress the consumer de­mands.

In an highly com­pet­i­tive com­mu­ni­ca­tions sec­tor, one ought to con­sider all po­ten­tial rev­enue gen­er­at­ing strate­gies for cloud com­put­ing busi­ness. Cur­rently, the mar­ket’s pric­ing mod­els and as­so­ci­ated ser­vice level agree­ments (SLA) are fairly uni­form. How­ever, com­pa­nies could pro­vide dif­fer­en­ti­ated ser­vices and SLAS and bag additional rev­enue streams by in­te­grat­ing per­for­mance and ca­pac­ity man­age­ment tech­nolo­gies into cloud op­er­a­tions.

Tele­com com­pa­nies can op­ti­mize ROI on both com­mu­ni­ca­tion and ap­pli­ca­tion space. They could quan­tify some of these ser­vices in enterprise­s, says Vikram Sharma. “Iaas is very cap­i­tal in­ten­sive. ROI will de­pend on cap­i­tal in­vest­ment and it could be gen­er­ated in 3 to 5 yrs. In Plat­form-as-a-ser­vice, it is much more com­plex as they need to pro­vide de­vel­op­ment environmen­t. And ROI will be much higher in plat­form. On Saas ROI de­pends on scale as they move up the value chain. They will have to part­ner with ap­pli­ca­tion ser­vice provider to en-

cash on the Saas model,” shares Rakesh Aerath, di­rec­tor, tele­com and in­no­va­tion, Log­ica In­dia.


Although cloud com­put­ing brings with it umpteen op­por­tu­ni­ties, yet some ifs and buts need to be ad­dressed ef­fec­tively. The fun­da­men­tal is­sues are net­work­ing, se­cu­rity and real-time char­ac­ter­is­tics. Un­til re­cently, net­work­ing has wit­nessed ig­no­rance both from us­age and vir­tu­al­iza­tion point of view which ac­tu­ally ex­ac­er­bated the im­pact of net­work la­tency and band­width on the per­for­mance of cloud-based ap­pli­ca­tions. Tele­com is an in­fra­struc­ture savvy in­dus­try. Though the in­dus­try is in­fra­struc­ture ready, the cost of net­work­ing is the sin­gle most im­por­tant cost fac­tor for cloud com­put­ing in­fra­struc­ture com­pared to the cost of com­pu­ta­tion and stor­age. This, at times or at least in the ini­tial days, eats away the eco­nom­i­cal ben­e­fits of cloud com­put­ing. Be­sides, tele­com net­works have to en­sure mul­ti­ple qual­ity of ser­vice re­quire­ments and it needs to sup­ported and re­solved in the con­text of cloud com­put­ing in­fra­struc­ture. Net­works should fo­cus on QOS, place­ment of com­pu­ta­tion and in­ter­ac­tion be­tween com­pu­ta­tional in­stances. Net­work per­for­mance is a top con­cern.

It is need­less to say the im­por­tance of se­cu­rity. And it is iden­ti­fied as one the big­gest hin­drance for the adop­tion of cloud com­put­ing. Se­cu­rity, which is piv­otal, would be in­her­ently weak­ened due to the mal­ware at­tacks, ma­li­cious em­ploy­ees and de­nial of ser­vice at­tacks. It is para­mount to re­solve se­cu­rity is­sues through tech­nol­ogy rather than con­trac­tu­ally; and pro­vide the level of se­cu­rity in tele­com net­works. It is im­por­tant to build se­cure-by-de­sign in­fra­struc­ture. Se­cu­rity threats need to be mit­i­gated else multi-ten­ancy could lead to new at­tack op­por­tu­ni­ties and also unau­tho­rized ac­cess. “Good poli­cies around busi­ness con­ti­nu­ity plan around data loss and se­cu­rity should be en­sured. There are mech­a­nisms in cloud to over­come some of the se­cu­rity chal­lenges in pri­vate and pub­lic cloud. From the ar­chi­tec­ture

Cloud in tele­com is very com­ple­men­tary. Cloud in­her­ently is a net­work based so­lu­tion and en­ables to add more ca­pa­bil­i­ties to net­work to pro­vide more value added ser­vices for cus­tomers

per­spec­tive, they can look at hy­brid cloud—how well it can be de­signed to use the ben­e­fits of pub­lic cloud,” ad­vises Rakesh Aerath, di­rec­tor, tele­com and in­no­va­tion, Log­ica In­dia.

In ad­di­tion, cloud com­put­ing has to be us­able for tele­com and real time ser­vices. In this con­text, there should be stan­dard­iza­tion ef­forts in the area of cloud com­put­ing. In this re­gard, cloud com­put­ing seg­ment must have a com­mon goal in the di­rec­tion of in­creased open­ness of ar­chi­tec­ture along­side re­duc­ing the plat­form costs; while the us­age of in­ter-cloud ar­chi­tec­ture, pri­vate, pub­lic or hy­brid so­lu­tions for real-time and tele­com ser­vices. Tel­cos should be aware of the com­plex­i­ties of in­ter­op­er­abil­ity, for in­stance some apps are apt only for Google en­gine and it can­not be ac­cessed on other browser. They have to fo­cus on App port­fo­lio and they have to be ready for cloud.

Ac­cord­ing to Samvit Raina, SVP, igate Patni, “The other prom­i­nent chal­lenge arises be­cause typ­i­cally all of an or­ga­ni­za­tion’s com­put­ing tasks will not move into the cloud—cer­tainly not all at one time and most prob­a­bly some will al­ways re­main in house for one rea­son or the other. It is also likely that those tasks that move into the cloud and those that re­main be­hind in­ter­act very closely, ex­change data or trans­ac­tions

For more re­lated ar­ti­cles go to voicen­

fre­quently, share com­mon data­bases, de­pend on each other’s suc­cess­ful ex­e­cu­tion be­cause they rep­re­sent dis­creet steps in a sin­gle con­tin­u­ous busi­ness process etc. There­fore in­te­grat­ing the two—tasks that have moved into the cloud and tasks that re­main be­hind—it is a non-triv­ial is­sue that must be re­solved dili­gently, that re­quires sig­nif­i­cant ef­forts, that may re­quire al­ter­ations or re-en­gi­neer­ing of ap­pli­ca­tions and their in­ter­faces, that may even re­quire re­design of the un­der­ly­ing busi­ness pro­cesses in some cases.”

Cloud Of­fer­ings— Telecom­mu­ni­ca­tions

Cloud Ser­vice Provider Plat­form was launched by IBM in last year Novem­ber for tel­cos specif­i­cally. This plat­form is ba­si­cally to en­able them to be a ser­vice provider. This is more fo­cused to­wards tel­cos but some of the sys­tem in­te­gra­tors and non-telco data cen­ter provider can also uti­lize this. IBM of­fers nearly 14 cloud of­fer­ings from Iaas to man­ag­ing the cloud which could be ei­ther resold or hosted by tel­cos them­selves apart from the cloud ser­vices of­fered to any in­dus­try. IBM also part­ners with tel­cos and of­fers 3 ba­sic ser­vices— firstly, help­ing them to cre­ate con­tent to of­fer on the cloud. Se­condly, of­fer­ing its cloud ar­chi­tec­ture and en­able them to re-sell the of­fer­ings. Thirdly, to help them mon­e­tize through huge sales en­gine in the coun­try by help­ing to lever­age on sales­force.

Cisco’s core of­fer­ing is to pro­vide es­sen­tial build­ing blocks to set up a cloud model. Build­ing blocks can be di­vided into 3 dif­fer­ent ar­eas—vi­sion­ing the cloud ser­vices, build­ing the cloud struc­ture, and sell­ing the cloud in­fra­struc­ture. Log­ica In­dia mainly of­fers ap­pli­ca­tionas-a-ser­vice.

In­deed, cloud tech­nol­ogy has a high po­ten­tial of be­ing an ubiq­ui­tous and ben­e­fi­cial tech­nol­ogy in the near fu­ture but the cloud adop­tion is rel­a­tively low at present; the ecosys­tem ought to ad­dress real is­sues, chal­lenges, and po­ten­tial prob­lems for it to de­liver tech­ni­cal and prof­itable busi­ness value.

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