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October 3, 2013
There is no shortage of Cassandras predicting that operators will never make a decent fist of selling cloud services to enterprises. They point to the fact that operators don't have the right organizational and go-to-market structures, that telcos under-invest in cloud platforms compared to the Internet giants and that they lack the software skills to build the innovative capabilities required.
One of the loudest critical voices belongs to IBM Corp. (NYSE: IBM), although this is somewhat surprising since IBM's acquisition of SoftLayer in July this year is a tacit admission that even this experienced software player failed to build a successful cloud provider platform using its stable of repurposed, enterprise-grade Tivoli automation tools.
IBM's SmartCloud Enterprise will become a "skin" running on top of SoftLayer to protect existing cloud customers' investment: New customers will be put straight onto SoftLayer. SoftLayer is a pretty impressive cloud fabric designed from the ground up several years ago, so it's understandable that IBM bought it, reportedly against stiff competition from EMC Corp. (NYSE: EMC)/ VMware Inc. (NYSE: VMW).
But evidence is mounting that certain telcos are making good headway with enterprise cloud and are winning business from the likes of Amazon.com Inc. (Nasdaq: AMZN) and IBM. They are investing significantly in cloud, whether by acquiring cloud technology companies themselves, recruiting large numbers of skilled software developers, and/or network-enabling their clouds in interesting ways. Like IBM, they have had their first- and even second-generation cloud failures. But, as a result, they understand what the pain points of cloud operations are and have accepted that they will have to control cloud technology integration and develop certain capabilities themselves rather than depend on third-party cloud enablement systems and tools.
None has yet gone as far as Verizon Communications Inc. (NYSE: VZ), which has unveiled its next-generation cloud platform today. Verizon Cloud Compute features a novel, Verizon-developed software-defined networking fabric, an in-house extended open source hypervisor and a simplified hardware platform. (See Verizon Launches New Cloud Service.)
But what other leading providers, such as BT Global Services , CenturyLink Inc. (NYSE: CTL) (Savvis), Colt Technology Services Group Ltd , and Interoute Communications Ltd. have in common with Verizon is an emphasis on the cloud orchestration layer and the need to take a holistic, "fabric" approach to cloud management with an integrated view of the entire cloud environment.
Advanced telco cloud providers recognize that enterprise business is going to be won or lost on the strength of their orchestration layers. That is, on how unified their orchestration capabilities are, and how able they are to orchestrate the simultaneous and distributed fulfillment of multiple components in a cloud services bundle -- for example, dedicated or shared IaaS, networking services (VPNs that span both LAN and WAN), communications services, security services (virtual firewalls, identity servers etc), and enterprise applications.
In addition, factors such as how much self-service control their orchestration layers give customers in choosing what their cloud environments look like, how services are configured, where they run, and what failover policies are in place, are key to gaining enterprise trust. The level of management granularity that the orchestration layer provides to communications service providers, so that they can continue to innovate in terms of the features and business models they can offer to enterprise customers, is also a critical factor.
The fact that orchestration layers demonstrated by the leading telco cloud providers are becoming increasingly rich and capable is a good sign, although a gap is opening up between those that are investing at the cloud cutting edge and those telcos that either don't have, or don't want, to acquire the development capabilities required. IBM plans to target such telcos as resellers for SoftLayer and telco cloud providers will benefit from the wholesale opportunity too.
But first, there is still some way to go, for any type of cloud provider, to persuade enterprises to come on board.
— Caroline Chappell, senior analyst, Heavy Reading
Read more about:Omdia
Contributing Analyst, Heavy Reading
Caroline Chappell leads Heavy Reading's research into service provider cloud adoption for internal IT, enterprise service delivery and network functions virtualization (NFV) purposes. She also covers technologies that support telco application development and delivery and customer experience management. She is currently tracking the impact of SDN and NFV on telecom organizations and has a major interest in the new architectures and management systems needed for operating SDN and NFV-based networks. Caroline has over 20 years' experience of researching and writing about the ICT industry for global analyst firms and her work synthesizes a broad understanding of ICT innovation with a deep knowledge of telecom market dynamics.
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