BT is due to announce details of new partnerships with leading SaaS and data-center providers by late December, Light Reading has learned.
The UK-headquartered operator is positioning itself as a major cloud services integrator through a "cloud of clouds" initiative it launched in April, and it has already signed up a number of the world's biggest cloud companies, including Amazon Web Services Inc. , Cisco Systems Inc. (Nasdaq: CSCO), Equinix Inc. (Nasdaq: EQIX), Hewlett Packard Enterprise , Interxion , Microsoft Corp. (Nasdaq: MSFT) and Salesforce.com Inc.
Light Reading has reason to believe that IBM Corp. (NYSE: IBM)-owned SoftLayer Technologies Inc. , Oracle Corp. (Nasdaq: ORCL) and SAP AG (NYSE/Frankfurt: SAP) may be among BT Group plc (NYSE: BT; London: BTA)'s new partners, although the operator did not confirm these details.
By working in partnership with cloud services companies, BT claims it can offer enterprise organizations better performance, reliability and security than they would otherwise enjoy when using cloud services.
Its partnership with Microsoft is a notable example of how BT is looking to work with cloud companies in the future.
Since last year, BT has been offering enterprise customers an IP/MPLS alternative to the public Internet for connecting to Microsoft Azure, the software giant's cloud computing platform.
Branded Azure ExpressRoute, that service is intended to give enterprises "a level of service they would get if the Microsoft environment was running in their own data centers," according to Neil Sutton, BT's vice president of global strategic alliances.
BT recently expanded the scope of its ExpressRoute partnership with Microsoft to include Office 365, a suite of software applications that includes the Skype for Business communications offering.
"We have won quite a lot of cloud-based Skype for Business service," says Sutton, expressing confidence that BT's partnership with Microsoft is paying off financially. "Hopefully we'll see in BT's quarterly results more signs of that and from what I see in our pipeline I have strong hopes."
BT is not the only European service provider trying to become an important fulcrum in the cloud services market.
Deutsche Telekom AG (NYSE: DT) has established cloud partnerships with a number of the world's biggest technology players, including Cisco and SAP, but the German operator also believes it can compete against the likes of Google (Nasdaq: GOOG) and Amazon in the market for cloud enterprise services. (See DT Takes Cloud Fight to Google, Amazon.)
In June, Deutsche Telekom announced plans to double annual revenues in this market over the next three years in partnership with China's Huawei Technologies Co. Ltd.
At the time, a Deutsche Telekom spokesperson told Light Reading the operator's systems integration and consulting capabilities would give it an advantage over Google and Amazon and that it would also compete on pricing.
Deutsche Telekom is set to become BT's biggest single shareholder, with a 12% stake, following BT's £12.5 billion ($19.1 billion) takeover of EE -- currently a joint venture between the German incumbent and France's Orange (NYSE: FTE) -- early next year. (See BT Locks Down £12.5B EE Takeover Deal.)
Asked about BT's interest in going head to head against cloud services players, Sutton ruled out any prospect of challenging what he calls the "hyperscale" providers.
"I don't see us trying to take on Amazon," he says. "Unless you have global hyperscale, I'm not sure how profitable it would be."
Since announcing its original deal with BT, Microsoft has formed ExpressRoute tie-ups with a variety of other leading telecom operators, including AT&T Inc. (NYSE: T), Colt Technology Services Group Ltd , Orange, Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NYSE: VOD), but it is clearly emerging as a major communications provider in its own right.
Next month, the Seattle-based company will begin selling an upgrade to its Office 365 package that includes several new features, including more support for cloud PBX functionality.
Indeed, industry concern is growing that Microsoft could eventually eclipse its telecom operator partners to become one of the world's biggest communications services providers, leaving the traditional players as mere "dumb pipes." (See BT Plays Down Microsoft-as-Carrier Threat, BroadSoft Offers Telcos a UC Weapon to Fight Microsoft, Incumbents: Do or Die and White Box Networking: It's Not About Cost.)
Sutton, however, is confident the software company will not seek to bypass operators in the enterprise sector, as a number of "over-the-top" players have done in the consumer market.
"I still think there is a strong role for a partner going forwards unless Microsoft is going to cope with all of the regulatory issues and all the complexities of enterprise solutions," he says. "I still think they are trying to be a cloud-based software company and not a services provider that deals with regulation, integration and with the changes brought about by convergence that are going to become more relevant."
— Iain Morris, , News Editor, Light Reading