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Cloud enablement

Orange Unveils Cloud Formation

Orange Business Services , the international business services division of Orange (NYSE: FTE), is the latest telecom player to unveil its cloud services strategy, taking what appears to be a pragmatic approach to a market regarded by many as an essential sector for telecom operators.

The carrier has developed a range of offerings, including infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS) products -- on-demand computing capabilities and applications on a pay-as-you-go basis -- tailored for organizations of various sizes.

Its cloud services portfolio, the operator believes, plays to its (self-proclaimed) network asset and service level management strengths, and is strengthened by its willingness to partner with the likes of Microsoft Corp. (Nasdaq: MSFT), which has its own cloud services offering.

"Cloud computing is our new frontier," stated Orange Business Services CEO Barbara Dalibard during a media briefing in Paris on Thursday.

Dalibard was keen to stress that managing and operating a physical network is a distinct advantage in a cloud services world. "The network is not a commodity," she proclaimed, before noting that FT is on course to invest more than €700 million ($1 billion) in its international backbone network (subsea and terrestrial) in 2009. She also boasted about the operator's investment in its IPv6 capabilities -- "We are ready for the Internet of Things" -- and in its telepresence capabilities for enterprise users.

But as Dalibard and her team provided an overview of OBS's plans to the media in Paris Thursday, the occasion was dampened by news that the CEO will be leaving in early 2010 as part of an unexpected top-level management shakeup at France Telecom. (See Shakeup at France Telecom.)

The carrier, though, says the strategy is now (finally) in place and up and running, and won't be impacted by a change at the top. (The cloud services announcement had originally been scheduled for early November, the operator told Light Reading, but decisions related to certain key assets, such as a Parisian data center and the formation of a 150-strong cloud services R&D team, had not been finalized in time.)

So what is Orange Business Services actually offering? Well, the operator says it has invested in tens of thousands of servers, data center capacity, security tools, and self-service management platforms that will enable business customers to access a range of services that provide flexible access to computing resources and applications without the need to invest upfront in their own technology.

It already offers business the capability to access cloud-based business applications and tools under its IT Plan service; provides virtual IT infrastructure as part of its Flexible Computing service, which was launched in July; and has a specific service for entertainment companies called Fastbeat 360, that provides on-demand resources to support one-time or short-lived launches or promotions. (See Orange Business Gets Cloudy.)

But the company will go further during the next two years, with plans to launch an enterprise applications store, offer specific services for the health, transportation, and retail sectors (among others), launch a cloud storage capability, and enable cloud-based unified collaboration.

But if the enterprise customers aren't investing in the required infrastructure and applications, that means Orange Business Services has to. So what's the cost? Dalibard wouldn't provide specifics, but she said the investments would run to hundreds of millions of euros.

She also stressed, though, that this wouldn't alter France Telecom's capex strategy: These investments will come from within FT's stated annual spending allocations. The carrier invests about 10 percent of its annual revenues in its network and development costs.

Get the SLAs right, and be the trusted partner
So is there a market for Orange to exploit? Yankee Group Research Inc. analyst Camille Mendler believes there is. She says the whole cloud services market offers a "seductive vision" of pay-as-you-go resources on demand with instant provisioning, and believes it's "not just hype."

While there's still a lot of learning to be done by all parties, enterprises are already embracing the SaaS model, and intend to divert more and more of their resources (some up to a third of their budgets) to cloud-based services during the next two years. The main attractions to enterprises are the capex savings and easier capacity management, she noted.

Telecom operators have many of the assets that would make them suitable cloud players: high-speed networks; next-generation data centers; holistic service management capabilities; billing and settlement systems; and so on.

But if carriers want to win the business and loyalty of enterprise cloud services users, they'll need to pay a lot of attention to their service level agreement (SLA) development. Mendler says she has studied the SLAs on offer from 40 existing cloud services providers, and found that "while some aspects of the SLAs are good, many are poor."

So there's a gap for a "trusted intermediary," says Mendler, and that's where the telcos can fit into the cloud formation.

"Carriers can sit between the enterprise and the cloud services," whether that's their own or provided by others, "and manage the services and the SLAs. That's not a walk-on role -- that's a very central part," concludes Mendler.

— Ray Le Maistre, International News Editor, Light Reading

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