Telecom Trends in Cloud Computing

Ericsson, the leading Telecom vendor, has recently included Cloud Computing in its formula for Success:

Success = (device*innovation) + (cloud computing*innovation) + (mobile connectivity*innovation) + (application*innovation)

Our view at wedran.com Consulting is that Telecom operators and vendors that manage to reposition correctly to the cloud will be the most competitive. Those who fail might become “dumb pipes”, providing only connectivity.

IaaS leaders relevant for Telecom

What are the Market leaders within IaaS (Infrastructure as a Service)? The red dots are Tier-1 operators providing IaaS. The blue dot, Amazon, is the leading Visionary and the leading cloud provider.

Ericsson’s partnership with Akamai

In 2011 Ericsson announced an “Exclusive  partnership with Akamai”. (SonyEricsson had a cooperation with Akamai already in 2001.) The details of the exclusivity are unclear. However, Ericsson products will be prioritized and other vendors should therefore partner with other CDNs, preferably one of the vendors in the above Magic Quadrant.

Ericsson also announced that they are working on a Patented solution. Akamai and Ericsson are committed to bring to market joint products:

• Ericsson is building a machine-to-machine wholesale Cloud platform and will lease access to it i.e. provide an IaaS and/or SaaS solution.
  
• The solution will increase speed by offering a CDN, through Akamai. The target customers are network operators, content providers and high-traffic Customers like eCommerce sites, banking sites, premium content sites and B2B sites.
  
• Content will be delivered to any device at any time, at a faster speed. Mobile subscribers will have the same experience as on the fixed network.

Speed improvement with a CDN

Speed is the most important factor for end users and Speed is the major motivation for Ericsson choosing Akamai.  Akamai is a world leading CDN with 84000 servers and delivers 15-30% of all Web traffic. Akamai doubles the speed of many Services. The static data can be cached on more than 80000 servers located close to the users. The following case study from Akamai shows the speed improvement.

Recommendation to Telecom Operators and Vendors

Some operators see Cloud Computing and new services as a huge threat. They are currently losing money from users with smartphones using VoIP clients, Apps instead of SMS etc. Other operators see new possibilities and receive Revenues from new products.
Ericsson recommends a 3-step strategy for Operators:

1. Control e.g. deep packet inspection
   
2. Innovate new services beyond Phone and SMS
   
3. Move up the value chain.

We think that blocking traffic is no way to go forward. Operators should not control what services users can access. Operators should utilize Cloud IaaS and SaaS to decrease operational costs and then develop innovative services. Operators should start thinking more in the terms of IT and hire the right people if they aim to compete with traditional IT services and IT companies like Google, Microsoft and Apple.

Ericsson claims that “In telecommunications, cloud computing is essentially outsourcing information” .  Cloud Computing is a lot more than that, even in Telecom. It is possible to combine Akamai CDN (or other CDN) with Amazon Ec2, the leading cloud provider. Doing so, you will get an extremely scalable infrastructure where you can install any type of software, including Telecom Software.

The yellow servers are Akamai’s edge locations, close to the user That optimize static content such as HTML, Pictures and Video. The grey servers are Amazons edge servers that deliver Distributed Virtualized servers and are able to host most Software Systems. Together they provide extremely cost efficient, fast and scalable infrastructure and provide opportunity to build innovative services to huge amount of End users.

Transform IT from Cost to Revenue

Today, IT work is often equated with costs, e.g. development, operation, hardware, and maintenance. Cloud Services redistribute these costs, and other hidden costs, to more valued work, which will generate revenue.

Cloud Services enable companies to put time, focus, and resources on the right things. By outsourcing the operation to the Cloud, a companies IT resources no longer has to maintain servers and clients. Instead they are able to focus their time on activities that improve business and increase sales. The Cloud also releases resources to actively work with process improvements, support, and developing the flow of business models throughout the company. An efficient and correctly set-up business flow can generate large revenues in time.

A Corporation will have shorter Time to Market (TTM) with Cloud Services since the user can have a service or application uploaded, installed, and ready to be used in a couple of hours. The return will therefore also be swifter.

Developing a company in this manner increases both the Competitive Edge and Market Shares. Since the Cloud enables fast development and a quick redistribution of resources to the right type of labour, both large and small organizations can quickly gain new business areas.

Let others pay for your IT-systems

Getting started with Cloud Services does not take long at all. All systems are already installed and in operation by the supplier. All that is required is registration of a new client, configuration of the new account for your business, and, possibly, a transfer of data. A task that previously took months to complete, now only takes a few days.

The Multi-Tenancy concept reduces IT-costs tremendously, since several companies will share the most expensive aspects like system development, operation, and maintenance. Traditionally, companies invest in hardware and software to increase productivity and reduce administrative costs. The tightened competition and the price pressure have resulted in more and more IT-systems, which in turn render bigger costs. A transition to the Cloud is therefore the next necessity to grow and remain competitive.

Read more about the advantages of Cloud Services in the next post...