The Reality of Hybrid IT for Telco’s

Does Hybrid IT best describe the reality of how most IT deployments and organization will exist for the foreseeable future….! Can Telco’s address that market opportunity…?

Let me start by sharing a definition for Hybrid IT: Hybrid IT is an approach to enterprise computing in which an organization provides and manages some information technology (IT) resources in-house but uses cloud-based services for others. A hybrid approach allows an enterprise to maintain a centralized approach to IT governance, while transforming to cloud computing.

We see three forces driving the adoption of Hybrid IT:

1. The need to maintain control of data
2. The cost effectiveness of cloud components such as SaaS, IaaS & PaaS
3. The need to respond quickly to rapidly changing business needs.

At the recent Telco-cloud Telco Cloud Forum event in London on May 10^th /11^th there was explosive interest in how Telco’s can better leverage opportunities within their customer base around Cloud and associated cloud services by playing a stronger intermediary role.

The overriding message was that this is a BIG and exploding opportunity and positioning themselves as a credible intermediary / broker to the SMB sector in this space was a key business objective for many.

As part of their traditional business model, Telco’s have been utilizing specially built data centers for large enterprise customers with long term contracts for years.  However, over the last few years, the public cloud market and Hybrid Cloud approach has grown exponentially, led by giants like Amazon with AWS and Microsoft with Azure. The O365 momentum at the business user level is helping  Telco’s now recognize their opportunity to become leading public cloud brokers by partnering with these market leaders. As such, they can integrate their solutions and present value-added services to their customers as well as create new business opportunities in the growing cloud market. * The Telco challenge is, how do you create differentiation and add value on top of a commodity product such as the public cloud?

Within the larger enterprise customers with larger dedicated IT functions availing of the increase in transition methodologies, and migration tools has enabled traditional enterprises to leverage the public cloud for their new IT projects and developments whilst sustaining internal IT and private virtualized cloud deployments.

Speaking to a few of the larger Telco’s at the show I heard how they’ve seen how their established enterprise customers leverage the public cloud’s flexibility and reap the benefits of running efficient IT operations for substantially lower costs. The emerging untapped potential I explained is to bring this enterprise grade experience into the broader SMB business sector. (For clarity my definition of SMB here is 50 to 250 employees) Today, Telco’s are successfully interconnecting IT organizations with the public cloud. One of the main examples of this is a Direct Connect capability the leading vendors like AWS and Azure are offering, enabling customers to establish a private virtual interface from their on-premises networks directly to their public environments

Telco’s still heavily rely on internal data centers selling their own custom data center solutions, giving birth to the challenge of managing both parts of the market along with a growing customer push to use large public clouds such as Azure.

Telco leaders are starting to recognize this trend and recognize the fact that in order to play an active role in the market, they need to become intermediaries with value-added cloud based solutions. They have already made significant investments in order to stay in the game to-date, acquiring skills and assets to serve IT organizations with their public cloud environments. However, by becoming mediators in the public cloud realm, telco’s face a packaging and delivery challenge in the transition from their traditional role as data center builders. This is where the value of the specialized integration partners comes to the fore. By becoming cloud resellers or brokers, telco’s have to make sure current public cloud pricing structures  fit into their businesses model. Contrary to the high margin associated with traditional connectivity and IT integration services, the cloud’s economies of scale are associated with slim margins and therefore may present significant business risks.

Due to these risks, telco’s must recognize the importance of packaging public cloud services in a way that offers telco-like solutions, meeting their own business needs by driving incremental service offers as well as meeting customer requirements.

A key sponsor and exhibitor at the show ChannelCloud ( www.channelcloud.com) was demonstrating their new CloudSmart Hybrid Server.   ChannelCloud’s Hybrid Server is a fully managed on-site device that enables small businesses to get up and running quickly by leveraging a comprehensive suite of IT services and integration tools that simplify the migration to Public and Private cloud. Fully certified by Microsoft as compatible with hybrid cloud implementations and provides a seamless integration with services such as Office365, Private Cloud and Azure Public Cloud.

This solutions enables the Enterprise or SMB customer to leverage Public Cloud capabilities, deploy local private cloud and fully manage existing onsite traditional IT infrastructure. http://channelcloud.com/what-we-do/

This was of particular interest as it is deployed by the telco onto their customer sites, is fully remotely managed by ChannelCloud, is branded in the Telco, there is NO upfront cost and is based on a recurring monthly fee.

For this article, I have outlined five major reasons telecom companies are well positioned for cloud computing:

1. Network monitoring: the ability to monitor networks and ensure delivery of cloud services is a major advantage that telecom companies have over businesses that only handle service platforms and data centers (no network, no Cloud)
2. Operation and maintenance: this includes customer support, large-scale billing, and operating cloud service platforms and networks for several hundreds of millions of users.
3. User experience and customer relations: telecom/ITC companies have developed a high level of understanding of user experience and customer relations with individual customers, small -and medium- businesses, and large companies.
4. Trusted partner: customers see these companies as trusted partners with good reputations for data security and privacy. Regional locations are also an advantage. Most companies apply ISO and UIT-T security standards for networks and service platforms.
5. Service broker: these companies can serve as a broker between cloud service providers and users, thus creating a new role in the market. They can also ensure delivery of cloud services to public and private networks.

 With their strong position in this field, the Cloud is the opportunity for telecom/ICT companies to successfully migrate to cloud services, which means moving from supplying fixed, mobile and data communications services, to supplying services based on cloud computing technologies.

Working with and adopting solutions from Cloud specialist partners greatly reduces their time to market and provides for solution credibility to their target customers.