Communications Service Providers (CSPs): Claiming a Seat at the “Cloud” Table
By Melanie Posey, Research Vice President for IDC‘s Hosting Infrastructure and Managed Network Services
Everybody wants a piece of the cloud. Equipment vendors, traditional software companies, IT outsourcers, system integrators, and a bewildering array of “cloud-native” providers are all jostling for position and mindshare in the emerging landscape of cloud-delivered virtual IT services. CSPs, like other technology-oriented service providers, face crucial challenges in profitably growing their top lines. As such, CSPs cannot allow themselves to be left out the cloud services revenue opportunity or marginalized in this space and dismissed as being “just the network company.” One way to avoid this fate is by approaching “the cloud” not just as a more dynamic model for delivering basic IT and application functionality but as a new, scalable paradigm for the creation, delivery, and consumption of hardware, software, and communications functionality at scale and with service assurance capabilities baked into the backend operations and processes. Looked at this way, CSPs’ heritage in providing reliable voice and data communications services via their network clouds puts them in a position to build on what they already have by adding IT infrastructure and applications to the mix.
Communications networks are essentially centralized shared-tenant architectures for the delivery of always-on services such as dial tone and network-embedded capabilities such as switching and routing for data connectivity, audio conferencing, security, advanced IP telephony, and messaging/collaboration services. CSPs bring other important areas of expertise and experience to the cloud party. One of these is their proven ability to support scale operations. A communication network is at heart a multitenant environment that CSPs leverage to offer multiple services to multiple customers through the use of capacity management techniques that ensure optimal resource allocation and quality-of-service levels. CSPs also have massive OSS/BSS infrastructures that tie together network layer (backbone, access, and customer premises equipment) and datacenter elements (servers, storage, and the applications that reside on them). This infrastructure also governs service availability and delivery; ensures SLA compliance; and provides billing, support, and sales linkages to CSPs’ large (and relatively stable) customer bases.
Finally, there is the network itself—an element often left out of industry discussions about cloud on the assumption that end-user access to the cloud is BYOB (bring your own broadband) and therefore not the cloud service providers’ problem. Similar thinking prevails about the back-end connection from the core cloud infrastructure out to the public Internet: this is procured as a commodity component from third-party suppliers. However, it is difficult to guarantee end-to-end service delivery and offer “business grade” SLAs when key elements of the value chain are commodity products controlled by third-party providers.
This is where CSPs can pull up a chair and claim a seat at the table. By offering their own infrastructure-as-a-service offerings, they can differentiate from non-network cloud providers with a value proposition that combines performance-oriented network and IT solutions with end-to-end service and management and monitoring. CSPs can also use the architecture of cloud as an agent of their own transformation. By opening up their networks to host software-as-a-service providers, CSPs can also share in the broader cloud revenue opportunity by providing the infrastructure and distribution channels that emerging application developers lack and that CSPs have in abundance. In this way, CSPs can enable an agile assembly line of their own and third-party services delivered with cloud style and telco reliability.
Furthermore, both emerging and established SaaS providers must provide end-to-end service guarantees to their customers, ensuring not only the availability of the IT and network resources, but also the optimized delivery of the overall service or application. This “quality of experience” view of cloud-based solutions requires deep-dive visibility into cloud services operating conditions—including network latency, application/transaction response times, and coordinated performance of all parts of the stack. When service providers can track quality of service at the network and IT component level and coordinate these metrics to application/business process performance, enterprises view cloud services as an attractive service delivery model rather than as a risky business model that results in lack of internal visibility and control.
Melanie Posey is Research Vice President for IDC’s Hosting Infrastructure and Managed Network Services programs. In this position, Ms. Posey provides market analysis, forecasting, and consulting on the dynamics of the rapidly converging IT and telecom sectors and the emerging opportunities in the transition toward cloud-based service delivery/consumption models.
This is post 1 of 5 from the analysts of IDC about Communication Service Providers in the cloud.
