Outsourcing in the cloud era
Feature

Outsourcing in the cloud era

The cloud era has found carriers in the unusual position of both offering cloud as a managed service as well as utilising it for their own business processes. Guy Matthews explores the multifaceted world of carrier cloud strategies.

 


Essentially, cloud is just another form of outsourcing by a different name, believes Andreas Hipp, CEO of global carrier’s carrier Epsilon. “You’re just taking functions that are currently managed by carriers themselves and getting someone to host them on a pay-as-you-go model,” he says.

Here begins one of the many complexities of cloud within a carrier’s outsourcing and managed services strategy.

On the one hand, carriers must consider what it takes to be a cloud-enabler for customers, whether as a full provider of outsourced cloud services in their own right, or as one part of a more complex cloud value chain.

On the other hand, carriers must question which of their own business processes belong in the cloud if they are to achieve the kind of cost efficiencies that will be necessary to thrive in an increasingly competitive environment.

Alam Gill, SVP for international managed services and IT services specialist CSG International, has noted an upswing in interest among the company’s carrier customer base: “We’re seeing a lot of take up from carriers adopting cloud-based services as part of the rationalisation of their IT estate,” he says. “They are moving to a more flexible architecture. Cloud, for example, is becoming a significant part of how carriers are dealing with their customers, helping them reduce complexity and be more agile.”

Gill says that CSGi operates the largest industrial-scale cloud platform in the US, supplying a number of players in the wider communications service provider community, from carriers to cable companies: “More than 48 million customers [of communications services] are having their billing processed over that platform,” he claims. “Billing is one important area where carriers are migrating to the cloud. Another is content.”



A new world order

Most established carrier names are in transition from a very different era, where vendors of IT solutions would tend to supply them with highly individual architectures, and leave them to struggle to integrate those various solutions as best they could.

But this traditional model of buying technologies in and operating them in separate stacks is an expensive way to carry on. IT can become a large and unwieldy mess, representing a challenge when the carrier wants to launch a new type of service that demands particular agility, like LTE or M2M. Cloud, carriers are finding, offers a cleaner architecture allowing faster speed to market and lower costs.

Partnering and outsourcing as a way of adjusting to new industry realities takes many forms – not least consensus between what would once have been sworn competitors (see box-out).

“Operators are taking to heart the old adage that you cannot do it all, and are making a conscious decision to focus their business on what they can do well,” says Mary Stanhope, vice president of marketing with Global Capacity, which operates an automated exchange platform for telecoms service providers.

“They are turning to other carriers and operators for the rest. They are turning to other carriers to extend their footprint into other geographies, they are turning to other carriers for long-haul solutions or access network, and they are turning to other service providers for remote management, IP services or cloud applications.”

But it’s when carriers have to confront cloud purely as a business opportunity, rather than as a way to facilitate their own processes, that their work is really cut out.

Carriers tend to have entrenched business models, as well as network operational models, that can dictate the way they think and operate. These models are fundamentally challenged by the emergence of the cloud, causing many carriers to feel a need to embrace this change and make the most of the consequent opportunities. The choice as many see it is as stark as succeeding as key parts in the cloud value chain, or falling by the wayside and being absorbed.

“The key differences are best represented by the rigid control carriers have traditionally applied to the way services are provisioned,” believes Ian Harris, system integrators leader with vendor Ciena.

“There’s also the commercial models that underpin those services and the operational support infrastructure that binds the components into an SLA-backed offer to the end customer. Traditional carrier network operations delivering bandwidth services typically suffer lengthy lead times as networks have to be carefully reconfigured, hardware ordered and truck rolls instituted in order to deliver the requested capability. Cloud services have fundamentally different characteristics.”

Carrier customers are becoming accustomed to the idea of services delivered on a whim, based on instantaneous changes in demand. Operational models that are based on lead times of several weeks will not prosper in an environment where end user demand varies on a minute-by-minute basis. The commercial structures that typify traditional bandwidth services – long multi-year leases, fixed asset delivery irrespective of need, and amortised SLAs rather than instantaneous availability – will not apply to the new world order.

Some carriers have responded by establishing new and separate cloud service delivery organisations, perhaps realising that changing traditional practices and mindsets within the mother company represents too massive a challenge. The next trick they face is to merge the interests of the new organisation with the old. Carriers that figure out how to bind next-generation managed service delivery with their valuable network assets will be well positioned to succeed.

“Network and IT solution vendors have a role to play in this transition too,” believes Harris. “It is incumbent upon them to offer technologies and solutions that enable carriers to leverage their traditional strengths as they deliver new dynamic, customer-driven virtual IT services. We’re talking network intelligence that offers dynamic reconfiguration, APIs that enable control of those dynamics by customer applications and end-to-end solutions delivered by cooperating partners.”

Solutions, he believes, will need to be truly end-to-end. Traditional technology silos and divisions will need to be replaced by horizontally integrated capability delivering seamless end-to-end-value which will enable carriers to succeed in this new, challenging but ultimately rewarding new order.

Elements of this challenge can of course be outsourced. Carriers can look to external consultation and support in order to make the change to new service delivery models. They can choose to delegate significant portions of the service delivery to partners with a clear history and track record in that field. In this case they will need seamless integration of their own SLA with that of any other suppliers that make up any virtual supply chain.

In all cases, the ability to come up with successful partner-based models for service delivery will benefit from appropriate, end-to-end tools, providing complete service views that enable carriers, partners and customers to monitor and enforce performance SLAs.



Delivering the future of cloud

So what of carriers that have already made headway in the provision of managed cloud services? What is their testimony?

“Cloud is a much abused word, but our customers are interested in it for sure,” says Tejaswini Tilak, global head of carrier services at Telstra Global. “Can we play a part in enabling our customers to move to the cloud? Sure we can. We have the tools and assets to deliver a cloud solution. It’s that underlying network performance that’s key or whatever apps you have on top just won’t work. One reinforces the other.”

NTT Europe has got several cloud-related offerings, but would never call itself a pure play cloud provider, says Len Padilla, senior director of technology: “We use cloud as an enabler, not as a product that we sell. We’re not Amazon Web Services. I define what we do as blending what I call industrialised virtual computing along with managed services, professional services and so on.”

He says NTT Europe partners with outsiders in the delivery of cloud, but only where there isn’t a partner within the wider NTT group: “By dealing with NTT, the customer gets all the elements they need with only the one company to deal with – us.”

Andreas Kederer, director of product management for managed services with Colt believes it may be a matter of picking one niche area to deliver to customers as a cloud service: “Operators need to embrace cloud services, at a time when we’re seeing more integration of consumer devices into the workplace,” he says. “Providing a secure way for customers to manage ‘bring your own device’ in the workplace is an area where carriers can play.”

Andreas Hipp, CEO of global carrier’s carrier Epsilon, says that cloud is not a space the company wants to enter directly, as it sees it primarily as an enterprise market: “But we’re here to support customers who do want to provide a cloud service,” he says. “It’s difficult for them to plan the network resources they will need. What they want is to focus on the application side and leave the transport to a partner. For us, it’s a good opportunity to move away from selling point-to-point links where the cheapest price is going to get the deal.”

Cloud then may be a leveller and a game changer – but it does not eliminate the role of the carrier. It may simply be encouraging carriers to think in new ways as they look to remain relevant.




Fighting fraud in the cloud

“Telecoms has made the world a smaller place, and organised criminals have exploited that,” says Alexandre Pébereau, executive vice president for international carriers at French telco Orange.

Orange has decided to fight back against a rising tide of telecoms industry fraud with a new services offer, as well as a call to the industry to collaborate in new and innovative ways to secure themselves against crime.

It has launched what it calls the first fully-integrated wholesale offer that provides protection for telecoms operators against fraudulent interconnect and revenue leakage.

Pébereau says @first is designed to provide operators with protection against fraudulent interaction with networks for on-net and off-net calls, as well as providing additional services such as revenue assurance and security of transactions.

“The telecoms industry has become a prime target of criminal organisations due to the complexity of network infrastructure, and in particular the way in which different networks interact with each other,” he says. “The wide-range of interconnection equipment between different operators’ networks and the lack of visibility over the exact route that calls take has made it possible for criminals to exploit weaknesses in the system.”

He says this global issue costs the industry billions of dollars every year as increasingly sophisticated techniques are used by fraudsters. With the rise of on-demand managed services, confidence in the integrity and security of networks has never been more important, making now the time for joint action across the industry, he says.

“Orange believes in the importance of fighting fraud in a cooperative and coordinated manner,” he says. “Due to the highly interdependent nature of operators in the wholesale market, they must work closely to end this growing phenomenon. Operators need to take collective action to develop both technical and legal means to protect their interconnect revenue.”



Gift this article