The Digital Telecom Cloud Services

In Search of New Streams Parviz Iskhakov, January, 2016

Growth in traditional telecom in developed and developing markets is stagnant with declining ARPU and prices.

The OTT players are long affecting CSPs by substituting voiceand messaging services, placing significant strain on the CSP data networks and grabbing consumer mind share, and thus weakening the CSPs’ relationship with their user communities.

Thus, CSPs find themselves under increasing pressure, they notonly want to protect their core business and their relationship with consumers, but have to seek new revenue opportunities in nontraditional markets.

CSPs are beginning to partner with alternative partner types to fill gaps in their service portfolios and accelerate the time to market of new services. In contrast to aggressive, competitive and alienating tactics to address OTT vendor threats, CSPs can benefit substantially from pursuing these more collaborative approaches.

SMS and OTT Messages

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Cloud and Hosting

Rich Media

Mobile Finance

M2M/IOT

Healthcare

Security

Big Data

EMM

Comm and Collab

Other

CSPs are focusing on IoT, Rich Media and Cloud

New Digital Domains CSPs are Focusing on

The figure is approximate and is based on Gartner’s research- Market trends: Eight innovative CSPs embark on digital

service transformation- CSPs’ market trends and digital transformation strategy

Today, cloud technologies are the basis of nearly all next-generation IT discussions

• Software as a service• Public Web APIs• Microservices• Shadow IT and bimodal IT• Self-service virtualization• Big data• Omnichannel• IoT• DevOps

Globally, cloud apps will account for 90% of total mobile data traffic by 2019, compared to 81% at the end of last year. Mobile cloud traffic will grow 11-fold from 2014 to 2019, attaining a compound annual growth rate (CAGR) of 60%.

Importance of cloud services is growing in

the wake of continued digitalization of lifeCloud

- Software as a Service- “End-Product”

- Platform as a Service- “Design and Development”

- Infrastructure as a Service- “Exploitation”Major Drivers of

Cloud Services

Consumer concerns are abstracted from

provider concerns through service interfaces

that are well defined.

The service can scale capacity up or down

as the consumer demands at the speed of

full automation (which may be seconds for

some services and hours for others).

Services share a pool of resources to build

economies of scale.

Services are tracked with usage metrics to

enable multiple payment models.

The service is delivered using Internet

identifiers, formats and protocols, such as

URLs, HTTP, IP and representational state

transfer Web-oriented architecture.

Scalable and

elastic

Shared

Metered by use

Characteristics of Cloudiness.

And How CSP’s Differentiate from Others?CloudService-based

Uses internet

technologies

Security

Cu

sto

miz

atio

n Customer Service

SLA and QoS

Advantages CSPs can promise on top of other players’ cloud propositions

• According to data from Gartner, the global cloud services market is worth more than $150 billion, up 19% from 2013

• Even though the CAGR is going to decline starting from 2015 it forecasted to stay double-digit in the coming years, bringing the market to a size of $210 billion by 2016.

• The global SaaS market is projected to grow from $49B in 2015 to $67B in 2018, attaining a CAGR of 8.14%. Global infrastructure-as-a-Service (IaaS) spending globally is projected to grow from $23B in 2015 to $34B in 2018, attaining a CAGR of 10.27% in the forecast period.*

• 47% of marketing departments will have 60% or more of their applications on a cloud platform in two years.

Cloud is in RiseCloud

*Source: Technology Business Research presentation The Developer’s Coup: 2015 Applications Development Demands and Vendor Opportunities.

Network Centric

• SaaS (Software as a service)• BPaaS (Business Process as a

Service)• Digital Services

• SaaS (Software as a Service)• IaaS (Infrastructure as a Service)• Brokerage

• Colocation• Connectivity• Security• PaaS (Platform as a Service)• IaaS (Infrastructure as a Service)

Cloud Services Strategies CSPs Can DevelopCloud

Solution Centric

Aggregation Centric

An alternative where a CSP providesnetworks and data centers that enableothers to offer cloud computingservices. IaaS – compute, storage as aservice

CSP’s solutions that are aimed atsatisfying needs of the completefunctions, domains or industries, suchas healthcare, education orgovernment

CSP’s cloud strategy where cloudservices brokerage enables value-addedintermediation capabilities betweenthird-party SaaS and other cloudservices providers and the customer

Network Centric

Possible value propositions and

initiatives of some CSPsCloud

Solution Centric

Aggregation Centric

Val

ue

chai

n

Margin

AT&T and Digital Realty are broadening AT&T's colocation service offerings by expanding their alliance, enabling AT&T to incorporate Digital Realty colocation capacity into its solutions. The alliance will span Digital Realty's global portfolio of data centers, enhancing AT&T's existing product offerings of network and managed services. This complements AT&T's existing Colocation Services network of 38 locations in 16 countries.

‘Business Together as a Service’ is a 100% cloud-based global unified communications services with end-to-end service level agreements and customer support. Since it launch in 2011 it allows unified communications solutions to be offered via the cloud, using an ‘as a service’ model that lets enterprises to quickly and cost-effectively access communication and collaboration tools.

Business Together as a Service Solution

In 2015, China Telecom and SAP announced the general availability of the SAP Anywhere solution in China. SAP Anywhere is the first front-office solution specifically tailored to the e-commerce needs of small and midsize businesses (SMBs) with 10 to 500 employees.SAP Anywhere offers SMBs inventory control and insight, online marketplace management and business and customer engagement.

The Business Marketplace launched in 2012 by DeutscheTelecom has thousands of registered small and medium-sized companies and provides them cloud-based secure solutions from major providers. The customers receive all services from a single source. Telekom provides the software and the service. The users receive a single bill for all ordered applications on a monthly basis. for instance, popular cloud applications such as Office 365 from Microsoft, collaboration applications such as iMeet and Box, as well as security software, e.g., from Symantec, and many other are available.

Singtel's PowerOn serves 150,000 business users and 800 companies

Cloud Marketplaces Can Make All the

DifferenceCloud

Business Together as a Service Solution

Val

ue

chai

n

Margin

• Many CSPs are focused on providing collocation services and building their own data center capabilities. However, these services are already commoditized and huge economies of scale are needed to compete.

• To solve this issue, carriers can create their own cloud services offering and marketplace for their customers, and populate them with third-party services, often with degrees of customization for each carrier. Hiding technical complexities from customers as much as possible and delivering service guarantee and quality together with affordable monthly fees can make all the difference.

Disadvantages of Cloud StrategiesCloud

• Inability to leverage existing capabilities** due to: - Capital constraints for R&D - Complex organisations (e.g. separating IT-related initiatives from non-IT initiatives) - The inability to integrate complex services because of different product and marketing organisations- The inability to communicate between internal telco business and client organisations, which leaves potential service opportunities untouched - The inability to see the bigger, longer-term opportunity

• Solution-Centric approach is people intensive

Network CentricNetworks and data centers that

enable others to offer cloud computing services. IaaS –

compute, storage as a servicePaaS - Platform as a service

Solution CentricSolutions that are aimed at

satisfying needs of the complete industries, such as healthcare,

education or government

Aggregation Centric

Cloud services brokerage that enables value-added

intermediation capabilities between third-party SaaS and other cloud services providers

and the customer

• Network centric approach if adopted will face very fierce competition since it is dominated by pure-player competitors

• 57% of IT architects and tech professionals are running apps on the Amazon Web Services (AWS) platform today. Rightscale’s 2015 State of the Cloud Report found that AWS adoption is over 4X greater than Microsoft Azure IaaS and 5X that of Rackspace Public Cloud*.

*Rightscale State of the Cloud Report, 2015**Cloud-enabled telco opportunities, PwC Research, 2013

• No premium pricing in Aggregation-Centric approach since prices are fully transparent

• High responsibility but limited authority

Digital Turnaround

Note: Dimension Data, Terremark, Keane, and Hughes Telematics are represented at 50 per cent of acquisition value to fit onto the chart Source: MergerMarket, press searches, August 2012

Approaches in Building Cloud CapabilitiesCloud• Cloud Enablers, System Integrators,

e.g. Vmware, Citrix, Cisco, HP, IBM, EMC

• SaaS Marketplaces

• IaaS (Hybrid Cloud)

GallerieVPN

Resell or Brokerage

Buy

Build

• Acquisition of smaller IT companies and startups

The Digital Telecom Cloud Services

In Search of New Streams

Thank you!Should you have any questions please reach me out @

Parviz.Iskhakov@gmail.com