The Good, the Bad

and the Ugly of Telcos

in the Cloud

There is a huge untapped

opportunity for Telcos in the

cloud. But, time is of the

essence.

Most Telcos are missing out on

the cloud opportunity and their

existing customer base is at risk

because of growing competitive

threats.

Take effective action now! How?

Well, there is good news and bad news…

The good news first

The UK and U.S. SMB cloud services market could be worth more than $22 billion to UK and U.S. service providers collectively.

$22BN

Source: http://www.fiercetelecom.com/story/smb-cloud-services-could-be-multibillion-dollar-opportunity-telcos-says-res/2015-09-28

Even Better, the Market is Untapped and Willing to Participate

of SMBs currently have a cloud migration strategy in place – the

segment remains largely untapped.

of UK and US SMBs are openly willing to purchase software and tools from operators to help them grow their

business.

40%

31%

Source: http://www.fiercetelecom.com/story/smb-cloud-services-could-be-multibillion-dollar-opportunity-telcos-says-res/2015-09-28

Now for the bad news…

of SMBs receive ‘no help from their telecoms operators whatsoever’.

Source: http://www.fiercetelecom.com/story/smb-cloud-services-could-be-multibillion-dollar-opportunity-telcos-says-res/2015-09-28

42 %

of companies surveyed said they’d take their business to any service provider that shows them how to get access to a

broader range of technology.

58%

Source: http://www.fiercetelecom.com/story/smb-cloud-services-could-be-multibillion-dollar-opportunity-telcos-says-res/2015-09-28

52 percent of SMBs said they will

contemplate switching

operators in the next two

years due to the lack of

interest shown by Telcos in

their existing customers.

Source: http://www.fiercetelecom.com/story/smb-cloud-services-could-be-multibillion-dollar-opportunity-telcos-says-res/2015-09-28

Communications service providers (CSPs) continue to struggle with telecoms’ emerging new order.

For the past two reported quarters, global CSP revenues have declined year after year.

In comparison, Internet content providers (ICPs) such as Google, Apple, and Alibaba continue recording strong revenue growth, often at the expense of CSPs, and they’re investing in their networks: ICP capex now accounts for over 6% of revenues, up from 4% a few years ago.

Source: Analyst Opinion: Telcos struggle with emerging new world orderhttp://www.ovum.com/analyst-opinion-telcos-struggle-with-emerging-new-world-order/

Even worse for existing Telcos…

Globally a new Telco service is now launched every working day of the year.

Source: Telcos in the Cloud: A Global Status Report, Camille Mendlerhttp://www.slideshare.net/camillem/ovum-telcos-in-the-cloud-mendler-251114

More than 330 communication service providers (CSPs) are active in the cloud market today.

330 46

• There is massive opportunity for Telcos

• There is a hungry audience waiting to be engaged

• Existing customers are ready to switch and are under threat from competitors

• There is an urgent need to implement effective action now

Quite Simply

There are common reasons why many Telco’s have not fully seized the opportunity

A Telco moving to the cloud is a no-brainer, but when they try to implement, the traditional CULTURAL way of working gets in the way.

Telcos focus on network ownership rather than the needs of the existing captive customer base.

Ovum analyst Camille Mendler says CSPs are overlooking the extraordinary value of a captive customer base. Many cloud operations are run separately – operationally and commercially – from

other services.

Source: Telcos in the Cloud: A Global Status Report, Camille Mendlerhttp://www.slideshare.net/camillem/ovum-telcos-in-the-cloud-mendler-251114

The Telco culture is used to:

Large project mentality rather than lean service launch and a ‘land and expand’ approach

Multi-million dollar investments making ROI difficult in an emerging market

Bespoke builds with traditional suppliers rather than seeking out ‘born in the cloud’ solutions

Focusing on technology possibilities and not customer need and demand

A desire to deliver all bells and whistles often defined by tech analysts – many of these have real commercial demand today

Application of existing business models rather than developing cloud specific commercial

Allowing the cloud business to be constrained by existing operational and back-end systems

Poor marketing and go to market execution

Other cultural norms have inhibited success

Does any of this seem familiar?

The Result?

Huge amounts

of money spent

Multi-year

projects

Restrictive and

non-agile

technology

solutions

Disappointing

results… even

project failure

External influences have fuelled this lack of success

BUT…

Telcos have many crown jewels

A captive customer base

Understanding of complex

technology

Metering and billing

Purchasing power & economies of

scale

Knowledge of how to scale

Constraints to success are therefore not resource related

Telco procurement processes have been a barrier to engaging and selecting solutions that are best suited to the needs of the emerging cloud market than traditional vendor solutions. This has meant that Telcoshave not been exposed to service provider ready solutions developed by ISV’s that have emerged alongside the cloud market.

Traditional large tech vendors have promoted their existing portfolio of solutions which have not been cloud ready. These vendors have taken a consultancy led approach to solution development and implementation to the detriment of the Telco.

Constraints have been produced from internal & external influences

Analyst models and advice is future focused including specifying capabilities that have barely emerged as commercially viable customer requirements. This continues to result in Telcos over-specifying and over-complicating their project requirements. This causes significant delays in all stages of project development and out of control project costs to deliver functionality that has little or no customer demand.

Analysts were slow to recognize the limitations of existing tech solutions, the value of public and hybrid-cloud models and the need for ‘cloud ready, service provider solutions’. Early advice from analysts did not fit the cloud market opportunity that has emerged.

We should therefore not be surprised with poor results, slow implementation and massive project costs

Look at what the actual impact has been from cloud

on your revenue stream. Then consider what it could

be…

So ask yourself has the cloud moved your business

forward in any significant way?

Remember

There is massive opportunity for Telcos

There is a hungry audience waiting to be engaged

Existing customers are ready to switch and are under threat

from competitors

There is an urgent need to implement effective action

immediately

Instead Telcoscould start here

Undertake a deep engagement with your existing captive customer base to understand the current use cases that they would be willing to purchase and any constraints (educational or otherwise) that they would need to overcome.

Use this knowledge to define the initial cloud services and the market entry strategy.

Define a technology solution that will deliver the base use cases and that will help you expand and integrate with third party solutions as the customer use cases evolve.

Select a technology solution that delivers the vast majority of the initial base requirements “out of the box”. This allows rapid market entry and the ability to secure the existing customer base from predatory activity from competitors.

Avoid, a component based approach that requires an expensive army of consultant and a long project timeline to implement

Next, define your technology solution

Build effective go to market and fulfillment capabilities. Ensure that you invest sufficiently in customer education, on-boarding and training. Make sure that you deliver a ‘whole solution and customer experience’ and not just a technical capability.

As we have seen, Telco customers have spoken and they crave guidance.

Then…

Launch, Learn, Innovate & Grow

• The Telcos’ biggest asset is its customer base.

• Engage with customers, understand their ongoing and changing needs.

• Continuously define what services you can launch to help them fulfil these needs more effectively.

• Keep a focus on what is either generating or protecting revenue.

• Shield yourself from investing in over-hyped requirements by validating, with your customers, the volume of use cases for each requirement and their sensitivity towards paying for a solution.

Remember

There is massive opportunity for Telcos

There is a hungry audience waiting to be engaged

Existing customers are ready to switch and are under threat

from competitors

There is an urgent need to implement effective action

immediately

True Nirvana is…

Making money

from the cloud

Retaining

customers

Attracting new

customers

Get started today, improve tomorrow.

Download our checklist for Telcosto get started now!

“Flexiant combines fundamental cloud enablement a la OpenStack with sophisticated management and automation. It’s a double threat.”

451 Research Group

http://learn.flexiant.com/what-every-telecom-operator-should-know-about-the-cloud