Telcos face a challenging task when deploying cloud services

Telcos bringing cloud services to market have tended to focus on getting to market quickly rather than on the complex and timely process of adapting their existing OSS/BSS to fit a cloud delivery model. Ovum’s report Enabling Telco Cloud Services (OT00056-001, May 2011) indicates that a lack of expertise, available resources, and difficulties in bringing internal network and IT teams together means that telcos are increasingly turning to IT services players to help them enable their cloud offerings. In some cases, this relationship is evolving to include a go-to-market partnership as telcos attempt to overcome a lack of credibility in the supply of IT services and quickly capture market share.

Telcos face significant challenges in supporting and selling cloud services

Telcos that are looking to launch cloud services face considerable challenges in moving to a cloud-based delivery model. Much has been made of telcos’ ability to leverage their existing assets such as data centers, OSS and BSS systems, and customer relationships. However, while cloud services are essentially an evolution of telcos’ traditional managed hosting services, their on-demand, self-service nature puts them at odds with telcos’ traditional service portfolios, which creates a number of potential challenges.

Telcos tend to lack credibility in the IT services market, and have limited experience in supplying and managing IT services for enterprises. Telcos also face operational challenges in outfitting their delivery model to support cloud services. This requires that network and IT teams work closely together, which is something that many telcos have struggled to achieve in the past. It also requires that telcos deploy the internal IT systems and processes needed to deliver, support, and bill for cloud services. In addition, there is the need for telco sales teams to be trained and incentivized to sell cloud services. This is a significant challenge given that most enterprise telecoms contracts typically last between three and seven years.

It is for these reasons that many telcos are looking to engage with IT services players that offer cloud enablement services such as business case consulting, cloud orchestration platforms, integration services, and sales training. Some telcos have moved beyond this engagement to form joint go-to-market partnerships with IT services players. These partnerships will help telcos to address a lack of credibility as an IT supplier and increase the number of channels to market.

Desire to get to market quickly means that telcos will face future integration issues

For many telcos, the desire to get to market quickly and establish their cloud offerings has seen them implement a new set of IT systems and processes rather than adapt their existing systems and processes to fit a cloud delivery model. Some telcos have been so keen to deploy their cloud services that they have saved integration with their billing systems (a process that is typically the longest stage in the implementation) for after launch, relying on manual intervention until then. While this may suit telcos in the short term, they will face future integration issues as the pressure to consolidate their platforms increases and the scale of their cloud services grows beyond the capabilities of any interim systems.

Telcos must also be aware of the impact that the evolving cloud services market could have on their operations in the future. For instance, as competition increases, telcos may want to offer realtime, capacity-based, scalable pricing for infrastructure-as-a-service, or may wish to offer tiered service levels. This will place considerable demands on billing processes, policy management, and product cost-management processes, which will need to ensure that telcos are not delivering their cloud services at a loss.