Sanjeev Aggarwal's Blog

March 27, 2009

Can Cloud Computing and Managed Services Resolve the Telecom Crisis?

The telecom dilemma is not new, the failure of telecom network service providers to leave their legacy technologies and embrace the all-IP world has not materialized as anticipated, especially in helping them generate significant revenues. They are still dependent on a handful of commodity services, even when one considers their cellular operations. They have not succeeded to create mobile IP applications that would have provided the growth engine – Apple with their iPhone platform is successful leading that effort.

Telecom companies (like AT&T, Verizon, BT) are painfully aware that their existing services telephony (PSTN services are experiencing a rapid decline and mobile services are also experiencing stagnation; some growth in VoIP services), Internet access markets are experiencing slow growth as adoption reaches saturation, and their Managed Services are still not breaking even as they not widely promoted. However, what these giant Telecom companies have going for them is that they still own the networks that power the cloud and large data centers in the cloud.

These companies need to introduce new services if they are to gain new and retain existing customers and grow revenue streams. If they can partner with some strategic global vendors and develop a vision to monetize these assets, they can become a key player in the cloud ecosystem. The current turbulent economic conditions provide the market disruption that provides an entry for these Telecom based partner ecosystem.

‘Cloud Computing and Services’ presents this market disruption, an opportunity for the telecom companies, as enterprises and SMBs look for alternatives to significantly reduce their capital and IT staff expenditures to more flexible pay-as-you-use operational expense models – if they can address IT needs of the enterprises and SMBs, not just ISVs or custom application developers (the existing cloud computing vendors are primarily addressing the needs of the software developers).

Cloud Computing and Services presents is a significant growth market opportunity. As the management/services of IT infrastructure and applications accounts for a more than 60% of the total IT spend, IT segments getting more specialized, cost and complexity of data centers increasing exponentially – enterprises and SMBs are looking for alternate IT solutions that can help these enterprises focus on their core business. This represents a very significant revenue and growth market opportunity in cloud computing and services for solutions that address the IT needs of mainstream enterprises and not only tech savvy software developers.

The significant Telecom companies surely have the financial resources to do this. However, they need to transform and act more like a technology company – partner with the technology companies that are successful at developing and implementing compelling new ideas – with go-to-market urgency, marketing prowess, technology partnerships with vendors that are market leaders and can bring channels to quickly reach the enterprise and SMB businesses, easy-to-understand and implement business models, and proactive customer service models.

The question is can these traditional Telecom companies comprehend and exploit the market momentum for this opportunity – Can they be aggressive and innovative like the IT technology and Web 2.0 companies or will their traditional bureaucratic structure relegate them to a me-too status!

March 19, 2009

BroadSoft now supporting Hosted Video Unified Communications creating new revenue opportunities for Service Provider partners

BroadSoft, the leading provider of hosted PBX platform, VoIP services and unified communications solutions is now supporting video communication solutions from the leading video communications vendors – Tandberg, Polycom and LifeSize.

As SMBs become more distributed and globalized, efficient communications and collaboration are becoming increasingly difficult with utilizing only applications like e-mail and audio conferencing solutions. These companies are turning to affordable web and video conferencing solutions to resolve and optimize the above issues.

In the current difficult economic environments and with increasing travel expenses (both domestic and international) and time commitment required, the new affordable and easy-to-use hosted video conferencing systems that may be conference room or desktop based, the reduction in travel costs is providing rapid ROI and savings in travel time providing increased employee productivity – leading to increased adoption even among SMBs globally. In addition, as SMBs become more environmentally aware and responsible, these solutions help support the need to reduce carbon emissions and provide support for ‘green’ initiatives.

In my discussions with several small and mid-market SMBs in the last several weeks, an increasing percentage of the SMB and mid-market enterprises distributed over several locations, are now seriously considering video conferencing solutions. Some of the larger financial and private venture companies are looking at 3 Tier solutions. The top Tier of Telepresence solution at corporate locations to communicate with key accounts for executive management, Tier 2 small conference room solutions for teams/workgroup meetings and training sessions, Tier 3 of personal integrated or desktop system for more regular 1:1 communication sessions. As the adoption of “presence” becomes more prevalent for IP devices and unified communications, integration of video communications into presence engines will further increase interest and adoption; new video conferencing solutions are based on standards and allow easy integration with other audio visual systems at partner and customer sites.

The ability to use standard web browsers with hosted solutions, off-the-shelf web cameras, and existing network infrastructure has accelerated the popularity and growth of web-based video conferencing market and has helped to drive its adoption into new industries and applications. As video communication solutions now support reservationless On-demand conferencing, they let employees hold impromptu meeting, without pre-scheduling these meetings – allowing them to collaborate when they need to, with whomever they need to, provided both parties have access to video conferencing systems.

Vendors are recognizing the market opportunity and value of video conferencing solutions for the SMB market and are making available systems that are affordable and easy-to-install/ use/manage because SMBs typically don’t have the IT staff to support these solutions. In some instances these solutions can be managed remotely by VARs and service providers. However, they are still a ways away from a price that will explode mainstream adoption in the global SMB markets.

Key Drivers for Video Conferencing Solutions in the SMB Market:

  • Availability of affordable HD/SD Video Conferencing Systems, both web and on-premise based Video Conferencing solutions
  • Support for Unified Communications
    supporting integration of video with UC desktop and smartphone applications
  • Support for end-to-end video solutions
  • Increasing employee productivity and enhancing organizational efficiency
  • Better and more interactive real-time communication and collaboration between employees
  • Need to interconnect distributed branch offices (within country and international locations), better interaction with outsourcing partners
  • Enhance the ability of distributed workforce to communicate and collaborate among themselves, and with customers/ partners
  • Save travel costs and meeting expenses
  • Ability to utilize off-the-shelf video cameras and headsets
  • Increased bandwidth availability and lower cost of high bandwidth connectivity
  • Increased adoption of rich media communications – video
  • Scaling knowledge by making domain experts more accessible and productive

Applications/Markets — Horizontally across all mid-market companies’ sales, marketing, training (for distributed employees, partners, and customers), recruitment, and product development are the key application segments. Vertical industries including financial services, professional services, technology, manufacturing, healthcare, oil and gas, law, entertainment and education are among the top adopters of video conferencing solutions. New applications for video conferencing are being launched with greater frequency as deployment increases; increases in travel costs are prompting SMBs to interview potential employees as this allows one to interact virtually face-to-face.

Why are SMBs and Mid-Market Enterprises interested in Cloud Computing?

As SMBs and mid-market enterprises are looking at their IT budget and face the realities to cut them, they look at what is discretionary and what can be supported through innovative IT strategies. However, at the same time they need to adopt new technology solutions that will make them more competitive in the current economic environment and prepares them to grow when the economy improves. They following arguments shed light on why these companies are actively exploring various cloud computing initiatives:

  • Vendors Making it Easy to Adopt Cloud Services – Amazon leads the cloud computing movement because they make it very easy for companies to adopt their platform and storage services with implementation and pricing services that are easy to understand and try without the need for complex contracts and pricing. Vendors that seek to service the SMB market need to learn from the simplicity and flexibility of the Amazon Web Services model.
  • Change in Appetite for Risk – SMB and mid-market companies focus on risk has changed, driven by the realities of the current economic environment. Instead of making do with outdated systems and slowing adoption of new technologies, these companies are now more comfortable with the risks associated with cloud computing solutions. This is driven by examples of success achieved by some of the high-profile companies through “show-me” examples. They are feeling more comfortable with security, access and reliability issues.
  • More Effective Backup and Disaster Recovery SMBs usually do not have remote data centers. Cloud services provide them the ability to encapsulate the internal virtual machines and replicate them to the cloud off-site. Virtualization vendors like VMware and Citrix are making this easier.
  • Shift away from New On-premise Hardware Purchases – As SMBs and mid-market enterprises look at the Key IT initiatives that are being considered in the decision-making processes, initiatives that will help save costs and show quick ROI are getting attention. IT strategies based on flexible monthly operating expenses, without a significant upfront investment is gaining momentum. New hardware purchases and upgrades have a lower priority; business applications that are critical to the business operations are getting approval. However, implementing new business applications sometimes require additional new hardware purchases, the spending on hardware purchases can be alleviated by adopting flexible pay-as-you-use cloud computing solutions and services with business applications which are delivered software-as-a-service (examples NetSuite and Salesforce.com) or hosted in the cloud (example Rackspace).
  • Increase in Adoption of Virtualization – As SMBs and mid-market enterprises adoption of virtualization solutions enters mainstream, adoption of cloud computing solutions is becoming easier.
  • Significantly Reduced Application Implementation Time – SMBs don’t have to go through a two week purchase order process and an additional two weeks of configuration and testing before an application is available for productive use.
  • ISVs Solutions Supporting Cloud Platforms – Majority of the ISVs are now developing solutions that are multi-tenant and built to be delivered over the cloud. Some of them are using cloud platforms like force.com or Quickbase built to support cloud solutions.
  • Savings in Power and Data Center Space – Cloud computing enable SMBs to control server and storage sprawl by moving some of the applications and storage to the cloud vendors data centers, freeing up data center space and at the same time saving on power consumption costs. These SMBs do not want any more hardware in their equipment closets.

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