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!

3 Comments »

  1. […] hard to argue that Cloud providers have nothing to learn form telco providers (many of which are becoming Cloud providers themselves). I shutter at the idea of AT&T teaching another company how to handle customer service, but […]

    Pingback by William Vambenepe’s blog » Blog Archive » Cloud APIs need to be complemented by Cloud processes — May 22, 2009 @ 6:06 am

  2. That is where the partnership’s they (telcos) forms with the likes of Cisco, EMC, etc. will help as these partners are good at customer service and have a large channel network. If cloud computing is going to go mainstream some day, the channel will have a role to play as the trusted advisor to the SMB and mid-market companies – that would like to take advantage of cloud computing solutions, but majority of them are not technology savvy enough to do it i the self service model.

    Comment by Sanjeev Aggarwal — May 25, 2009 @ 2:58 pm

  3. […] hard to argue that Cloud providers have nothing to learn form telco providers (many of which are becoming Cloud providers themselves). I shudder at the idea of AT&T teaching another company how to handle customer service, but […]

    Pingback by Cloud APIs need to be complemented by Cloud processes | Oracle — August 11, 2009 @ 8:48 am


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