Cloud on call: Should you go with a telco for Cloud?

With vendors, data centre providers and services outfits making a mint in the swirling Cloud market it was always a question of time until telecommunications companies would jump on the bandwagon.

This article is part one of a three part series on telcos as Cloud providers.

Now, telcos such as Telstra, Optus and Macquarie Telecom talk of the Cloud with gusto and services offerings across Infrastructure-as-a-Service (IaaS), Software-as-a-Service (SaaS) and Platform-as-a-Service (PaaS) move down into the mid-market.

For the would-be Cloud customer this course of events poses a dilemma: Do they stick with their IT services provider or go with their telco?

Traditional IT services companies will tell you that as Cloud technology is still relatively immature and that it’s their years of experience in complex IT management that’s the key to Cloud success.

Telcos, on the other hand, will tell you they have the advantage of an already existing network as well as experience in metering, billing and managing a hefty customer base and thus have the potential to act as a ‘one-stop-shop’ for those looking to invest in the Cloud.

As the IT service provider argument will be pretty well known to all, let’s take a look in-depth at the new Cloud kids on the block, the telcos.

Why opt for a telco?

According to Gartner analyst, Rolf Jester, the investment by telecommunications companies in Cloud is based purely on a strategy to grow the business into new areas as the traditional fixed line business continues to decline. However, it’s also an attempt to capitalise on in-house expertise.

“They’ve recognised that what they are good at in a technical sense is managing large infrastructure; it’s an asset intensive business model that a telco has as well as an automated service delivery model,” Jester said.

“Plus they already have large data centres so from that point of view it’s a logical fit. What they bring to the business of the delivery of data centre and infrastructure services is that asset intensity, the ability to make the cultural habit of making investments and then earning their income over a long period of time.”

Jester says that delivering services to large numbers of customers and automating the management and delivery of processes such as provisioning, billing and metering are what telcos are good at.

One of the earlier adopters, Telstra began offering Cloud services in 2008. The company now has an IaaS offering, Silver Lining, in addition to a SaaS platform called T-Suite via which it resells Microsoft’s Business Productivity Online Suite (BPOS).

Telstra general manager, Cloud computing, Mark Pratley, says the telco offers a hybrid model that addresses small to medium business as well as enterprise and government needs.

He notes the company’s significant investment in the IaaS space in order to hone capacity management skills to manage infrastructure at scale.

“The infrastructure component is really designed to start in the enterprise marketplace, so large corporates with large IT shops who have large footprints starting at the infrastructure layer because their enterprise software isn’t a drag and drop type software model,” he says.

The telco has partnered with global management consulting company Accenture to assist consultation with and integration of clients with old systems.

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Macquarie Telecom also operates in the Cloud space, a move the company’s hosting managing director, Aidan Tudehope, says was a natural evolution from managed hosting and virtualisation.

Tudehope slices Macquarie’s version of Cloud computing into two parts; the first includes IaaS, SaaS and PaaS, while the second is concerned with whether or not the service is managed or un-managed, as well as public or private.

The company’s platform is aimed at large corporate environments whether in the public or private sector, while its recently launched subsidiary Ninefold targets developers and startups with a public unmanaged Cloud.

“What we’ve done in our view with enterprise Cloud is rather than have a trade-off where it’s an ‘or’ choice — choose flexibility ‘or’ risk mitigation — we make it an ‘and’,” Tudehope says.

“The key there is to provide it as a managed service as opposed to a public unmanaged Cloud offering.”

According to Tudehope, Cloud is a natural progression from managed hosting and is driven by IT departments wanting the ability to dimension for peak load.

“There are a number of telcos that have seen the magic you get when you combine telecoms with IT and form the Cloud offering as a telco,” Tudehope says.

“However the question is really, culturally, have they moved their business as opposed to the marketing headlines — does your account manager genuinely understand Cloud computing or are they more focused on what’s happening with mobiles, voice and WAN [Wide Area Network] connectivity and the like?”


Copyright © 2011 IDG Communications, Inc.

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