Driving value, beyond IaaS: where next for telcos?
As a business, you can’t beat finding a new use for infrastructure you already own. That became a reality for telcos a handful of years ago, when the growth of cloud computing meant they could put their data centres to good use, offering virtual servers and storage to businesses around the world. IaaS was both a natural progression of their core offering and a welcome source of new revenue. It became the pillar of cloud computing.
Fast forward to 2015 and this service has become commoditized in a market dominated by the Big Three “Hyperscale” IaaS vendors (Amazon – AWS, Google – GCE and Microsoft – Azure). While IaaS is recognized as a core essential service offering it is questionable whether it can drive value for telcos and other service providers in the longer term. With IaaS margins being driven down, what other options are available?
Managing the IaaS cloud
One route is a move into the managed cloud space. For example, some hosting companies have bundled support in with infrastructure as a service, helping businesses by deploying their IaaS cloud, managing updates, troubleshooting and more through a choice of different packages. They are able to make this move because low-price competitors have, so far, kept their offer to a fairly basic IaaS-on-demand service.
Other companies are looking at renting on-premise servers to businesses, with accompanying support. This removes the need for capex but then raises the question of how upgrades will be managed. And it seems to be going against the huge shift of workloads away from on-premise environments into the cloud.
Moving towards a total cloud solution
Both of these strategies are ways to build on IaaS, which we’ll follow with interest. Nevertheless many providers have realized the need to offer other types of services in order to remain competitive. And they’re looking at supplementing IaaS with PaaS and SaaS, especially because the latter is harder to commoditize. More than that, the range of software available, the options to bundle applications with core services, the introduction of new apps and discovery of new ways of working mean SaaS can be customized in a multitude of ways.
Accessing the expertise needed
While SaaS doesn’t present a major shift in the processes that telcos are used to following with IaaS, getting it right can require significant cultural change.
Unlike IaaS, which is generally purchased and managed through IT, SaaS must appeal to a far broader audience. It must be relevant, simple to use and quick to provide value.
From the sole trader wanting to stay on top of their accounts, expenses and VAT through to HR and marketing directors in growing businesses, it has the potential to answer many needs. So packaging, presenting, marketing and selling these cloud services will be just as important as getting the technology right. In my view this balance is best achieved through a turnkey solution. By outsourcing the orchestration of IaaS, PaaS and SaaS, telcos can retain a level of control through brand alignment and product specification, handover the operational elements that take up valuable time and resource, and work together with their partner to develop an effective Go To Market strategy.
It’s in this way that cloud services will continue to drive value for telcos and AVS providers.
For more information on telecoms cloud services and the benefits of implementing a cloud application marketplace, visit the telcos tab in our resources section