|Issue:||Europe II 2010|
|Topic:||Reaching for the cloud|
|Title:||Head of Business Solutions|
|Organisation:||Nokia Siemens Networks|
Jürgen Walter is Head of the newly formed Business Solutions Business Unit at Nokia Siemens Networks and is a member of Nokia Siemens Networks’ Global Executive Board. He previously headed the Converged Core business at Nokia Siemens Networks, was Head of Integration Planning of Nokia Siemens Networks, and Head of Strategy at Siemens Communications. Jürgen Walter holds a degree in electrical engineering from the Technical University of Munich.
Cloud computing has to demonstrate it is robust and reliable enough for the needs of the telecom business. Cloud computing for telecom will need to be implemented in a controlled and planned manner in order to avoid problems experienced in the past with public clouds and disaggregated value networks. Security and quality of service are critical success factors that have to be considered. Defining roadmaps and service level agreements will be key to operators’ success.
A few years ago, when Amazon announced its Elastic Cloud Compute (ECC) web service allowing customers to ‘rent’ computing resources from its data centre, few realized that cloud computing, a concept that the top IT players had to embrace to defend their business, could bring major benefits to the telecom sector. The concept envisions a day when businesses and consumers will no longer need to own and manage technology infrastructure, platforms and software applications themselves, but rather use virtualized resources stored in the ‘cloud’ or the Internet, as a service and pay for what they use. Therefore for the telecom industry, which is facing major revenue and growth challenges and is in need of a transformation, cloud computing clearly is an opportunity worth considering. The first signs of future growth can already be seen. Several European providers are already bundling cloud services with connectivity. Last year, Vodafone in partnership with EMC-owned Decho, launched a data backup service for consumer and businesses on its European network.1 Orange Business Services, the business-to-business wing of France Telecom has also recently announced its plans for the cloud for enterprise customers.2 The opportunities are limitless. For businesses, telecom operators could offer real-time applications, collaboration, security, infrastructure, cloud-ready networking and vertical solutions for specific industries. However, its acceptance within the industry so far has been limited. A key reason for this is that apart from communication service providers (CSPs) needing to identify cloud-ready applications both in IT and telecom, telecom services are dependent on latency and availability and it hasn’t been proven whether cloud computing is robust and reliable enough for the needs of the telecom business. In addition, security of cloud services and quality of service are critical success factors that have to be considered. That said, while cloud computing may not be a mega trend within the telecommunications business today, its benefits make it a viable bet for the future. It can equip CSPs with the flexibility needed for rapid service innovation, so that they can introduce new services and meet evolving consumer needs; it can also help improve internal efficiencies, enabling operators to save costs and increase their profitability. Need for the five nines To understand the factors that make its adoption challenging, we need to take a closer look at the needs of subscribers and service providers, and the way that telecom systems have been built. Communications infrastructure has emerged as a lifeline for consumers and even economies, and telecom-grade systems are designed to support real-time applications where five-nine’s (99.999 per cent) availability is a pre-requisite. That translates to a total downtime of just about five minutes in an entire year, an outage benchmark that Google would not even recognize in its service level agreement (SLA). A CSP not having access to a subscriber’s usage details for one hour can lead to chaos, with the business losing revenue and even precious customers. A practical example is prepaid charging, which needs to be ‘always-on’ as CSPs rely on real-time information about the credit status of the prepaid account while determining if they can allow calls, messages and other services. That’s not all – imagine you as a subscriber not having access to a mobile service for one hour – and the discomfort this would create for you. Huge potential for cloud computing in telecom For CSPs, the promise of cost efficiencies, the ability to create differentiated revenue models and offer new services to customers indicate that cloud computing can help drive business transformation within our industry, and is an idea whose time will come. However, the journey will not be easy and will require a close look at many aspects. Above all, the industry will need to invest in building a winning ecosystem. Taking an outside-in approach Rule number one is that customers should be in the driver’s seat towards clouds. CSPs need to decide the best way to capitalize on the cloud computing opportunity. They need to leverage their knowledge of the network, customer needs and how the enterprise customer and their network and services need to integrate in an end-to-end process. The opportunity is huge. Verizon Communications in the USA has adopted a virtual approach to enterprise resource planning, consolidating hardware and other IT components, by implementing cloud computing for internal processes. The CSP has reduced operating costs by one-third and improved IT performance by 400 per cent.3 Taking this a step further, it could re-deploy these cost savings towards investments in affordable, high-value cloud services, to create new revenue streams for itself. This is similar to what Australian CSP Telstra is doing with its T-suite service. With T-suite, Telstra’s customers can access a range of applications such as email, collaboration and conferencing, data security, customer relationship management (CRM), financial and human resource management, as well as online storage with a software-as-a-service (SaaS) model, for a monthly subscription fee.4 It works well for small business customers who can keep their IT costs down, paying only for what they use. Telstra and its software business partners, in turn, have a new revenue model, with vast business potential. Realizing the value within – one step at a time By migrating applications to the cloud, operators can reduce staff training costs, reduce management burdens, and focus more on their core business operations. For most operators, the internal transition will begin with non real-time telecom systems that are quite similar to IT systems. Most applications such as CRM, service and content delivery, management systems, many departmental systems, and value added services (VAS) fall within this category. For example, offline billing/invoice generation for post-paid customers is ideal for starters, and also nourishes billing vendor competition. Telecom operators can also expose their assets as a service in a secure and trusted manner to their business partners. Telecom has been subject to server multiplication to support the increasing quantity of voice related applications.5 While legacy telecom infrastructure may not be migrated easily, some telecom hardware is already moving to standardized IT hardware and there, one can start to leverage virtualization and cloud computing. As the strict definitions of IT and telecom gradually fade, there will be fewer differences, making the switch to cloud computing easier over time. Real-time applications on the other hand will move to the cloud only when technology evolves to guarantee high reliability and availability – which means that there are few and minimal time gaps that disrupt service delivery. Standards set by the telecommunications industry have set the latency or time gap allowed for charging on carrier-grade networks at 150 milliseconds. The fact is that today this cannot be achieved by the best virtualization middleware. Telecom subscriber data management systems and gateways are similar examples. Technology evolution is naturally fast and in a few years time the situation is likely to be very different. Choosing the right model Once the decision on what needs to be moved to the cloud is made, CSPs need to consider what kind of cloud services would make the most sense. There are several options that can be considered – private, public or hybrid clouds. Personally, I believe that private clouds are ideal for CSPs. A private cloud is a CSP’s internal computing architecture that supplies cloud-based or hosted services to their customers and business partners. Private clouds offer the benefits of virtualization without the inherent risks – loss of control over data stored in the cloud, security, service availability and overall control over performance, as it is managed by the organization it serves. In the foreseeable future many telecom applications will move to private clouds, like previously mentioned VAS servers, reporting and management systems, and service delivery, just to mention a few. Public clouds like those offered by service providers such as Amazon, Microsoft Azure and Google are more suitable for non time-critical applications such as CRM, web, email and remote meetings. These services are generally available to the masses and charged per-use or delivered free – such as Google Docs. Users of these services typically cannot expect the same standards of quality of service and security as those who use private cloud services. The benefits of public clouds include higher economies of scale and a rich ecosystem of third party offerings. On the other hand, they have different standards for reliability and their SLAs on outages may not meet enterprise needs. Finally, there’s the hybrid cloud concept, which is a few years away, but is expected to be the way ahead. A hybrid cloud environment will see the co-existence of multiple internal or external service providers, where non-critical information will reside with a public cloud service, while mission-critical applications will be hosted on the operator’s internal or private cloud. Disciplined implementation To live up to its promise, cloud computing for telecom will need to be implemented in a controlled and planned manner. Examples from the past indicate that public clouds and disaggregated value networks may lead to problems. In the USA, a device backup service was provided from the cloud, without a correctly planned end-to-end SLA chain, and due to this many people lost their device data. Such end-to-end SLAs are an opportunity for quality focused CSPs. There are also technology factors to consider such as understanding what applications are available for the cloud or what model should be implemented. Finally, a concept like cloud computing raises several policy issues, which existing regulations do not cover. Customers will expect protection of privacy, data security, reliability of service and clearly defined liabilities in case of disruptions of cloud services, all of which will need revisions in IT and telecom regulations.6 Given the potential impact of cloud computing on the telecom industry, communication service providers should explore cloud computing but with a clear roadmap in mind. It would be prudent for them to simplify their architecture and application landscape and decide what needs to be moved to the cloud before they invest in the technology, so that they get it right. So when my customers ask me, “Should I move to the cloud?” my response usually is, “Yes, it is time to start the journey.” l 1 http://www.vodafone.com/start/media_relations/news/group_press_releases/2009/pcbackup.html 2 http://www.itwire.com/component/content/article/132-virtualisation/25982-orange-business-services-launches-cloud-computing-service 3 http://www.lightreading.com/document.asp?doc_id=185578 4 http://www.telstrabusiness.com/business/portal/online/site/productsservices/tsuiteapplications.11003 5 http://www.ucstrategies.com/unified-communications-strategies-views/cloud-computing-for-telecom-why-now.aspx 6 http://www.umiacs.umd.edu/~jimmylin/publications/Jaeger_etal_2008.pdf