The cloud computing market is exploding and service providers are beefing up their strategies to take a share of turf that was once dominated by big IT suppliers. But are telco providers up for the challenge? Kirk Laughlin reports.
The top five things the large US carriers (basically AT&T and Verizon) have to do to not only roll out enterprise-class cloud computing services – but someday become marketplace titans are:
- Fully exploit the innovative capabilities of research facilities like AT&T Labs
- Continue investing in the growth of professional services divisions
- Understand the business of the customer
- Keep the global footprint robust, flexible and world-class
- Change your operating culture
At first glance the list probably doesn’t look that daunting. Most Fortune 100 companies know all about investing, innovating and adapting. However, for AT&T and Verizon, companies that have clung tightly to legacy and heritage, adapting and taking a lead role in unfamiliar territory does not come naturally.
This issue is particularly relevant to the fast approach giant-sized market opportunity known as cloud computing. Both AT&T and Verizon are desperately hungry to become major players in offering on-demand IT application and hosting services to enable higher performing computing for corporate customers.
Plenty of observers, myself included, believe that the telcos are actually in a great place to take advantage of the cloud business. They have the network – and particularly the VPN capabilities for reliable transport; they already have relationships in servicing corporate clients and they are quite familiar with a nifty little acronym known as the SLA.
What is troubling, however, are the softer issues in maturing to become less about taking orders, and more about partnering in customizing IT solutions to fit the unique requirements of individual customers.
Is the customer ordering burgers and fries, or is the requirement really a medium rare burger with loads of onions and salt-free chips?
In recent interviews and conversations with IT decision makers, there is plenty of trepidation around cloud computing because of the security risks. Speak to any financial services CIO and the last thing they’ll be doing is shipping off vital customer information to some random data center where pools of data from different businesses are stored. These IT leaders want their providers to not just introduce cost savings, but also have a clear level of familiarity around risks inherent in their businesses, compliance requirements, application development environments and finally – and perhaps most importantly – offer strategic input on the functions IT provides to lines of business.
In other words, cloud will not just be about selling a particular service. If telcos are to be successful, it will require the ability to maintain ongoing, proactive engagement that brings a measurable amount of business value to the table.
Is the US telecom provider culture ready to make that shift? My suggestion is to keep an eye on what people like Joe Weinman, AT&T’s global portfolio strategy and business development head, have to say about the telco’s unique contribution to the corporate IT customer. Weinman has a very compelling way of expressing the value of AT&T’s network in supplying high-grade cloud services. What will be interesting is how those services will interlock with business customers whose demands will be inconsistent and difficult to anticipate.
If this is the beginning of an era of the truly flexible and adaptable telco – bring it on – we’ll be excited to see the results.
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