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					            Presentation for Cloud Services Breakfast Briefing

            Telco opportunities in cloud services

            Gareth Williams

            29 March 2011
            Ref: 19510-85




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                            Introduction

                            Defining cloud services

                            Stimuli for cloud services

                            The market opportunity

                            The cloud services value chain and telco strategic plays

                            Threats to the cloud services market




                                                                                       19510-85




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            Introduction                                                                                                                           3

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                 sustainable business benefits to clients around the world

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                                 Introduction

                                 Defining cloud services

                                 Stimuli for cloud services

                                 The market opportunity

                                 The cloud services value chain and telco strategic plays

                                 Threats to the cloud services market




                                                                                                                                               19510-85




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            Defining cloud services                                                                         5


                Cloud computing combines three concepts
                to offer a fully hosted solution




                           Infrastructure as a
                                                       Platform as a service    Software as a service
                                 service




                                                                                                        19510-85




            Defining cloud services                                                                         6


                Cloud computing incorporates different
                flavours


                                                       Community
                                                       clouds




                                                                      Public clouds
                                      Private clouds




                                                   Hybrid clouds



                                                                                                        19510-85




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                                                                                                    7




                                     Introduction

                                     Defining cloud services

                                     Stimuli for cloud services

                                     The market opportunity

                                     The cloud services value chain and telco strategic plays

                                     Threats to the cloud services market




                                                                                                19510-85




            Stimuli for cloud services                                                              8

                Cloud services are being driven by recessionary factors,
                changing ICT demands and increasing enterprise interest

                                                                  Enterprises
                                                                   having to
                                                                closely adhere
                                                                core business
                                                                  objectives




                                                                   Cloud
                                                                  services




                                                                                                19510-85
                                   Source: Analysys Mason




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                                     Introduction

                                     Defining cloud services

                                     Stimuli for cloud services

                                     The market opportunity

                                     The cloud services value chain and telco strategic plays

                                     Threats to the cloud services market




                                                                                                19510-85




            The market opportunity                                                                  10

                We forecast that revenue from enterprise cloud services
                will treble over the next five years



                            USD12.1 billion in 2010 growing to
                            USD35.6 billion in 2015
                            SaaS dominated cloud shifts toward
                            more IaaS over next 5 years
                            Channels have unique roles to play
                            Telcos (CSPs) need to consider
                            their market opportunity and how
                            best to maximise it




                  Source: Analysys Mason, 2010



                                                                                                19510-85




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                                                                                                                                                                    11




                                    Introduction

                                    Defining cloud services

                                    Stimuli for cloud services

                                    The market opportunity

                                    The cloud services value chain and telco strategic plays

                                    Threats to the cloud services market




                                                                                                                                                                19510-85




            Cloud services value chain                                                                                                                              12

                There is a huge mix of requirements for and provision of
                cloud services
                                Revenue                            Vodafone                              OBS
                    Note:       potential                                                                                 IBM
                  revenue                                Google                  salesforce.
                  potential                                                         com                   EMC
                                                                                                                             CISCO
                 not to scale                                     Amazon
                                            USD 50–75/user                                          VMware                HP
                Number of companies                                                                                                          USD 40–50/user

                  Public-cloud revenue
                   potential (estimate)
                 Private-cloud revenue
                    potential (estimate)
                                                                                                                                                     Company size
                                                SMEs                               Mid-market                     Very large companies

                                                    Public cloud                     Hybrid cloud                     Private cloud
                                Service              Off-premises                                                      On-premises
                                type                Shared servers                                                Owned, dedicated servers
                                                  Managed by provider                                               Managed by owner
                          Mostly SaaS
                                               Email etc.   CRM/SFA
                                                                           ERP
                                                                                                 Virtualisation
                                                                           Specific solutions                                       Virtualisation
                           Mostly IaaS          Backup      CPU                                                             International deployment
                                                                                           CPU          Backup
                                                                                                                                                     Company size
                                                SMEs                               Mid-market                     Very large companies


                                                                                                                                                                19510-85

                                 Source: Analysys Mason




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            Cloud services value chain                                                                                       13

                So are telcos ready to take advantage of the cloud
                services chain?




                  Network                                                                        System
                                         Infrastructure   Platform   Application    Service
                connectivity                                                                   integration/
               and hardware
                                          and hosting     services    software     provision
                                                                                                consulting
                                                                                                              Customer




                                                                                                                         19510-85
                               Source: Analysys Mason




            Cloud services value chain                                                                                       14

                Telcos should consider that cloud services is breaking
                the “traditional” value chain
                                                                       Platform
                                                                       services




                                                                     Customer
                                                                       provision
                                                                        Service




                                                                                                                         19510-85

                               Source: Analysys Mason




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            Cloud services value chain                                                                                     15

                Telcos should also consider that customer requirements
                for telco and cloud services are different
                                                               Telecom services requirements




                                                                        Healthcare                            Small
                          Corporate
                                                                         customer                           business
                          customer
                                                                                                            customer




                                                                  Cloud services requirements




                                                                        Healthcare                            Small
                          Corporate
                                                                         customer                           business
                          customer
                                                                                                            customer




                                                                                                                       19510-85
                               Source: Analysys Mason




            Cloud services value chain                                                                                     16

                Telcos should also consider that in the “telco world”
                customers all have different requirements

                                                        The world of telco product provision in the cloud
                                                                          service world




                                                                        Healthcare                            Small
                          Corporate
                                                                         customer                           business
                          customer
                                                                                                            customer




                                                                                                                       19510-85

                               Source: Analysys Mason




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            Cloud services value chain                                                                                                                 17

                Telcos also need to consider the provision of generic
                horizontal …
                      Generic solutions                                                                                           Starting point


                                         PSTN                                                                      Horizontal A
                      Horizontal /
                      cross              Unified communications                                                    Horizontal B
                      vertical
                      products,          Connectivity                                                              Horizontal C
                      services,
                      solutions          Processing power                                                          Horizontal D



                      Vertical packaging

                                          Vertical A     Vertical B    Vertical C Vertical D       Vertical E
                                          Manu           Gov           Healthcare Retail           Other
                      Vertical
                      products,
                      services,
                      solutions          PSTN                                                                     Horizontal A

                     Horizontal /        Unified communications                                                   Horizontal B
                     cross
                     vertical            Connectivity                                                             Horizontal C
                     products,
                     services,           Processing power                                                         Horizontal D
                     solutions
                                                                                                                                                   19510-85
                               Source: Analysys Mason




            Cloud services value chain                                                                                                                 18

                … and bespoke vertical solutions, if they are going to
                benefit from the changing cloud services value chain
                      Full vertical offering



                                      Vertical A        Vertical B    Vertical C   Vertical D       Vertical E
                                     Manu               Gov           Healthcare   Retail           Other
                                         Inventory        Electro-     Remote       Mobile stock
                                         manage-          nic ID       monitor      replenish-
                                         ment                                       ment
                                                          Biometric    Blood
                    Vertical             Order            check        tracking     CRM
                    applications         manage-
                                                                                    Mobile SFA
                                         ment




                                     PSTN                                                                        Horizontal A

                                     Unified communications                                                      Horizontal B
                    Horizontal /
                    cross            Connectivity                                                                Horizontal C
                    vertical
                    applications                                                                                 Horizontal D
                                     Processing power

                                                                                                                                   End game

                                                                                                                                                   19510-85

                               Source: Analysys Mason




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            Cloud services value chain                                                                                               19

            What do telcos need to do become a lynchpin in the cloud
            services value chain?

                           Customer support competency                    Evaluate, enhance and aggregate
                                  requirements                                      competencies
                   •   Provisioning, fulfillment
                   •   Maintenance / support                           Evaluate competencies
                   •   Integration                                          Channel strategy
                   •   Customisition                                        Technology strategy – including platform
                                                                            Customer segment strategy
                   •   Localisation                                         Vertical industry strategy
                   •   Service aggregation
                                                                       Internal competencies may need to be enhanced:
                        Technology support competency                        Build internal competencies
                                 requirements                                Buy-in – M&A
                   •   Application development                               Through partners
                   •   Application maintenance
                                                                       Competencies need aggregating as part of a cloud
                   •   Data centre management                          strategy
                   •   Hardware development / maintenance
                   •   Service provisioning
                   •   Security


                                                                                                                                 19510-85

                               Source: Analysys Mason




            Cloud services value chain                                                                                               20

                Telcos need to think much more carefully about their
                relationship with partners in the context of the value chain

                    Telcos should consider the value of partners in the cloud services value chain


                                                        Win-win for telco and telco partners?

                                                                                         Better, more varied solutions for
                                                                                         customers - single ordering,
                           Minimised costs and cost of                                   provisioning, fulfillment process for
                           service deployment                                            multiple products
                                                                                         Single point of contact for customers
                           Increased differentiation of                                  Opportunity to provide single sign-on
                           services                                                      for multiple services
                                                                                         Access to new revenue streams
                           Increased availability of                                     Maximising efficient use of
                           horizontal and vertical                                       infrastructure and support services –
                           applications and services                                     keeping costs down
                                                                                         …
                           Increased provision of bespoke
                           solutions




                                                                                                                                 19510-85

                               Source: Analysys Mason




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            Cloud services value chain                                                                           21

                Telcos must not over-extend themselves and try to offer
                everything to everyone, or they face a high risk of failure




                                                                          Platform
                                                                          services
                                                                          Telco




                                                                          provision
                                                                           Service




                                     Telcos need to aggregate the cloud competencies of many partners, but
                                                       based on customers’ requirements
                                                                                                             19510-85
                               Source: Analysys Mason, company websites




                                                                                                                 22




                                   Introduction

                                   Defining cloud services

                                   Stimuli for cloud services

                                   The market opportunity

                                   The cloud services value chain and telco strategic plays

                                   Threats to the cloud services market




                                                                                                             19510-85




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            Treats to cloud services                                                                                        23

                Telcos, and the market, must address cloud services
                market inhibitors



                          • Registered IT partners' reluctance                  • Brokering resources
                             to sell cloud services instead of                       (internal/external)
                             premises-based solutions                                   • Redeployment to value-
                                 • Explore new business models                             creation projects
                                       - hybrid                                         • Target finance department /
                                                                                           procurement

                                                                 Select key issues


                          • Regulatory/compliance/governance                     • Security within the cloud is not
                             issues                                                   mature
                                 • Adapt services                                         • Provide assurance
                                 • Buy in advice / work with                              • Deliver the capability
                                       experts                                            • Delineate between private
                                                                                            and public cloud



                                                                                                                        19510-85




                                                                                                                            24

                Telcos need to better understand their customers, not all
                applications are equal

                      What applications are dynamic / static (changing usage throughout the day)?
                      What is the spare capacity in an organisation’s “private” cloud and how can the public cloud
                      support?
                      Are there any constraints preventing applications being migrated?
                      Is the organisation ready to adopt a new “charging model”?
                      Has the organisation thought about a cloud roadmap? Has it already consolidated its vendor
                      suppliers?




                                                                                                                        19510-85




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            Variance in application usage is one determinant for
            migrating to cloud services

                                  MVNO model - excess capacity by time of day
                                                          Off-peak         Peak     Off-peak


                                  Usage = app usage
                                                                                                 Variance in the cloud word
                                                                                                  makes applications more
                                                                          Week                    appropriate for migration


                                                                          Weekend
                                                      12 AM          8 AM 12 PM   6 PM   11 PM


                 An application that has no usage variance may not be appropriate to migrate to the public
                 cloud
                 Customers can use spare capacity in a “private” cloud and offload the rest to the public cloud
                      For appropriate applications
                 This is the most economic option for adopting cloud services



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                                                                                                                                  26

            Thanks for your attention




                                                                     Gareth Williams
                                             Gareth.williams@analysysmason.com
                                                              Analysys Mason Limited
                                                         Bush House, North West Wing
                                                        Aldwych, London WC2B 4PJ, UK
                                                              Tel: +44 (0)845 600 5244
                                                              Fax: +44 (0)20 7395 9001
                                                              www.analysysmason.com


                                                                                                                              19510-85




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