The private cloud is the fake cloud

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Danielle Royston, CEO of Optiva argues in favour of the public, as opposed to private cloud for telcos.

Confusion reigns when it comes to cloud and telecoms. CTOs are looking to cloud architectures to increase their processing power, scalability and savings. Yet they are in the dark ages! For starters, there is confusion about private and public clouds and how they differ. Some CTOs think that they can get the same benefits of public cloud with private cloud. Sure, private clouds are ideal if you have money to burn – it is a lot of effort with no rewards.

Often when most telco CTOs refer to the cloud, they mean private cloud deployments, hosting telecom infrastructures on-premises. Most are unaware that private clouds can be complex and costly. When using private cloud, compute and database resources still need to be pre-purchased and provisioned — typically up to 20-30% above peak capacity. Even when the data is virtualized, there is little or no elasticity. Instead, it’s being held in an over-provisioned, private cloud. Basically — a fake cloud.

Moving to the public cloud, on the other hand, can unlock huge cost savings by using external compute resources and it can quickly deliver benefits only possible with a true cloud deployment. With the public cloud, operators can provision for average capacity and scale up or down as needed. That can in turn make a significant difference to the bottom line.

Learning from the enterprise

Many enterprises have deployed Google Cloud, AWS and Azure. For example, Salesforce uses Google Cloud and AWS to host their application services, and Twitter recently moved to AWS. But the telecoms industry hardly hears about the major cloud moves. Why? Most telcos are stuck in the 90s of application management — virtualizing servers, rather than managing IT stacks in the public cloud.

These are some of the key benefits in enterprise that operators can replicate:

  1. Considerable cost savings: When you consider moving an application to the cloud, the business considers the entire stack — from the ground the servers sit on to the people who manage the application. The TCO includes the cost of installation, database licenses, hardware, hardware renewal, power, management time and so on. The public cloud makes all those expenses go away, which is one way it allows CSPs to reduce TCO by up to 80%.
  2. Elasticity: As operators gear up for 5G and the Internet of Things (IoT), processing power and data storage requirements will increase exponentially.  Although no one knows how much is really needed. Getting ready for the peak data demands of these largely unknown variables will be an expensive guess. Leverage the auto-scaling capabilities of public cloud for compute and database resources – that way you will pay only for what you need, when you need it.
  3. Innovation: The reality is that hyperscale web companies out-gun CSPs in terms of R&D and spending on data centers. Google spent more than US$40 billion building data centers to support its public cloud. It spends more than US$3 billion annually on cloud security and announced an additional US$13 billion spend for 2019 alone.

How not to go ‘cloud-native’

The public cloud’s architecture cannot be replicated with an on-premise cloud. Taking existing software architecture and dropping it into Google Cloud or AWS (known as a “lift and shift”) will not deliver the benefits operators hope to gain from the cloud. While “lift and shift” is a quick and dirty way to move to the cloud, it’s not cloud-native, and it’s not the same as an application architected to run “cloud-natively.”

Cloud-native means that an application is built from the ground up to work in the cloud. It is the responsibility of CTOs to dig into vendor terminology that might be misleading, such as “cloud-ready.” Doing so helps to ensure that what you are considering is genuinely fit for the carrier’s purpose and allows the operator to realize the real, full benefits of the public cloud.

If an application claims to be “cloud-ready” or “cloud-native” but requires an old-school Oracle relational database, you’ll have serious problems — and vast license fees too. Instead, a genuine cloud-native database will be faster, more powerful and cost-effective. A good sign that your application is architected and fully suited for the cloud is also when it utilizes containerization, like Kubernetes.

A turning point

It’s surprising that more CTOs have not connected the dots when it comes to the benefits of public cloud. Given the cost pressures facing the industry, the savings alone of moving to the public cloud should be a no brainer. 2019 has been a turning point for telco engagement with the public cloud — one of the biggest technological innovations of the past decade. Don’t take the easy route and go with a fake cloud.

 

Danielle Royston OptivaDanielle Royston is CEO of Optiva Inc. (TSX: OPT) and has close to 20 years of executive experience in the technology industry with an emphasis on turning around enterprise software companies. Before joining Optiva, she served as Portfolio CEO for the ESW Capital family of companies, leading over 15 turnarounds during her tenure. Royston holds a B.S. in computer science from Stanford University.

Success of 5G depends upon operators’ monetization and pricing strategies

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Shay Assaraf, CMO of Optiva takes a look at how operators can make the most of the 5G opportunity.

As headlines and advertisements increasingly tout the promise of 5G, it’s important that operators not fall for their own hype. While 5G certainly holds promise for creating new business models and service segments, realizing that promise depends, in large part, on the development and implementation of sound monetization and pricing strategies.

5G completely alters the way in which communication happens by improving throughput and reliability, lowering latency and increasing network robustness. Likewise, 5G alters what is communicated, enabling machine and device communications that underpin connected autonomous cars, smart cities and other next-gen applications. Furthermore, the dynamic and elastic nature of 5G requires operators to fully embrace and utilize the public cloud to support demand for those applications and decrease time to market for launching new, related services. As such, operators cannot and should not apply 4G thinking and 4G IT infrastructure to monetize 5G.

Instead, operators should visualize the types of 5G environments they want to support and then build a business case around it. Operators need to determine the applications they want to support and design ways in which they can deeply immerse customers into experiences and content. They should consider how customers will interact with each other, as well as with machines and devices, over the 5G network.

Throughout this process, consideration should be given to opportunities for monetization. Likewise, pricing strategies should be developed to address the unique nature of 5G offerings. Following are three key areas that operators should consider when developing such plans.

1. Monetize the network

5G enables operators to fully leverage their network and infrastructure capabilities to create new monetization opportunities, including:

  • Developing and selling premium service offerings that are charged and upsold based on quality of service (QoS).
  • Monetizing the mobile network to sell fixed wireless services.
  • Enabling developers to monetize applications that connect to devices, generating revenue from developers, as well as device end users.
  • Creating ecosystems with a variety of partnership opportunities and revenue-sharing models by leveraging infrastructure.

2. Monetize the slice

According to research from Gartner, the greatest revenue potential for 5G will be developed through network slicing, which supports multiple use cases, business models and services. Network slicing enables operators to create multiple virtual networks using a shared physical infrastructure. They can then tailor slices of the network to highly specific use cases and unique business requirements based on capacity, latency, quality of service (QoS), security and other variables.

Network slicing enables operators to deploy only those functions needed to support each customer and/or market segment, allowing them to differentiate through service customization. Slicing also enables “network as a service” offerings that enable operators to manage the slices independently and apply rules as needed. As such, operators can develop offerings for third-party tenants, wherein they maintain control over service deployment and operation and adjusting access according to each agreement.

For operators to truly monetize, the slice will require significant changes in business and operation support systems (B/OSS). Orchestration and Intelligent network functionality - managed in real time - will be key in the OSS layer to enable automated network operations. Meanwhile, the BSS layer requires more flexibility to rate and then charge in real time for a new wave of services for any account, customer, subscriber or user.

3. Monetize the enterprise market

While 5G enables operators to expand service offerings to consumers, the bigger opportunity is what 5G enables for enterprises, including applications for B2B, B2B2X and IoT market segments. For the B2B market, 5G enables mobility solutions and cloud services to SMEs and large corporations. In B2B2X markets, the concept of “customer” expands even more. For instance, an operator might provide high definition video services to a stadium operator that then sells the service to its premium customers, who are able to capture lost moments and referee decisions using virtual and augmented reality.

Likewise, operators glean great potential from monetizing enterprise applications for IoT. In fact, Gartner predicts that the enterprise market, as opposed to the consumer market, will account for more than 90 percent of the overall IoT services spend.

Determining the pricing model

As operators determine how they want to monetize 5G, consideration also should be given to pricing models for new products and services. Pricing models should include options for one-time charges, subscriptions, usage-based charges, “pay as you go” applications, freemium models and charges for application programming interfaces (APIs).

For operators to maximize ROI on their 5G investments, they need to clearly understand the costs and what they stand to gain from 5G transactions. It’s key to implement end-to-end real-time billing and charging to glean the most revenue for every interaction on the 5G network.

Without question, 5G networks enable vibrant use cases that are creating excitement and expectation for operator networks. However, a well-developed monetization and pricing strategy will enable operators to exceed the expectations of 5G, differentiate their service offerings and ensure future revenue.

 

Shay AssarafShay Assaraf is CMO of Optiva. He has a wealth of B2B and B2C experience in marketing and strategy with more than 15 years in the telecom industry. At Amdocs and before that with Pontis (acquired by Amdocs), Assaraf held various positions, and in his last role, he led the marketing consulting and analytics teams addressing customers’ challenges using analytical data, machine learning and artificial intelligence tools and expertise.