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Cloud computing: How service providers can thrive

Some predict cloud computing will relegate service providers to bit carriers, but they are the only players who can assure CIOs on security, performance and availability.

Cloud computing is rapidly coming of age. When Google demonstrated the Wave in May to its third-party developers, industry watchers commented that it was a major breakthrough in cloud computing, and asked whether desktop software has any future.

Given the importance of the network in its delivery, cloud computing presents a significant opportunity for network service providers that are ready to grasp it: the enterprise software license market is estimated to be more than twice the managed network services market. Those service providers that see cloud as an opportunity can tap into an attractive new revenue stream: those that don’t could see their traditional revenue streams eroded.

So how can service providers tap into this ongoing revenue stream? The answer lies in ensuring that the very essence of the cloud – the service provider infrastructure – provides embedded and perceived value to the services delivered through it. Doing this, the service provider has the potential to command incremental revenue streams from upstream customers (the application providers) and downstream customers (the application consumers).

The concept is simple enough: by inserting themselves in the value chain from application to consumer, the service provider can improve the experience of user-to-application transactions that far exceed cloud applications hosted on the open Internet. This in turn can attract a share of the adjacent market of software revenue associated with the use of the applications.

Value per bit strategies are key to sustainable business
To succeed in cloud computing service providers need to move away from focusing on connectivity alone. If they don’t, they will find it hard to differentiate themselves and price pressures will weigh on the cost per bit sent across the network.

The only way to ensure profitability in this ‘cost-per-bit’ model is to maximise scale. We have seen this clearly in mobile telephony, where a lack of differentiation has led to intense price pressure, flat rate tariffs and a decoupling of the revenues from the costs.

The mobile operator suffers the cost of deploying ever increasing bandwidth while the ‘value’ that this bandwidth enables – the access to over the top (OTT) applications and services – benefits the OTT providers.

To avoid this commoditisation, service providers need to add intelligence to the way they deliver these bits. Adopting a ’value-per-bit’ strategy ensures that the value added over and above the simple transport of data is seen and desired by the consumer and by any upstream content or application provider.

This creates a tighter coupling between infrastructure costs and the revenue that infrastructure can attract, thereby ensuring a far more sustainable business model for the service provider. It also benefits consumers and application providers by providing them levels of security, performance and reliability appropriate to the transaction being carried out and the subscribed service.

Behind every cloud lies an intelligent network
Service providers are in a unique position in the value chain, because they can ultimately shape the overall end user experience. They have vital data about end users, where they are, what device they are using, their available bandwidth, and the required bandwidth and security for any given application.

To grasp this opportunity, service providers need to correlate data fragmented across different services and partners in order to create real time user information that can drive changes in the network to deliver a positive user experience.

When combined with the ability to treat this whole collaborative environment as a transactional business at scale, the unique role of the service provider becomes clear. This will be increasingly important as cloud computing develops from ‘best-effort’ OTT services to business-critical enterprise applications with demanding SLAs.

To deliver this, service providers will need a policy and control layer that interacts with applications not only embedded within their own walled garden services, but also with third party applications in an ‘open garden’ model, where they partner with an off-net cloud content / application owner to enhance the experience of delivery to customers. Adding security, performance and availability assurances to open garden applications is key to delivering value and leveraging revenue share from upstream customers.

Driving architectural change
By focusing open garden approaches to deliver a value-per-bit strategy, the potentially dynamic nature of cloud-based services and the concept of flexible demand and delivery will trigger a key architectural transition in network design and thinking: the move from a predominantly static IP Next Generation Network (NGN) to a much more dynamic and agile environment.

Resources will be demanded at scale from the network at an application level. In addition to those demands, the network has to meet application-level SLAs and deliver the ability to transact for those occurrences a massive scale.

To fully realise this collaborative service environment, it is critical for the overriding applications and management systems to have direct access to the underlying infrastructure through a network API. A network API will give managed service providers the ability to develop differentiated services and management capabilities that will support innovation, built-in flexibility and reductions in operational costs.

A sustainable infrastructure business is a win-win for all involved. It’s a win for the service providers tasked with deploying and managing this critical resource, and a win for those using it to deliver an enhanced experience – be that in the form of security at the appropriate level, bandwidth, latency reliability or even access method.

Although technology advances are central in helping service providers capture the opportunity of cloud computing, they aren’t the whole story. In a world of collaborative services with micro-service SLAs that span organizational boundaries, it is the providers who best manage the organizational as well as the technical challenges of cloud computing who will best capitalize on this exciting managed service opportunity.

Источник: Total Telecom

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