As customers become more accustomed to consuming information and communications technologies (ICT) through cloud delivery models, the cloud market will increasingly cannibalise legacy delivery models for ICT. Telcos have faced disruptive technologies in the past — voice-over-IP cannibalising public switched telephone networks, and standard Internet Protocol networks cannibalising expensive legacy network technologies. Some telcos have acknowledged the need to sacrifice legacy service revenue to better meet the needs of customers. As an example, Orange, Telefónica, and Deutsche Telekom all released applications (apps) in 2012 that provide access to free voice calls and short message service through an over-the-top (OTT)-based service across multiple networks and operating systems.
If cloud is destined to become as ubiquitous as other disruptive changes, then should telcos embrace a new business model for cloud and actively migrate their business models towards it, rather than follow a wait-and-see approach?
Telcos have successfully managed wide area network propositions, but the step beyond that – into deeper outsourcing or specific managed services for customers – often resulted in bespoke features that aren’t part of the standard models telcos can repeatedly deliver. These bespoke features and contracts have led to a business model that seems to rely on a heroic culture that’s always on the edge of being out of control. The result has been a patchwork of process and systems fixes to get a new service launched.
To transform from an old operating model and implement a new, more efficient operating model is a daunting and difficult task. There are organisational, process, and product management and overall infrastructure transformation challenges that eventually prohibit the delivery of services through an agile, cost-effective environment.
Cloud services, the telcos will argue, are nowhere near as diverse or complex as the managed networks that they have built for their customers. Telcos are well positioned to serve the B2B cloud market, because they own the network upon which the cloud applications and services are delivered. They have experience in providing the enterprise-wide network service levels that corporate customers need. Telcos have the means to take the lead, given the reach of their networks and their ability to manage large communication and hosting centres. Identifying and delivering the right combination of services that creates a unique customer experience will be the key to their success.