Vous êtes sur la page 1sur 20

AND EXECUTION

MARKETS, POSITIONING
QUICK INSIGHTS
2 0 1 1 | www. t mf or um. or g
APPROACHING
CLOUD SERVICES
Sponsored by:
Free to TM Forum members
US$995 where sold
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
2 www.tmforum.org QUICK INSIGHT
ENABLING SIMPLICITY
Being a service provider in todays market isnt
easy. Delivering the right level of service, at the
right price - and making a prot is a tall order.
To succeed, your business needs to run with
maximum agility, simplicity and efciency.
As the global industry association focused on
simplifying the complexity of running a service
providers business, TM Forum is collaboratively
delivering the standards that are taking the cost
and risk out of, and putting the exibility into,
running your business.

Visit www.tmforum.org today to join the worlds
leading service providers who are using our
Frameworx standard to enable simplicity.
EnablingSimplicityAD.indd 1 3/3/11 9:33 AM
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
3 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
2011. The entire contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or
by any means: electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, TeleManagement Forum. TM Forum would like to thank the sponsors and
advertisers who have enabled the publication of this fully independently researched report. The views and opinions expressed by individual authors and contributors in this publication are provided in
the writers personal capacities and are their sole responsibility. Their publication does not imply that they represent the views or opinions of TeleManagement Forum and must neither be regarded as
constituting advice on any matter whatsoever, nor be interpreted as such. The reproduction of advertisements and sponsored features in this publication does not in any way imply endorsement by
TeleManagement Forum of products or services referred to therein.
Report author:
Rob Rich
Managing Director
TM Forum Insights Research
rrich@tmforum.org
Publications Managing Editor:
Annie Turner
aturner@tmforum.org
Editor:
Claire Manuel
cmanuel@tmforum.org
Creative Director:
David Andrews
dandrews@tmforum.org
Commercial Sales Consultant:
Mark Bradbury
mbradbury@tmforum.org
Publisher:
Katy Gambino
kgambino@tmforum.org
Client Services:
Caroline Taylor
ctaylor@tmforum.org
Corporate Marketing Director:
Lacey Caldwell Senko
lsenko@tmforum.org
Report Design:
The Page Design Consultancy Ltd
Head of Research and Publications:
Rebecca Henderson
rhenderson@tmforum.org
Advisors:
Keith Willetts, Non-executive Chairman, TM Forum
Martin Creaner, Chief Executive Ofcer, TM Forum
Nik Willetts, Senior Vice President of
Communications, TM Forum
Published by:
TM Forum
240 Headquarters Plaza
East Tower, 10th Floor
Morristown, NJ 07960-6628
USA
www.tmforum.org
Phone: +1 973-944-5100
Fax: +1 973-944-5110
ISBN:978-0-9838027-3-0
This publication is free to TM Forum members
Page 4 Executive summary
Page 5 Section 1
Understanding markets
Page 9 Section 2
Delivering cloud services positioning
and execution issues
Page 13 Section 3
How might service providers approach things?
Page 16 Sponsored feature
Parallels
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
4 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
There must be hundreds of permutations for
deploying cloud services, and it seemed that most
of them were touched upon at the Innovative
Service Provider executive roundtable at TM
Forums Management World 2011 in Dublin.
Whether it was market targeting, service
portfolios, business models, operational models,
partnering strategies or a host of other topics,
opinions varied greatly.
Only a handful of topics drew broad
consensus; namely the need to approach cloud
services rst from a market perspective, the
challenges of data security and privacy, and
the need to educate regulators in anticipation
of new rules. We look at these market issues
in Section 1 of the report, in particular, at how
service providers could segment and address
various markets.
The debate and our survey of attendees at the
roundtable all very senior industry executives
indicated that small and medium-sized
businesses are their preferred target.
The second favorite choice was that all
segments were important, and the third
enterprise customers. Service providers overall
were least interested in consumers, who
they viewed as unwilling and unable to pay
sufciently well to be of much interest.
The notion that service providers should
consider how they could best play the role
of enabler to communities of interest was
something of a departure, with eBay cited as
a good example of how this could be done,
bringing buyers and sellers together and
supporting both, as well as customers, with a
range of tailored services.
Section 1 also examines the relative merits
of and some common misunderstandings
about the various X as a Service (XaaS)
business models for cloud as major revenue
generators over the next two years.
Section 2 seeks to establish just how
fundamental a change cloud is concerning
business models and ways of operating, and the
implications of these changes.
There is some diverse and original thinking
around what the service providers potential
strengths and weaknesses are as providers of
cloud it is both interesting and signicant that
some attributes are mentioned as potentially
being both.
We also look at how the market for cloud
services has been affected by some recent
major outages at leading cloud providers and
natural disasters, such as those suffered by
Japan earlier in 2011.
Section 3 has a brief round-up of possible
future roles for service providers and some
recommendations for would-be cloud service
providers. It also includes a brief account of TM
Forums major initiatives around cloud and how
you can join in.
The Forum would like to thank all those
who attended the roundtable in Dublin and
so generously shared their thinking. We are
particularly grateful to Colin Orviss, Founding
Partner, Parhelion Global Communications
Advisors; Chris Lewis, Global Vice President of
International Telecoms and Networking, IDC;
and Jim Warner; President of The Westport
Group, who served as highly effective
provocateurs.
Executive summary
Whether it was market targeting, service portfolios, business models, operational models,
partnering strategies or a host of other topics, opinions varied greatly.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
5 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
Understanding how markets
are emerging is essential
As we said in the introduction, one of the
few points of consensus around the myriad
topics was the need to understand markets
and how they are emerging as a precursor to
any reasonable cloud strategy. But beyond the
principle of market-driven planning, again there
was a broad diversity of opinions.
The debate on markets was initially spawned
by a discussion on business models, and who
really controlled the customer. This brought a
torrent of responses, with a few looking for ways
to lock the customer into the relationship with
their service provider, while most argued that the
best strategy was to try to present a clear, simple
and compelling offer and experience to the
customer so they would want to stay.
This faction argued vehemently that no one
controlled the customer, rather that in a value
chain as rich, diverse and increasingly ubiquitous
as cloud, customers would have a great deal of
choice in who they obtain their cloud services
from, how they would obtain the services, and
how they would manage their suppliers.
In addition, depending on the market and
application segment, the barriers to switching,
especially for a consumer or small business, may
be quite small, so service providers would need
to stay on their toes if they were to avoid the
churn that characterized, say, the early stages
of wireless/mobile services markets. Some also
argued in this market scenario, operators had
little to no advantage over other types of service
providers in leading the charge to the customer
(more on that later).
Having said that, the market discussion moved
to segmentation. There was lots of discussion
around how to segment markets. Some felt the
only reasonable way at a strategic level was to
use the classic sizing approach, with enterprise,
small/medium business (SMB) and consumer
Understanding markets
Section 1
markets as a start, and then further segmentation
based on various strategies, including industry and
application for business segments, and a plethora
of demographics for consumer segments.
Others argued that it might be better to
focus on an application-based strategy, since
service requirements were more common than
not within a particular application space (such
as nancial transactions) than across broad
demographic segments, and this strategy
would allow service providers to focus their
launch more.
Opponents argued that starting with an
application focus was too narrow, and might
prevent discovery of attractive areas that could
fall out of broader market analysis, or delay
the launch of truly differentiating applications.
However, the opponents seemed to agree
that an application-based strategy could be a
reasonable conclusion after performing a broader
market-based analysis. In the end most agreed
that what customers want is an application
capability, end to end, with value creation driven
by policy-driven networking.
The most interesting suggestions
One of the most interesting suggestions
was that service providers should look for
opportunities not just in market and application
segments, but rather in enabling communities
of interest. After all, what is a network but
a platform for facilitating connection among
members of communities of interest? Service
providers may be able to add value to these
connections through some additional capabilities.
The example of eBay was a popular one here,
discussing how it not only brings together buyers
and sellers, but provides other services such as
payment services, fraud prevention and a host of
promotional mechanisms for sellers.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
6 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
This idea of community enablement brings
with it not only the prospect of higher prots by
growing from commodity technology services
to business process enablement, but also
opportunities for reducing customer churn, since
the services provided are more complex and
specic to the customers needs.
Closely tied to this was the notion that
application segment analysis and planning
should be expanded to include business
process outsourcing, probably in partnership
with another organization, or through an
acquisition. Again, the value and opportunity
for higher margins and increased customer
loyalty was thought to be in the higher-level
business services, and not just in commodity
infrastructure. Having said that, the infrastructure
services could potentially add unique and
specic value to the business services and the
customers situation.
With all this in mind, lets take a look at
the responses from the survey of our attendees
around some of the market issues. Figure
1-1 looks at the market from a segmentation
approach.
The most important market segments
The single most attractive segment, according
to our respondents, is all SMBs. This is true for
a variety of reasons, including the perception
that this segment is the most deprived of
applications, has the most challenges in retaining
skilled IT staff, has relatively little desire or ability
to undertake signicant capital investment, and
can gain the most from cloud deployment.
Some asserted that judicious use of cloud-
based applications could make a smaller business
appear much larger and more mature than it
otherwise might be, and get it to that stage more
quickly than could be achieved through traditional
approaches. In addition, some felt that SMBs
might be more prone to look to their service
providers for solutions than larger companies,
who may already have stronger relationships with
a number of technology product and services
providers.
Opponents felt that this is a very diverse
segment to serve, and that the relatively small
revenues from many accounts, at least in the
early stages, may limit service providers in
rolling out an effective sales strategy. Supporters
countered that they could limit these risks by
focusing on specic industries and/or applications
within the segment.
The next largest respondent group stated
that all segments were important. The main
arguments here were that in an infrastructure-
based business, scale and multi-tenancy were
important to drive lower costs, allowing service
providers to complete more broadly. Some
service providers felt it would be better to offer
limited services to everyone, and partner with
higher-level players segment by segment to
deliver more specicity.
Another argument was that by competing
in all segments, service providers could gain
awareness in strong segments that may be
leveraged across weaker segments, creating
greater barriers to entry for new entrants in the
early market stages.
Figure 1-1: Perception of the most valuable market segments
Consumer
Small-medium businesses
Large enterprise
All are important
9.1%
40.9%
13.6%
36.4%
Which market segment offers the most service revenue opportunities?
Source: TM Forum survey May 2011
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
7 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
Fewer than 10 percent of respondents singled
out the consumer as a target for cloud services
Opponents argued that by simultaneously
focusing on all segments, service providers could
fall into the trap of trying to be all things to all
people, and never gain sustainable strength
in any particular segment. In addition, they felt
that by taking the partnership approach, service
providers would not retain enough value in
their customer relationships to gain adequate
prot margins, or even to justify the marketing
and support initiatives necessary to launch and
expand the businesses in a timely fashion.
The enterprise segment was the third most
popular choice, given the anticipated slow
uptake of cloud services by enterprises, the
complexity of servicing enterprise customers
and the necessary attendant cost of sales and
service. Those who favored enterprise already
had a strong enterprise services base and viewed
cloud services as an extension to their enterprise
services portfolio.
Those who argued against enterprise said
that enterprises have many suppliers to choose
from, with whom they have relationships already,
and CIOs might view those players as stronger
in their potential to deliver cloud services. In
addition, some felt that service providers sales
teams of 10 had more trouble reaching the
highest levels of management in the enterprise
IT and business functions, limiting their inuence
and therefore the service providers chances.
Supporters argued that by partnering with
some of the more inuential technology
companies and perhaps adding some
differentiated enabling capabilities such as
policy, location or billing many of these issues
could be at least partially addressed.
Fewer than 10 percent of respondents singled
out the consumer as a target for cloud services.
Those who did were more likely to be primarily
wireless service providers whose focus was to
deliver a variety of consumer-based applications,
perhaps through an app store, or to provide
some sort of entertainment, shopping or nancial
service to consumers.
Opponents of a consumer-driven cloud
strategy cited the consumers perceived lack
of willingness or ability to pay, in general, for
services from cloud, and the high level of
competition for consumer mindshare from well-
established brands like web companies, online
retailers and device manufacturers. Supporters
argued that new business models, such as
advertiser-supported or partner risk-sharing
models could mitigate some of this risk.
Its worth noting that the relative priorities of
the segments, if not the exact proportions, are
similar to those found in our survey conducted
last year for our TM Forum Insights Research
report entitled Cloud services: Issues and
opportunities for service providers (which is free
to members to download from our website).
The SMB sector has long been viewed as an
attractive market for service providers to expand
into and many service providers are particularly
guarded about large investments in consumer
areas where there is apparently less willingness
to pay.
We suspect that in future, these market
segment priorities will remain largely unchanged,
if and when service providers decide to spend
their cash on acquisitions (as Verizon has done
with its Terremark acquisition).
Issues around new service and
business models
In addition to segments, respondents also gave
their top revenue generators of today and in two
years. See Figure 1-2 for results.
Small and medium-sized businesses have long been viewed as an attractive market
for service providers to expand into and many service providers are particularly
guarded about large investments in consumer areas.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
8 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
As might be expected, Infrastructure as a
Service (IaaS) leads today, with Platform as a
Service (PaaS) and Software as a Service (SaaS)
in a dead heat for second, and Communications
as a Service (CaaS) coming in last. While our
respondents expect the total value of the stack to
grow signicantly, they expect SaaS to pull out to
a commanding lead, and PaaS to edge out IaaS
for the second spot.
The reasons for the drop in IaaS are relatively
straightforward. Firstly, many service providers
view the IaaS business and to some extent the
PaaS business as approaching commodity status,
and feel they will struggle to maintain protability
versus leaner, more nimble competitors.
Secondly, all of those who listed IaaS as their
top revenue source in the next two years are
already in and committed to the hosting business
today, so this is in many ways a continuation of
an existing business with a new delivery and
operational model versus a completely new
initiative by the service provider.
SaaS is also straightforward, although
there are some opponents to this notion. The
fundamental driver is that, as one participant put
it, What customers want at the end of the day
is an application capability, end to end. Service
providers who can add value through application
delivery are likely to reach the best gross
margins, and reach the largest audience.
Those who oppose this generally take the
position that others are better positioned to
deliver the applications and that service providers
should look for partnership opportunities,
but the fact remains that the fastest-growing
piece of the market is in apps, especially in the
SMB space, which most service providers
are targeting.
PaaS is not so simple, and this may be
somewhat misunderstood, as it often refers
to facilities that allow for web development.
PaaS could as easily apply to development of
network-centric apps on top of service delivery
platforms or apps for a particular device or app
store, or enhanced software capabilities built on
top of BSS types of applications. In any case the
category has been relegated fairly low in terms
of priorities.
CaaS appears to be a missed opportunity for
service providers who seem to be more star-
struck with SaaS, but these communications-
centric applications are very close to the network,
and in fact could drive more protability in the
core business if implemented correctly. Strictly
speaking, CaaS applications could also function
in a PaaS-like manner, leveraging for example
customer relationship management apps with
integrated multichannel connectivity, though
some would argue that more of the market views
these applications in the SaaS category anyway.
In any case, one area of agreement among the
participants was that this is no area for a Field
of Dreams (that is the idea, from the lm of that
title, that if operators develop the services, they
will denitely attract customers). Indeed one
participant told the story of a large infrastructure
build that his company had committed to, but
was now unable to sell capacity on. Savvy service
providers will be able to start with a reasonable
investment and scale with market adoption.
Figure 1-2: Top revenue generators for services
Which of the XaaS models is currently the greatest revenue generator
for you and which do you expect to be the greatest in 24 months time?
SaaS
PaaS
IaaS
CaaS
100%
80%
60%
40%
20%
0%
Now In 24 months
Source: TM Forum survey May 2011
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
9 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
What is the introduction of
cloud services really about?
Delivering cloud services positioning and execution issues
Section 2
To be successful in an emerging market,
service providers (and others) need to position
themselves for success. Regardless of what
strengths an enterprise might have, if they are
not brought to bear in an appropriate and timely
fashion, the enterprise is, at best, unlikely to
reach its potential. At worst it will probably fail.
So beyond understanding market demand,
Service providers need to evaluate all aspects
of the value chain, understand their strengths,
weaknesses, opportunities and threats, and
position themselves for success. In this
section, well look at how the participants view
the nature of the value chain and the strengths
and weaknesses of service providers as players
in it, as well as the role(s) they should play.
New business models or new services?
One of the key questions in delivery is
dening what is needed to be successful.
Fundamentally, this means understanding
the relationship between business models,
operational models and the services that
those models deliver. For example, if we
delivered the same services (say phone calls
or messages) as today, but paid for them with
advertising dollars, there would be very small
changes to products and operational models,
but the business model would change radically.
If we delivered the same services as today
using a cloud infrastructure, but paid for the
same way, that would require primarily a new
operational model, and so forth.
So one fundamental question is what is the
introduction of cloud services really about?
Clearly the operational model changes after
all, its a new architecture but what else
changes?
In this case, participants were largely in
agreement. Figure 2-1 shows that almost 80
percent of respondents felt it is about new
services and new business models. Part of
this rationale comes from recognition that
service providers will not be able to compete
in some instances if they rely on traditional
approaches like end-to-end ownership and
vertical integration. To be successful, they will
need to understand not only the market, but
the complete ecosystem, and the positioning
of the various players relative to the market.
They will also need to set realistic goals,
position themselves to achieve those goals
and seek partnerships with appropriate players.
Finally, they will need to learn to manage those
relationships to sustain them, and to look for
opportunities and strategies to gain strength in
the ecosystem as it evolves.
Figure 2-1: Service providers and cloud services
New services
Business models
They are equally important
4.3%
17.4%
78.3%
Is the key to being an innovative operator dependent more on
offering new services or adopting new business models?
Source: TM Forum survey May 2011
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
10 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
How are service providers positioned to
play in this market?
An outline of the most commonly cited
strengths and weaknesses of service providers
as providers of cloud services. Interestingly,
sometimes the same attribute is seen as both
a strength and a weakness.
Financial strength some suggested that
service providers were among the strongest
companies from a nancial perspective in
their countries, and exhibited very positive
cashow. Also, because of their relative
size, many felt they were in a position to
acquire companies to bring new skills and
capabilities.
Others argued that despite their large size,
protability was at best slowing or shrinking
due to the maturity of core services, while
the need to build new networks means
discretionary capital budgets are largely
exhausted.
Also, attening prot growth has brought
lower equity valuations, leaving many service
providers at a big disadvantage relative to
the share price and market power of web
companies like Google or Amazon.
Customer relationships some suggested
that service providers have long-time
relationships with customers across
the spectrum, are trusted partners of
their customers, and have the ability to
monetize those relationships through their
longstanding billing infrastructures and billing
relationships. Others argued that while those
relationships have existed for a long time,
many customers view the service providers
as having a relatively narrow portfolio of
important but not necessarily strategic or
unique services.
In addition, especially in the enterprise
market, service provider relationships tend
to fall short of C-level decision makers, while
other technology companies may have these
relationships, or be thought of more readily
when customers think about services like
PaaS, SaaS or business process services.
Finally, while service providers are clearly
capable of operating massive and complex
revenue management systems, they are not
alone. Web companies like Amazon, Google
and Apple all have billing capabilities, and
sophisticated third-party applications are
available on the open market to other players.
In fact several participants felt that service
providers had no particular advantage over
other members of the value chain.
Ability to operate at scale service
providers have certainly shown themselves
capable of operating very large networks
with extremely large numbers of elements,
sessions and transactions. So do many of
the cloud providers, especially Amazon and
Google, who handle extremely large numbers
of transactions as well, and have learned to
design their infrastructure to handle these.
In fact, Amazon keeps a separate test
facility mirroring itself, where it models the
performance of the infrastructure under
peak trafc loads, such as so-called Black
Friday in the U.S., which is the rst Friday
after Thanksgiving, generally regarded by
retailers as the all-important, very busy, rst
day of Christmas shopping. Service providers
can deal with scale, they are not alone nor
necessarily better at it than others.
Customer information one area where
service providers appear to have a big
advantage is the amount of data they have
about customers. In addition to detailed
billing information about companies and
consumers, they can look at customers
utilization and trafc patterns, as well as
historical information on their preferences
and locations. Competitors like Google also
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
11 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
Service providers need to learn to
partner in many areas, not just cloud
have a large amount of information, but most
other potential rivals havent.
The key question is how will the use of this
information be regulated in future? Several
participants felt strongly that it was illegal or
would become illegal for companies to use
information they had collected on purpose
to accomplish other things. In addition,
transfer of this information across borders
is illegal in some countries and becoming an
increasingly serious issue in many others.
It is possible that ultimately senior
management of companies would be held
responsible for abuse of personal data, with
the likelihood of serious punishment (possibly
including imprisonment) for major violations.
In this scenario, the advantages for service
providers retaining customers data remain a
big advantage, but perhaps not as large as it
might be in a less regulated environment.
The perceived weaknesses of operators as
cloud service providers were seen as being the
following:
Speed the cloud services market is very
young and changing rapidly, populated
with fast growing, agile companies. Many
questioned service providers ability to move
quickly enough with decision-making and/
or deployments to keep with these smaller
more nimble companies.
Service providers could deal with this
through acquisition and by keeping the
acquired companies relatively autonomous
from the parents operations, but the industry
has little or no track record in this style of
management.
Competing on cost service providers are
not necessarily known for their low-cost
facilities, infrastructure or workforce, yet
many of the other members of the value
chain, especially the hosters, are very lean.
Again, perhaps this could be addressed by
keeping acquired cloud activities separate
from the rest.
Skills some argued that service providers
have a large skills base, especially in the
network organization, but also in IT, that
could be deployed to implement cloud
services. Others argued that many of those
skills are currently supplied to service
providers by vendors. This is especially
true for those service providers that have
outsourced all or part of their network and/or
IT infrastructure.
This ties in with the research undertaken
by TM Forum and published in our recent
Insights Research report, Transformation
update: The impact of standards and
standardization, which is free to members
and can be downloaded from our website.
The detailed report also identied skills
availability as both a challenge and a critical
success factor for transformation programs.
Ability to partner again the industry does
not have a track record in forging partnerships
and need to learn to partner in many areas,
not just cloud, to improve their business
performance. While there is no guarantee of
success, it is a very important area for many
service providers.
Customers perception this topic was
also mentioned under strengths, yet service
providers do not readily come to mind as IT
solution providers for many customers, and
changing customers perception does not
happen overnight. Service providers will need
strong partners and/or sustained marketing
efforts to effect a change in perception.
Core competencies in general, service
providers core competency is largely limited
to providing network services: applications,
Service providers do
not readily come to mind
as IT solution providers
for many customers, and
changing customers
perception does not
happen overnight.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
12 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
An enterprise executing
time-dependent,
high-value nancial
transactions likely feels
more concerned about
the reliability of cloud
services.
platform and computer services are not
really their main activities. Also, much of
the technical side of these functions has
been outsourced as part of IT and network
infrastructure initiatives.
Experience with new business models
almost all agreed that service providers have
little experience with new business models,
and few have strategists experienced in the
design and implementation of these models.
This combined with the issues already
mentioned around speed/agility, brought real
concern to a number of the participants.
A recurring theme in debates about how
operators are going to move forward is that the
industry is too hard on itself, and that its huge
achievements are all too often ignored or
under-stated, as is the fact that other players in
the value chain also have their own issues to
deal with. Still it is difcult to quantify or compare
service providers issues with those of others
with any precision for many reasons, including
different levels of maturity and business models
are involved.
Disaster or a bump in the road?
Speaking of shortcomings, the recent difculties
experienced by both Google and Amazon in their
cloud implementations, as well as sensitivity to
natural disasters, like Japans earthquake and
tsunami, have had a big effect on how people
think about cloud.
Almost 40 percent of respondents to our
survey said these events were causing them to
reconsider their cloud services strategy to some
extent, as depicted in Figure 2-2.
Some felt that Amazon EC2s recent outage,
the worst in its history, was a disaster, which
has affected customers attitudes to cloud.
Others argued this was simply a bump in the
road and the industry will recover any lost
ground quickly. Still others said that it was a good
learning opportunity for Amazon and for users of
cloud services alike.
Another wondered if a telco is really better than
Amazon at running a data center?
As for the bump in the road versus disaster
argument, the answer probably lies somewhere
in the middle, and is perceived very differently
by various parties, depending on the type of
customer and the application.
At one end of the spectrum, an enterprise
executing time-dependent, high-value nancial
transactions likely feels more concerned about
the reliability of cloud services. At the other end,
a consumer storing non-critical personal data
for little or no cost is probably more worried
about the privacy and security aspects of cloud
than outages.
In retrospect, the important thing is that the
industry learns from this, and that customers
make intelligent, informed choices and take
appropriate measures to protect themselves.
Perhaps like all things that are cloud-related,
this is easier said than done!
Figure 2-2: Impact of recent outages on planning for cloud services
Yes
No
39.1%
60.9%
Given some of the recent challenges with cloud reliability, are
you reconsidering your plans for cloud implementation?
Source: TM Forum survey May 2011
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
13 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
Most operators have not formulated
a specic cloud deployment policy
Many in the industry advocate the evolution
(or is it revolution?) of the service provider to a
stronger, more diverse role of enablement, or
even that of experienced provider/retailer but
not everyone thinks this is the way to go.
There is a solid core of veterans who are
not concerned about a future as a dumb
pipe. provider. Indeed, some think it is the
most appropriate strategy, and it probably is
for some. We asked our respondents if they
would consider the dumb pipe route. Figure 3-1
illustrates their answers.
As shown, the respondents split almost
evenly down the middle. Now, this does
not mean that they all will end up limiting
themselves to a dumb pipe portfolio, but it
does show that they are willing to consider all
options. Nor does it mean they cant or wont
partner with others who might offer a broader
service portfolio.
Nevertheless, most supported the idea of the
service provider as enabler, making its money
from connectivity and enablement services like
billing, customized service levels, and so on.
In truth, at this stage most of the respondent
companies have not formulated a specic
policy regarding deployment of cloud services,
or come up with specialized monetization
models. This is shown in Figure 3-2.
Recommendations for would-be
cloud providers
Now, having said all that, here is a summary
set of recommendations for those considering
the cloud services path. This should not be
considered comprehensive, but a reection
of the roundtable dialog and a valuable insight
into current thinking by senior executives in the
industry.
How might service providers approach things?
Section 3
Understand the market requirements as
almost all of our respondents concurred, a
good understanding of the markets is key
to success. Make sure you know what each
segment, whether it is by size, industry,
application, demographic or other category, is
expecting from you.
Figure 3-1: Operator attitudes on delivering primarily dumb pipe services
Figure 3-2: State of policy formulation for cloud services
Yes
No
52.4% 47.6%
Yes
No
Would you consider being primarily a provider of dumb pipe network services?
Have you formulated a specic policy regarding the degree of cloud services you will embrace in
the organization and has the monetization model (business case) been approved?
27.3%
72.7%
Source: TM Forum survey May 2011
Source: TM Forum survey May 2011
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
14 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
Understand the other players in the value
chain. Customers are looking for an end-to-
end solution: only by understanding the other
players of the value chain and their strengths
and weaknesses can you craft appropriate
positioning, go-to-market and partnership
strategies.
Pick your places the importance of a
tailored strategy cannot be emphasized
enough. The breadth of cloud services is
huge, and service providers can only be
expected to deliver what they have dened
and scoped properly. Better to deliver well on
a smaller portfolio initially than to overextend
and damage the brand through a poorly
executed start. Be realistic with your self-
assessment, and nd partners to ll gaps or
strengthen your offer.
Carefully choose and leverage your partners.
Cloud initiatives can benet not only service
providers and their customers, but also their
partners. Service providers can help their
partners (and gain market power) through a
variety of cloud services. For some services,
co-branding may make sense, and different
levels of cooperation for customer support
can be shared among partners. Partners may
also be effective at providing referrals for
services to their customer base.
Educate your customers. Much of the
damage from the Amazon EC2 outage
could have been avoided with proper
disaster recovery planning. Make sure
your customers understand the risks and
responsibilities they have in using cloud
services, and help to educate them about the
steps they can take to mitigate those risks.
Cloud & New Services Initiative
The primary objective of TM Forums Cloud &
New Services Initiative is to help industries
overcome barriers to adoption and encourage
a vibrant, commercial marketplace for
cloud-based services. The centerpiece of
this initiative is an ecosystem of enterprise
customers, cloud service providers and
technology suppliers that collaborate to dene
a range of common approaches, processes,
metrics and other key service enablers.
The Enterprise Cloud Leadership Council
(ECLC*) represents the users of cloud
services within the Initiative. In January
2011, the ECLC published the Enterprise-
Grade External Compute IaaS [Infrastructure
as a Service] Requirements. The document
contains a set of clearly-dened business and
technical requirements for external private
cloud services and is designed to put a stake
in the ground for how business and technical
agreements between enterprise customers
The breadth of cloud services is huge, and service providers can only be
expected to deliver what they have dened and scoped properly.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
15 www.tmforum.org QUICK INSIGHTS
APPROACHING CLOUD SERVICES
MARKETS, POSITIONING AND EXECUTION
and cloud service providers should be dened
and managed.
This work is being expanded by the Service
Providers Leadership Council (SPLC**), which
is running a Tiger Team to carry out analysis of
the requirements laid out in the document from
a service provider perspective, using two NIST
case study examples (service level agreement
(SLA) impacts and billing aspects) as the basis
of the analysis.
The Tiger Team, which is led by Jenny
Huang, Strategic Standards, AT&T, is scheduled
to deliver its recommendations in late summer
2011. If you are interested in the Tiger Team,
please contact David Milham, Chief Architect,
TM Forum via dmilham@tmforum.org.
In addition, the Initiative will publish a white
paper on cloud billing in September this year
and work with TM Forums SLA Management
Team to stress test the SLA Handbook in a
cloud context.
In addition, the Cloud Security & Risk
effort, which was announced at TM Forums
Management World 2011 in Dublin, will look
also look at the ECLCs requirements and the
standards development organization landscape
concerning these aspects. It will seek to
establish what has already been developed that
is applicable to cloud and where the gaps are.
If you would like to join this effort, please
email Michele Drgon, Cloud Service Provider
Director, TM Forum via mdrgon@tmforum.org
*Enterprise members of the Cloud & New Services Initiative include some of the worlds biggest technology companies,
including Boeing, CA, Cisco, Dassault Systems, Dell, HP, IBM, Intel, Microsoft and Northrop-Grumman; leading service
providers such as AT&T, BT, and Telstra; and large enterprise users such as Curtin University, Defense Information Services
Agency (DISA) of the U.S. Department of Defense, Deutsche Bank, ING, McCann Worldgroup, State Street Financial, SWIFT,
The Commonwealth Bank of Australia and ThomsonReuters.
** Members of the SPLC include AT&T, BT, China Telecom, Chunghwa Telecom, Deutsche Telekom, France Telecom, KPN,
NTT Group, O2, Qinetiq, Qwest Business, Sprint, Telecom Italia, TeliaSonera, Telstra, Telus and Vodafone.
TM Forum corporate members are welcome to join the Initiative and take an active role by contacting Matthew Edwards,
Director Cloud & New Services Initiative, at medwards@tmforum. org. If your company is not a member, please contact
Apostolos Kallis, SVP, Account Management and Sales, akallis@tmforum. org. For more about the Initiative, please go to
http://www.tmforum.org/EnablingCloudServices/8006/home.html
Most operators have not formulated
a specic cloud deployment policy
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
16 www.tmforum.org QUICK INSIGHTS
SPONSORED FEATURE
Rapidly launch Microsoft

Ofce 365
syndication with Parallels

Automation
Overview
Microsoft Ofce 365 was built for application
reliability, availability and performance in the
cloud. By combining versions of Microsofts
most trusted communications and collaboration
products with the latest version of its desktop
suite, customers can realize unparalleled
productivity gains. Ofce 365 provides
Information Workers the convenience of
being able to access the latest versions of
Ofce

Professional Plus, SharePoint

Online,
Exchange

Online and Lync

Online from any


location and from any device with a browser.
As a service provider, there are two ways of
offering Microsoft Ofce 365 to your customers:
refer them to Microsoft to purchase the service
and in exchange receive a multi-year referral
fee, or for qualied Microsoft Ofce 365
partners, sell the service as part of a bundle
to customers directly through syndication.
Syndication offers higher margins and enables
you to maintain the customer billing relationship,
providing the opportunity to sell customers
additional cloud services. However, building
the right infrastructure to offer Microsoft Ofce
365 through syndication means integrating
the service with all your systems marketing,
ordering, provisioning, billing and support. This
white paper shows how Parallels Automation
can help you minimize syndication complexity
and get to market with Ofce 365 in the fastest
way possible.
Parallels Automation: A complete cloud
delivery solution
Parallels

is a market leader in cloud services


enablement and a long-time Microsoft Gold
Certied Partner. The company offers Parallels
Automation, the most protable and complete
operations and business support system for
launching and delivering all cloud solutions.
Whether youre a traditional Web hosting
service provider, a telecom looking to get
into hosting, or a developer interested in
delivering cloud-based applications, Parallels
Automation offers:
The broadesl sel of cloudbased solulions
available today one thats constantly being
updated with new services to meet emerging
market needs.
A business and operalions nanagenenl cloud
platform, with the ability to integrate
everything including in-house systems,
external systems like payment gateways and
domain registrars through a single pane
of glass.
Billing aulonalion lo nanage recurring
charges, a product catalog, bundling options
for services.
A broad ecosyslen of parlners lhal furlher
enhances the services and applications
available for the platform.
Exlensive scalabilily, enabling you lo launch a
wide range of enterprise-class cloud services
to a worldwide customer base.
By helping you launch, host, syndicate and
market new and enhanced cloud services,
Parallels Automation represents the quickest
way to prot from the ongoing shift to the
cloud. Furthermore, when you use Parallels
Automation to deliver Ofce 365 to your
customers, you will be able to bundle other
high-margin services like shared hosting, VPS,
domain name registration and hundreds of
other Software as a Service (SaaS) applications.
These services are highly sticky and will
increase the average lifetime value of a
customer. Additionally, the built-in integration
capabilities and extensive automation provided
by Parallels Automation will signicantly reduce
your operating expenses.
Time to market is critical for success
in the cloud
With $40 billion in IT spend moving to the
cloud in just the next 3 years (IDC, June
2010), service providers have a tremendous
opportunity to capitalize on this shift by offering
customers Ofce 365 bundled with other key
cloud services. However, the market is highly
competitive, as Internet giants, distributors,
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
17 www.tmforum.org QUICK INSIGHTS
ISVs, hardware companies, network vendors,
and virtually every major segment in the IT
ecosystem are moving to embrace cloud
services. Therefore, minimizing time to market
is critical for success in the syndication of Ofce
365, as all qualied partners will be coming out
of the gate at the same time.
If you had to create the entire cloud
service delivery infrastructure yourself from
building the data center to integrating with
orchestration and billing software to executing
on marketing campaigns it would likely take
a sizeable, multi-year development project and
then ongoing maintenance. Furthermore, if
youre planning to offer your cloud service to
customers in other countries, you would have
to deal with issues such as differing tax laws
and currencies, which would require additional
planning and engineering time and effort.
However, when you use Parallels Automation
to launch Ofce 365, you can get to market
in weeks rather than quarters. By leveraging
Microsofts world-class infrastructure and
Parallels Automation you have all the tools
you need to deliver Ofce 365 syndication
as a completely automated offering. This
includes branding and marketing the new
offerings, integrating them into your corporate
infrastructure, and giving you an online
storefront that can further increase your
revenues.
Additionally, because Parallels is working
collaboratively with Microsoft, Parallels
Automation will support the delivery and
bundling of new Microsoft cloud services as
soon as theyre available as syndicated services.
Finally, because all this can be accomplished
with minimal development effort, your valuable
internal developer resources can stay focused
on your core business.
Increase ARPU and reduce churn
Ofce 365 offers a host of capabilities that small
and medium-sized businesses want and need
from the award-winning business productivity
tools of Ofce Professional Plus, to the widely
used messaging and collaboration capabilities of
Exchange Online, SharePoint Online and Lync
Online. Together, these tools enable business
users to work from anywhere, on virtually any
device, while collaborating with others inside
and outside their organization and to do it all
easily and with a high degree of security.
The broad popularity of these Microsoft tools,
combined with the convenience of accessing
them through the cloud, will change the way
customers procure applications and services.
This will ultimately driving new business and
increasing the average revenue per user (ARPU)
for the service provider while offering sticky
services that will decrease churn. Plus, as you
build a strong base of customers with Microsoft
Ofce 365, you can up-sell and cross-sell them
other services, further increasing ARPU.
Figure 1. Parallels Automation simplies the delivery of multiple cloud services
With Ofce 365, small and midsize businesses can get the latest productivity
technology in a single cloud service. Enabling service providers to offer Ofce 365
through Parallels Automation will help deliver this new service to SMBs.
- David Scult, General Manager, Online Services Partner Marketing at Microsoft
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
18 www.tmforum.org QUICK INSIGHTS
SPONSORED FEATURE
These include customer relationship
management (CRM) solutions, virtual private
servers (VPS), shared hosting, domain
registration and hundreds of other SaaS
applications all easily integrated with
your existing offerings. You can also readily
aggregate third-party syndicated cloud services,
including archiving, anti-spam, and anti-virus
solutions from Symantec and McAfee, as
shown in Figure 1.
In order for Parallels Automation to integrate
and be able to provision and bill for Microsoft
Ofce 365 and other services or applications,
the Application Packaging Standard (APS)
was used. The APS standard is a set of
specications that covers provisioning,
management and integration of cloud-based
services and applications. APS covers the
full service lifecycle of applications and was
designed from the ground up to address
requirements of SaaS and cloud computing
paradigms, such as license management,
subscription terms, and role-based access
control. APS makes it easy for a service
provider to offer Microsoft Ofce 365, plus
potentially hundreds of other cloud services
or applications, thereby also positively
impacting ARPU.
Reduce operating expenses
Parallels Automation gives you everything you
need to launch new cloud services. By giving
you a single delivery system that supports
hundreds of cloud services, Parallels Automation
enables you to automate the entire process of
creating a new offering, thereby reducing your
operating expenses. Key capabilities include:
Conplele aulonalion of cloud service
delivery, including provisioning and billing,
enabling you to minimize both administrative
and development costs.
Exlensive cusloner selfservice lhrough
powerful and intuitive control panels, reducing
the burden on your support team.
Buillin applicalion progranning inlerfaces
(APIs) that allow you to rapidly integrate Ofce
365 with your back-ofce systems, including
CRM, help desk, billing and ERP systems and
to do so with minimal staff and minimal touch.
Abilily lo easily inlegrale Offce 365 wilh olher
third-party services, such as domain registration,
SSL certicates, and payment gateways, so your
small business customers can get all their needs
met through your company.
Easy lransilion belween cloud and onprenise
models with migration support, via Parallels
APIs and migration scripts, for customers using
existing hosted Microsoft products.
Reduce risk by partnering with a market leader
With more than ten years of experience in cloud
service enablement, Parallels today is the market
leader. The company powers cloud services for
more than 12 million businesses worldwide,
holds the #1 position in self-service control panels
and virtualization technology for VPS offerings,
and has reference customers including Go
Daddy, SoftLayer, 1&1 Internet, KPN, Charter
Communications and Softbank.
As a Microsoft Gold Certied Partner, Parallels
also has a long history of working closely with
Microsoft to deliver integrated solutions that help
Microsofts partners maximize their prots from
cloud service delivery. The Parallels Automation
Ofce 365 integration developed in co-operation
with Microsoft and designed specically for
service providers is an example of the close
collaboration that regularly takes place between
our two companies.
About Parallels
Parallels is a worldwide leader in hosting and cloud service enablement and
desktop virtualization. Founded in 1999, Parallels is a fast-growing company
with more than 800 employees in North America, Europe, and Asia. For more
information, visit www.parallels.com/csp and for additional details about Microsoft
Ofce 365 syndication and Parallels Automation, please see the press release that
was issued on July 11, 2011 at the Microsoft Worldwide Partner Conference.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
Innovation: The trillion-dollar question
Recently Juniper Research stated that revenues billed by operators will be more
than $1 trillion annually by 2016, but that costs will exceed revenues within four
years unless operators take action.
This report was inspired by the animated debated between 30 of the
communications industrys most senior executives. Drawing from their input and
other sources, it explores different approaches to this trillion-dollar question.
Managed services: Approaches to a changing landscape
Major shifts are taking place in our industry: this is well known and discussed
constantly. Less well understood and publicized are the implications for managed
services, but they are fundamental. What we mean by managed services is
changing, too.
This report tackles:
The crusade for new revenue streams
Delivering managed services through partnerships
Lessons learned, from consumers and suppliers
Where we are now, and where we need to be.
Expanding cable revenues: Strategies for the commercial market
The past decade has seen more advances in technology than the previous
century. The cable industry is right at the very heart of this with the deployment
of new fast technologies. But technology isnt the only thing that is changing
the market is too. With Internet-based content rivals and IPTV offers,
multi-system operators recognize future revenues are threatened, and the
need to broaden the income base.
This Quick Insights report discusses how these cable companies can expand
revenue in the commercial sector.
Visit www.tmforum.org/researchandpublications to nd out more
Have you read our other Quick Insights reports?
They are free to TM Forum members.
CHANGING LANDSCAPE
APPROACHES TO A
QUICK INSIGHTS
2 0 1 1 | www. t mf or um. or g
MANAGED
SERVICES
Sponsored by:
Free to tmforum members
$995 where sold
COMMERCIAL MARKET
STRATEGIES FOR THE
QUICK INSIGHTS
2 0 1 1 | www. t mf or um. or g
EXPANDING CABLE
REVENUES
Sponsored by:
Free to tmforum members
$995 where sold
THE TRILLION-DOLLAR QUESTION
QUICK INSIGHTS
INNOVATION
Free to TM Forum members
US$995 where sold
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.
ENABLING INNOVATION
The game is changing for communications service
providers. Cutting costs is merely a ticket to play,
not to grow. The key to growth lies with innovation
underpinned by business agility, smart partnerships
and inspired creativity.
As the global industry association focused on
simplifying the complexity of running a service
providers business, TM Forum brings together a
community of more than 50,000 professionals on
the cutting edge of innovation. As a unifying force for
the industry, its time for you to join more than 750
companies across 195 countries collaborating to
simplify service innovation.

Visit www.tmforum.org to learn more about
TM Forum membership and how we help you
enable innovation.
Report prepared for Rio Puja Laksana of SML Technologies. No unauthorised sharing.