tmfc15492 - approaching cloud services - markets, positioning and execution

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AND EXECUTIONMARKETS, POSITIONING

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APPROACHINGCLOUD SERVICES

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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 orby 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

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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



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APPROACHING CLOUD SERVICESMARKETS, 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

Forum’s 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 first 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

sufficiently well to be of much interest.

The notion that service providers shouldconsider 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 significant 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

Forum’s 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 areparticularly 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.”




Understanding how marketsare 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 stagesof 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 financial 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 applicationsegments, 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.





This idea of community enablement brings

with it not only the prospect of higher profits 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

specific 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

specific value to the business services and the

customers’ situation.

With all this in mind, let’s 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 abilityto undertake significant 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 specific 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 serviceproviders 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 specificity.

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




Fewer than 10 percent of respondents singledout 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

profit 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 influence

and therefore the service providers’ chances.

Supporters argued that by partnering with

some of the more influential technology

companies and perhaps adding somedifferentiated 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 financial

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.

It’s 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.”





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 significantly, 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 profitability

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-growingpiece 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 profitability 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 viewsthese 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 film of that

title, that if operators develop the services, they

will definitely 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 generatorfor 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





What is the introduction ofcloud 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, we’ll 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

defining 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, it’s 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 andvertical 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 onoffering new services or adopting new business models?






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 financial perspective in

their countries, and exhibited very positive

cashflow. 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,

profitability 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, flattening profit 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 tomonetize 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 traffic loads, such as so-called Black

Friday in the U.S., which is the first Friday

after Thanksgiving, generally regarded by

retailers as the all-important, very busy, first

day of Christmas shopping. Service providers

can deal with scale, they are not alone nornecessarily 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 traffic patterns, as well as

historical information on their preferences

and locations. Competitors like Google also




Service providers need to learn topartner in many areas, not just cloud

have a large amount of information, but most

other potential rivals haven’t.

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 thisthrough acquisition and by keeping the

acquired companies relatively autonomous

from the parent’s 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

I nsights Research r eport, T ransformation

update: The impact of standards and

standardization, which is free to members

and can be downloaded from our website.

The detailed report also identified 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 wasalso 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.”





“An enterprise executing

time-dependent,

high-value financial

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 difficult 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 difficulties

experienced by both Google and Amazon in their

cloud implementations, as well as sensitivity to

natural disasters, like Japan’s earthquake and

tsunami, have had a big effect on how people

think about cloud.

Almost 40 percent of respondents to oursurvey 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 EC2’s 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 financial

transactions likely feels more concerned aboutthe 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, areyou reconsidering your plans for cloud implementation?





Most operators have not formulateda specific 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 can’t or won’t

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 specific

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 reflection

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 specific policy regarding the degree of cloud services you will embrace inthe organization and has the monetization model (business case) been approved?

27.3%

72.7%







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 defined

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 find partners to fill gaps or

strengthen your offer.

Carefully choose and leverage your partners.

Cloud initiatives can benefit 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 Forum’s 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 define

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-defined 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 defined and scoped properly.”




and cloud service providers should be defined

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 [email protected].

In addition, the Initiative will publish a white

paper on cloud billing in September this year

and work with TM Forum’s 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 Forum’s

Management World 2011 in Dublin, will look

also look at the ECLC’s 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 [email protected]

*Enterprise members of the Cloud & New Services Initiative include some of the world’s biggest technology companies,

including Boeing, CA, Cisco, Dassault Systemès, 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 ServicesAgency (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 contactApostolos 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 formulateda specific cloud deployment policy




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http://www.tmforum.org/InnovationTheTrillion/11419/home.html

http://www.tmforum.org/ExpandingCableRevenues/11058/home.html

http://www.tmforum.org/ApproachestoaChanging/11194/home.html



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

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the cutting edge of innovation. As a unifying force for

the industry, it’s time for you to join more than 750

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simplify service innovation.

Visit www.tmforum.org to learn more about

TM Forum membership and how we help you


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