Telcos will not win out in cloud says British Gas director of tech
Telcos are not the natural providers of enterprise cloud services because they do not come from the software industry, according to Kassir Hussain, director of technology for Centrica/British gas, and a former O2, Orange and 3UK network specialist.
Hussain was speaking on a panel at the Cloud World Forum in London this week and his dismissal of telcos’ opportunities in the cloud will doubtless prove contentious. Informa principal analyst Camille Mendler has said that there were more than 300 telco cloud service launches in 2012 and more than 800,000 square metres of datacentre construction by telcos in the last three years.
Hussain’s background in the telecoms industry makes his judgement noteworthy. “Telcos will not be at the core of cloud,” he said. “To be at the core of cloud you need software in your DNA.”
The observation that software is not in the telco DNA is “entirely fair,” Mendler told Telecoms.com. But that is changing as the network that sits at the heart of the telco becomes increasingly software defined, she pointed out. Mendler said that there is a “spectrum of ability” within the telco sector when it comes to cloud-based enterprise offerings; a few telcos have competence and others will buy it in, she said.
Uri Gurevitz, director of product marketing at Amdocs, who was on the same panel, made a similar observation, suggesting that telcos remain in a strong position because of their existing relationships with enterprises. Even if they partner to provide a range of services, Gurevitz said, they are the natural service providers.
But the nature of service provision is changing with the cloud, said Hussain. He said that automation and self-provisioning are more important than personal customer relationship management.
“I don’t want to have to talk to an account manager,” he said.
Clearly a statement that is designed to provoke a reaction, particulalry if you consider that most telcos have a strong or dominant position for hosting services in almost every country and IaaS services are natural extension of this.
Having worked for a tier-1 telco, I tend to agree with Kassir. Keep in mind that:
1. Telcos themselves struggle with hundreds of legacy IT systems
2. Telcos are narrow-minded, regarding software and are linked closely to a handful of specific vendors, many of whom are niche with telco-industry only offerings
3. As most of them regard & outsource their own IT as commodity, how will they be able to support new services for their customers? It’s a big challenge for them and remains to be seen
I respectfully challenge that to some extent. Please keep in mind a few things:
1) Telcos still continue to have an embedded base. What they lack in cloud expertise is quickly offset by cash.
2) Despite grumblings from Telco customers, “forgiveness” for their clumsy/soviet style of bringing innovation to the market is only one discount away
3) WAN/Voice/Circuit costs ALWAYS trump CPE in the end. Right up there with the software folks who thumb their noses at the inept in Telecom. Software Spectrum was a good example. In the heady days of Dot.bomb, these wonderful folks managed to sell 1.0 billion in software for a whopping 1.6% Gross margin…a whopping 16 million in gross profit.
And you thought Telecoms could burn cash? This is the type of logic only Bernie Ebbers and Steve Winnick could come up with.
4) Grabbing Cloud based expertise is one big fat check and options away for some smart kid in Silicon Valley. Try to deploy the infrastructure to deploy ANY cloud based solution without the highways to get there…I wish you luck….
Perhaps if the likes of Comcast (45 billion) and other similar cable co’s and telcos decide to get off the bench and start shopping for “cloud” brains, you may start to have a difference of opinion.
And much like “forgiveness” is only one discount away, imagine what they will do to the “islands” of clouds once they bundle/leverage/target those without a little component called a network….
Hardware learned this the hardway. I suspect cloud will do the same. Don’t ever, every under-estimate the power of residual income with their comma’s and zero’s behind it.
Clumsy though they may be in execution, they make a whirlwind of difference when they set their sights on something.
Also, they do have one slightly inter-galactic advantage….a customer base….so…there’s…..that….
Should be fun….