Cloud formations

Spain-based Telefónica, a large scale carrier with operations in Europe and Latin America, is well placed to take advantage of the opportunities afforded by the cloud to improve its own business internally as well as the services it offers to customers.

In this interview, Jose Luis Gamo, global cloud services director at Telefónica, talks about the importance of partnerships, and the efficiencies of a cloud-based business model.

One of the main reasons the cloud has won such favour is the opportunities it introduces for consolidation and virtualisation. Telcos often have a wide range of legacy systems in place, as well as countless different platforms which change from operation to operation. The sheer scope of this fragmentation puts pressure on the operator’s internal IT management that is not the same as in other sectors, which Gamo believes is driving the speed of the migration to the cloud.

But it’s a complicated moved to make and foolhardy to go it alone. “Partnerships are critical for us,” says Gamo. “One has to be conscious of its position in the ecosystem and have great ambition, but never leave realism: We are a service provider and not a technology designer or manufacturer, so we need best-of-breed technology to build our services.”

Telcos like Telefónica tend to be large and disparate organisations as well as huge consumers of IT, so Gamo is clear on the point that summing up internal and external demand should improve the carrier’s economics.

Telefonica’s extensive geographical spread also means the carrier can leverage its footprint to distribute the data centres worldwide and help tackle issues that range from the regulatory to the functional.

“We need this technology to be state-ofthe- art, cost-effective and flexible for its integration with our own operations support and business support systems,” he says. “In these partnerships we are looking for this and for a joint go-to-market, to improve the effectiveness of our commercial action.”

Telefónica has a strategic partnership with Japanese vendor NEC for its SaaS offering, but it also teams up with VMware, Cisco and EMC to offer IaaS. In infrastructure, Telefónica is offering virtual data centre services, including utility computing, self-provisioning and selfmonitoring; as well as virtual desktop services, in both dumb terminal and with thin-client flavours; and cloud storage. As for the marketplace, which is named Aplicateca, Telefónica offers cloud applications for a monthly fee and bundles this with customer care, technical support and billing. The applications themselves are developed by ISVs, which brings us back to the importance of partnerships.

“As for the value that we add to our partners, I think that it lies mainly on our experience in providing mission-critical services with stringent SLAs, our channels and our brand,” Gamo says. “But when you consider revenue streams, it’s not so much an issue of the potential of each product line as of maturity, and as such in the short term it is the Virtual Data Centre, which is the one bringing in more revenue.”

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Yet Gamo is weary of the position of the telco as a “broker” of cloud services and urges the industry to be cautious of the term, because “the concept, the business model and the potential of the cloud broker is not totally clear,” he says. “Different people have a very different understanding of a broker. I think it makes sense to classify the brokers as three types: Intermediation, Aggregation and Arbitration.

Aggregation brokerage is what we are already doing in Aplicateca: We provide to the customer several homogeneous layers for service buying and delivery, which work for all the ISVs in the marketplace. The real potential for Arbitration— in which workloads can be moved in real-time to the cheapest bidder- remains to be seen since some of the technology and the service level management tools are still embryonic.

As for intermediation, I see that there is a big opportunity for telcos, putting together several blocks or enablers to build services that make sense in terms of end-to-end control and service levels for the final customer,” Gamo says. “We are service providers and our creed is that the customer experience is more important than the underlying technologies, which are instrumental.”