Most market forecasts coincide around $45-50bnpa of revenue globally by 2013-2014 (more than double the level in 2011) and weexpect a 20% CAGR to 2020. According to Informa, telcos took 16% of a $20bncloud services market in 2011 (~$3bn). Cisco expects telcos share to rise to c.20%by 2014 implying a three-fold increase to around $9bn of revenue.
How can cloud help you improve your operations, be cost-efficient and satisfy your customers?To help you understand more what cloud is, let me show you this video.PLAY PEANUTS JAY PEREZ VIDEOAfter the video:In essence, cloud is a form of outsourcing. You subscribe to a service from a company that has the expertise to do it for you at a competitive cost.Sometimes what happens is that customers over invest. They buy more than they need or sometimes they under invest. What they buy is less than what they need, so the applications and the user experience suffers. The scalability of the cloud service addresses all of these concerns, for a fixed monthly service fee.
The French state will invest EUR 135 million in national cloud computing alliance Andromede, Les Echos reports. The joint venture will be formed on 1 November with the backing of France Telecom-Orange, Thales and DassaultSystemes. The state will hold a one-third stake. Orange and Dassault will own 26.7 percent for EUR 60 million each and Thales 13.3 percent for EUR 30 million. Documents submitted to personnel representatives state that Andromede will be a "completely independent" entity and that its management will not be chosen amongst its industrial partners. The board will be composed of nine executives, including two independent directors and two appointed by the government. Shareholders will have to wait five years before selling any stock. All of Andromede's data centres will be located in France or elsewhere in Europe, a unique selling point for clients wary of seeing their data transit through US-based servers. Orange will provide co-location services and all of the necessary connectivity for Andromede clients. Thales will supply security services. The estimated value of four years of work for these two companies is EUR 60 million and EUR 30 million, respectively. Elsewhere, Le Monde reports that data sovereignty is a key point for public sector clients. Microsoft and Atos have formed a partnership to offer Offfice 365 services on servers hosted by Atos in France. "The public sector needs assurances that its data will not leave Europe, or better yet, the national territory", Atos vice president Jerome Brun said at Microsoft France's autumn conference.
IT admins are also struggling to keep pace with evolving technology. There are a lot of challenges we are faced with. However, a lot of the infrastructure we have was not built with a grand plan in mind but simply evolved over time as we solved immediate challenges.Let's look at a typical environment today.Step 1: We had PCs, and OS's and productivity software. Life looked pretty good.Step 2: We started buying systems, and just kept going. Mail systems, security systems, directory systems, SPAM filters, etc. Pretty soon an entire environment had grown up around us.Step 3: Eventually we realized that these systems were really business-critical and that they could no longer go down. Step 3: And now we spend lots of time maintaining existing systems. Patch Tuesday rolls around and we are just putting CDs into servers.Most IT time is spent just keeping current systems running. According to Gartner, 80% of IT resources and money go to maintain current systems. And this when our users are begging for more functionality.
Demand varies with time. The Pay-As-You-Go quality of cloud services meansthat a company that experiences, for example, peak use for a few days a month(such as an online ticket seller) can pay only for the resources it needs, withouthaving to build capacity for itself that would normally be superfluous. Working Capital Management. The ability to lease IT as required providescompanies with improved flexibility when managing their working capital. Batch analytics. Companies that are required to complete computationallyexpensive activities can benefit from speed/time advantages. For example, using1,000 servers for 1 hour costs the same as using one server for 1,000 hours. Addresses resource / talent management issues. We note two sub-pointshere. (1) Usage of the cloud has first taken off among small businesses, whichhave been historically underserved by traditional IT, largely because serving thisclient base in the traditional manner was less profitable (small businesses havevery limited budgets over which to spread overhead costs). (2) Take-up of cloudis also rising for repeatable and lower-risk functions where technology offers achance to re-allocate scarce resources to more meaningful tasks. This is a factorbecause of the extremely low 2%-5% unemployment rate for IT talent in mostwestern countries.
The Web-grade IaaS was the first cloud computing business model and waspioneered by Amazon, which remains the market leader in this segment, primarilythrough its Elastic Compute Cloud (EC2). EC2 provides a web service throughwhich a user can boot an Amazon Machine Image to create a virtual machine,containing any software desired. EC2 was first offered as a public beta in 2006, andnow Technology Business Research estimates that Amazon Web Services (AWS)revenue for Q1 2012 reached $283 million, up 37% year to year. AWS operates ona cost-plus pricing model, where it maintains 10% margins, continually cuttingprices as costs fall due to improved economies of scale.In contrast, enterprise-grade platforms are used where customers sign contractsand arrange service agreements with cloud providers. They typically incorporatehigh-end storage and are more rigorous about security certification. There is alsogreater accountability for reliability through SLAs.Consequently, these providers are capable of charging a premium. There is alsoscope for further differentiation, by offering services targeting particular industryverticals or further specific functional requirements such as hybrid clouds andprovision for customised enterprise software requirements.It is important to note that the distinction between enterprise-grade and web-gradeclouds is not the same as between private and public clouds. Enterprise-gradecloud providers typically provide a range of public, hybrid and private clouds.On the other hand, web-grade clouds are almost exclusively public clouds.
Cloud AdministrationIt’s particularly important for IT departments to enable administration systems that let them monitor every dimension of the service they’re getting.Service level agreements and monitoringEvery company that buys any service from a cloud service provider must either accept a standard service level agreement (SLA) from the provider or negotiate such an agreement.No organization should commit mission-critical systems to the cloud without negotiating an SLA that includes significant penalties for not delivering the promised service level.SupportSupport problems don’t disappear when applications or infrastructures move to the cloud. You have to make sure that support targets are agreed on in advance with a cloud services provider. Therefore, your company must align its internal support team to deal with both internal customers and the cloud provider.Billing and accountingOne cloud benefit is that, as a customer you can acquire just as much capability as needed. Billing and account management must be automated so that customers can monitor what they’re using and how much it costs.Customers can run up unexpected bills if they can’t accurately track usage.Cloud Technical InterfaceTo take advantage of the benefits of cloud computing the proper technical interface must be in place. Companies that have already moved to a service-oriented architecture (SOA) will be find this transition easier.APIs and data transformationsA cloud’s Application Programming Interface (API) is the software interface that lets your company’s infrastructure or applications plug in to the cloud. This is perhaps the most important place for standardization. For an organization to easily build connections between its internal data center and the cloud, it must use standardized APIs and data transformation capabilities.Data and application architectureNew internally created services that support the business’s changing demands must operate with cloud ecosystems. These services may need to migrate to and from the cloud. This means that it will have to build an architecture that’s modular enough to allow services to move between various cloud platforms.To be effective, data also has to be packaged and managed. The IT organization needs to manage data independently of the underlying packaged application, transactional system, or data environment such as a warehouse. Your organization needs to start with consistent definitions of data elements to manage cloud-based information services.Security in the cloudCompanies planning to use cloud services must be assured of tight, well-defined security services. Many levels of security are required within a cloud environment:Identity management: For example, so that any application service or even hardware component can be authorized on a personal or group role basis.Access control: There also needs to be the right level of access control within the cloud environment to protect the security of resources.Authorization and authentication: There must be an authentication mechanism so the right people can change applications and data.A comprehensive security infrastructure must be provided at all levels and types of cloud services. Developers also need tools that allow them to secure the services they design to be delivered in the cloud. Organizations need consistent security across their own data center environments that intersect with a cloud service.
Reversing the decline seen in the fourth quarter of 2011, global average connection speed increased by 14% quarterover-quarter in the first three months of 2012 to 2.6 MBps, according to Akamai.Telefónica Digital estimates suggest that by 2015,70% of its customer base will have more than 5 connected devices.
In our view, market-side drivers have been far more relevant in driving forward thecloud computing agenda and will continue to provide its momentum into the future.We consider both the advantageous supply- and demand-side economies of scale,before looking at other associated advantages for cloud customers.Supply-side economies of scaleCloud computing is not a return to the mainframe era, but in fact offers economiesof scale and efficiency that exceed those of a mainframe. The key feature on thesupply-side is multi-tenancy, which allows for data to be concentrated at a singlephysical location. In other words, one data centre can host resources for multiplecustomers. This results in the following economies of scale: Cost of power. The operators of small data centres must pay the prevailing localrate for electricity, but it is possible for larger operators to pay a fraction of theaverage rate by locating their data centres in locations with inexpensive electricsupply and through bulk purchase agreements. This rapidly decreases the costper MIP (million instructions per second) as the scale of the operation increases. Infrastructure labour costs. The workforce required to service, maintain andupdate a given number of servers decreases markedly when those servers areconcentrated in a single physical location. Whereas one IT professional couldpreviously service around 140 servers at different locations, he or she can nowlook after a data centre of 10,000. This in turn permits IT employees toconcentrate on higher value-add activities such as building new capabilities andimproving user control. Infrastructure buying power. Bulk buying data centre hardware and softwarereduces unit costs, favouring the larger cloud data centre controllers.Demand-side economies of scaleThe efficiency with which the capacity is used also plays a role in achievingeconomies of scale, and this is improved with demand aggregation. Time-of-day patterns. Behavioural patterns dictate the degree of serverutilisation at different times of the day. In business use, peaks tend to beobserved during nine-to-five working hours. Capacity has to be built-in toanticipate these peaks, but under conventional server systems it would remainunused at other times. Cloud data centres are able to run the same workload formultiple time zones on the same server. Equally, multi-location scheduledprocessing can ‘follow-the-moon’ to consistently make use of cheaper night-timeelectricity costs. Randomness. Random usage can account for spikes in required servercapacity. However, the pooling of servers will necessarily smooth this as the totalnumber of users increases. Multiplexing. On the cloud, capacity is shared and when not being employed byone user, it can be allocated to another. This is antithetical to the case withindividual desktops, where processing power is locked up on individual machineswhich is plainly extremely wasteful. The same is true on the software side, and soa smaller number of copies of pieces of software are required, again reducingcosts.
The Right Type of Cloud Messaging
The Right Type of
Cocoy J. Claravall
VP-Business Products & Services
The Right Messaging
The Right Cloud for You
Telco’s Trump Card
In the US and European major telcos, Cloud is still at
the infancy stage but seen as a key driver for revenue
AT&T cloud represents a very small
but growing portion of total revenue
which makes up around 5%.
Telefónica generated (if we
assume Cloud & Security was 10%
of TDigital) €240m, 0.5% of 2011
Verizon’s Strategic Services
represent 7% of 2012E
consolidated revenue or 10% of
2012E proportionate revenue.
Portugal Telecom expects cloud
to form an interesting additional
revenue stream. In 2011 and
1H12, PT's total cloud revenues
were >€5.5mn from c.100 new
Source: Citi Research Cloud Computing (090512)
In the US, cloud computing is still in the
nascent stages of adoption and has
emerged as a valuable tool for companies to
drive cost efficiencies and revenue growth.
In Europe, some telecom operators are
lagging behind their US counterparts. In
many cases their approach to cloud remains
too fragmented and sometimes defensive
rather than driven by a strategic vision.
AT&T Telefonica Verizon
Cloud Revenue Share VS Total Revenue
In the Philippines, customer adoption of cloud services is
starting to increase as the market becomes more open and
relevant products become available
Philippine Market (Billions PhP)
2011 2012 2013 2014 2015 2016
IAAS 0.5 0.8 1.2 1.9 3.0 5.8
PAAS 0.2 0.3 0.5 0.8 1.2 3.2
SAAS 1 1.6 2.5 3.9 6.1 6.4
Total 1.7 2.7 4.2 6.6 10.3 15.4
Growth 57% 57% 57% 57% 49%
Globe Market Share (%)
0% 2% 7% 10% 15% 25%
Cloud industry revenue growth @
57% p.a. – McKinsey
Market share of Globe starting to
increase as sales pipeline grows
due to availability of products
offers, customer adoption and
sustained marketing campaigns
IaaS and SaaS will be key
contributors to this growth
2011 2012 2013 2014 2015 2016
Cloud Revenue Forecast (Billions - Php)
Increase Speed to Market
Increase Revenue and Profit
In the B2B environment, it’s all about AGILITY.
But first, we need to address these
common “barriers” to Cloud Adoption …
Availability - The risk of information outages turns many business away
from the cloud
Confidentiality - There are currently limited guarantees for data
confidentiality and security
Local Regulations - The requirements of cloud-associated regulations can
outweigh the benefits of its implementation, leading to initiatives like
Andromède in France
Industry Fragmentation - Many different services, and limited market
Specialization - There is a perceived lack of specialized services available
Existing Sunk Costs - The cost of moving to the cloud may outweigh its
Inertia - If it works, don’t fix it
From Citi Research
Identify your customers and develop
specific messaging addressing their needs
IT and Operations
Let’s look at IT and Operations, what are
their concerns that we need to address?
What’s the best use of our annual budget?
How to migrate from legacy systems?
How to effectively manage information explosion real-time?
How to manage the risk of consumerization?
How to continue to keep pace with evolving technologies?
What do I move into the cloud? And, what type?
How to talk differently
to IT & Ops People
Three Short Episodes in Filipino
with English Translation
ESTABLISH AND ACHIEVE
FOCUS ON RELEVANT
Let’s listen to Juan
and his peanuts …
An interview with a typical Filipino
Diagnostic Marketing Mix Approach
Sales and Support
Learn from Deployments
Infrastructure as a Service (IaaS) is the most basic
cloud service model, where raw hardware resources
are delivered on demand and priced consumptively.
From Citi Research
To help our customers select the right
cloud service, we need to ask them the ff:
PUBLIC PRIVATE HYBRID
Do you have constant demand for IT
NO YES Mostly
Do you have a clear view of your
NO YES Likely, but
need to plan
If you need to scale your resources,
can you plan it over a period of
NO YES Most of it
Do you serve end users locally or are
they geographically dispersed?
More local Mixed
Do you require standard or
Standard Customized Customized
Also, open the discussions to think about
these other considerations:
Service Level Agreements & Monitoring
Billing and Accounting
Security in the Cloud
APIs, Data & Application Architecture
Track Record, Experience, & Sustainability
Technology Push Driver #1: Improved
broadband connectivity and penetration
• Advanced high-speed telecommunications networks are the key enabler of cloud
architecture and their existence relies on recent technological developments in
speed, sophistication and penetration.
• Developments include both an increase in the raw capacity of networks as well as
their improved intelligence in being able to prioritize certain data packets over others.
• There has been a massive increase in the number of connected devices particularly
the proliferation of smartphones and tablets, shown in the data from the August 2012
Ofcom communication market report.
Charts from Cisco Global Cloud Index
Technology Push Driver #2:
Excess Computing Infrastructure
• Cost of power
• Infrastructure labor costs
• Infrastructure buying power
• Time of day patterns
1. Our infrastructure
2. Our customers
3. Our scale
4. Our coverage
5. Our ability to offer
6. Our billing
Perceived lack of
IT and Network Silos
Perceived lack of
Speed of Execution
Telcos are naturally well positioned
to play in the cloud …
For a Telco to succeed in this space, a holistic
view and a coherent strategy is needed.
IT, Applications, Business Analysis,
Revenue & Commercial Model,
Engagement, Audience to talk to
Examples of Globe Customers Today
Current DIY Exchange email
system is getting bigger due to
increasing number of ports
Need to upgrade to 2010 version
They wanted it managed so that
they can focus on their core
Managed Email with Computing
Management is very important to
Current system is fragmented and
requires multiple IT Resources
Managed CRM with Computing
GLOBAL PORT & TERMINAL OPERATOR INTERNATIONAL AIRLINE
- A full-service telecommunications company with 5.8K+ employees, 32M+ mobile
subscribers, 1.6M+ broadband subscribers, 700K+ landline subscribers, 800K+
retailers and distributors and business partners.
- Has its own international data & voice gateways, cable landing stations
(Nasugbu and Ballesteros), domestic fiber backhaul and access network
(data, fiber, 3G/HSDPA, LTE, WiMax).
Margins among the highest in Asia-Pacific region
Credit metrics reflect prudent balance sheet management
Generates high dividend yields – Pay-out at 75% of prior year’s
core net income
Consistently rated one of the best managed companies in
Strong and committed shareholders from Ayala Corporation
and Singapore Telecom
Who is Globe Telecom?
Market leader in wireless postpaid market
Over 38% share of wireless industry revenues
Major player in corporate voice, data, and broadband