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Cloud services a natural play for telecom carriers

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By Adrian Ho, IDC Asia/Pacific Telecommunications Group | Jun 24, 2009

IDC predicts Cloud Services (or cloud computing) to be an enormous opportunity for telecom carriers across the Asia/Pacific region, on condition these carriers can seize the initiative and become aggressive in driving innovative use of their natural resources – their infrastructure. Though Asia/Pacific is, in general, adopting cloud services more slowly than the rest of the world, this adoption lag presents THE window of opportunity that will most help telecom carriers play a major role in cloud services

IDC views cloud services as a "once in a generation technology" for which telecom carriers have a distinct and natural built-in advantage that could allow them to dominate the industry. Telecom carriers are considered to be natural cloud services providers for many reasons – they have massive, state-of-the-art datacenters and vast next-generation Multiprotocol Label Switching (MPLS) networks and their historical position as the largest utility players in the world. In addition to these inherent advantages, they have brand equity, technical resources, deep pockets and access to capital that are all crucial ingredients for success in cloud services. However, even with these advantages, they risk being relegated to the role of a partner in the cloud services market, albeit an important partner. If carriers allow this to happen, they will have missed the most important opportunity in a decade to drive the utilization rates of their networks.

But are Asian-based organizations ready to dive into cloud services? IDC’s end-user surveys have shown that organizations are turning to cloud services for both cost savings and business improvements, and the market is already moving from an “early adopter” phase to the “mainstream” phase. Cost savings is the most frequently cited benefit in this present economic environment with ease of deployment, scalability and low monthly payments also being rated favorably. In countries like Singapore and Australia are both very technologically- and business-aware ICT market. As such, ICT vendors and ICT consumers are well aware of the potential benefits of cloud services. However, they are not yet convinced that the potential of these benefits will be reflected in reality, but with the global financial crisis causing all parts of a business to rethink their spending priorities, CIOs in these countries are almost always evaluating cloud delivery in any business case for new ICT investments. Within two years, IDC expects that the business case for ICT investment will be about why a purchase should NOT be for cloud services.

At present, there are three active segments within the cloud services market - the most well-recognized being Software as a Service (SaaS). SaaS has been validated through the market success of, in particular, salesforce.com’s CRM application and Google’s Google Apps. These examples address two parts of the market where cloud services are most attractive, that of business applications and low-cost personal productivity tools Business applications such as salesforce.com’s CRM offering fill a ready demand for a point solution to a business problem and allow a level of customization to suit a business environment and some integration with existing enterprise applications. Point solutions such as those that address local legislative requirements for human resources, such as payroll and labor law, are always at the forefront of cloud services adoption. Google Apps is being adopted by many enterprises, both private and public, in global and local organizations. Its uptake in the public sector, especially education, is attributed to its low cost, its ease of implementation and the ability to maintain data stores within national boundaries.