The 4 Ps for Successful Telco Cloud

About 5 years ago, I surveyed over 200 global telcos to assess their plans for rolling out Cloud services to their customers.  The conclusion: about half of them had some basic services (email, collaboration), while a few had broadened the portfolio with CRM, Web Conferencing, etc.  However, there was no real success story, even at a small scale.

Cut to 2013, and (unfortunately) the story hasn't really changed much.  A few telcos have made some headway, but even they are some way off to having built significant revenues or customer base.   Most telcos do recognize that with connectivity increasingly becoming a pricing conversation, the only option is to move up the value chain of their customer needs.  Cloud is one path that can help them leapfrog ahead of competitors across segments.

Logically, telcos are well suited to offer Cloud services, having the following assets:
- Connectivity and Hosting: the infrastructure required to host, and for end customers to connect with
- Brand: having invested heavily in their brands, they are well known and credible
- Reach and distribution: an extensive channel and retail network which can reach remote corners of the country
- Billing relationship: a recurring relationship, which also supports both prepaid and postpaid billing models

With so much going for them, why have there been no real success stories for Cloud with Telcos?

Is there a way for Telco Cloud initiatives to turn out like this?

Having engaged with telcos for various Cloud services during the past 6 years, my experience brings me to the following two observations:
a) the intent to offer Cloud is clearly there, and all have evaluated cloud
b) the changes required to deliver on that intent require some fundamental rethink, and herein lies the gap.

I am listing the 4 Ps I believe can help telcos bridge the gap between intent and success for Cloud.  

1. People and GTM - Telcos will need to build up capabilities, either directly or through partners, to effectively engage the target segments.  For SMEs, this means channels that a) understand IT in addition to networks b) are able to talk solutions.   For large enterprises, this means a) creating solutions teams that are able to talk business pains before technology b) an extended SI / delivery partner ecosystem that can actually deliver on those solutions (e.g. Telco partnership with SI).  Teams need to be able to talk as effectively with, for example, the Sales and Marketing head as with the CTO.

2. Product - Most product teams come from the traditional telco background and struggle with the paradigm shifts required for Cloud services. These product teams tend to go with the market trends, and work on what their cloud partners suggest.  The offerings then tend to be "me too", not a real differentiator (e.g. most have partnerships with either of Google Apps or Office 365, most are considering IaaS / StaaS / DRaaS as initial offerings).  Moving beyond this to analyze their customer base, identify core needs and build services to address those is possibly the most effective way. 

3. Processes - Processes are typically geared for their bread and butter business i.e. data and voice connectivity.  Some of them are not relevant for the Cloud environment (e.g. requiring a week to provision a Cloud service for a customer) and being able to identify and adapt those processes based on the fundamental customer need, is critical.  Cloud processes need to be ensure faster delivery and adaptability based on market feedback.  

4. Prioritization - This by far is the biggest challenge and the responsibility rests on the executive management.  Cloud is viewed as something they cannot avoid, and they invest in the PR when announcing Cloud initiatives.  That PR is subsequently not backed up with their commitment and empowerment required by the teams to align the above and build up a profitable business line in the mid to long term.

Some have made attempts by forming completely separate entities (e.g. Alatum by Singtel, Telefonica Digital).  The initial success rates have been better, but since the people and most processes are defined by the parent organization, there continue to be challenges. Some have acquired core infra companies (e.g. Verizon and Terramark) to move forward faster, and the initial results have again been positive.

I have engaged with teams across multiple telcos that are putting in a lot of effort to bring out Cloud, but the overall organization is still geared towards their core businesses.  I do see (and hope) that changes, and as the maturity and awareness starts coming in, there could be a sizable telco cloud business that builds up in the next couple of years.