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7/29/2019 Cloud Services - Issues and Opportunities for Services Providers
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ISSUES ANDOPPORTUNITIES FORSERVICE PROVIDERS
INSIGHTS RESEARCH
7/29/2019 Cloud Services - Issues and Opportunities for Services Providers
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CLOUDSERVICES
INSIGHTS RESEARCH
7/29/2019 Cloud Services - Issues and Opportunities for Services Providers
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CLOUD SERVICES:
ISSUES AND OPPORTUNITIES FOR SERVICE PROVIDERS
INSIGHTS RESEARCH
Report author:
Rob Rich
Managing Director, TM Forum
Insights Research:rrich@tmorum.org
Publications Managing Editor:
Annie Turner
aturner@tmorum.org
Creative Director:
David Andrews
dandrews@tmorum.org
Commercial Sales Consultant:
Mark Bradburymbradbury@tmorum.org
Publisher:
Katy Gambinokgambino@tmorum.org
Client Services:
Caroline Taylorctaylor@tmorum.org
Marketing:
Saryia Green, Marketing Manager,
Publications & Virtual Events
sgreen@tmorum.org
Report Design:
The Page Design Consultancy Ltd
Head o Research and Publications:Rebecca Henderson
rhenderson@tmorum.org
Advisors:
Keith Willetts, Chairman and Chie
Executive Ocer, TM Forum
Martin Creaner, President and Chie
Operating Ocer, TM Forum
Nik Willetts, Chie InormationOcer, TM Forum
Published by:
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Executive summary
Amidst the hype, cloud services are taking
shape and their deployment is accelerating
Page 6
Section 1: The cloud emerges
Understanding the opportunities or
service providers
Page 14
Section 2: Analysis
Service providers discuss present and uture actions and
plans or the delivery o cloud services
Page 20
Section 3: Key areas in providing cloud services
Critical areas service providers must ocus on to succeed
Page 25
Section 4: RecommendationsIssues to consider rst
Page 28
Section 5: A new era o agile IT
Introducing TM Forums Enabling Cloud Services Initiative
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CLOUDSERVICES
INSIGHTS RESEARCH
In this report, we are addressing the issues and
opportunities around providing those services
or each player in the cloud ecosystem. We
discuss the communications service providers
(CSPs) view o the services potential benets
and challenges, and the actors critical to
their success with the services. The report
also introduces TM Forums Enabling Cloud
Services initiative.
The Forums initial, primary research,
gleaned rom interviews with 20 Tier 1 service
providers, indicated CSPs are more active in
the eld o providing cloud services rather than
consumption at this stage. (We explore the
possible advantages and potential pitalls o
using cloud services in a Quick Insightsreport,
Cloud services: The users perspectivewhich is
published in tandem with this one.)
The rst section o this report outlines
how cloud services are a new approach to
planning, delivering and consuming IT and
network-enabled services or businesses and
consumers. They are end-user ocused, with
little or no onus on the user to understand the
location or characteristics o the underlying
inrastructure.
It explains the hope is that cloud servicescan greatly improve todays IT delivery model
through smaller upront costs, reduced capital
and operational expense, and less nancial
risk. Other benets could be aster time to
market, less downtime and ewer delays,
access to greater expertise, and higher levels
o standardization.
The cloud services market is in its inancy
and will likely enjoy double digit annual revenue
or the oreseeable uture. In act, cloud looks
to be a ar more sustainable phenomenon than
many other recently hyped architectures and
technologies. It shares many characteristics o
tsunami-like trends such as:
n early market leadership by web icons
like Amazon and Google;
n rapid emergence o new tools and
technologies or use and operations;
n strong endorsement by long established and
emerging technology companies;
n substantial investment by service providers
o all types, including some o the largest
and most innovative CSPs;
n the attention o hordes o developers
across a very broad spectrum o markets,
applications and capabilities; and
n the attention o a variety o users,
including large enterprises, small and
medium businesses, and early adopting
consumers.
In addition, cloud providers and customers
alike are increasingly accepting o cloud service
delivery model denitions, including Sotware
as a Service (SaaS), Platorm as a Service
(PaaS), and Inrastructure as a Service (IaaS), as
well as industry-specied deployment models,including private cloud, community cloud,
public cloud and hybrid cloud.
At the same time, lack o clarity (or even
acceptance) o denitions, a lack o standards,
and a healthy dose o skepticism are
creating barriers to adoption. Concerns about
security, availability, perormance, unit costs,
interoperability, fexibility and personalization
raise those barriers, and slow the adoption o
cloud services.
The cloud services market will not realize its
Executive summaryAmidst the hype, cloud services are now taking shape and
their deployment is accelerating.
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Many challenges o providing cloud services
could be met through partnerships
INSIGHTS RESEARCH
potential unless these concerns are addressed,
and cloud services deliver the eectiveness,
variety, value and security that they promise.
Working on this premise, the report exploressome workloads which have characteristics
that might be well served through cloud
services, as well as those that might be
inappropriate, at least at this stage.
The report goes on to assesses the
strengths and weaknesses o CSPs as cloud
services providers to business customers.
CSPs have many strengths, such as a long
history o selling services to enterprises,
reliability, and a proven ability to scale services
to meet demand. On the other hand, they
need to tackle dicult issues such as gaining
sucient business agility and IT market
knowledge, and delivering cloud services at
low cost.
Some o these challenges could be achieved
through partnerships and several CSPs have
already established partnerships with apps
vendors, security sotware vendors, unied
communications vendors, and PaaS and IaaS
vendors to fesh out their portolios.
The second section o the report
summarizes primary research involving 20
Tier 1 CSPs including the status o their cloud
services programs, the perceived benets
o the services, target markets, the most
important services, and the biggest challenges
and critical success actors.
Some 65 percent o CSPs are oering
one or more services with most targeting
business markets initially. Respondents think
their largest revenue gains will come rom
cloud-related connectivity and computing-
related services to established customers.
They believe the primary benet o their cloudservices would be cost savings, better value
or the money, reduced capital expenditure and
greater fexibility o IT resources.
CSPs are most keen to oer services such
as collaboration and conerencing, connectivity,
applications, unied communications and
security, but acknowledge their biggest
challenges include managing service
quality and costs, providing good customer
experience, and security management.
They see the most critical actors to their
success as being operational excellence,
customer experience management, service
portolio management, and managing partners.
Section 3 explores our broad areas oocus or service providers in delivering cloud
services: security management; perormance
and service level agreement management;
usage metering and charging; and end-to-end
process automation.
These are just a ew o the areas that
require attention, but they are among the most
important and some have been neglected in
the past. CSPs need to address them i they
are to succeed with cloud.
Section 4 puts orward a series o
recommendations, ranging rom the need
to understand the big picture and crating
an eective strategy, to the importance
o ocusing rst on excellence in service
quality, leveraging partners and seeking top
management support.
It also advises CSPs to take advantage o
standards and rameworks: to assess and adapt
revenue management to the new services, or
their delivery mechanism and business models;
to test their own services; and to bolster and
emphasize security and perormance as key
issues or would-be customers.
Section 5 introduces TM Forums Enabling
Cloud Services initiative, which aims to
stimulate the growth o a vibrant and open
marketplace or the services by bringing
together the ecosystem o enterprise users
and cloud providers to remove barriers to
adoption through industry standards.
We hope you nd the report valuable.
Though cloud services scope is broad and the
models inherently complex, or the oreseeable
uture they will provide considerable revenueopportunities or service providers that can
ocus and execute.
CSPs have many
strengths, such as a long
history o selling servicesto enterprises, reliability,
and a proven ability to
scale services to meet
demand.
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INSIGHTS RESEARCH
Many question whether todays incumbent IT
delivery model is sustainable in the long run.
While hardware capital expenditure (CapEx) is
relatively fat, thanks to the eect o Moores
law, the cost o power and especially the
cost o systems and network management
is increasing markedly, with no end in sight.
Clearly, the worlds collective compute
inrastructure needs to be simplied i users
are to manage costs. This has given rise to the
cloud computing movement, which is probably
the most hyped topic in IT today.
Cloud services are a new approach to
planning, delivering and consuming IT and
network-enabled services or businesses and
consumers. Cloud is end-user ocused, with
little or no onus on the user to understand the
location or characteristics o the underlying
inrastructure.
To accomplish this, cloud requires ubiquitous
network access, resource pooling that takes
no account o location, rapid elasticity, fexible
pricing models, readily available sel-service,
and, most o all, economies o scale. The
implementation o cloud seems to be complex,
but it appears to address most i not all o the
issues in the incumbent IT delivery model.
The purpose o this report is to:
n outline the issues and opportunities relevant
to each o the players in the cloud services
ecosystem;
n discuss communications service providers
(CSPs) views o the potential, benets,
challenges and critical success actors o
cloud computing or them;
n introduce the TM Forums Enabling Cloud
Services Initiative.
Understanding opportunitiesor service providers
Section1: The cloud emerges
To accomplish this,cloud requires ubiquitous
network access, resource
pooling that takes no
account o location, rapid
elasticity, exible pricing
models, readily available
sel-service, and, most o
all, economies o scale.
Some view cloud services as a recent
phenomenon, others suggest they have a long
history and that the rst cloud was the PSTN.
The term cloud is believed to have been
coined in the 1990s in telephony, when it was
used to reer to the network in the context
o Virtual Private Network (VPN) services,
which at the time were or voice. Others argue
that the real origin o the concept behind
cloud computing dates back to 1960, when
pioneering computer scientist John McCarthy
suggested that computation may someday be
organized as a public utility
Certainly rom the end-users point o
view todays cloud computing shares some
conceptual characteristics with service delivery
models that date back to the 1960s. This is
especially true with service bureaus, where
subscribers used connected dumb terminals
to perorm computing tasks through very
expensive mainrames at remote acilities, and
never physically encountered the inrastructure
The advent o cheaper hardware
(minicomputers in the 1970s and PCs in
the 1980s) spelled the death o many o
these services bureaus, but ultimately
the prolieration o computing platorms
(including smart devices), the mushrooming omanagement costs and technological evolution
(such as virtualization, Service Oriented
Architecture SOA and so on) appears to
be bringing us back to more o a cloud-based,
service bureau-type approach, although
in a ar more fexible, robust, and scalable
environment.
Despite its rich history, cloud today is a
service delivery model and a market in its
relative inancy. It is buoyed by a collection o
capabilities and models that have emerged
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Cloud looks to be a ar more sustainable
phenomenon than many other recently hyped architectures
INSIGHTS RESEARCH
Lower
operational
expense
Access to
broader
expertise
Decreased
downtime
Lower
capital
expense
Increased
standardization
Decreased
time to
market
Reduced
fnancial risk
Lower
upront
costs
over the last decade or so, and many observers
think it will enjoy annual revenue growth rates
greater than 20 percent, sustainable or the
oreseeable uture. In act, cloud looks to
be a ar more sustainable phenomenon than
many other recently hyped architectures and
technologies. It displays many characteristics
o other tsunami-like trends such as:
n early market leadership by web icons like
Amazon and Google;
n rapid emergence o new tools and
technologies or use and operations;
n strong endorsement by long established and
emerging technology companies;
n sizeable investment by service providers o
all types, including some o the largest and
most innovative CSPs;
n the attention o hordes o developers across
a very broad spectrum o markets,
applications and capabilities; and
n the attention o a broad variety o users,
including large enterprises, small and
medium businesses (SMBs), and early
adopter consumers.
These points notwithstanding, there are
many dierent views on the uture o cloudservices, due in large part to the diversity o
ways in which cloud services and computing
are perceived. In summary they constitute
an emerging computing and communications
paradigm that has the potential to change how
businesses, consumers, governments and a
variety o devices gain access to, generate
and consume inormation, content and
entertainment services.
Some think cloud will rise rapidly to become
the most important service delivery platorm
o the uture, while others say it will collapse
under the weight o expectation.
The lack o clarity (or even acceptance)
o denitions, the lack o standards, and a
healthy dose o skepticism create adoption
barriers. Concerns about security, availability,
perormance, unit costs, interoperability,
and fexibility and personalization raise those
barriers, and slow the adoption o cloud
services.
These concerns have been ueled by a
handul o events where access to services
have been lost or extended periods, and in
one case, a critical database storing inormation
rom thousands o mobile devices was lost
and largely unrecoverable. While these sorts
o disruptions are to be expected in early
stage deployments, they are not acceptable
in more mature production environments, and
customers condence must be bolstered to
encourage growth.
Figure 1.2: The potential
benefts o cloud services.
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INSIGHTS RESEARCH
Cloud clearly oers terric potential benets
to subscribers and providers alike (as shown in
Figure 1.2) including:
n lower upront costs. When introducing a
new application, hardware is an upront cost,
but cloud services allow the subscriber to
pay the provider or usage, avoiding advance
expenditure and allowing them to spread the
cost over time, and manage it closely. So the
ten servers required by an application can be
purchased incrementally.
n aster time to market. It typically takes a ew
months to get an application into production,
but in the cloud, applications could be
deployed and scaled in hours. O course,
rollout issues like training remain, but online
training and support acilities can help speed
rollout as well.
n reduced nancial risk. I an application is
not successul or whatever reason, or its use
within the business is or a limited time, it can
be discontinued without the user being let
with ownership o the inrastructure. The user
also avoids the nancial risk o technological
obsolescence.
n lower capital expense. Cloud computing
allows the user to avoid not only the expense
o the hardware, but also the expense o
setting up data centers, which may exceed
investment in the computing inrastructure
itsel. For large users, it also avoids the
potential limitations o power and cooling or a
single acility, as workloads are spread across
the cloud.
n lower operational expense. With economies
o scale, high levels o automation and
sel-service, users can avoid many o the
expenses o current operations, and the bestcloud providers may gain energy savings.
n decreased downtime and delays. Since the
workloads can be spread across many
acilities, and even across clouds, redundant
instances o applications can be used to
avoid downtime. In addition, data distribution
strategies can help address disaster recovery
and business continuity issues. Finally, larger
providers can aord to build hardened
acilities, with state-o-the art, backed up
power supply and cooling equipment.
n access to expanded expertise. Cloud service
providers can aord to oer more specialized
services and deeper expertise than many IT
departments, given their economies o scale.For example, advanced security techniques,
application perormance optimization, tailored
user support and business continuity services
may be available.
n Standardization. The use o cloud services
drives standardization among users, who
might not get every bell and whistle they have
in a proprietary world, but the overall benets
o cloud services oten make up or this.
Importantly, standardization o services can
also acilitate the simplication and alignment
o business processes, yielding urther
savings and enabling the scaling o processes
within an enterprise.
Oerings by pioneering cloud service providers
have demonstrated some o these benets
to some extent. The scale o benets is still
relatively small, but they are real and will only
increase as the market grows, along with
the maturity and experience o cloud service
providers. Yet it cannot be over-stated that
clouds potential will not be realized unless real
customers needs are addressed, and cloud
services deliver the eectiveness, variety, value
and security that they promise.
Defning the cloud
Beore dealing with cloud services in the
communications industry, it is useul to
introduce the baseline denition o what cloud
is. By ar the most accepted (and neutral)
denition is provided by the National Institute o
Standards and Technology (NIST).
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By ar the most accepted (and neutral) defnition is
rom the National Institute o Standards and Technology
INSIGHTS RESEARCH
Here is what NIST has come up with:
Cloud computing is a model or enabling
convenient, on-demand network access toa shared pool o congurable computing
resources (or example, networks, servers,
storage, applications, and services) that can be
rapidly provisioned and released with minimal
management eort or service provider interaction.
This cloud model promotes availability and is
composed o ve essential characteristics, three
service models, and our deployment models.1
Essential characteristics o cloud computing:
On-demand sel-service. A consumer can
unilaterally provision computing capabilities
as needed, such as server time and network
storage, automatically (without requirement or
human interaction with each services provider).
Broad network access. Capabilities are
available over the network and accessed
through standard mechanisms that promote use
by heterogeneous thin or thick client platorms
(e.g., mobile phones, laptops, and PDAs).
Resource pooling. The providers computing
resources are pooled to serve multiple
consumers using a multi-tenant model,
with dierent physical and virtual resources
dynamically assigned and reassigned according
to consumer demand. There is a sense o
location independence in that the customer
generally has no control or knowledge over
the exact location o the provided resources
but may be able to speciy location at a higher
level o abstraction (e.g., country, state, or data
center). Examples o resources include storage,processing, memory, network bandwidth, and
virtual machines.
Rapid elasticity. Capabilities can be rapidly
and elastically provisioned, in some cases
automatically, to quickly scale out and rapidly
released to quickly scale in. To the consumer,
the capabilities available or provisioning oten
appear to be unlimited and can be purchased in
any quantity at any time.
1 Source: Peter Mell and Tim
Grance o National Institute o
Standards and Technology (NIST),
Inormation Technology Laboratory
Measured Service. Cloud systems
automatically control and optimize resource
use by leveraging a metering capability at some
level o abstraction appropriate to the type oservice (e.g., storage, processing, bandwidth,
and active user accounts). Resource usage
can be monitored, controlled, and reported
providing transparency or both the provider and
consumer o the utilized service.
Service models:
Cloud Sotware as a Service (SaaS). The
capability provided to the consumer is to use
the providers applications running on a cloud
inrastructure. The applications are accessible
rom various client devices through a thin
client interace such as a web browser (or
example, web-based email). The consumer
does not manage or control the underlying
cloud inrastructure including network, servers,
operating systems, storage, or even individual
application capabilities, with the possible
exception o limited user-specic application
conguration settings.
Cloud Platorm as a Service (PaaS). The
capability provided to the consumer is to
deploy onto the cloud inrastructure consumer-
created or acquired applications created using
programming languages and tools supported by
the provider. The consumer does not manage
or control the underlying cloud inrastructure,
including network, servers, operating systems,
or storage, but has control over the deployed
applications and possibly application hosting
environment congurations.
Cloud Inrastructure as a Service (IaaS).The capability provided to the consumer is
to provision processing, storage, networks,
and other undamental computing resources
where the consumer is able to deploy and run
arbitrary sotware, which can include operating
systems and applications. The consumer does
not manage or control the underlying cloud
inrastructure but has control over operating
systems, storage, deployed applications, and
possibly limited control o select networking
components (or example, host rewalls).
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CLOUDSERVICES
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Another useul extension
is communications as
a service (CaaS), which
provides a varietyo IP-based
communications and
collaboration capabilities
using a cloud service
model. CaaS is generally
targeted toward small
and medium businesses
(SMBs).
Deployment models:
Private cloud. The cloud inrastructure is
operated solely or an organization. It may bemanaged by the organization or a third party and
may exist on premise or o premise.
Community cloud. The cloud inrastructure is
shared by several organizations and supports a
specic community that has shared concerns
(e.g., mission, security requirements, policy, and
compliance considerations). It may be managed
by the organizations or a third party and may
exist on premise or o premise.
Public cloud. The cloud inrastructure is made
available to the general public or a large industry
group and is owned by an organization selling
cloud services.
Hybrid cloud. The cloud inrastructure is a
composition o two or more clouds (private,
community, or public) that remain unique
entities but are bound together by standardized
or proprietary technology that enables data and
application portability (e.g., cloud bursting or
load-balancing between clouds).
Note: Cloud sotware takes ull advantage o
the cloud paradigm by being service oriented
with a ocus on statelessness, low coupling,
modularity, and semantic interoperability.
Source, NIST 2009
It should be noted that there are various useul
extensions or additional components to the
denition that have been suggested by industry
players. These include service models like
Business Process as a Service (BaaS), wherebusiness process outsourcing providers might
provide services like travel, payroll/benets
administration, clearinghouse or procurement
services through a cloud delivery paradigm.
Another useul extension is Communications
as a Service (CaaS), which provides a variety
o IP-based communications and collaboration
capabilities using a cloud service model. CaaS
is generally targeted toward small and medium
businesses (SMBs).
TM Forum is also exploring the concept o
Database as a Service (DBaaS). There are a
handul o other emerging models as well, but
or the most part, we will stick with the NIST
denitions throughout the report.
Leveraging the cloud fnding workloads
that work
As stated earlier, cloud computing is a service
delivery model and a market in its relative
inancy. As such it should not be seen as a
panacea, but rather as a model able to deliver
some (but not all) important services and
applications. Users must be careul about which
sorts o services they choose to deploy initially i
they are to be successul and gain momentum.
Some initial services that are suitable or cloud
deployment include:
n Compute services and storage services
which could exploit economies o scale,
provide attractive nancial benets and get to
market aster.
n Development and test environments can
oten be provisioned ar more quickly,
as existing capacity can be used rather
than having to provision new servers and
development tools.
n Business continuity and disaster recovery can
also be provisioned more quickly, and oers
the advantage o instant, o-site, ubiquitous
access, as well as substantial CapEx and
operational expenditure savings.
n Audio, video and web-style collaboration can
be accessed almost immediately, again with
signicant savings.
n Select industry applications, especially those
or a distributed workorce (such as sales
orce automation) can be provided aster,and at lower cost. Also, resource intensive
applications that are run only periodically
(like invoice rendering) are good candidates.
n Analytics can be provisioned quickly as a
service, and provide additional horsepower
or in-house, compute-intensive, analytical
applications, or they might be used or real-
time results on cloud-centric inormation like
web or mobile advertising,
n Contact center services like IP-based
automatic call distribution (ACD) and
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There are a number o areas that
cannot be easily accommodated by cloud
INSIGHTS RESEARCH
interactive voice response (IVR) can be
deployed in the cloud, especially or SMBs or
inormal contact centers that wish to avoid
the expense involved in a ull blown contactcenter. Collaboration tools also t in here.
n Data storage and archiving could be oered
relatively inexpensively by cloud, either as part
o a business continuity/disaster recovery
solution, or standalone.
n Desktop virtualization separates a PC desktop
environment rom a physical machine using a
client-server model o computing. The model
stores the resulting virtualized desktop on a
remote central server, instead o on the local
storage o a remote client. This can potentially
be done more eciently in a cloud model
There are also a number o areas that cannot be
easily accommodated by cloud, at least at the
present time. Some examples include:
n Highly customized applications since
some o the scalability and fexibility o cloud
inrastructure is dependent on standard
sotware, users should use caution in moving
these applications to the cloud.
n Sensitive data as concerns remain regarding
security in the cloud, users should be careul
about moving sensitive data there. This is
particularly true or data with geographic
storage restrictions i the cloud services
provider cannot guarantee the location o the
data to the user.
n Complex transactions may not be suitable,
given the latency and interoperability concerns
around current cloud implementations.
n Applications and data with regulatory
restrictions; given the relative immaturity o
cloud inrastructure, users should proceedwith caution here.
n Legacy batch applications which have already
been optimized or may have a relatively short
reaming lie may gain little rom transition to a
new delivery environment.
There may be exceptions to each o these
cases, but generally speaking services and
applications in the rst group will see more
value and less risk rom a cloud implementation.
Cloud service brokers an emerging concept
Among the most interesting roles emerging in
the market is that o the cloud services broker.One characteristic o rapidly emerging markets,
such as cloud services, is the prolieration o
new roles. There is a growing opportunity or so-
called cloud service brokers to serve as trusted
intermediaries between end-users and cloud
services providers.
There are many small and specialized rms,
each with their own characteristics, fooding
into this market. Cloud services brokers can
help customers select the right services, deploy
services and applications across multiple clouds,
and perhaps even gain by arbitraging services
across clouds to improve users pricing and
brokers protability. There are a number o
ways brokers can add value, including:
n One stop shopping: Brokers can ease the
selection process and add expertise;
n Expanded service portolios: Brokers can
expand the oerings to their customers,
increasing responsiveness;
n Cloud aggregation: Brokers can deploy user
services across multiple cloud inrastructures
and platorms, potentially improving
perormance and avoiding provider lock-in;
n Cloud service intermediation: Brokers
can build additional services on an existing
cloud providers platorm. Examples might
include beeng up security and management
capabilities, or building complementary
applications;
n Cloud service arbitrage: Brokers can acilitate
opportunistic choices driving competition
among cloud providers or the benet o the
broker or the customer.
CSPs would do well to explore the cloud service
broker opportunity, perhaps mixing some third
party services with their own and leveraging
their brand by marketing them to their customer
base.
CSPs would do well to
explore the cloud service
broker opportunity,perhaps mixing some third
party services with their
own and leveraging their
brand by marketing them
to their customer base.
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CLOUDSERVICES
INSIGHTS RESEARCH
CSPs and cloud services
Many service providers have already announced
or deployed cloud services, a considerablenumber o them through partnerships. CSPs
must demonstrate business agility, market
knowledge, and cost leadership with their
own oerings. They can also do so through
partnerships with other providers. For example,
a CSP may choose to partner with a lower cost
supplier to provide cheaper inrastructure or
customers lower priority applications, or to gain
early access to a particular application. This gives
the partner access to a stronger distribution
channel and brand in return. The list o services
and partnerships is too long or the purposes o
this paper, but generic partnership types include:
n Apps vendors as a number o CSPs are
oering SaaS services, especially in the areas
o customer relationship management (CRM),
email, collaboration and conerencing. Some
have also augmented these oers with their
own sotware; or example, BT has coupled
its Ribbit sotware with a popular third party
sales orce automation suite.
n Security vendors are oering security services
in partnership with security sotware vendors.
These may be oered as standalone security
services, or in conjunction with another cloud
service, such as messaging.
n Unied communications providers have
oerings particularly or SMBs;
n PaaS is on oer through a number o CSPs
partnering with a variety o operating systems,
middleware and development tools vendors
which collectively act as PaaS suppliers.
A ew are partnering with other PaaS vendors
to sell their services.n IaaS is available rom some CSPs which
are making their own compute and storage
Inrastructure available as service oerings.
Some are also reselling the IaaS o other
players in specic circumstances.
CSPs have sti competition as cloud service
providers, and the number o competitors is
growing. CSPs have particular strengths though,
especially in what they can oer enterpriseand SMB market segments. CSPs advantages
include:
n Enterprise sales capability: Telcos have a long
history o selling to enterprises. Unlike their
consumer or very small business counterparts
or start-ups, enterprise CIOs expect dedicated
account teams collaborating closely with them
as part o a long relationship.
n Liecycle service and support: Enterprises
expect ater-sales service and support
throughout the service liecycle. This
includes liecycle management teams
ensuring successul service delivery 24/7;
advanced tooling or service monitoring
and management; sel-service portals or
network and application perormance; usage
monitoring; conguration and provisioning
changes; and in some cases e-bonding
between enterprise systems and service
provider systems. Many CSPs that deal with
enterprises already have these capabilities in
place.
n Scalable, reliable operations: CSPs have a
long history o engineering services or very
high availability, even as they scale up to
many millions o customers. This reliability at
scale is built into CSPs service culture, and
in some cases reinorced by regulatory policy.
Enterprises expect this o their applications
and service providers, especially or mission
critical apps.
n Service level agreements (SLAs) with nancial
penalties: Most enterprises expect meaningul
SLAs with clear metrics or evaluating theachievement o those SLAs, backed up by
monitoring and management systems, and
nancial penalties such as credits or reunds
i service levels arent met. A low-cost service
with best eort delivery quality is generally
not attractive to a CIO.
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Service providers must move quickly and
decisively, leveraging their inherent advantages
INSIGHTS RESEARCH
In todays challenging economic environment, enterprises
are increasingly ocused on the fnancial stability, brand
and business viability o service providers which provide
key parts o their inrastructures.
n Broad enterprise solutions portolio: Many
enterprises preer to buy solutions rather
than put pieces together themselves.
Moreover, bundles o services may resultin additional discounting. Providers with
larger enterprise portolios oer a broad
range o services including network access
and transport, multi-protocol label switching
(MPLS) VPNs or backhaul to the enterprise
data center, application management,
global load balancing, asymmetric web
acceleration, network-based rewalls and
other network-based security services,
content delivery, Voice over IP, Video over
IP, managed messaging, web conerencing
and remote access. All o these services can
oer synergies when combined with cloud
applications, computing and storage.
n Vendor independence: CSPs tend to be
independent o sotware and hardware
vendors, as their customer base has a wide
range o requirements and preerences, and
CSPs tend to try to reach as wide a market as
possible. Consequently, lock-in to a specic
storage, server, operating system, hypervisor,
middleware, database or application vendor
would be sel-deeating by limiting market
penetration. This contrasts with some other
players, which may have proprietary elements
to their platorms. One note o caution here;
managing the number o oers rom the start
would be a wise move.
nGlobal ootprint: Many enterprises have a
global ootprint, and expect their strategic
partners to have the same. Some o the
largest CSPs are achieving this through
organic growth or acquisition and have
acilities to provide local services, in a
consistent way, across much o the world.
n Financial stability and market commitment:
In todays challenging economic environment,
enterprises are increasingly ocused on the
nancial stability, brand and business viabilityo service providers that provide key parts o
their inrastructures. Enterprise governance
will likely concentrate spending or cloud
services across a relatively small number
o providers which have demonstrated
proper handling o their IT services. There
will probably be some ad hoc purchasing,
but most enterprise expenditures will go to
nancially stable, trusted partners like CSPs.
CSPs can extend some o their advantage to
innovative partners through a service broker
relationship, as discussed above.
n Long term relationships and perormance:
Large scale networks, an experienced
skill base, long term enterprise customer
relationships, management tools, support
organizations, service culture, and local access
and regulatory relationships that deliver
services successully, at scale, are dicult
to replicate. Enterprise CIOs understand this
well, and tend to concentrate their purchases
with suppliers that have strong track records.
Clearly, CSPs are well positioned to benet
rom cloud services, both as users o cloud
services (which will be explored in the Quick
Insightsreport Cloud services: Looking rom
the users perspective, to be published in July
2010) and providers o them. To maximize
the benet however, they must move quickly
and decisively, choosing appropriate services
to deploy, selecting the right partners and
leveraging their inherent advantages.
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CLOUDSERVICES
INSIGHTS RESEARCH
To investigate rsthand how service providers
are approaching cloud services, and to identiy
their goals, perceptions, learning and results,
TM Forum Insights conducted interviews with
senior executives at 20 service providers rom
around the world. While the goals, positioning,
perception o value and progress varied broadly
among the service providers, all had cloud
initiatives or at least management discussions
underway. All were ar enough along to talk
about drivers, barriers, target oers and delivery
priorities, positioning, potential, program
challenges and critical success actors.
Importantly, one can look at service providers
as both providers o commercial cloud services
and consumers o those services. In practice,
most service providers seem more concerned
with rolling out commercial services than
consuming them as an enterprise. This should
not be surprising, given the push or new
services revenues, and general reticence o
large corporations (and many service providers
are among the largest) to trust mission critical
applications to new delivery paradigms.
It became clear rom the interviews that
there are many dierent views o cloud
services rom almost every perspective. This is
an indication o the diversity o markets aroundthe world, but also a by-product o market
maturity, as service providers determine what
their customers require and how to deliver it.
A large majority indicated they needed to move
quickly, but at the same time recognized that
this is a market that will develop over a number
o years. Almost all said this was a visible issue
with their senior management, but not all elt
that top management had a realistic or even
clear view o the market.
Still, many providers are beginning to get
Service providers discuss presentand uture actions and plans or
delivery o cloud services
Section 2: Analysis
To investigate frsthand
how service providers
are approaching cloudservices, and to identiy
their goals, perceptions,
learning and results, TM
Forum Insights conducted
interviews with senior
executives at 20 service
providers rom around
the world.
their arms around the basics, and there are
enough early eorts out there or the industry
to start learning rom implementations.
Equally important is that most respondents
expect to begin to shit gears with a stronger
ocus on service enablement, and delivering
new services and business models. This should
help them dierentiate their oerings rom
those o competing players.
Respondent profles: views romacross the industry
The service providers we interviewed came
rom two segments. The largest segment,
representing 75 percent o our respondents,
were convergent suppliers, oering voice and
data, both xed and wireless, and in some
cases video services. Most o the converged
carriers operated primarily in a single country,
though a ew had a substantial regional
presence. Interestingly, a ew o them owned
divisions that were already oering hosting and
other IT related services beyond their usual
geographies.
Wireless mobile companies were the second
most common respondents, comprising
25 percent o the base. Most o the mobileproviders have multi-country operations. A
ew owned some xed inrastructure, but their
xed revenues were dwared by their wireless
operations.
The vast majority o our operators were
among the top ranked in terms o market share
in the countries they served, though in a ew
cases the mobile operators slipped below this
ranking in some countries. There was only one
case though where an operator was not among
the top three.
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Determining just how committed
the industry is to cloud services
INSIGHTS RESEARCH
Question 1: State o the cloud initiative
Our rst question was intended to determine
how committed the industry is to cloudservices. We ound that almost every CSP has
a budgeted cloud program o some sort, and
most have launched at least a service or set
o services. O those CSPs that had not yet
launched, all were experimenting, or studying
the market.
Status o cloud services
nLaunched initial cloud services
nBudgeted but not ully launchednExperimenting but not budgeted
Question 2: Primary beneft to CSPs
o the cloud initiative
We asked this to determine how CSPs would
benet rom their cloud initiatives. While
opinions were split, the most requent answer
was gains in revenues rom connectivity
services. This was particularly true o those
service providers ocused on partnerships
to drive revenue. CSPs expect the move o
applications and computing services to the
cloud to drive big increases in connectivity
and transport services. They also believe that
much o the increase will be in higher quality,
managed communications services, and not just
best eort Internet trac.
The second most popular response was
revenue gains rom application services and
computing inrastructure services. A ew o
the service providers elt that by dierentiating
themselves with cloud services, they couldgain new customers which do not subscribe to
their core services currently. One CSP elt that
oering cloud services would make its portolio
sticky enough to impact customer retention.
Primary beneft o cloud
services to CSPs
nRevenue gains rom connectivity
services
nRevenue gains rom inrastructure
services
nRevenue gains rom application
services
nAcquisition o new subscribers
nRetention o current subscribers
65% 25%
10%
45%
5%
10%
20%
20%
A ew o the service providers elt that by dierentiating
themselves with cloud services, they could gain new
customers which do not subscribe to their core
services currently.
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CLOUDSERVICES
INSIGHTS RESEARCH
Question 3: Target markets or cloud services
This question endeavored to establish which
markets were most important to CSPs as theydevelop their cloud services oerings. Only one
CSP said it was most interested in consumers,
but a slight majority was targeting all business
customers, rom small and medium businesses
(SMBs) to large and enterprise customers.
This is cause or some concern, as there will
likely be marked dierences in the services
consumed, delivery expectations and marketing
strategies among customers in each o the
segments. Such a broad ocus could dilute
service providers eorts. When we expressed
this concern to some o the respondents, they
replied that many o the services they will be
oering they already oer to these segments
(see question 5 or details), but they will be
delivered dierently.
The second most popular response was
SMBs. This has previously been viewed as a
potential strong suit or CSPs, and as SMBs
are currently leading cloud services adoption,
the response makes sense. There are myriad
challenges here though, especially in going
beyond basic cross-industry services, as each
segment will have some unique requirements,
particularly at the application level. Managing
sales and marketing costs is also a real
challenge in dealing with this segment. Only
a ew were ocused primarily on enterprise to
start.
Question 4: Primary beneft to customers
Our next question was about the value o
services to customers. We asked respondents
to give their opinions about the top threebenets to their customers through deploying
cloud services. Not surprisingly, most o
the responses ocused on cost. Almost all
responded rst with cost savings as the primary
benet, but they also cited reduced CapEx and
IT management eort as equally important.
A majority also cited improved service quality
and delivery. Most elt this was particularly
important or SMBs, where dedicated IT sta
were limited. Respondents also highlighted
greater fexibility o resources available to
55%
5%
5%
10%
25%
Target markets or cloud
services
nBusiness marketsnSmall-medium businesses
nLarge enterprise
nConsumers
nOther
users, especially in terms o scalability to meet
customers peak demands. Rapid deployment o
applications on inrastructure was proered by
35 percent o respondents, who elt this would
be important to customers with overloaded IT
organizations. Finally, 20 percent elt that access
to the latest technology will be important to
customers who may struggle to understand,
acquire or manage it.
Primary beneft to customers
nCost savings
nImproved service/value
nReduce CapEx
nIncrease resource flexibility
nRapid deployment
nLatest technology
nReduce IT management eort
0
20
40
60
80
100
80%
55% 55%
40%
35%
20%
15%
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Service providers discuss which cloud
related services are most important to them
INSIGHTS RESEARCH
Question 5: Most important services
To get a more granular sense o where service
providers believe they might achieve thegreatest revenue gains, we asked which cloud
related services were most important to them.
We allowed respondents to name their top
three services.
Interestingly, most o the top responses
were services many are oering in some
orm, but that could be oered via cloud.
Collaboration services included voice, video and
web capabilities, as well as some web-related
content delivery. As mentioned previously, CSPs
expect connectivity services will receive a boost
rom cloud services adoption.
Enterprise applications were the third choice,
with customer relationship management/sales
orce automation dominating the responses,
but a ew mentioned enterprise resource
planning and helpdesk applications or the
SMB segment as being important as well. The
ourth most important category was unied
communications, again, especially or the SMB
segment. Security is also expected to play an
important role, with 20 percent o respondents
placing it in their top three choices. The rest o
the oers were spread airly evenly.
Perhaps most important here is that core
inrastructure and platorm services are not
viewed as the primary money makers. In act,
many service providers have partnered, at least
initially, to deliver these services. We believe
this is driven by CSPs desire to stick to their
knitting as well as recognizing the strength o
potential partners.
Most important oers or
service providers
nCollaboration/ conerencing
nConnectivity services
nEnterprise applications
nUnifed communications
nSecurity
nContact center
nComputing services
nData storage/archiving
nMessaging/email
nDesktop virtualization
nBusiness continuity/disaster
recovery
nDevelopment & test
0
10
20
30
40
50
6060%
55%
40%
35%
20%
15%
10%
5%
In act, many service providers have partnered, at least
initially, to deliver these services. We believe this is
driven by CSPs desire to stick to their knitting as well as
recognizing the strength o potential partners.
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70%
65%
35%
60%
20%
15%
0
20
40
60
80
18 www.tmorum.org
CLOUDSERVICES
INSIGHTS RESEARCH
Question 6: Biggest challenges or cloud
services providers
This question dealt with the biggest challengesservice providers perceive in delivering cloud
services. Generally speaking, challenges
ranged rom highly strategic business
issues like portolio, partner and customer
management, to more operational issues o
service quality, cost, and security management.
We asked respondents to name their top three
challenges.
Not surprisingly, service quality, cost
and customer experience led the list by a
considerable margin. CSPs already understand
the importance and diculties o dealing
with this three-headed monster, just as they
struggle with it to deliver core services now.
Cloud services increase the complexity o each
o these challenges or CSPs, since there are
more services, devices, applications, platorms,
partners and competitors added to the mixture.
Managing delivery costs is particularly
important here, especially or inrastructure and
platorm services. Those who remember the
race to the bottom in hosting prices during
the dot com boom and bust will be prepared
or a real shakeout in the commodity services
market.
Standing alone as the ourth biggest
challenge is security management. Many
service providers are less worried about the
execution than customers perception. Indeed,
when those who did not select this as a great
challenge were asked why not, they responded
they elt that i they could simply match or
exceed a given customers required level o
security, the issue would all away. Many o
these respondents elt that competitors thatcould not demonstrate adequate security
would be among the early casualties, or
relegated to very low margin services.
Revenue management was cited by 20
percent o respondents. The concern here was
whether the billing and charging systems could
handle the myriad services and pricing models
in a timely and accurate ashion.
Managing partnerships was also viewed
as the most challenging by 20 percent o the
respondents, as many were using partners to
Biggest challenges or
service providers
nManaging service qualitynManaging delivery costs
nManaging customer experience
nSecurity management
nRevenue management
nPartner management
nManaging the service portolio
nApplications perormance
deliver at least some o their services. Thisincluded attracting the best partners, managing
partner perormance and implementing air and
accurate revenue sharing.
Several CSPs expressed concern about
top management commitment, and a ew
wondered whether their top management
had an adequate understanding o the cloud
universe, and what it would take to be
successul in this endeavor.
A handul o CSPs included managing the
service portolio as a key challenge. Those
respondents elt that it would pose a real
challenge to the marketing organization to
dierentiate a CSP through myriad new
services in an immature market.
Finally, a ew CSPs expressed concern about
their ability to guarantee the perormance o a
variety o applications, especially when those
applications would not necessarily reside on
their own inrastructure.
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Wide agreement about the top
three critical success actors
INSIGHTS RESEARCH
Question 7: Critical success actors
As with biggest challenges, we asked
respondents to name their top three criticalsuccess actors. The leading response was
operational excellence. While many CSPs elt
they could oer a premium service, they were
sensitive about the number o competitors and
the specter o aggressive pricing. They elt that
cost leadership and eciency would be key to
competitiveness and protability.
The second most popular response was
customer experience. Most CSPs elt that
sel-service is extremely important, but simply
providing adequate capability in this area would
not be enough, especially or larger enterprise
customers and high touch SMBs. There was
also widespread recognition o the complexity
involved here, as refected in the biggest
challenges responses.
The third most popular response was service
portolio management. Oering a competitive
set o services and oers, cognizant o the
customer base and competition, was most oten
the actor rst mentioned by respondents even
though it was eclipsed overall by other issues.
Managing partnerships was viewed as critical
by 35 percent o respondents, as many were
using partners to deliver at least some o their
services. In act, i service providers are to
protably oer all the services their customers
are looking or, it is likely that they will need
partners.
As with challenges, revenue management
was cited by 20 percent o respondents. They
elt the billing charging system being able to
handle myriad services and pricing models, in
a timely and accurate ashion, was critical to
early success.Again several CSPs expressed concern about
top management commitment, and whether
their top management was truly committed to
Critical success actors
or CSPs
nOperational excellence
nCustomer experience
nService portolio management
nAbility to manage partners
nRevenue management
nTop management commitment
nSales/marketing abilities
cloud services. Again a ew wondered whether
their top management truly had an adequateunderstanding o cloud, and what it would take
to be successul in cloud services.
Finally, some CSPs ocused on the
importance o their sales and marketing
organizations ability to properly position
cloud services with their customers. These
respondents also stressed the importance
o proper tools and skills within the sales
organization to help the clients make the
right choices.
As can be seen by the responses, most CSPs
are on their way to delivering cloud services,
and eel they have a good sense o which
customers they need to target, what they need
to oer, their biggest challenges and critical
success actors. Increasingly, and especially orthe largest players, it seems that the remaining
questions are around ocus, commitment, and
execution.
0
20
40
60
80
100
80%
65%
60%
35%
20%
Most CSPs elt that sel-service is extremely important,
but simply providing adequate capability in this area
would not be enough, especially or larger enterprise
customers and high touch SMBs.
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CLOUDSERVICES
INSIGHTS RESEARCH
While the scope o cloud services is huge,
there are a number o critical areas on which
service providers must ocus i they are to be
successul. Out o all o these, we have picked
our broad areas security management,
perormance management, billing and charging,
and process automation as being critical to
the success o any cloud service provider in
delivering a competitive set o oers.
Security management
Security has been identied in many instances
as a critical prerequisite or cloud services
adoption, especially among business
customers. This has been shown again and
again in studies, and has been highlighted
repeatedly at meetings o the TM Forums
Enterprise Cloud Leadership Council and
several Executive Roundtables on cloud at
Management Worldevents.
In act, we believe that providers that
are unable to demonstrate proper security
measures and recovery plans, at least or
services to business customers, will be among
the early casualties in the cloud services
market. Proper security management is table
stakes or business customers and savvyconsumers, and repeated inadequacy by
providers will not be tolerated or long.
Generally speaking, security management
and controls or cloud services are unctionally
similar to security management and controls
in any robust IT environment. This is an
advantage rom a market perspective, since
a knowledgeable customer will already
understand the relative importance o various
aspects o security, and thereore be able to
judge i a providers oer is good enough.
Critical areas service providersmust ocus on to succeed
Section 3: Key areas in providing cloud services
In act, we believe thatproviders that are unable
to demonstrate proper
security measures and
recovery plans, at least
or services to business
customers, will be among
the early casualties in the
cloud services market.
The dierences between ordinary enterprise
security and cloud security management reside
largely in the delivery and operational models,
and the subsequent division o responsibility
and labor or the provider and consumer.
The scope o security management or all
IT service providers is broad and complex. In
addressing IT operations, providers must ocus
on physical security (or example, acilities),
network security, IT systems security, data
security and privacy, and applications systems
security. In addition, there are many controls
necessary at the process level or each o
these areas, including identity management,
separation o unction and responsibility,
access control, change management
procedures, and so on.
Organizations must address all o these
aspects to be eective, and oten levels o
sophistication and maturity vary between
dierent areas, or may even vary among
dierent acilities in the organization. Since
the chain is only as strong as the weakest
link, each o these aspects must be examined
closely across all cloud and the usual delivery
and operational models.
Security management is urther complicated
by the delivery models, and the roles thatsuppliers and consumers must play in each
o them. So or an Inrastructure as a Service,
the responsibility or security might include
only physical security and virtualization
security, leaving the customer responsible or
everything rom the operating system up (such
as middleware, applications, data, and identity
management).
On the other hand, a Sotware as a Service
would need to provide security unctions up
through applications and data in addition to the
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The key areas are divided into governance
and operational domains
INSIGHTS RESEARCH
inrastructure-related aspects since it provides
essentially a turnkey bundle o capabilities. This
still leaves the consumer with some aspects
o network, process and access security, but
alleviates a considerable amount o the overall
burden. Figure 3-1 illustrates the relative roles
and responsibilities or security related to
delivery models.
One o the greatest challenges o security
is providing services that are considered
fexible, and accommodating to a variety o
users, while maintaining adequate control.
This balancing act is a tall order or service
providers, as consumers may view industrial
strength security controls and practices as
overly restrictive. Security management must
be implemented fexibly, while retaining overall
integrity and providing an audit trail.
The Computer Security Alliance has identied
a number o critical areas o ocus. The areas
are divided into governance and operational
domains.
The governance domains include:
n Governance and enterprise riskmanagement the ability o an organization
to govern and measure risk induced by cloud
computing. This encompasses items such
as legal precedence or agreement
breaches, user organizations being able
to assess the risk o using cloud
providers services adequately, the
responsibility to protect sensitive data
when both user and providers may be at
ault, international boundary issues, and
others.
n Legal and electronic discovery extends
to potential legal issues such as protection
requirements or inormation and laws
concerning disclosure in the event o a
breach in security, regulatory requirements,
privacy requirements, international laws, and
others.
n Inormation liecycle management includes
identication and control o data in the
cloud, controls to compensate or the
loss o physical control when moving
data into the cloud, taking responsibility or
data condentiality, integrity and availability,
and so on.
n Portability and interoperability is about
being able to move data and services rom
one provider to another, including bringing it
back in-house, as well as Issues
surrounding interoperability between
providers.
The operational domains include:
n Traditional security, business continuity
and disaster recovery is about how cloud
services aects the operational processesand procedures currently used to implement
security, business continuity and disaster
recovery. Identiying where cloud services
increases or decreases security risks.
n Data center operations: How to evaluate
a providers data center architecture and
operations? Understanding characteristics
that could be benecial or detrimental to
short and long term stability.
n Incident response, notication and
remediation involves proper incident
Sotware as a Service
Platorm as a Service
Inrastructure as a Service
Inrastructure elements
Consumers
responsibilityor security
increases with
lower level
services
Suppliers
responsibility
or security
increases with
higher level
services
Figure 3.1: Security
responsibilities relative to
delivery models
Source: TM Forum, 2010
One o the greatest
challenges o security is
providing services that
are considered exible,
and accommodating to
a variety o users, while
maintaining adequate
control.
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CLOUDSERVICES
INSIGHTS RESEARCH
detection, response, notication and
remediation, including an understanding
o the complexity that cloud services bring
to these processes.n Applications security covers securing
application sotware in the cloud, whether
in operational or development mode, and
assessing how appropriate the use o cloud
is or particular applications.
n Encryption and key management demands
the identication o proper encryption usage
and scalable key management.
n Identity and access management means
managing identities and leveraging directory
services to provide access controls, plus
assessing organizational readiness to
conduct cloud-based identity and access
management
n Virtualization the use o hardware and
system virtualization technology in cloud
computing gives rise to risks associated
with multi-tenancy, virtual machine
(VM) isolation, VM-co-residence, hypervisor
vulnerabilities and so on.
This alone demonstrates the complexity and
criticality o security management and control
in a cloud environment.
While the scope here may seem daunting,
service providers and consumers must
remember that dierent levels o security
are necessary or dierent workloads. Great
importance must be attached to balancing
security with fexibility, and the goal or service
providers should be to achieve at least the
level o security required or demonstrated by
their consumers, rather than perection at the
expense o business eectiveness.
Perormance management and SLAs
Perormance is among the most important
mentioned aspects o cloud service delivery,
eclipsed perhaps only by security as a
requirement. Perormance shares much o
securitys complexity in that consumers
expectations are end-to-end, a dicult
challenge or any service provider.
For cloud this cuts across at least network,
system and application management, and may
include actors such as device management
as well. Sophisticated customers look or
service level agreements (SLAs) with specic
guarantees o perormance against establishedmeasurements and customer credits i those
levels o service are not met.
SLA management strategy considers two
well-dened phases: contract negotiation and
the monitoring o contract ulllment over pre-
dened intervals (such as downtime per billing
period). Measuring, monitoring and reporting
on cloud perormance are based on an end-
users experience or the end-users access to
resources.
This can be dicult as determining the root
cause or service interruptions or degradations
are hindered by the complex nature o the
environment. The more complicated the
service, the more complex the determination
o SLA ulllment becomes.
Service providers vary greatly regarding how
granular the metrics o their agreements are,
as well as the measurement periods they use,
their credit policies or missing their SLAs and
deciding who is responsible or notication o
a violation o the SLA. Oten service providers
put the onus o notication on the customer,
which does not urther customer satisaction
or condence, but instead creates more
complexity or customers in evaluating and
comparing service providers.
Reporting and audit is an important area
o perormance management. Sophisticated
customers will require both periodic and
on-demand reports detailing usage, quality,
outages, provisioning intervals, incident
response and recovery, and so on across
a variety o services. They will also look to
be able to perorm periodic audits to insurethat service delivery, security management
and perormance are within the contracted
boundaries and their own corporate policies.
Finally, customers will look or ways to
manage service contracts over the lie o the
contract, attempting to correlate the technical
detail they receive rom suppliers with the
specic business goals stipulated or implied
in the contract. This emerging discipline o
service contract management will become
more important as customers move more
Finally, customers will
look or ways to manage
service contracts overthe lie o the contract,
attempting to correlate
the technical detail they
receive rom suppliers
with the specifc business
goals stipulated or implied
in the contract.
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Flexible, accurate billing and charging are
critical prerequisites or success
INSIGHTS RESEARCH
unctions to the cloud, and as service providers
seek to expand, extend and renew contracts.
Usage metering, billing and charging
Flexible, accurate billing and charging are
critical prerequisites or success in cloud
services. Billing has long been a critical
component or CSPs, and has become ar more
fexible as new services, oers and business
models have emerged in recent years. Cloud
services however, combined with sel-service
capabilities and real-time processes, will
introduce a new set o challenges or billing,
charging and revenue management in general.
Not only are the services more diverse,
but the big rise in delivery components,
competitors, business models and unctions
will likely drive unprecedented creativity
into the service delivery, oer management,
order management, customer management,
settlement and revenue management
processes. Billing and charging will have an
important role in all o these processes.
For example:
n To handle increased transactions as
service providers introduce more
usage-based services;
n To work with order management,
provisioning systems and product catalogs
to ensure appropriate handling and provide
things such as quotations or advice o
charge;
n To help initiate new oers upon
achievement o certain thresholds
or example i a usage or spending
threshold is met, the billing system could
trigger a new oer or reward;n To work with product catalogs dynamically
to create new bundles and oers, or enorce
eligibility in real-time;
n To deal with a variety o new transactions
and ormats (through mediation);
n To support the SLA reconciliation process i
the service levels are not met;
n To support the settlement process with
partners or a variety o services;n To support real-time notications, alarms,
budget control, de-provisioning and
promotion management or both prepaid
and postpaid customers;
n To provide the customer with a single
source o usage and billing truth in
situations where the CSP is a cloud service
broker.
Clearly, billing and charging are key
components or any cloud services provider.
Process automation
Much has been said about the benets o
cloud, including rapid elasticity, ast time to
market, low expenses, eective sel-service
and decreased downtime. However, these
benets are only possible with a high degree
o automation, data integrity and operational
excellence. In act, operational excellence
was the single most popular choice among
our respondents when asked to name critical
success actors, and process automation is an
extremely important part o that.
While we have already discussed
the importance o automation in billing,
perormance, and security, there are a number
o other areas where automation is important.
They include:
n Oer management as service providers
must be able to create and communicate
oers dynamically, and drive them through
a variety o channels. While most enterpriseaccounts will require a sales team,
sel-service and messaging can supplement
personal interaction.
Not only are the services more diverse, but the big rise in delivery components,
competitors, business models and unctions will likely drive unprecedented
creativity into the service delivery, oer management, order management, customer
management, settlement and revenue management processes.
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CLOUDSERVICES
INSIGHTS RESEARCH
Many smaller businesses and consumers
will use and even preer sel-service.
Moreover, the ability to generate real-timeoers based on usage will become more
important in consumer and small and
medium-sized business markets, so this will
increase in importance over time.
n Order management, because without
real-time order management and activation,
time-to-market and the cost o activation
are increased, which is a lose-lose
proposition or both customer and provider.
To succeed service providers must deploy
strong systems logic that can translate an
order to a set o services, and work with
the inrastructure, billing and customer
support systems to complete the order.
n Service catalogs are critical to the
sel-service experience as they house the
inormation needed to identiy and deploy
a new service. Catalogs also should be
able to describe and support the service
throughout its liecycle, ostering processes
rom services creation to retirement.
n Automated peering and settlement allows
service providers to improve their partner
relationships, gain better visibility o
costs and revenues, and scale the number
o partners they can work with.
n Conguration management is necessary
with so many new elements added to the
inrastructure. An automated way to manage
conguration parameters will reduce cost
and improve availability and perormance.
n Sel-service integration it is critical
that underlying applications and process
fows are designed to work well in a
sel-service environment. Without seamlesssel-service integration, it will be very
dicult or CSPs to be competitive rom a
cost perspective, and to provide an
acceptable customer experience.
These are just a ew o the o the process
areas that require automation, but they are
among the most important or those neglected
in the past. Service providers will need to
address them i they are to succeed with
cloud.
Service catalogs are critical
to the sel-service experienceas they house the inormation
needed to identiy and deploy
a new service. Catalogs also
should be able to describe and
support the service throughout
its liecycle, ostering processes
rom services creation to
retirement.
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Trying to do too much too soon
can retard growth
INSIGHTS RESEARCH
Sharing with more than 20 service providers
and an approximately equal number o vendors,
the early direction o the cloud services market
is becoming clearer, even though we are in
the early stages o a market that will likely play
out over a decade or more. The ollowing are
our recommendations, gleaned rom these
conversations and the perusal o countless
documents:
1. Understand the big picture
At the outset o this report, we explored the
NIST denitions o cloud computing, including
service models, deployment models, and
essential characteristics. It is important or
service providers to understand the broader
market, including all these aspects, as well as
relevant competitive initiatives and attractive
emerging capabilities and business models
like the cloud service broker model. Service
providers must develop an enterprise-wide
vision o all aspects o cloud i they are to
deliver an appropriate experience to customers.
2. One size does not ft all
Understanding the possibilities within cloud,
market characteristics and their competitive
dierentiators, communication service
providers (CSPs) must crat a compelling yet
manageable cloud computing strategy.
The initial urge may be to try to provide
everything and go ater all markets
simultaneously, but this creates a huge
challenge even to the largest o players.
Developing a cloud services strategy does
not require the CSP to be world class at
everything or many service providers, that
would serve only to overwhelm them rom
the start, ensuring ailure. Rather, the CSP
must determine what is important to its target
customers in its serving domain, and prioritize
and ocus on those things that will dierentiate
it to the customers.
Focus, as determined by market needs
and dierentiated competencies, is likely the
best approach to quick success and building
momentum in cloud services markets. I you
must provide a broad variety o services,
consider partnering with various vendors to
deliver these services, or even becoming a
cloud services broker. For a service provider
in multiple countries targeting multinationals,
a consistent strategy regardless o geography
is oten the goal, so enterprises can know
what to expect and local operations can be in
compliance with corporate goals.
The overall concept here is that the cloud
strategy must be tailored and achievable. Trying
to do too much too soon can result in operational
problems, which could retard growth.
3. Focus frst on operational excellence
Operational excellence in service management
is key. CSPs have a long history o delivering
highly reliable, available services, and this has
gone a long way to strengthen their brands.
Most customers are likely to expect this kind
o service when extending their purchases to
cloud services. In addition, service providers
will need to ocus here to dierentiate
themselves rom smaller, agile players, and to
ensure their operational costs are as low as
possible.
Issues service providersshould consider frst
Section 4: Recommendations
Focus, as determined
by market needs
and dierentiated
competencies, is likely
the best approach to quick
success and building
momentum in cloud
services markets.
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CLOUDSERVICES
INSIGHTS RESEARCH
4. Tailor your customer experience strategy
CSPs customer experience strategies must
be appropriate or their target audiences. Asdiscussed in our recent Insights Research Report,
Customer Experience Management: Driving
Loyalty & Proftability(available rom TM Forums
website) on managing customer experience,
programs must match the expectations o the
target market while remaining aordable to
t