Creating Value through Cloud Computing

by Biswajit Deva Sharma, Product Architect, CLM

CRM on cloud is now a well established concept in the market, and almost every industry is looking to take the advantage of the benefits of cloud computing. However the burning question CIOs of Telecom companies ask is, how relevant is cloud computing for the Telecom industry? Or More specifically how relevant is Cloud computing for their company?

The following parameters primarily drive the decision of IT spending and technology choices for Telecom Operators in the current market scenario.

User Base:
Extremely cost sensitive markets are also forcing the Telecom operators to be extremely innovative in their market offerings. The challenge today is to offer high value with low investments to the customers. The growing competition is further pushing the Telecom Operators to be effective and efficient in their operations.

Average revenue per user (ARPU):
The Telecom industry is going through one of the toughest times in terms of the market dynamics. Recently Bharti Airtel, India’s lar¬gest telecom services com¬pany by revenue and subs¬cribers announced a 33 per cent fall in net profit to Rs 60.47 millions for the year ended March 31, 2011, from Rs 8,9.69 millions in FY10, th¬o¬ugh revenue grew 42 per cent to Rs 59.47 millions from Rs 41.85 millions. One strong reason, Bharti Airtel’s average revenue per user (ARPU) in India continued to fall to Rs 194 in the fourth quarter from Rs 198 ($4.3) in the third quarter.
The above story of Airtel pretty much represents the global picture. The narrowing revenue margin is increasingly prevalent trend of the Telecom industry. Additionally, the competition is forcing the telecom operators to offer more value at a lower cost, thereby impacting the revenue per user.

IT Spending:
Decreasing revenue margins is forcing the Telecom operators to control the Operational cost. The growing demand of the customers for better services at limited cost poses a challenge for Telecom operators to deliver value with limited investment. The leading research reports points out that the IT Spending in the telecom domain has in fact slashed down in 2009-2010. Furthermore, prediction is that the IT Spending will only improve marginally in the major markets until 2013.

Telecom Industry Technology Demands:
The Changing needs of the Telecom operators are also pushing the Software vendors to deliver Customer Management solutions that enable Telecom operators to handle the market constraints. The increasing pressure to control the Operating Cost, point towards moving from a CapEx to an OpEx mode of IT investment. Cloud Computing offers exactly the solution for the Telecom Operators.

The market scenario poses following important challenges for software product design:

• Flexible Operating Cost – Depending on the demands of the markets, the Telecom operators must be able to vary their cost. Hence, the operating cost must comprise primarily of Variable cost, and very minimal fixed cost.
• Customizability – Varying customer need means, Telecom operators must be able to customize their solutions to cater to their business needs.
• Lower Adoption/Exit Time – Customers need highly agile systems, which can be adapted to the business needs with efficacy and provide an option for a smooth exit when needed.
  

Tecnotree leverages on the above needs and is currently conceptualizing to offer it’s solutions through two key delivery models:

• SaaS – Software as a Service. This consists of standard functionalities with standardized business processes specific to Telecom domain, which allows Tecnotree to address standard business needs of the customers.
• PaaS – Platform as a Service. This is to enable the customers and independent software operators to innovate using the Tecnotree application platform. Customers can leverage on the platform to create customized solutions to meet specific business needs.
  

Tecnotree is on a quest to serve its customers, by changing the marketplace with innovations that really matter.

In the coming months, we will publish more blog posts on topics related to technology, delivery & deployment platforms. We believe these are really relevant when it comes to delivering value in the true business sense.

Stay tuned!

BLUE SKY & CUMULUS CLOUDS

By Tatu Tahkokallio, Group Marketing Director

This Monday people woke up with lots of excitement in the air. It was time to turn our eyes and ears towards California and hear what Steve Jobs had to present. No surprise, sky was blue and clouds were expected to appear at the center stage! And they did, amongst many other game changing services and solutions.

But California is not the only place where we see lots of innovation, progress, and development. Already for several months, Tecnotree has been promoting three solutions suits of which ‘Bundle Services for Every Taste’ is the first one. For this suite, the idea and message behind has just become timelier than ever, and Apple is a great example of a player following the same philosophy. I believe a golden opportunity truly exists if different demand from customers is met by packaging services individually, pricing them attractively and offering the bundles out through channels relevant to buyers. I call this opportunity the blue-sky business for tomorrow’s communications service provider!

So what did Steve announce then? Well, as expected the iCloud came out. It is the current (and soon to be closed) MobileMe service extended with a set of new features such as Photo Stream, App Store, iTunes, and storage and it offers a full integration and synchronization between all Apple platforms (iOS and MacOS), products, and applications. iCloud is able to store the pictures you take, device settings, and apps and make them available via all your devices. However, iCould is intended to be a sharing cloud, not a permanent full storage. For this reason, it for example stores only the most recent 1,000 photographs, and albums for 30 days. On the music side iTunes is expanded with a new iCloud service called iTunes Match, which at an extra annual cost of USD 24.99 gives cloud access to songs purchased and ripped from previously owned CDs.

No doubt, the iCloud offers a great set of services for end-users but the impact for mobile operators is less attractive. The system will heavily utilize existing networks, both Wi-Fi and 3G, to connect and signal between applications and services, and as such leave the operator as a bit pipe.

An other new interesting service launched by Apple was iMessaging. It will enable iOS5 users to communicate with each other free of charge by utilizing Apple’s own messaging infrastructure. This system sends notifications over SMS and MMS but uses data connection for actual messaging. As the service and user experience is integrated into the same iOS Messaging application now used to send and receive SMS and MMS messages, there should be no question about its success. What’s the impact for service providers then? A mobile operator will most likely see an increase in data traffic but at the same time a decrease in SMS/MMS revenues.

These new services from Apple are important and there is a lot to learn both from the packaging but also from the pricing point of view. Needless to say, they may also act as precursors on what to expect from the other ecosystem ‘owners’ such as Google, Facebook, Microsoft/Nokia in their future service offerings.

I bet the question pondering in many of the mobile operator’s minds is: “how should a service provider act upon these news?” Are they true cumulus clouds just ahead of rain and thunder? Or is there a way to keep diving in the blue sky? I think there is, and it begins from keeping in mind that there are several ecosystems at play, there are many consumers with various needs and wants, and an operator must be able to locally pull of a similar show – creating the positive service buzz – as what Apple often does. This means, that service provider’s business owners, technologists, and sales & marketing professionals must be working hand-in-hand towards an operator controlled digital marketplace bundling best in breed offerings for subscribers to enjoy!

Yours,

Tatu T

p.s. Talking about clouds, if you haven’t seen the latest Tecnotree press release about private cloud deployment go read it here!