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Going from IaaS to SaaS is the wrong direction…

July 18, 2011 1 comment

Several operators are planning on launching Cloud Infrastructure-as-a-Service (IaaS) soon. Afterwards they want to launch SaaS and Telco SaaS (SaaS + Telecom assets) that run on top of their IaaS. Unfortunately this is doing things the wrong way around.

Since an operator spends millions on IaaS, CxOs want to see results. As such telecom managers are looking for applications and SaaS that can utilize this new IaaS. The problem is that operators are likely to spend again 4-6 months to launch a limited number of SaaS that are fully integrated into their complete backoffice system. This means that operators will be able to launch a limited set of SaaS by mid 2012 at very high APEX. Due to the limited number of services, operators are picking the “usual” suspects to launch, e.g. Microsoft 365.

What will happen in mid-2012?

Several European operators will launch their highly priced IaaS together with a limited number of similar SaaS services. The end result will be an oversupply of Microsoft and virtual servers with an immediate price pressure as a result. Enterprise customers will find local operators offering similar services as global IT players, e.g. IBM, HP, Fujitsu, etc. All will have good SLA promises to compete with the likes of Amazon and Rackspace, so at the end the lowest price will be the only selection criteria.

Another approach?

Operators should focus on launching SaaS and Telco SaaS first via open marketplaces. Operators should focus on building up a unique SaaS catalog that sets them apart from competition and builds an eco-system of customers and partners. The next step should be to open telecom assets and allow SaaS solutions to be extended into Telco SaaS. Only when operators see a clear winner in a niche or global marketplace, then they should talk to the supplier about becoming a strategic partner and to use the operator’s infrastructure to guarantee SLAs, etc.

Why?

The SaaS market is not mature yet. It is hard to pick winners because end-customers are only beginning to migrate towards SaaS. Most operators think that big names like Google and Microsoft are the only way of helping their end-customers move towards SaaS. However applying “Crossing the Chasm“, tells us that it would be better to be a big fish in a small pont first. Pick niche markets and specialized solutions that solve problems that currently are not addressed or generate new revenues that currently are not available. These niche products are easier to sell since they often involve a clear customer segment that will see a real problem solved. It will take time for end-customers to switch off their data centers and move everything to the cloud. These end-customers have established policies, IT-staff, etc. that will work against moving towards the cloud. By offering a solution that is substantially better then the current and offering a complete eco-system around a limited set of solutions, operators will be able to easily pursuade a well-defined group of companies to move parts of their operations towards the cloud. A final advantage is also that suppliers of niche products win most with the push of a large incumbant that has established relationships with all potential customers within a niche market. End-customers will not trust SmallABC.com but will trust LargeIncumbant offering the SmallABC solution. A Microsoft-like SaaS has its own name so LargeIncumbant’s 365 offering is not bringing end-customers any value.

Operators should focus on automating the onboarding of SaaS and offering quick and easy ways to over-the-top players to integrate telecom assets and become Telco SaaS providers and sell them via the operator’s open marketplaces. The only thing missing is to add Support 2.0 to the mix to have a telecom platform-as-a-service or Telco PaaS

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