Five Questions Telco Leaders Must Answer For A Sustainable Cloud Strategy

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Is a hybrid cloud approach more of a band-aid than a future-proofed strategy? Is single vendor lock-in a trap lying in wait? And are there any discernible benefits to mothballing legacy systems?
United Kingdom Media, Telecoms, IT, Entertainment

Is a hybrid cloud approach more of a band-aid than a future-proofed strategy? Is single vendor lock-in a trap lying in wait? And are there any discernible benefits to mothballing legacy systems?

As telcos take to the clouds, balancing cloud-native ambitions with more grounded legacy system obligations is no small feat. The potential rewards are high, but the obstacles in reaching such an altitude can be equally imposing.

The advent of 5G has compelled industry players to adopt cloud technology alongside the enduring complexity – and costliness – of managing legacy networks.

This evolution from physical infrastructures to private clouds underscores the critical decisions to be taken regarding proprietary versus open standards, and whether to adopt a fully cloud-native or hybrid architecture.

Meanwhile, collaborations with hyperscalers for service orchestration and edge computing further shape future competitiveness, while key roles are also to be played by automation, AI-driven analytics, and virtualisation.

In the pursuit of sustainable growth, innovation, and operational efficiency, what do telco leaders need to ask themselves to effectively manage their legacy systems and accelerating cloud capabilities?

1. "What architecture is right for my business?"
Telcos face a pivotal choice: go fully cloud-native or opt for a hybrid model.

Cloud-native solutions offer agility and streamline operations but involve extensive overhauls and high upfront costs. A hybrid approach, integrating existing infrastructure, may reduce initial expenses and risks but this can complicate operations, potentially slowing innovation.

As cloud-native technologies mature, hybrid models continue to dominate due to their ability to juggle workloads and foster gradual transitions. Utilising public clouds for non-critical tasks while keeping core operations private can strike a solid balance between innovation and stability.

However, the shift towards all-encompassing cloud-native deployments is gaining traction as telcos harness these solutions' efficiencies. It is therefore vital to balance this technological migration while focusing intensely on customer experience. By leading customers towards new cloud-based services, telcos can nurture loyalty and spur growth, ensuring minimal disruption to their existing systems. Ultimately, the successful migration of customers to new offerings will be key to sustaining a competitive advantage.

2. "Should I work with a single vendor or blend best-of-breed solutions?"
Telcos must choose wisely between a single-vendor solution or a best-of-breed strategy.

Single-vendor solutions offer simplicity and seamless operations but often trap companies in vendor lock-in, stifling flexibility and innovation. Meanwhile, a best-of-breed approach allows telcos to cherry-pick top-tier technology for individual functions, though it can spawn integration hurdles and operational complexities.

These critical decisions transcend technology stacks and influence broader business strategies. For instance, larger telcos usually retain control over core functions such as billing and customer management while outsourcing edge functions like network management and data analysis. This not only fosters innovation and ensures stability but also mitigates vendor lock-in risks.

Clarity in demarcating core and edge services is vital to avoid fragmented architectures. Moreover, while a best-of-breed model might suit an operator with $100 billion in revenue, smaller players with revenues below $2 billion might steer clear due to the complexity of this approach.


3. "How will my business model need to change?"
The transition to cloud-based operations requires a fundamental overhaul of a telco's business model.

Traditionally rooted in hierarchical, process-driven methodologies, telcos must pivot to a more flexible and agile framework rooted in DevOps principles. This transition affects not just operational processes but also financial strategies, shifting from capital-heavy investments in infrastructure to a model based on operational expenditures with usage-based pricing.

While this OPEX model introduces flexibility, it demands rigorous cost-control mechanisms to prevent unforeseen expenses and truly capitalise on cloud-enabled efficiencies. Inspired by the nimbleness of tech giants like Netflix and Amazon, telcos are implementing practices such as DevOps and CI/CD to streamline operations and hasten service delivery.

The integration of automation and AI-powered analytics is revolutionising network management, decreasing manual tasks and boosting performance. This evolution goes hand in hand with an organisational culture shift – one that involves staff retraining, role redefinitions, and new process adoptions. Without these essential changes, the full advantages of an agile operational model will remain elusive, undermining the potential gains of cloud adoption.


4. "What should I do with my legacy systems?"
A significant hurdle for telcos is the management of their extensive legacy infrastructure.

While moving to the cloud presents undeniable advantages – such as heightened performance, reduced maintenance expenses, and seamless integration with new applications – the path to cloud migration is fraught with complexity. Migration can extend the life of legacy systems and enhance their integration with modern cloud-based applications, but it also requires careful planning and significant resources.

Conversely, completely decommissioning these systems may initially appear cost-effective, but this can quickly spiral into operational inefficiencies, stifling innovation and adaptability.

As migration tools improve and associated costs decrease, telcos are increasingly poised to relocate more of their legacy frameworks to the cloud. This considered yet gradual migration not only ensures future-readiness but also paves the way for innovative, cloud-native solutions.


5. "Which hyperscaler is right for my business?"
Not all hyperscalers are alike, and telcos need to judiciously assess each provider's offerings.

The critical components of cost, capability, support, and alignment with telco-specific needs are paramount to this evaluation. Every hyperscaler, be it AWS, Google Cloud, or Azure, brings unique strengths and weaknesses to the table, so making the right choice will be a key success factor for telco cloud strategies.

This is about more than just the lowest cost or the widest array of features; it is about aligning a hyperscaler's strengths with a telco's strategic objectives. Missteps here can result in diminished performance and inflated costs, complicating scalability.

Moreover, the choice directly influences how a telco can differentiate itself, an imperative in a landscape where agility and innovation reign supreme. By leveraging multiple hyperscaler strengths, telcos can optimise costs and performance, mitigating vendor dependency risks.

A multi-cloud approach also offers the dexterity to align specific workloads with the most fitting provider, thus ensuring robust performance, scalability, and security. As hyperscalers innovate with telco-centric solutions, closer partnerships between operators and cloud providers promise to supercharge service delivery and foster further innovation.

A cautionary conclusion...

There are many pivotal choices that will impact telcos' competitive edge in a cloud-enabled era. Missteps or misunderstandings could come at a significant financial cost.

By way of example, managing existing data centres is crucial.

Many operators are burdened by sizeable legacy infrastructure costs, so assessing total cost of ownership (TCO) is vital to avoid spiralling expenses. Effective strategies involve deciding which centres to retain, repurpose, or shut down as workloads migrate. Consolidating or terminating excess facilities can reduce costs and modernise infrastructure, concentrating on fewer, more efficient data centres.

However, cloud costs are often underestimated, too; migration can lead to unexpected expenses due to cloud complexity and inefficiencies. Telcos must implement strong financial and operational models to control costs and establish governance, ensuring cloud investments are sustainable. This approach enables a competitive, agile operational framework aligned with long-term objectives.

All told, striking the right balance between legacy system strategy and cloud-native innovation is essential, ultimately delivering flexible, scalable solutions to improve service, manage costs, and enhance agility. Mastery here can position them as leaders for the 5G era and beyond.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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