Commit to the cloud

The radical transformation opportunity for telecom operators through the cloud

Viewpoint

Executive summary

Telecom operators in the Middle East face significant growth and profitability challenges. However, cloud computing and 5G are bringing a wave of opportunities for the industry. Thus far, there has been limited adoption of cloud computing by telecom operators because of the complexity of the endeavor, lack of expertise, regulatory burdens, security concerns, and limited presence of hyperscale cloud service providers (CSPs) in the region. These barriers are now dropping, and telecom operators have an opportunity to use the cloud to radically transform operations and improve their financial performance. It is time to commit to the cloud.

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Achieving superior returns from the cloud requires telecom operators to implement three transformations in parallel. These transformations must be connected, with clear value-exchange mechanisms established among them. Operators should:

1. Transform their networks to be cloud native and better integrate their networks and IT workloads

2. Simplify and modernize IT architecture and operations

3. Create capacity to innovate and rapidly deploy cloud-enabled use cases in market-facing and internal operations

Embrace the cloud and the virtualization of their networks as they deliver new 5G, edge computing (processing of data within a device itself rather than the cloud), the internet of things (IOT, the network of connected devices), and software-defined wide area network (virtual computing architecture) services. Positive outcomes include improved customer experience, closed-loop automation (which automatically improves the network experience), and orchestration of network operations for rapid service delivery.

Modernize their IT architecture and operations to fully exploit the scale and benefits of the cloud. In doing so, telecom operators have to make critical choices about their cloud approach, such as whether to use public, private, or hybrid cloud systems and whether they want a single or multiple cloud vendors. Telecom operators also need to prioritize in terms of which cloud initiative generates the most value. Through these choices, telecom operators should simplify their often very complex application portfolio by a minimum of 20 percent. Such a transformed application portfolio in the cloud has significant potential to improve application resilience and availability.

Unlock value through creating cloud centers of excellence. These centers can rapidly and efficiently generate innovative use cases linked to the core business along with targeting new business opportunities. For business-to-business (B2B) services, operators can expand revenue through 5G, IOT, and advanced edge-computing use cases. Cloud technology enables offerings such as gaming and other low-latency content services and over-the-top (OTT) capabilities for business-to-consumer (B2C) services.

Given the complexity of cloud transformations, telecom operators need a well-structured and planned approach, consisting of several steps:

1Design the cloud strategy and road map

Telecom operators need to define their cloud road map, identify the core business drivers for the cloud, and translate these business drivers into underlying technology requirements.
2Obtain quick wins

Telecom operators need to move into implementation mode, starting with quick wins across the network, IT, and the business. These wins enable operators to demonstrate impact and create momentum within the organization.
3Transition network and IT

They need to bring the broader cloud migration strategy to life, modernizing the network and IT. The focus in this step should be on pushing for automation, decoupling services, improving efficiency and virtualization, and reinventing the way operators build applications and infrastructure.
4Unlock new business value

Telecom operators need to programmatically unlock value through implementation of prioritized use cases aimed at generating new business opportunities in the B2B and B2C markets, build analytics capabilities with the cloud, and improve customer management and value.
5Manage and run

Finally, telecom operators should establish teams and build the capabilities to manage and run the transition to the cloud.

Conclusion

Telecom operators in the Middle East have faced barriers to the adoption of the cloud in the past. However, as those obstacles fall and cloud capabilities become more accessible in the region, the opportunity for value realization from the cloud is significant. A holistic, multi-domain cloud transformation strategy can lead to increased core business revenue, unlock new revenue, and produce significant savings on the TCO. As pressures on growth and profitability continue, it is time for Middle East telecom operators to commit to the cloud.