The advantages of selling Everything as a Service

Tom Nolle, CIMI Corp
14 Apr 2010

3.    Economies of scale and public utility history

Telcos' ability to offer economies of scale and their long history as public utilities combine to create the final exploitable advantage in the X as a Service market. Centralization of technology for Everything as a Service deployment is an economy-of-scale game in a financial sense, one of the purest examples of this in all of technology. Network operators who use cloud computing themselves for feature hosting and content delivery will create a significant economy of scale in software/server assets. This means that unit costs for telcos will be lower than nearly anyone else could achieve.

An even more powerful financial advantage may be hidden more deeply. Because most telcos and network operators have historically low internal rates of return (total return on invested capital), they can accept a lower ROI on projects than their competitors and still enhance their financial position. The Everything as a Service market may demand massive investments in infrastructure, and being able to accept a lower ROI can mean having pricing power. For enterprise cloud computing and X as a Service offerings, in particular, this can be a decisive asset.

A systematic approach is required

Telecom operators have compelling assets in the cloud computing and Everything as a Service market, but exploiting these assets will require a systematic approach to cloud computing as a unified service platform, a new and flexible service-layer architecture to create a service platform on that cloud, and an integrated operations strategy that can not only scale to fill internal needs but can also supply the critical support component of future services.

Tom Nolle is president of CIMI Corporation

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