Gearing up for the cloud

John C. Tanner
15 Mar 2011

Sidebar: Outsourcing cloud build-out

Service providers facing competitive pressure to launch cloud services but lack capital to do so are turning to telecom outsourcing services. Like their own customers, carriers are looking to minimize their upfront capital expenses by outsourcing various pieces of their cloud deployments, says Amy Larsen DeCarlo, principal analyst at Current Analysis.

"Service providers are spending a lot of money investing in their networks and a lot of that money is going into the wireless infrastructure," she said. "They don't have a lot of money to dedicate to data center-based services... so they want something that's cost-effective."

Some are looking for turnkey cloud computing equipment packages that vendors have pre-assembled, says to Lew Tucker, VP and CTO of cloud computing at Cisco Systems. This approach offers carriers a quicker time to market for large-scale deployments by dictating the service objectives but leaving the cloud infrastructure design, testing, integration and configuration to the vendor.

"Our objective is for service providers to spend less time bringing up the basic infrastructure so they can spend more time on making each of their service offerings the best in the market," Tucker said.

These turnkey options mitigate the risk of building out the infrastructure "before one sale is made," said Lauren Robinette, principal analyst at ACG Research. "Cisco [is] managing the infrastructure... until the service provider directly takes on this business."

But there's a catch to this kind of telecom outsourcing for cloud deployment: lock-in with a single vendor.

Larger telecom cloud vendors such as Alcatel-Lucent, Ericsson and Huawei "take a more pure 'outsource your multi-vendor platform [to us]'" approach similar to HP and IBM, partnering with various cloud infrastructure vendors, Robinette said. Those vendor-agnostic services generally appeal more to service providers than the "pure Cisco-only" approach, she said.

DeCarlo cautioned that service providers may not be able to differentiate their cloud services as easily if they adopt telecom outsourcing services that uniformly pre-package cloud infrastructure - especially if business enterprises demand further customization that requires carriers to enlist the vendor again.

"Then you're going to have to spend for extra development cycles," she said. "On the flip side, the providers that have built their own stuff and are incredibly flexible might [have] some barriers they run into that we don't see right now."

Jessica Scarpati/