Cloud computing has had a democratising effect, making enterprise-grade technology available to businesses of all sizes without the need for costly upfront investments.
But it can be easy to forget that the cloud hasn’t just opened doors for end-users; service providers themselves are faced with both opportunities associated with the cloud and the challenge of evolving away from business models that have served them well in the past.
Alianza is on a mission to show service providers that, although moving to a cloud-based business may feel equivalent to turning their business upside, it may not be as daunting as they expect.
A new report from the cloud provider strips away much of the rhetoric around cloud migration, leaving service providers with cold, hard numbers — particularly around cost and revenue.
Kevin Dundon, EVP of Sales and Marketing for Alianza, said service providers still have misconceptions.
“Despite the clear, established cost savings moving to the cloud offers communication service providers, it’s not necessarily apparent to all providers that their initial network transformation and migration doesn’t have to be expensive,” he said.
“Sometimes, there is a false assumption that a cloud model would be more expensive than developing and building their own infrastructure”
There are two core components here: firstly, the cost of cloud infrastructure; and secondly, the cost of cloud infrastructure compared to what service providers have become used to spending on their set–up.
Looking at the first part, Alianza lays out some stark figures showing how much service providers can save with the cloud:
- 5-10% on product development
- 15-20% on customer support
- 10-20% on sales and marketing
The second part is harder to quantify, partly because service providers don’t always total up the true cost of running their infrastructure.
A cloud-based model both lowers OPEX expenditure and eradicates hefty CAPEX — leaving cash that can be invested in strategic projects instead.
“Operating or building your own network is like an iceberg in that there are a significant number of hidden costs beneath the surface,” Dundon explained.
“Hidden costs that folks don’t always think about are ongoing expenses for engineering and IT staff, costs associated with keeping the network compliant with regulations, space and power for the datacentre, annual fraud loss, and more.”
Taking the Leap
Removing hefty upfront investment is a clear benefit to going with a cloud infrastructure.
But in this new world, many companies are concerned that hidden costs will only reveal themselves once it is too late, or too costly, to go back.
There may also be lingering memories of the last rip-and-replace the service provider went through — that may well have caused some pain.
Dundon said Alianza is aware of these fears and takes steps to be transparent with service providers.
Customers can be added onto the service in increments, even as small as one at a time, so there is no danger of costs rocketing ahead of income. This means service providers can grow into a solution without having to buy a ‘batch’ of licenses that are not already allocated to a customer —something that can often happen with traditional infrastructure, according to Alianza’s research.
The report states that communication service providers (CSPs) typically overbuy licensing by 50 percent to prepare for growth or a system failure. This is unnecessary with the cloud because of its scalability and consumption payment model.
“Alianza’s business model ensures that costs are always aligned with revenue,” Dundon said.
“For service providers that fear an inability to ‘uncloud’, Alianza supports customer trials to allow CSPs to see the increased operational simplicity, performance, ease of use.
“Like any cloud service, since it’s cheaper, easier, and creates a better customer experience than traditional network infrastructure, it’s unlikely service providers would want to switch back”
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