Enabling cloud transformation: How can telcos address enterprise demand?

This article explores how telcos can meet the growing demand for managed cloud services and become strategic partners in enterprise cloud transformation. To capitalise on the opportunity, telcos must prioritise developing a deep understanding of specific enterprise pain points and build targeted solutions that address them. We share insights from a recent global survey of 1000+ enterprises.

Enterprises seek greater support to manage complex cloud environments

Most enterprises are undergoing a significant transformation as they migrate their IT workloads to the cloud. This shift is driven by the need to modernise, unlock data management and analytics capabilities, and drive service innovation. Cloud adoption is essential for enterprises to remain competitive and keep up with industry advancements, with 84% of organisations already on this journey.

As adoption grows, enterprises are increasingly using more than one cloud. This growing heterogeneity makes internal management difficult, and enterprises are seeking the assistance of a third party to support multi-cloud management – 95% of enterprises surveyed recognise the value of managed cloud services.

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As STL Partners has previously defined it, a managed cloud service is the outsourcing of cloud operations to a third party through a contract which includes the technical capability and the ongoing management of that capability. There are various forms that a managed cloud services proposition can take. In a managed cloud proposition an operator might include some or all of the following capabilities: a self-service management platform, integration with other systems, issue resolution, service maintenance, systems optimisation, resource and cost management.

There is an opportunity for telcos to evolve their role with enterprises by becoming strategic enablers of cloud transformation

Telcos already play a critical role in enterprise cloud transformation, by providing the secure and reliable connectivity to the cloud. Leveraging this position, many telcos already have a basic enterprise cloud offering, like cloud-centric connectivity solutions (e.g. SD-WAN, secure cloud interconnect), and some have expanded to become intermediaries/resellers of other cloud products and services (e.g. IaaS, PaaS and SaaS).

Increasingly, telcos are turning to managed cloud services to deepen their relationships with enterprise customers and position themselves as strategic enablers (and therefore “sticky” partners) of cloud transformation. Core telco strengths play well to enterprise expectations of a managed cloud service provider, as confirmed in our survey below:

“Managed services allows us to provide an additional layer of value to add to [cloud], which allows us to get closer to our customers throughout their lifecycle and facilitate greater upselling/cross-selling opportunities with them.” Global Head of Commercial – Cloud, Tier 1 Operator, EMEA

Despite the competition from the hyperscalers, operators are better suited to serve enterprises increasingly diverse and complex cloud environments for the following reasons:

1. As enterprise cloud environments are becoming increasingly diverse (multi-cloud and multi-vendor), managed cloud services providers will be needed to coordinate across enterprises’ diverse IT stack and operate in a cloud agnostic way. Telcos are better suited to cater this requirement than hyperscalers.

2. Networking expertise becomes increasingly important as enterprises’ dependence on cloud increases, and telcos’ central position as connectivity experts play well to coordinate enterprise IT stacks. Enterprises are also increasingly looking to outsource networking expertise and adopt best practices, which telcos can support on.

Operators must target specific enterprise pain points to build a compelling cloud proposition

As enterprises make progress with their cloud transformation, their cloud needs become increasingly diverse, requiring telcos to move beyond the one-size-fits-all approach often used in the core communications market. This begins with developing a deep understanding of different customer segments and their unique requirements and tailoring solutions to meet specific enterprise painpoints.

Cloud maturity plays a critical role in shaping these needs. Our survey revealed strong enterprise demand for managed cloud services across all technical maturity levels, but enterprises at different stages require varying support according to their challenges.

  • Enterprises early in their cloud journey are seeking support to begin their transformation, such as planning and migration strategies, initial migration of workloads to the cloud and rearchitecting of existing systems for cloud environments, including hybrid setups.
  • Advanced enterprises will be more focused on optimising cloud-enabled operations, looking to manage their multi-cloud or multi-vendor environments efficiently and measuring ROI.

Operators should consider industry-specific challenges and their influence on enterprise cloud needs. Demand for planning & migration support (such as cloud readiness assessments, tailored migration support) was strongest with enterprises in the banking industry; of which 57% finding this proposition very attractive. Optimisation focused support (such as cloud optimisation training, cost reduction advisory support) would be most valuable for manufacturing enterprises, with 55% of the enterprises surveyed in the industry finding this very attractive.

Conclusion

Managed cloud services present operators an opportunity to expand their role beyond connectivity and deepen their relationship with enterprise customers. To meet enterprise demand effectively, operators must rethink their customer approach and develop tailored solutions that address specific painpoints and unique challenges faced by enterprises. For more insights on how telcos can transform their role and capitalise on the managed cloud services opportunity, please watch our recent webinar and see our recent report: “Transforming telcos’ role through managed cloud services”.

Miriam Sabapathy

Author

Miriam Sabapathy

Consultant

Miriam is a consultant at STL Partners working across a range of projects focusing on private networks, the impact of 5G across industry verticals and B2B growth strategies. Alongside this, she works within our private networks practice. Miriam holds a BA in Classics & Philosophy from Durham University.

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