Local Telcos Are Well-Positioned For Cloud Services In Southeast Asia
At the 2nd Annual Telco Cloud Strategies 2013 event in Singapore, I moderated a discussion on how Southeast Asian telcos are gearing up to offer cloud services. Here’s what I observed:
- In the cloud era, SE Asian telcos are moving faster than they are used to. A year ago, Philippine telco Globe Telecom set up a new division, IT Enabled Services, to effectively deliver cloud services, supported by more than 100 professional services people on the ground. While revenues are still low, the new division is now freed from being part of the larger parent company’s processes and can move quicker than competitors to offer managed cloud services for specific industries. Indonesia’s Indosat, on the other hand, has brought both the IT and network divisions together to offer a bundled service — cloud with connectivity — in the same period. Others, like Singapore’s SingTel, acquired IT services company, NCS, to tap into the enterprise segment.
- Telcos need partners for cloud services. This is essential, as telcos do not typically have all the pieces for an end-to-end solution. For instance, even with a solid IaaS offering, a telco still needs partners to build the value chain in their ecosystem, e.g., SaaS, and grow together. Indosat, for instance, partnered with Dimension Data to offer enterprise cloud services in Indonesia. The partnership combines Indosat’s nationwide connectivity backbone infrastructure and its 10 data center facilities in Indonesia with Dimension Data’s cloud consultancy services.
- Being ‘local’ is an advantage. Going upstream is a strategy that Globe Telecom has employed. It found an opportunity to broker supply chain management processes between retailers and manufacturers, cutting down time-to-market for both groups. This was only feasible because Globe Telecom knows the local conditions better than global players and is able to help its customers respond in a timely fashion.
What it means:
- Reinforcing the value of total cost of ownership (TCO). Buyers of cloud services need to consider service-level agreements (SLAs) as part of the broader TCO consideration. In some circumstances, organizations may select a global player like Amazon Web Services (AWS), only to find that latency issues have negatively affected service availability or performance. In other situations, organizations may prefer to consume telco-hosted, virtual private cloud-based services, as telcos could leverage their assets (infrastructure, people, network) to deliver managed IT services that enhance TCO value for their customers.
- Building credibility in the local context. Local telcos need to build credibility as cloud service providers. This is not that easy, given the global brands they compete against. Raising visibility/awareness should therefore be a top priority for these telcos. Globe Telecom, for example, talks about how its “backup-as-a-service” helped customers to continue to run their businesses in spite of the recent floods in Manila.
- Closing the skill shortage gap. SE Asian telcos lack suitable talent for cloud services. Malaysian service provider, YTL Comms, for instance, had to enlarge its talent pool by hiring from India, the US, and elsewhere to run its cloud business. Local Asian telcos serious about cloud should have a HR strategy for talent recruitment, knowledge transfer, and talent management that transcends national borders.
SE Asian telcos targeting cloud services at locally-based medium and large enterprises have an abundance of potential opportunities, but only if they properly align their strategies to their actual delivery capabilities. Organizations sourcing cloud services in country should closely evaluate local telcos alongside regional or global ones — they may offer a location-specific value that others may not, and at a service level that improves time-to-market.