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A successful managed services arrangement relies increasingly on synergies between data centre operators and network operators.
As we progress into the age of the cloud-enabled application, hosted remotely and delivered over a high-speed network, this relationship is becoming more and more critical, but in certain respects more difficult.
There’s a danger that data centres and carriers at times overlap in their interests. Many data centres are now deliverers of managed services themselves, while certain carriers have moved to become data centre operators so that they have a more central role in the supply chain.
So when are the two sides of the equation in competition in the managed services arena, and when are they in collaboration? How do carriers need to approach this relationship for their best advantage?
Data centres and network operators have a necessarily co-dependent relationship, says Mary Stanhope, vice president of marketing with Global Capacity, which operates an automated exchange platform for telecoms service providers.
“Data centres rely on network operators for access network and inter-data centre connectivity,” she says. “Even with an estimated 75% of traffic staying within the data centre, network operators are critical for connecting enterprise business and business continuity strategies.”
Network operators for their part are becoming more and more dependent on data centres, as data centres become the de facto meeting locations for private, public and hybrid networks, she believes: “The data centre is the new central office,” is how she expresses it. “The two [data centres and network operators] need the other to be successful.”
The probability is that despite tensions, the relationship between data centres and network operators will only continue to deepen. In certain cases this is literal, as a party from one camp merges with or acquires one from the other.
Many data centre businesses have announced strategic partnerships as they seek to cement their part in the application delivery market of the future. If they are not doing this with M&A, then they are certainly doing it with sometimes complex alliances, with managed service providers, cloud providers as well as network operators. In certain cases, carriers are making acquisitions to enhance their cloud appeal (see box-out). The business models of all these types of businesses will probably continue to blend and converge.
Does cloud negate carrier neutrality?
Many carriers, particularly the larger ones with a global footprint, will these days own and operate their own data centres. But with a fair proportion of their enterprise customers moving over from a traditionally licensed on-premise software model to cloud-based services, these customers will often as not be making their arrangements not direct with carriers but with cloud service providers. Enterprise cloud services will typically be delivered from a third party, carrier neutral data centre.
“Cloud computing will enable enterprises to access compute and storage in a cloud provider’s data centre,” says Mervyn Kelly, EMEA marketing director with vendor Ciena. “In addition, the service provider will require flexible, dynamic connectivity between their data centres in order to synchronise user information and make best use of distributed resources to offer a reliable cloud service delivery model.”
The result, he says, is a virtualised cloud service delivery model which he describes as a ‘data centre without walls’.
The central place of the network in all this has taken a fresh turn with the advent of Carrier Ethernet 2.0. Ethernet has for years now been a credible alternative to legacy wide area networking technologies. The custodian of Ethernet as a long-haul standard, the Metro Ethernet Forum, has this year created a whole new wave in the market with Carrier Ethernet 2.0.
With its multiple classes of service and multi-network manageability, Carrier Ethernet 2.0 simplifies the challenge of interconnecting services from different providers – network service providers, cloud services providers, data centre operators – where each is using their preferred choice of technical and business attributes.
This innovation is already generating a discussion about the requirements of enterprise grade cloud computing services, believes Kelly: “Cloud computing will create a new model for the delivery of IT services, enabling enterprises to pay for services according to usage instead of overbuilding infrastructure to deal with peak demand,” he says.
“But this model can only work if the services provided are reliable and measurable. CE 2.0 supports various service delivery models with classes of service aligned to applications delivered using the cloud delivery model. This enables service providers to set-up SLAs that meet the requirements of the individual enterprise. The new set of standards offers the flexibility, reliability and measurement tools needed to support the cloud era.”
The cloud has indeed started to redress the balance between the data centre and the network operator, which has been swinging towards the data centre over the past four to five years in the opinion of Jonathan Wright, VP, service provider with European network operator Interoute.
“In the cloud era, the data centre is less prevalent,” he claims. “Their role is tempered by the fact that there’s a network solution in there as well. It will be interesting to see what happens next, now that lots of carriers have got their own data centre strategies. Cloud also means in many cases that the ‘carrier neutrality’ of the data centre goes out of the window. They’ve got to have a carrier partner in there. The issue for them is no longer a message of ‘Here is my data centre, it’s got all these features’. The agenda has shifted to things like network security instead.”
Going it alone?
As Wright points out, carriers now often fancy themselves as the right people to not only provide cloud connectivity, but in many cases to host the applications themselves. But in reality are carriers actually better off operating their own data centres, developing their own data centre solution, or relying entirely on partnerships to achieve what they need?
Carriers, particularly smaller regionally focussed ones, should be asking themselves whether they want to be owning and operating their own data centres at all, or if they are to play a part in this cloud ecosystem whether they would do better to be one part in a much wider supply chain.
Certainly creating your own cloud service, including the building of a cloud platform, is not an option for many, says Andreas Kederer, director of product management for managed services with Colt.
“When you are looking at the different services you could bring to the cloud, it’s hard for telcos to create that on their own,” he says. “What’s needed is aggregation in the marketplace to bring these solutions about. The legacy process of developing products that telcos typically use is not desirable where short development cycles apply. If you want to develop a cloud platform, you are better off sourcing from an ISV, then integrating it into your own infrastructure, presenting it as a managed end-to-end solution.”
To complicate matters further, there are also companies with a data centre background who now want to deliver services too, a hybrid model that they control and not the carrier.
Telecity Group UK managing director, Adriaan Oosthoek, says the company’s core activity remains co-location, but that it has a small services capability too, so sees things from both sides of the fence. “We work with traditional managed services providers, and cloud service providers too, and the competitive nature of that environment means we need to be close to them,” he says.
To deliver for service provider customers these days, he says, means a data centre needs to be high spec – up to 2kW per square metre – and support low latency: “If you are located somewhere that’s hard to get to, then it won’t take off,” he says.
“It’s all about flexibility too. The service provider needs to make sure they are getting what they need from their colo provider, because they will have competitors in a building nearby. They need the colo to provide the base layer, and to work with them to be as flexible as possible. The more we see outsourcing grow, the more important connectivity with data centres becomes, and diversity of connectivity. We’ve already seen virtualisation in areas like data storage, and now we’re seeing it in networks too.”
The term ‘ecosystem’ is probably overused, but in the complex interplay between carriers, data centres, cloud providers and others, it is surely applicable. One might even be tempted to call it a jungle, where species are mutually interdependent, but locked in a permanent struggle for survival.
Thinking ahead of the SME curve
Colt Technology Services announced earlier this year that it was to acquire ThinkGrid, a cloud platform provider.
ThinkGrid had made a name for itself by working with a sales channel of cloud providers, offering them a portfolio of cloud-based services with a turn-key management platform and the commercial and technical training required to grow their cloud business.
Colt has been looking to grow the number of companies it works with in the cloud space, and this acquisition was aimed at adding substantially to those partnerships it had created organically.
“The SME market for managed services is set to grow at 15% annually during the coming years. Colt is well positioned to penetrate this market through our indirect channels,” explains François Eloy, executive vice president at Colt.
“This gives us a complementary range of cloud-based services. We also gain a reseller-oriented management platform and portal which will reduce our time to market across our European markets. This acquisition allows us to extend our channel community to include skilled managed services resellers who will help us to accelerate our growth.”
