What’s Driving CSPs to Cloud Transformation?

By: Sandro Tavares, Director, Telecom Systems Marketing, Dell Technologies

Just as plain old telephone services (POTS) were eclipsed by emerging technologies and eventually became commoditized, a similar pattern is unfolding in real time today. Business cases had assumed more manageable levels of data growth and that CSPs would be able to monetize data consumption, which led to a status quo mindset among many CSPs. But today, wireless connectivity and data consumption continue to grow exponentially while revenue growth expectations generally did not materialize.

As a result, communications service providers (CSPs) have reached an inflection point. They continue to build infrastructure to support increasing demand, but their investments aren’t sustainable without new revenue sources. Faced with downward pressure on revenues, rigid network architectures, and a growing need to bring new applications and solutions to market quickly, they are compelled to reimagine their networks for the future.

We recently partnered with MeriTalk to gauge how CSPs are looking at their future. The resulting report, Global Insights for CSPs, shows that 88 percent of CSPs believe that a cloud-native architecture is necessary for their future, yet less than one-third are actively planning to embark on that transformation journey. What’s driven these CSPs to adopt this mindset, and what’s holding them back from getting started?

When I look at the data through two distinct lenses – business and technology – the case for cloud transformation is clear.

On the business side of the equation, when your main product (data) is increasingly commoditized , the road to growth can’t be paved by continuing to sell the same old service. It needs to be built with new offerings that position CSPs to develop new revenue streams and future growth.

On the technology side, the processes and mindsets rooted in the traditional way of doing things need a long-overdue fresh look. Traditional networks simply aren’t built for today’s challenges, while cloud-native horizontal architectures are. A horizontal cloud architecture helps drive down the CSPs’ “cost to serve,” which is the cost associated with building, operating, and delivering services to their customers. As part of their transformation process, CSPs will push compute power to the edge, where data “lives”, leveraging their new cloud-native horizontal network to enable faster decision-making, and greater speed-to-market for new services. Ultimately, cloud-native networks deliver an innovation platform that fuels growth for CSPs.

The move to cloud-native networks requires   expertise from multiple players. A well-coordinated ecosystem of partners can help to accelerate the process. Partners bring deep expertise in specific solutions and applications, and they facilitate design, testing, and validation functions that help CSPs design and deliver new services faster, and help their teams work more efficiently.

With the case for cloud transformation being so strong, what’s holding CSPs back from getting started? Certainly, embarking on this path is not an easy undertaking. It takes significant planning and requires wholesale buy-in across the C-suite and throughout the organization.

I suspect the gap between those who know a cloud-native network is necessary for their future and those who are actively engaged in transformation is much like what we see with New Year’s resolutions. People are self-aware of the changes they need to make, and they’re committed to setting positive goals for themselves, but in the face of the complexity and sustained effort, that commitment can wane. People who stick to their resolutions often join a like-minded group of people who are committed to achieving the same goal.

Similarly, CSPs supported by a dedicated ecosystem can approach their resolution for network transformation with the urgency that today’s market conditions require and position themselves well for the future. Resolutions are good things, and if you need help getting started on yours, let’s start the conversation.