The Road To Telco Cloud

1
The Road to Telco Cloud

Every journey is sacred
01 Introduction
In the summer of 2019, we spent time with senior
telecoms industry executives from around the globe
with the aim of understanding where the industry is
on its journey towards cloud - cloud in the sense of
leveraging cloud and its associated technologies to
build a new generation of telecoms infrastructure to
support the new generation of services being demanded
by customers. Thanks to all of those involved who gave
us their time and shared their experience and thoughts
on the subject as it relates to the network, IT and overall
operations. We followed up these depth interviews with
an online survey to put some more flesh on the bones
of the emerging story. In total we interacted with 65
different stakeholders. This paper is a blend of both
research streams. We promised to keep all participants
anonymous, so we identify companies by their region
and the type of role represented.
Figure 1 Who were our research respondents?
(Source: CSP Migration Research, Lewis Insight Ltd, October 2019)
Survey Interviews
IT & Operations Network Other
02 Summary
As analysts, we always hope to find a clear story about the
market and the journey the industry faces. The cloudification
of the telecoms industry is certainly not a single journey. It is
coloured by the individual organisation, even individual parts
of the organisation and by the country and region in which
it operates. Cloud is, of course, about a shift in technology
© Lewis Insight Ltd - January 2020

2
“
supporting a business (as it is for every other industry).
For the telecoms industry it is flavoured by organisational,
commercial, cultural as well as the technical step-shift Many would say that they
suffer from a lack of a CTO
moving from legacy, self-defined technology to the more with a real technology
open cloud-based technologies. architecture and big picture
vision. It’s not just all about
The telecoms industry is at the beginning of this journey, how to execute.
(EMEA Tier 1 Head of
“scratching the surface” for most companies. The goal of
”
Transformation)
moving to be cloud native is clear in the minds of the vast
majority but bringing the many different journeys within
“
the organisations together into a coherent strategy still
requires some considerable work. It is noticeable that the
more senior executives driving the cloud transformation Over time the culture has
have a clear picture of the architecture and direction of the been shifted through a series
journey but, at OpCo and Lines of Business (LOB) levels, of workshops and senior
there is still a great deal of skepticism about the journey. management educating the
teams. It is more transparent,
Early movement can be seen as ‘cloud adoption; where
people are getting feedback
new projects, especially relating to the increasingly real-time and it should be used to help
customer interaction are going straight to cloud. Interestingly, demonstrate how people’s
the perceived cost savings relating to much of this early contribution fits into the big
movement to cloud are not being realised, at least not in transformation picture…This
came through setting up a
the short term. A fragmented approach to cloud in different separate unit whose job it
parts of the CSP can only help emphasise this lack of return was to evangelise the shift to
on investment. In the mid-term there will be a lot more of a more agile approach and
leveraging the cloud.
”
this as systems and products come to the natural end of
(EMEA Tier 2 CIO)
their life cycles, but some legacy areas (mainframe-based
“
in particular) will be ring-fenced and data extracted through
APIs to feed into the more open environments of the rest
of the IT and network components. In order to achieve this
major transformation several key activities must be put into The pain isn’t bad enough,
place: there isn’t enough urgency to
try new things…And, it may
not be painful enough for
Education of all stakeholders, especially at the Board some time yet. I used to plan
level where the understanding of what cloud can do to the in weeks and months (when
business as a whole appears to be limited working cloud native) and
now it’s in years! My cloud
timeline now starts in 2022.
Reskilling of the workforce complemented by more A new platform in 2019 isn’t
partner-like relationships with suppliers and specialist even cloud ready let alone
‘augmentation’ services. The lack of appropriate skills cloud native.
to make the jump to a more agile environment is (EMEA Tier 1 Head
”
of Transformation)
exacerbated by digital natives not wanting to work for the
telecoms industry, which is seen as being old-fashioned,
conservative and not a digital place to work
Closer blending of not only the IT and network

infrastructure and operations sides, but also linking
product development, design and customer interaction
into the approach. This can be seen as a conscious
decision to arrest control of the technology roadmap
away from leading suppliers and building cloud-based
architectures to which vendors must adhere

3
This change represents a total ‘about-face’ for the industry

which formerly made its own rules of engagement. As
the emphasis shifts to the outside-in, based on demands
from consumers, households, businesses and society,
the telecoms industry has to fundamentally change its
approach to working with fellow ecosystem partners. The
Webscale players themselves represent both partnership
and competitive pressures. Connectivity has never been
so important, but the patterns of getting connected and the
basis upon which we all pay for services are changing and
CSPs need a significantly different approach both technically
and commercially in order to become digital service
providers.
The good news is that connectivity and its related

services are not going away. The global market of circa
$1.4 trillion faces some slowing-down pressures, but the
Total Addressable Market (TAM) for the world’s telecoms
operators and service providers is a robust one albeit one
that is shifting from some formerly complex expensive
telecoms-specific products to a much more uniform set of
fixed and mobile broadband offerings. For the first time in
the history of the industry, the collective power of data being
driven by this enhanced connectivity activity is in a position
to be exploited for the good of the business, and, ideally for
the benefit of all parties in the ecosystem.
Throughout the work we had a notion of many parallel

journeys for the industry stakeholders. Not only do the
CSPs themselves need to change in the light of different
consumer, business and society activities, but the different
suppliers from hardware, software, analytics, integration all
need to adapt to this digital environment with its emphasis
on real-time and rapidly changing business models. The
Hyperscalers do have their global scale advantage, but the
CSPs have the local connectivity and customer touchpoints
that economists and strategists long for. Financial pressures
have been relatively light on the CSP community with
margins still relatively high. The advent of 5G and its
promise of new services and business models could be
the catalyst that pushes the CSP community over the
edge and finally triggers the route and branch review and
transformation.
Restructuring from the radio through transport to the core

and gaining the economies from deploying cloud is what is
required to drive efficiency savings to improve margins but,
more importantly, to open up the agility essential for the new
role of connectivity in every aspect of our personal, business
and societal lives.

4
03 Market backdrop
The telecoms industry has had the luxury of dictating the Figure 2 Market
terms of engagement both with the supplier community but Calibration
especially with its customers during most of its history. The
Revenues: mobile, fixed, TV
changes currently running through the sector can be seen and other
as the democratisation of the industry. Demand and supply 1,500
are beginning to find some form of equilibrium rather than Other
TV
the supply side dominating. This is taking place through a
number of convergences: 1,000
Fixed
$ billions
Fixed and mobile communications have had very separate
evolutions over the past decades with new technologies 500 Mobile
(or Generations) bringing their own services to market

addressing specific needs for individuals, households, 0
businesses and the broader community. Regulation, as
well as technological developments, have shaped these
Costs: Opex + Capex
different markets separately, but they are now being
blended commercially and merging technically to form the 1,500
future communications industry. In some ways the offering

to the customer is simplifying into broadband services 1,000 Capex
$ billions
which may be delivered through cellular/Wi-Fi or fibre/
copper connections
500 Opex
Business and consumer services were in the past totally

different even down to the networks themselves. Once
0
again, fixed and mobile broadband services are now
increasingly looking similar with enormous bandwidth
being consumed from the consumer side for video
especially and business moving away from its fixed
network predilection for connecting its employees as well
as business processes and assets
IT and networking were also seen as being quite separate

domains. In the telecoms world, unlike the rest of the
economy, networking and engineering dominated. IT
was the poorer relation and hence technological and
investment decisions were made with an engineering
backdrop rather than the broader business ones. The
advent of virtualisation and cloud have brought the IT and
networking sides of the CSP sector much closer together
(albeit still some work to be done but the die is cast)
At the same time as these convergences begin to impact

the industry, we also experience the dramatic impact
of the Webscale players and their origins from Search,
e-Commerce, IT and Social Media. Their motivations are
significantly different from the national CSPs as they have
global scale and a less complicated IT infrastructure to
support their activities.

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All of this places some fresh pressures on the CSPs and

the revenue models they have pursued for decades. The
$1.4 trillion of revenue will see only slight growth in some
markets, but often decline as the forces of competition and
convergence affect the spending patterns of all parties.
In short, telecoms was formerly a nicely self-contained

industry with its own rules of engagement, specific suppliers
and indeed ways of doing business. Connectivity, its
principal output, is now part of a broader ecosystem of
services which are consumed in the pursuit of personal
or business lives and government activity. The knock-on
effect of these changes is a need to radically reconstruct
the business, technological platforms and processes that
support a near real-time need for customers to be kept
abreast of their status as well as supporting other digital
services in the market. Attempts to build strong revenue lines
from adjacent areas such as TV and content, e-commerce
and finance have met with limited success hence the focus
is sharply back on building the right ‘platform’ to support the
role of the CSP as a core provider of connectivity services.
Hence cloud, and its many promises, features heavily in
CSP strategic and tactical discussions.
04 What is cloud to the CSP community?
“
‘Cloud’ is one of those terms that everyone thinks they
understand. But, when people are questioned in detail, it is
Some C-levels think cloud is
evident that the range of definitions are very wide and very
going to be the way they save
varied. Perhaps the fact that the Webscale players have a lot of money; others think
had such global scale success compared to the telecoms it is the way they are going
industry has shaped how we view cloud. The architectures to transform the business.
and processes that Amazon, Facebook, Google and Others think it is Office 365!
We are just at the beginning
Microsoft have built to underpin their many and varied of the journey. So much data
activities comes many years after the telecoms industry to be analysed and used
emerged from national ownership and attempted to shake throughout the organisation
off the trappings of civil service bureaucracy! What is clear for operational efficiency but
also for customer experience.
from the research is that these new ‘digital’ options landing
”
(North America Tier 1 CIO)
on peoples’ desks at the operational level are not well
understood at the Board-level.
The vast majority of cloud projects in the companies we

interviewed were driven by the CIO and CTO. These
initiatives are building on the so-called ‘shadow IT’ invasion
of services at the departmental level where individuals are
leveraging cloud accounts to try new things. We even came
across examples where the IT department was being helped
by the supplier’s salesperson’s credit card to get some trial
activities in place. This is an inevitable consequence of the
shift towards a more software-centric CSP. The people at the
coal face are finding ways to solve problems using cloud-

6
“
based services but they don’t fit into the overall corporate
architecture or approach. What is more concerning is the
In my last CRM project at a
lack of understanding at the upper levels. One disillusioned
tier 1 EMEA telco, despite
departmental manager said the Board thought cloud was the CEO driving the change,
Office 365 and they weren’t the only ones to point out this the second and third tier
lack of understanding. In fact, others pointed to the lack of management didn’t care
financial rigour throughout the CSP inhibiting the shift to a what the CEO said! They
knew that nothing could
more cloud-based environment. be done against them so
aimed to maintain the status
With this lack of a holistic understanding of cloud’s role it quo. Some of those middle
is not surprising that the main driver for cloud migration is management will lose power
and position so are not for
seen as cost savings. We suspect that the higher levels of
change.
management see how the cost base appears to be lower for
”
(EMEA Tier 3 CTO)
the Webscale players and they immediately assume they
can move towards a similar cost base through cloud. Hence,
they push down the savings mantra to the network and IT
parts of the business.
The word ‘agility’ also appears regularly in peoples’

thoughts about adopting cloud. Whilst a high proportion
of CSP organisations are deploying SAFE and similar
agile transformation frameworks to help with the broader
transformation, nobody could pin down an exact definition
of what ‘agile’ means to someone sitting on the main board
of a telecoms operator. Perhaps this is a function of the
coming together of the worlds of network and IT and their
respective languages. There has always been a ‘grass is
greener’ attitude between the two. In the telecoms world
the network has always commanded a much higher role in
the organisational and budget hierarchy, hence some of the
more IT agile approaches have not been adopted as readily
as in other industries such as financial services or retail.
What is clear is that the economies of scale that cloud-based

solutions bring are of enormous appeal to the telecoms
industry as it seeks to balance the flattening-to-shrinking
revenues from connectivity against the exploding traffic
levels and a need to invest extra to cope with the different
waves of investment to shift gears into a digital world.

7
05 Public versus private cloud

For an industry that prides itself in its many ‘9s’ of reliability
and its engineering prowess, the thought of putting anything
into a “public” anything is a stretch. Early cloud activity from
the larger CSPs was certainly around what cloud capabilities
and indeed how big a cloud they could build. This was not
necessarily a ‘not invented here’ attitude but the traditional
approach of taking different technological building blocks to
produce something specific for the telecoms industry. They
just want to stay in control.
Figure 3 When it comes to public cloud versus private cloud, which
of the following statements do you agree/disagree with?
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
We do not make We are tending to We will continue to We are developing We are leveraging We still have some
extensive use of favour public cloud use on-prem and cloud agnostic the cloud platform concerns about
public cloud for most of our private cloud where capabilities capabilities that are using public cloud
requirements latency and security specifix to different (please specify
are important cloud providers below)
Agree Neither agree nor disagree Disagree
06 What is going on in the cloud?

Figure 4 Which of the following best describes your IT cloud migration story?
We are on track to migrating the whole of our IT to the cloud
We are on track to migrating the majority of our IT to the cloud
We have had some success but the majority of our IT estate remain on-prem
It’s started but it’s embryonic
We have not started but are investigating
0% 10% 20% 30% 40% 50%
Both the in-depth and online interviews show that CSPs are
just at the early stages of the cloud journey. For example,
EMEA tier 1 CSPs talked about the work that had been
done internally and with their peers. They felt ahead of the
game but were no more than 30% down the road to where
the Webscale players are today in terms of cloudification

8
“
of their systems and processes. Many thought they were
just ‘scratching the surface’ of what cloud was and what
it meant to their organisations. Interestingly, few seemed DevOps is something to
be pushed for but CICD
to see the significance of the fact that one of their leading
works as you don’t actually
suppliers, Salesforce, was a cloud-native company. Once need cloud to go DevOps.
again, the telecoms industry has been obsessed with the And many find a blend of
inner workings of technology rather than focused on the DevOps and Waterfall, so-
outcomes. called ‘Hybrid DevOps’ the
ideal mix given the range of
systems and platforms in the
In reality we observe multiple cloud journeys within every organisation. In this way, as
organisation. The lack of Board-room drive means that and when cloud becomes an
individual efforts are rarely pulled into a coherent framework options, it is not a big change
for us. It is an area where
of how it can help the CSP. The survey results included here
you can catch up relatively
are, of course, just indicative of the direction these CSPs easily. The right change
are taking. The verbatim quotes from industry leaders are, management is essential in
in many ways, much more revealing about their personal order to take teams with you.
journey. The direction towards cloud is clear in most, if not all Doing DevOps is much much
easier than doing cloud.
of their minds. The journeys are, to say the least, very, very Leaving legacy in place and
different. More of this later. extracting data through APIs
is an ideal approach.
”
What is worth noting is that the organisational complexity (North American Tier 1 CIO)
of Tier 1 CSPs in particular may mean that cloud native
migrations will take place, but in in different pockets of the
organisation. One EMEA Tier 1 CSP reported that they had
built a fully cloud native telco stack. It was ready to go but
managerial changes and the Board’s reluctance to embrace
such a disruptive approach meant it never saw the light of
day.
At a Group level many of the CSPs reported extensive

work investigating how cloud might be adopted. Blueprints
of cloud migration are appearing at this level, but most
acknowledge that at the OpCo and LOB levels there are so
many factors impacting local decisions that the Blueprint is
not currently the norm. Furthermore, local and lower-level
decision makers are more likely to be appraised on their
ability to stay under budget and to keep the cogs turning
rather than embracing new technologies that could result
in higher costs and whose short-to-medium term business
benefits are uncertain.
Investment cycles across the breadth of network

technologies being deployed from core to access and across
all systems also mean that the CSP community has been
sucked into the digital discussion of DevOps and digital
services. Whilst CSPs are supporting many new digital
services on smart phones, TVs and in the IOT world, the
investment cycles and technology cadences under the roof
of the CSP stretch from a few weeks of a software or mobile
app release to the 30+ years of civil works investments for
fibre deployments.

9
07 State of cloud play
“
In terms of what is already moving to the cloud there seems
to be a clear pattern:
On a scale of operational
readiness, the Webscale
The adoption of cloud for new initiatives, especially
players are at 100% whilst
customer facing ones, new brand launches, new lines of we’re at 30% today. It isn’t
business such as IoT and apps which touch the customers just our peers (who are 20%)
in the mobile world are the first to move to cloud. Indeed, we need to worry about in
we can call them cloud adoption; as they are not migrating the future, it’s the broader
ecosystem. We think we
from the former CSP systems but going straight into cloud know what we need to do and
and are cloud native where to go, but it’s just such
a complex transformation.
The next wave is other CRM / customer experience A bigger issue is the lack of
roadmaps, almost ambition
applications. (There seems be little appetite for putting
across most parts of the
OSS in the cloud with the possible acceptance of service company.
”
assurance.) This wave also includes elements of the (EMEA Tier 1 CTO)
network being virtualised and brought into the cloud
environment where appropriate
The final group tends to be around the mainframe

environment, old telecoms systems and services where
the approach is to ring-fence or cap investment whilst at
the same time opening up the data associated with these
functions and services to the middleware/abstraction
layers through the exploitation of APIs, mainframe legacy
ring-fenced and waiting for end of life
Having received input from the in-depth interviews as well Migrated to date
as the online survey, we attempted to build some Word
Clouds around the responses. The wide variety in peoples’
responses shows just how diverse a set of perspectives
exist out there across the CSP community as to what cloud
is, what is shifting initially and the journey as a whole.
Figure 5 Cloud migration journey
What have you migrated What other applications Which applications and Will migrate in next 7 years
to cloud so far? and workloads will you workloads do you have
migrate to cloud over the NO plans to migrate to
next 2 years? cloud?
There is no consistent Cloud migration builds The inconsistency of

picture across CSPs upon initial cloud what is believed will
adoption and focuses never migrate to cloud
Short term activity is
on the customer and is further demonstration
cloud adoption rather
network of the fragmentation/
than cloud migration
diversity of the cloud
Again, plans are
Most CSPs believe that journey for CSPs
idiosyncratic according
the majority of things will No plans to migrate
to the individual CSP, For some, it includes
migrate eventually to
investment cadence and all those workloads and
cloud, but it’s the ‘new
the end-of-life of existing applications that still rely
requirements’ that will go
systems on mainframes
in the short term e.g.:
Whilst no area is out of
- New greenfield brands
scope, the decision is
- Customer touch points
more based on feasibility
- IoT technologies
and resources
- Analytics

10
08 Justifying the shift
“
There should be no doubt that this is a major shift in
direction for the world’s CSPs. The engineering-centric
approaches of past decades are to be replaced by the Spent a lot of time with the
LOBs. We have sat down and
software-centric approaches of the relatively more recent mapped out new customer
‘upstarts’ from the Webscale world. A more IT-centric journeys. In the past people
approach replacing the classical network engineering were told that zero human
approach of the telecoms industry is a major change to touch was not doable.
”
(AP Tier 2 CXO)
embrace. It is for this reason that most CSPs we talked to
“
have adopted cloud for new projects and the customer-
facing parts of the business. Justifying a major ‘Lift and shift’
of existing systems into the cloud environment just doesn’t
seem to stack up. And, since the cost savings are what When everything was on-
the organisation is looking for, this represents a bit of an prem everyone thought there
was unlimited capacity. Dev
impasse. teams did not see how much
their apps were costing the
Success stories from different parts of the organisation are business. Now, every month
also challenging as the multiplication of their individual costs there is a bill coming in
and the dev teams have to
up into the broader picture show that this is an expense that
settle these bills at director
could potentially get out of control, if it hasn’t already. level. Phenomenal for me to
see the change in culture.
The goal of cloud migration for all areas of the CSP is clearly Change in behaviour. I only
understood (given the eventual retirement of the older have this instance up and
running when I need it. (North
mainframe-style systems and applications). How to get from
”
American Tier 1 CIO)
the early adoption of cloud for the more customer-facing
“
areas to embrace all other activities requires the joined up
thinking that must not only come from bringing together
the IT and networking organisations but must also get the
blessing of the Board. The CEO needs to drive the message A blend of DevOps and
Waterfall, so-called hybrid
throughout the company that this is a major initiative to
DevOps, is the ideal
change the shape of the business. It is a a modernisation combination given the mix
and a recalibration of the business. Not only will it give of systems and platforms in
them a fighting chance of competing in the emerging digital the organisation. We are
services marketplace, but it will provide a platform for the thinking of pipeline at code
and containers as a service.
next decades of providing broadband services into all In this way, as and when
markets. This is a new message for the CSP employees. No cloud becomes an option, it
longer is it the right of the telecoms industry to decide what is not a big change for us.
services, and at what price, they are delivered. Competitive It is an area where you can
catch up relatively easily. The
pressures from device, content and Webscale players all
right change management in
impact the role of the connectivity provider. Re-aligning the place is essential in order to
product, systems and processes activities in the CSP are take teams with you. Doing
important streamlining. No longer can the industry afford DevOps is much much easier
to have isolated departments making decisions but all than doing cloud. Leaving
legacy in place and extracting
decisions, technological, process or systems must fit into data through APIs is an ideal
this broader picture. And, if it is all brought into focus every approach.
”
step of the journey can see its relevance to supporting the (Tier 1 North American CIO)
customer and their experience.
Another factor here is that the benefits that cloud brings in

terms of flexibility, scalability and agility are not necessarily

11
attributes that apply to the core telecoms business.

Operators do not experience spikes in demand for their
core broadband services that public cloud could help to
manage. Customer numbers are fairly stable and predictable
and while traffic levels are growing, existing IT systems
can manage. Where cloud comes into its own is where, for
example, an operator wants to launch a new service but is
uncertain what the demand will be and how quickly it will
ramp up. Cloud provides a ‘pay-as-you-grow’ model that
removes the need to make large upfront IT investments.
The ‘frozen middle’ that is often referred to blocking

decisions being made was very evident in the research.
Comparing one Tier 3 player to a Tier 1 CSP, the CTO
described how the owner of the business was engaged in
driving the cloud journey where middle management would
not allow this to happen in the old CSP. Culture therefore
plays a major role in freeing up the cloud story as well as
new technical approaches to connectivity, storage and
compute.
09 Measuring progress
“
Management speak is rife with Critical Success Factors
(CSFs), Key Performance Indicators (KPIs) and doubtless
other management acronyms. The aim is to have 80%
configuration and 20%
customisation.
”
Throughout the research we tried to delve into what ‘agility’ (EMEA Tier 3 CTO)
means to the different levels within the organisations and
“
from a business perspective. We didn’t get a convincing
answer from anyone. Once again, cost savings seems to be
the key driver but the lack of financial rigour throughout the
world’s CSPs is a hindrance to the most basic tracking of Operations are still reeling
from the rapid changes
Return on Investment (ROI). The benefits of agility will only required to support the new
be realised once CSPs can draw a line that connects their environments. They have
central technology function right into the lines of business. not entirely bought into the
Agility can bring huge benefits to an organisation that is DevOps model and struggle
to support it properly.
”
constantly taking feedback from the market, launching new
(Tier 2 AP CEO)
products and services and tweaking old ones. But we did not
“
see evidence that this was driving the need for agility in the
CSPs that we spoke to.
We’ve done a little bit of
The adoption of DevOps rather than the traditional Waterfall scratching on the surface.
approach to deploying major systems does appear to have We really need to shift
made inroads into the CSP world. Interestingly, it is not an the thinking towards the
all or nothing approach. Many talked about the move to products. If we focus on
technology we will miss what
DevOps but settling down around a hybrid approach. Some
we need to deliver to the
of the main systems just needing to be developed in a more customers
”
rigorous way and longer term, hence still using more of a (EMEA Tier 1 CIO)
waterfall approach.

12
“
The impact on the operations environment is also still
muddy to say the least. Perhaps this can be put down to the
relatively early days of cloud migration hence not impacting No Ops may well happen
at some point in time.
the broader operational environment. However, you cannot just
throw people at the problem
Figure 6 Which of the following best describes your IT cloud
of sorting out the operations
migration story?
and deploying AI. You have
(Source: CSP Migration Research, Lewis Insight Ltd, October 2019) got to pick your battles and
deal with the merits of each
I don’t know / not sure
case. Cloud and operations
We do not have any specific is in this position where more
metrics but are strategically hands just doesn’t solve the
committed to cloud migration
problem.
We are still assessing how to
”
measure the benefits
of cloud Transformation)
We measure the benefits of
cloud in terms of customer
experience
We measure the benefits of

cloud in terms of agility
We measure the benefits

of cloud in terms of cost
savings
We measure the proportion

of workloads/applications
transferred to the cloud
We use other operational

metrics to measure our cloud
migration
We use ROI business cases

for our cloud migration
0% 10% 20% 30% 40% 50% 60%
10 The impact of 5G
“
5G is such a ubiquitous issue throughout the industry that it
was inevitable that it would crop up in these discussions. In
many cases it is almost synonymous with cloud. Early hype 5G will allow the telcos to
wrestle back control because
around 5G with its enhanced bandwidth and lower latency
of the compute, storage
is not meeting with an equivalent uplift in revenue. Business and networking moving to
models are diverse between North America, Asia and the edge. 5G and the edge
Europe. Interestingly, many of the interviewees saw cloud are the key battle ground
and 5G evolving together, perhaps putting a more realistic and will allow telcos to get
involved in the applications
timeline on 5G mass market revenues in line with cloud that drive industries. And,
native migration in the five years plus timeframe. part of that getting back
control is having a software
The reason for this related evolution is that the early driven organisation that can
react to the demands of the
emphasis on Radio Access Network (RAN) activity, giving us
customer with a more agile
blistering speeds does not in itself do enough to create the infrastructure/platform.
”
more radical business models that end-to-end 5G will need (EMEA Tier 2 CEO)
to support in order to drive both consumer and, perhaps
more importantly, business 5G applications. Hence, it is the

cloudification of the 5G core and the true end-to-end delivery
of the service that is required.
In many ways 5G is a metaphor for the future of the

13
“
telecoms industry. It is only by bringing all components into
alignment, fixed, cellular and WiFi that the future telecoms
Talking to the Operations
service opportunity can be supported. They have all evolved
teams about orchestration,
in their own environments. This was inevitable given the containers and DevOps is like
structure of the industry. However, now that the telecoms talking a foreign language.
contribution to the broader digital economy is subject to They just haven’t been
non-telecoms pressures such as the Webscale players, the challenged yet. Management
understands the need for
industry must unite its different streams. Cloudification of the skills transformation and a
IT and network elements is a vital contributor to that holistic skills transfer programme is
approach. under way.
”
Transformation)
This is perhaps best described as a 180-degree shift from
being an ‘inside-out’ model to an ‘outside-in’ one. Under the
“
old regime the industry defined its technology and services
and eventually exposed a service to the customers. Under
the new regime, the outside influences such as smart There are two Power Houses
devices, content owners, applications developers and their [network and IT] in the
associated value and distribution chains are much more company. They are however
influential on the way services from the telecoms side are trying to have common
value streams and common
defined and consumed. Telecoms becomes a citizen in the release streams this is all
digital society and has to play by those societal rules rather part of the product iteration
than trying to impose its own value system on other sectors. and planning. What they
are trying to improve upon is
synchronising the different
The good news is that the explosion of end points in terms
road maps, functions getting
of new devices sensors and business models will contribute virtualised and what services
to the telecoms/broadband component remaining absolutely might be going into the
relevant. The bad news is that the former scarcity that we all cloud.”
experienced in terms of bandwidth and service is no longer (EMEA Tier 2 Head of
Transformation)
the case and hence prices for connectivity have become
subject to ‘normal’ economic pressures.
At the end of the day, the world’s CSPs have to recalibrate

their investment to reflect the new reality of revenue
projections. Many commentators have considered telecoms
to be a utility business for the past two decades. The shift
to 5G accompanied by the rebuilding of processes, systems
and services based on cloud technology will underpin CSPs’
ability to keep supporting the rest of the ecosystem and,
potentially, transition away from being just a utility.
Much is made of the Capex and Opex lines within CSPs.

The trend to do everything ‘As A Service’ may help the
CSPs reduce some of the cost but many see this as a long-
term transition and not something easily entered into over
the next couple of years. Furthermore, migrating spend
from Capex to Opex is going to be a challenge for many
technology functions.
Recasting the operations model to embrace DevOps is an

essential part of this shift. It helps bring all parties involved
in the CSP delivery into the same environment hence

14
making them more aware of how their particular, formerly

isolated function, fits into the bigger picture of supporting
the customer. This raises the question of why the telecoms
industry has not been quicker to adopt this approach where
other industries such as finance and retail have, arguably,
made more progress.
Figure 7 What are the main As this figure shows, barriers
barriers to cloud to cloud adoption and to
adoption? moving to new operating
environments are varied.
1 Security Much of the qualitative
2 Technical issues discussion with senior
3 Available skills industry people referred to
4 Organisational issues organisational and cultural
5 Budget / bill shock barriers. Reading between
6 Commercial issues the lines, it is evident that
7 Regulatory issues the regular cash flow into the
8 External skills world’s CSPs has created a
barrier to this organisational
and subsequent technology
change. As one CIO put it “we haven’t hurt enough yet”.
And, of course, when discussing this with CIOs outside of
the telecoms sector, few have any sympathy but see CSPs
as laggards in terms of adopting new approaches. One
CIO suggested that the lack of financial rigour throughout
the CSPs was responsible for this attitude. In some ways,
telecoms providers keep getting their income regardless of
the experience the customers have.
Operators are endeavouring to leverage cloud in their

customer touchpoints and interfaces through the launch of
mobile apps and chatbots. For the first time the industry’s
customers are seeing their experience through a pseudo-
realtime lens with these apps. But making the transition is
painfully slow, with CSPs lacking the software skills and
capabilities to build truly compelling digital experiences.
Perhaps if they were fully committed to winding down their
offline channels rather than having digital touchpoints
complement the offline experience, their efforts would be
more successful.
11 Mind the skills gap

A common theme throughout the depth discussions was the
lack of relevant skills to help on the cloud journey. This is
indicative of the major shift in terms of the technology being
deployed across all infrastructures and platforms and the
move from a traditional Waterfall development style to that of
DevOps.

15
“
Figure 8 When it comes to bringing new cloud skills into
your organisation, which of the following
approaches have you taken? We have adopted the Scale
Agile Framework. That has
(Source: CSP Migration Research, Lewis Insight Ltd, October 2019) been a real asset when it
comes to recruitment. We
Relying on expertise / skills
from our vendor partners may look like a telco, and we
are, but when recruiting we
Using temporary specialist
staff / outsourced / can show graduates that they
augmentation services work in an agile environment,
Recruiting new employees leveraging the skills that
rather than retraining
existing staff
students pick up around new
methods of working.
”
Retaining existing staff
rather than recruiting new (AP Tier 2 CIO)
employees
“
0% 10% 20% 30% 40% 50% 60% 70%
Used extensively Used moderately Not used

Finding the ideal balance of
In some ways this is similar to the cloud adoption and developers, data scientists,
migration distinction made earlier. New projects can be network technologists and
set up with new skills but the heavy lifting from traditional digital operations people is a
telecoms systems and processes into a more agile business challenge. Augmenting this
through specialist companies
approach building on cloud native technologies is a major in the short term is one
transformation. approach but retraining
existing people is often sub-
All CSPs acknowledged the challenge of retraining and optimal in productivity terms
but perhaps beggars can’t be
reskilling existing employees. It can be done and many
choosers in the telco context!
”
are indeed setting such programmes in place. However, (Tier 1 EMEA Chief Architect
acquiring new skills is proving challenging given that the
“
CSP world and traditional telecoms players in particular,
are struggling to attract that new talent. As Figure 8 shows,
the CSPs have a variety of approaches to bringing these We are lucky having such
skills into the organisation. Not all are as radical as setting strong engineering skills in
up a separate digital services business which serves other our home country but we
industries as well as its own telecoms needs. But, combining still have some problems
internal retraining, strategies for recruiting new talent, competing with the scale
players of FaceBook,
leveraging the so-called augmentation services as well as Amazon, Google etc.
relying on the talent inside different partners all add up to By using opensource
filling the skills gap. technologies we are able to
find people. We are using
agile frameworks, DevOps
One major area of aspiration when it comes to cloud and etc as everything is built on
DevOps is that Operations itself will be simplified. Indeed, microservices in the digital
the discussion of No Ops was often raised. This is, of space. We are bringing new
course, a dream from where we stand today but the promise features onto the market
of cloud and new offerings from the ecosystem partners will through the DevOps cycles
every two weeks. So we are
accelerate this particular aspect of the journey. able to bring something new
to the customers every three
Adopting approaches like the SAFE agile framework do weeks on average. We are
bring thinking together at a management level and bring all doing most of this in-house.
”
(AP Consumer CEO Tier 2)
stakeholders together. However, the fact that different cloud
providers have their own tools and approaches, combined
with the CSPs general wish not to get tied into a single cloud
platform, leaves the CSPs needing to embrace a number of
cloud development approaches rather than a single one.

16
“
The skills gap also reflects the need for every step of the
journey from the customer into the core of the network
and data centre to be clearly defined. Teams require data I’m under-staffed in this tier
3 organisation. In my former
scientists, behavioural experts, design-lead specialists as
tier 1 telco I was over-staffed
well as the appropriate communications technology people. with over 3,500 people. I
What this does emphasise is the need for information tried to take a hundred
systems to flow throughout and be available to everyone. people who worked on SAP
Nobody doubts that the CSP community has the data to and convert them to Java – it
didn’t work! At the end 80%
help make the right decisions. The problem has been that could programme in Java but
the data has resided in so many different systems siloed with very low productivity
”
in different business units and that this fragmentation has (CTO tier 3 EMEA)
negated the possibility of improving operational efficiency let
alone the actual customer experience. The shifting nature
of the digital ecosystem all means that this knowledge
will almost certainly need to be shared with third parties
in the B2B2X business models as well as, of course, the
customers themselves – all within the regulation of data
protection.
12 Ecosystem dynamics
“
Given the background to the cloud journey, it is not
surprising that the world’s CSPs see this as an opportunity
to rebuild their own supplier ecosystem as well as reposition Over time the culture has
been shifted through a series
themselves in the broader digital marketplace. The
of workshops and senior
accusation of CSPs being ‘conservative’ is often talked about management educating the
in the supplier community. Allegations of ‘lock-in’ from the teams. It is more transparent,
CSPs towards the more traditional suppliers is ironic given people are getting feedback
the way the CSPs have helped those companies to evolve and it should be used to help
demonstrate how people’s
into global players, having started life as local suppliers to contribution fits into the big
national organisations under the old PTT regimes. The fact transformation picture…This
is that the CSP world is starting to take a software-centric came through setting up a
approach to its systems and services. Hardware, wherever separate unit whose job it
was to evangelise the shift to
it sits in the cloud or on the premises, is commoditising,
a more agile approach and
hence, traditional telecoms-vertical suppliers need to change leveraging the cloud.
”
their products and services to satisfy this desire of CSPs to (Tier 2 EMEA CIO)
become more software-centric.
The disaggregation of hardware and software also

places further emphasis on the integration and software
development skills of all parties. The Systems Integrators
believe they hold the key card with their scale and access
to resources to build once and deliver many times with only
perhaps 20% customisation.
The danger for the CSPs is, of course, that they move from
one form of lock-in to another just with a cloud or digital
label.
The research shows that every CSP cloud journey is

different. Whilst we are always looking for global trends,

17
it is evident from this and our broader research, that local

conditions fundamentally shape the journey for the CSPs.
Local competition between cable, mobile and fixed service
providers is tempered by local or regional regulation, the
presence of local Systems Integrators and distribution
channel partners as well as governmental bodies (local and
central) around broadband as well as smart city projects.
This hyper-local emphasis sits against the global dynamic
of the Webscale players with their origins in search,
e-commerce, devices and content. No doubt they have
enormous financial clout and resonance with the customers
in consumer and business markets. The key question is how
much they compete – or want to compete - with the local
broadband providers. The emergence of virtual Wide Area
Network (WAN) services from some of these hyperscalers
suggests they will continue to encroach on lucrative formerly
telecoms-centric services. They may also transition into
retailers of telecoms services where their customer-centricity
and use of analytics to meet customer needs give them a
significant advantage over CSPs.
Artificial Intelligence (AI) is also a rich playground for the

hyperscalers. The wealth of data flowing through their
systems gives them a scale advantage over the local CSPs.
Indeed, they are now selling packaged AI services to many
of the CSPs to help with customer and service development.
The disaggregation of hardware and software is seen by the

CSPs as a means of stepping away from some of the more
onerous supplier relationships. The degree to which this will
happen from the RAN through transport back into the core
network is uncertain. What is evident from the market is
that many suppliers of technology and Systems Integrators
are keen to step in where the supplier relationship can be
broken. Once again, the SIs have regional and global stature
which will be helpful to the CSPs in rebuilding and operating
their next generation environments.
There is also the issue of governmental and regulatory

influence. Broadband and 5G have become political hot
potatoes. The added capillarity of networks to deliver 5G
and the policy of extending fibre or cellular connectivity into
rural areas is helping reshape investment between CSPs.
More cooperation between competing operators is evident.
Perhaps this is the first sign of an industry starting to
cooperate in the face of the shifting market described above.
It will doubtless result in a more open ecosystem of suppliers
and the removal of procurement practices from the CSPs
which many suppliers cite as being why they are ‘difficult to
do business with’.

18
13 Conclusions
“
The CSP industry clearly understands the direction of travel
when it comes to cloud and the transformation of its IT and
network environments. This understanding comes from the I’d be lying if I said I had a
strategy in place. I haven’t
fact that the role of telecoms in the broader digital economy
had the bandwidth to do it.
must be to deliver against a vastly shifting set of devices and
”
(EMEA Tier 3 CTO)
applications demanding new levels of connectivity from fixed
and mobile networks.
It is clear, however, that the industry is just scratching the

surface when it comes to cloud. Furthermore, most CSPs
lack a coherent, well-defined and ubiquitously communicated
strategy to bring all of the necessary elements together
across IT and network groups and down into the different
LOBs.
“
New skills in is a must. The
biggest problems for telcos
is talent attraction because
the youngsters think telco
is boring! It is a massive
reskilling job to get the
workforce prepared for this
Early adoption of cloud is typically for customer-facing new approach. It is a whole
functions and touchpoints. These need to be cloud native generation of people facing
the challenge to shift to
to work in real time through the increasingly diverse set of software thinking.
channels of interaction. The second wave of cloudification (Asia Pacific Tier 1 operator
”
will include more of this customer experience-related but CIO)
will also bring in more of the network side. Older systems,
especially mainframe-based, will remain outside of the cloud
journey. Building abstraction layers will allow the CSPs to
extract the relevant data through APIs to begin the journey
towards the exploitation of all relevant data.
Metrics to track the cloud journey appear to be woefully

lacking. Where they are applied, they tend to be crude and
unhelpful. Senior CSP executives suggest that the lack of
financial rigour, combined with different power bases within
the organisations and cultural organisational lethargy all lead
to a slow move towards this essential transformation for the
industry.
Skills, alongside culture, pose a major challenge for the

CSPs but an opportunity for the supplier ecosystem. CSPs
find it difficult to attract new talent as the telecoms industry
is seen as being ‘boring’. Reskilling existing staff is being
undertaken but is less efficient than bringing in fresh talent.
Operations have not yet experienced major impact from the

cloud shift due to the early nature of most journeys. The
move to DevOps is clear although a hybrid approach seems
to be preferred by many players today.
Some confusion exists around the issue of cost savings

when it comes to cloud. Most CSPs – at board level
- believe that cost savings are the main driver for cloud.
Experience of cloud migration today, however, suggests that

19
Lift and Shift of existing areas to cloud are simply not at a

lower cost.
Cloud is one of those topics that everyone believes they

understand but in fact there are a many very diverse
opinions scattered throughout the CSPs LOBs and IT/
Network departments. What is clear from this research is
that the CSPs’ must drive their cloud migration throughout
the organisation, carefully educating all parties as to its
rationale.
Setting the telecoms industry in a broader context, all

parties are going through a form of transformation. This is
true from consumer and business customers through the
many and varied suppliers back to the CSPs themselves.
The ecosystem is being restructured by not only the
softwarisation of many products and services but by
the entry of Hyperscale players into different markets.
Encroachment from Facebook, Amazon, Microsoft,
Salesforce, Alibaba as well as a services push from Apple
all add up to more competition for the telecoms-originated
players.
Those suppliers coming from a telecoms background also

need to demonstrate their own journey to cloud and a
more flexible way of working in order to not suffer from the
CSPs using cloud as an excuse to break existing supplier
relationships under the banner of hardware and software
disaggregation.
The cloud migration goal is clear. However, every CSP

will have its own series of journeys determined by internal
change management strategies and external pressures of
competition, technology and even regulation shifts.
The potential changes that cloud can bring to the telecoms

industry are enormous. A change in culture and an
acknowledgement of the future role of the CSPs in the
emerging digital economy need to be accepted and major
change management initiated in order to benefit from cloud’s
potential.
This paper was sponsored by
For more information or to use any of the content please contact:
Chris Lewis - Lewis Insight Ltd - [email protected] - Tel: + 44 7824 360747

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1

The Road to Telco Cloud

IT & Operations Network Other

© Lewis Insight Ltd - January 2020

Closer blending of not only the IT and network

© Lewis Insight Ltd - January 2020

This change represents a total ‘about-face’ for the industry

The good news is that connectivity and its related

Throughout the work we had a notion of many parallel

Restructuring from the radio through transport to the core

© Lewis Insight Ltd - January 2020

(or Generations) bringing their own services to market

future communications industry. In some ways the offering

Business and consumer services were in the past totally

IT and networking were also seen as being quite separate

At the same time as these convergences begin to impact

© Lewis Insight Ltd - January 2020

All of this places some fresh pressures on the CSPs and

In short, telecoms was formerly a nicely self-contained

04 What is cloud to the CSP community?

The vast majority of cloud projects in the companies we

© Lewis Insight Ltd - January 2020

The word ‘agility’ also appears regularly in peoples’

What is clear is that the economies of scale that cloud-based

© Lewis Insight Ltd - January 2020

05 Public versus private cloud

Agree Neither agree nor disagree Disagree

06 What is going on in the cloud?

We are on track to migrating the whole of our IT to the cloud

We are on track to migrating the majority of our IT to the cloud

It’s started but it’s embryonic

We have not started but are investigating

0% 10% 20% 30% 40% 50%

© Lewis Insight Ltd - January 2020

At a Group level many of the CSPs reported extensive

Investment cycles across the breadth of network

© Lewis Insight Ltd - January 2020

07 State of cloud play

The final group tends to be around the mainframe

There is no consistent Cloud migration builds The inconsistency of

© Lewis Insight Ltd - January 2020

08 Justifying the shift

Another factor here is that the benefits that cloud brings in

© Lewis Insight Ltd - January 2020

attributes that apply to the core telecoms business.

The ‘frozen middle’ that is often referred to blocking

© Lewis Insight Ltd - January 2020

We measure the benefits of

We measure the benefits

We measure the proportion

We use other operational

We use ROI business cases

0% 10% 20% 30% 40% 50% 60%

more importantly, business 5G applications. Hence, it is the

In many ways 5G is a metaphor for the future of the

© Lewis Insight Ltd - January 2020

At the end of the day, the world’s CSPs have to recalibrate

Much is made of the Capex and Opex lines within CSPs.

Recasting the operations model to embrace DevOps is an