IBM’s Osswald on Cloud 9

By Tim McElligott

Debra Osswald is IBM’s global communications industry strategy leader. She spends a majority of her strategy cycles on the Cloud. And based on the results IBM has seen from its own internal cloud initiative, she is convinced the opportunity for communications service providers is significant and imminent. Osswald will deliver a keynote address Friday at the Billing & OSS World Conference & Expo, where she will provide her perspective on the ways CSPs can leverage that opportunity and, more important, monetize it.

Here, she spoke with B/OSS editor Tim McElligott about how this opportunity for CSPs is two-fold: as both adopters and providers of cloud services.

What is IBM’s cloud strategy?

Our approach is two pronged. We focus on both private and public cloud opportunities. We are an enabler of technology and business value for clients in the enterprise market and beyond. Under the auspices of our Smarter Planet strategy, we enable enterprises to leverage the cloud so they can operate smarter and more cost effectively and build an infrastructure that has the flexibility and resiliency they will need moving forward.

We also focus on service enablement. We are looking at the public cloud and building up IBM’s own capabilities to offer more services to a broader audience, those looking for the lowest possible risk and the most rapid time-to-market for whatever business services they need.

Is either prong further along?

Probably the private enablement piece is further along. Data center enablement is something we have done a long time and we take a lot of the same approach toward extending it beyond IT to the whole fabric of the organization. We have used the cloud internally to prove out the value of cloud for ourselves. There’s some $4 billion IBM has saved within our own enterprise. We saved $2.5 million per year in a technology adoption program putting a large population of our research group on the cloud—3,000 researchers across eight countries.

When it comes to selling cloud services, should the term “cloud computing” ever make it into the lexicon like DSL did?

That irked me to no end when service providers sold services that way, calling it DSL. I do not in any way think the term “cloud computing” should ever make it to consumers of the services. They don’t need to hear the techno-speak.

However, our customers are not consumers. They are sophisticated enterprise users who would get the term. However, we still focus on what we can do for the business, not the terminology. We talk about service enablement, the portfolio, the pay-as-you go business model, etc. There are so many opportunities to talk about the benefits of cloud that you don’t need to get caught up in what you call it.

Cloud is pretty compelling any way you look at it. Coming from a communications service provider background, I am not a stranger to complex IT, but there is so much sophistication and complexity underlying this solution that we need to work hard to make it transparent to the user and keep it about the business objectives, not about the technology.

IBM has proved the business case for cloud internally, but can the case be made for service providers in general?

There are several ways CSPs can monetize the cloud computing opportunity. IBM identified three major imperatives for CSPs.

1. Reduce costs and improve operational efficiency and effectiveness
2. Enable new services and business models
3. Differentiate the customer experience.

Cloud addresses all three of these imperatives, any one of which is enough for CIOs to focus on to achieve their particular business objective.

If they’re after the Number 2 imperative – enabling new services and business models – obviously cloud offers a great opportunity for CSPs to be Cloud Service providers. And for IBM they can be a great channel to sell to SMBs and consumers. We don’t have the capability or intent to pursue those markets aggressively. We are best suited to serve the large enterprise. But for the CSP, it is a consumer and SMB story. This is where a beautiful paring between IBM and CSPs can do wonders, because we can enable them with a large portfolio of sell-through services as well as ISV and application development partners. We also can provide them with the new business models enabled by cloud services. From a cost-reduction standpoint there are great opportunities for IT optimization in the OSS/BSS realm.

For CSPs, it’s a great story of two centers of value capture and creation: one as an adopter of cloud and one as a provider. In comparison, most large enterprises only have a single opportunity to capitalize on cloud — and that is internally.

CSPs have great, natural assets to bring to bear in the cloud services model. They are comfortable with highly scalable, high-volume service fulfillment, billing and customer care, triple-A services, assurance, etc. They also have a tremendous amount of data around customers and very strong brand recognition. They are known for their financial stability and keeping information private and secure, so there is implicit confidence in service providers which they can leverage.

Connectivity is a natural asset, but what about data centers? Do you see service providers building their own or partnering with others?

All of the above, although I would suggest no one in isolation go out and build a new center just to leverage cloud. Service providers are in a capital-constrained environment, but heck, we have been cutting capital for a decade and change, so it makes sense to partner with a large IT vendor like IBM and share data center space. It’s a no-brainer.

From a server and storage utilization perspective, we have done studies where typical application servers were at 10-20 percent utilization. By virtualizing resources, we got them up to 70-90 percent for a single server. It’s incredible and makes total sense — better than seeing the equipment sitting idle.

Do you ever see BSS/OSS solutions being offered over the cloud or is their opportunity strictly supporting the cloud?

There is a value proposition now for Tier 2s and 3s, particularly in emerging markets to look to a large trusted IT partner to provide those things in a cloud environment. Ten years ago I said the ASP model wouldn’t work. The market and technology were not ready and there was a reticence on the part of CSPs to think about outsourcing BSS/OSS, and now service providers are outsourcing the very heart of their business, the network.

There has never been a more attractive time for CSPs to think about doing that because the table stakes of functionality required is pretty much available everywhere.

What is the main theme of your presentation at B/OSS?

It’s that CSPs are in the unique position to benefit from cloud both as adopters and providers. That makes it a more compelling technology to embrace as the underpinning of new business growth and profitable growth. I’ll also talk about it being a way to go to market in a more low-cost, self-service, pay-as-you-go kind of way. Those are all attractive models.

Is there still convincing to be done or have CSPs gotten the message?

Based on the fact that I sleep about six hours a week because I am responding to requests for information, I’d say they are very aware of the benefits. Interest is incredible. The troubling thing to me is I would like to see CSPs embrace the cost reduction, internal IT-optimization opportunity as enthusiastically as they are pursuing the new-services business model aspect of the cloud. Every one of them is coming to us asking about the new service model and I continue to tell them we absolutely want to help them with that but first they should think about the cost-reduction opportunity in storage infrastructure alone. We have saved customers tens of millions of dollars or more by doing an assessment of their storage utilization.

So the opportunity hasn’t sailed without the CSPs?

I don’t think it has at all. I think they’re in a great position. The innovation and technology has come around just at the right time for them to increase their value and their role in the value chain.

Debra J. Osswald is responsible for strategy and cloud computing solutions for IBM’s Global Communications Industry division. A 25-year veteran of the communications industry, Osswald previously held key marketing positions with Amdocs and Telcordia and was vice president and equity research analyst with Goldman Sachs. She has also served as the worldwide BSS/OSS research program manager at Gartner and a strategy consultant with AMS, as well as spending 10 years with AT&T.

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