How much does it 'really' cost to run a telco cloud?

It is widely understood but seldom acknowledged that telcos often have a tough time identifying their cost of operations. A newly-announced total cost of ownership (TCO) model for assessing telco data center costs from Cartesian, a TMNG Global

Company, tries to address that shortcoming.

The model incorporates 700 data center requirements, including taxes, insurance, labor rates, and climate impacts on heating and cooling costs, from one geographic location to another. Overall, the data center TCO Model provides a comprehensive view of capex and opex for data center planning, consolidation and continuing operations. The model can simultaneously perform side-by-side comparisons in a single view, enabling visibility across multiple elements for IT executives.

According to Joe Sharkey, Vice President of TMNG Global and chief architect of the model, clients are seeing upfront costs improve by as much as 30% and up to 35% improvement in ongoing expenses.

“We have been doing a lot of work around the cloud recently and have learnt a lot,” added TMNG Global’s chairman and CEO, Rich Nespola. “We had a long hard look at the cloud as part of a project to find the ‘next big thing’. From that research we developed an understanding of the real cloud opportunity and produced this data center TCO model as we expanded our thinking.”

“For the first time, telcos can now fully understand next generation data center costs,” he said. “Only if you understand the costs, can you develop robust pricing plans and so have far more confidence in the financial impact of your overall plan. This model is comprehensive and with every variable built in facilitates the decision making process. Because we do not ‘sell’ cloud products or services, we do not mind if the decision that the model helps telcos arrive at is ‘do not build a new data center yet, or here.’ What we are also finding is that companies from outside telecoms are approaching us asking to help them make decisions about data canters – construction is a good example.”

Commenting on cloud concepts generally, Nespola pointed out some misconceptions about the cloud. “A CIO can wake up one morning and have this great idea to use the 30% unused capacity on his servers. He advertises the space, puts in the checks, balances and firewalls and suddenly he is providing cloud services – but only in the most basic sense. The real cloud involves multiple devices, for instance – thank you Apple for iSync – but it requires a completely different level of orchestration. I think it will be a brave telco that puts ERP systems in the cloud anytime soon.”

Expanding on the cloud theme, Nespola cited IBM, who have pointed out that cloud computing can cost 80% more than simple outsourcing, “careful thought is needed before telcos jump into the cloud,” said Nespola. “there are seismic shifts taking place amongst the partners in telecoms. From recent work, we have a good understanding of the economics surrounding the still nascent cloud processes and technology. Frankly, when it comes to the cloud the rules have not been written yet.”