Jamcracker report: Telcos first-to-market with cloud service broker model

Telecom operators are the first-to-market using a so-called cloud service broker model, an approach that lets the cloud provider offer multiple cloud services on a single, aggregated platform – a tactic that fits well with their service provider roots.

Telcos are taking the cloud service broker approach by offering services – such as cloud-based security, email and collaboration – “that [their] SMB customers view as a natural extension of core communications offerings,” said Steve Crawford, VP of marketing and business development, Jamcracker, which has been touting its cloud service broker solutions and today released a new annual report on cloud adoption and usage.

The report compares 2009 and 2010 usage statistics across Jamcracker distribution partners on its Services Delivery Network (including dozens of service providers and distributors, more than 100 cloud providers, and hundreds of thousands of businesses).

In the report, there is evidence of a “sharp rise” in net new revenues for telcos adopting the cloud service broker model, something Connected Planet espoused early in the year.

The CSB model delivers and manages different cloud services – often times from multiple third party providers – within a federated and consistent framework for handling service provisioning, billing, security and support. A cloud service broker can most easily deliver software-as-a-service but there’s nothing stopping a cloud provider from using the model to deliver infrastructure- or platform-as-a-service offerings either.

Telcos using this approach benefit by reducing customer churn and increasing life-time customer profitability, said Crawford. For instance, Telstra recently reported that their cloud service customers are 65% more likely to renew their broadband contracts than non-cloud customers, and that 22% of their cloud customers who had not previously purchased broadband services from Telstra wound up doing so.

“Telcos are the trusted providers for SMBs that want collaboration, hosted email and security, as well as infrastructure services for sell-through,” said Crawford, noting that telcos will be going a step beyond those services as well. “We often hear telcos want to deliver hosted CRM or hosted ERP solutions, so they will look to use the cloud brokerage more to sell and work up the value chain to offer more business applications,” explained Crawford.

Indications for 2011 are that rapid expansion of the cloud service broker model into mainstream service providers/telcos will take place, as more companies focus on the approach as a way to handle rapidly growing subscription-based revenue streams without having to make major investments in hardware and software. “Not only will telecom expand its use of the CSB model, but other verticals,” said Crawford, citing email and collaboration services as high-growth areas since 2009. In the Jamcracker report, the growth is attributed to growing market awareness and aggressive price moves by Google and Microsoft, as well as a growing trend by businesses to migrate their email from on-premise to hosted solutions.

For telecom operators, overall acceptance by small enterprises of the service broker model means companies using telcos for communications services might also be amenable to purchasing CRM, web conferencing, collaborative software documents, and management software from their service providers as well.