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2021 Forecast: Cloudy with a chance of OpenRAN

Who’s not super excited to wave BUH BYE to 2020? Like the rest of the world, I don’t think I’ve ever been more excited about the prospect of wishing everyone ‘HAPPY NEW YEAR!’ in a couple of days. In the meantime, here’s my round-up of the top five things that happened in telco and the public cloud this year – and predictions for trends that’ll shape 2021.

1. Covid: a cloud wake-up call

Covid will be on everyone’s list this year because it’s the only thing everyone in the whole freaking world has talked about every single day (well, maybe not New Zealand, go Jacinda!). But for telco, Covid represented an overnight shift not only of human traffic – employees moving from working at the office to working from home – but all of telco’s network traffic patterns, too. I bet most disaster recovery runbooks didn’t account for the situation of a global pandemic, where no one can visit the office, much less the data center that’s running your business.

Wow. What worked? The public cloud. Cloud computing was a major trend prior to Covid. Every other industry had already done it and telcos were just beginning to flirt with it. Now, it’s do or die. A massive 93% of IT decision makers are accelerating cloud adoption programs as a result of the pandemic. Talk about a major wake-up call.

2. WFH: from no way to why didn’t we do this sooner?

Telcos’ in-person and formal culture got a rude awakening when their entire staff had to work from home. Many of these were organizations that probably didn’t have a clue what WFH stood for, let alone that it was something their workforce would have to shift to overnight.

In mid-March, Verizon, like most enterprises, sent 90% of its 135,000 employees home. Organizations had to completely eliminate all paper and in-person processes. We’re talking about not just interns doing the photocopying: many telcos were still reliant on wet signatures, hand stamps, paper POs … you name it. Meetings had to go virtual. People had to think about what their backgrounds looked like. Business processes needed to be executed from home, from mobile phones and away from the head office. Organizations had to adopt cloud products, moving to Zoom, Google apps, e-signatures – overnight. After the initial kinks were worked out and people realized productivity wasn’t really affected (it actually improved) and employees were actually happier, CFOs started to look around and see the piles of savings that could be had if companies adopted a more “remote-first” approach. As the vaccine looks to become available in spring ‘21, let’s see how many people stay working remotely and the impact on office space around the world.

3. Big telcos sign big deals with BFCs

Big. Fucking. Clouds. In 2020, anyone who’s anyone signed a deal with one of the big guys. Whether it was sparked by Covid, expedited by Covid, or simply telcos’ me-too, jump-on-the-bandwagon moment, telcos and vendors were falling over themselves to sign on the dotted line with the biggest names in cloud. Orange and Google CloudVodafone Business and IBMAWS and Giffgaff, Google Cloud and Deutsche TelekomAxiataNetcracker. Big names in telco joining up with the big hyperscalers. Some of the deals are to resell cloud services (not that exciting), some are really great projects. I’m keeping my eyes on Vodafone and Google’s analytics projectDT’s bold step to move 60% of its applications to the public cloud; Telefonica Germany’s AWS/network core project; Verizon’s Wavelength project; and Verizon’s AI for customer services project. Grab your popcorn and let’s see who’s serious as we move into 2021, who makes progress, and who’s all talk and no action.

4. Microsoft launches Azure for Operators

The Azure for Operators announcement is the boldest move by any of the three main hyperscalers to target telco. In my podcast episode with Yousef Khalidi, he swears Microsoft doesn’t want to compete with telcos – it wants to PARTNER with them. The acquisitions of Metaswitch and Affirmed were more about hiring telco expertise and bringing that knowledge and capability into Azure (acqui-hiring) to understand the telco industry. Satya Nadella, CEO of $MSFT, says it is trying to do three things with Azure for Operators: 1) bring the power of the cloud and edge to your network; 2) bring the scale of its partner and developer ecosystem to CSPs; and 3) my favorite – help you reduce costs and improve your revenue. Let’s hope it puts its money where its mouth is and delivers some great stuff to the market. Gooooo Azure!

5. Everyone started using the phrase ‘cloud native’ – incorrectly.

You know, I’m just a teensy bit proud of the fact that I’m this crazy cloud girl who talked about the public cloud before really anyone else in telco did.  My problem is now EVERYONE is talking about ‘the cloud’ and it’s hard to decipher exactly what people mean. Before I showed up to telco in 2016, hardly anyone was talking about the hyperscalers or cloud native. But in 2020, mentions of ‘cloud native’ in telco media were up 336% over 2016 levels, and mentions of ‘hyperscaler’ up a whopping 761%. It’s like I actually made FETCH happen.

Hyperscaler Total Mentions and Cloud Native Total Mentions

Now people are calling things ‘cloud native’ that are really just workloads running on kubernetes, on-premise or in a private cloud (#fakecloud!). If that’s what you mean by cloud native – you’re going to be really shocked to find out it’s a lot of work without a lot of payoff (and probably even more expensive). You need to be “public cloud native (my term) to get access to the benefits of the public cloud.

The biggest benefit of using the public cloud is not the hardware savings – it’s the software potential. I will try to do a better job of making this clear in 2021 and get more people to understand the great opportunity that exists with a move to the public cloud.

Now let’s tackle what I think is going to happen in 2021.

1. A telco will figure out how to really use the public cloud and save 50% on IT costs – or more

How will it happen? Some forward thinking telco will get it right and move a ton of software to the cloud and prove: 1) it works; 2) it saves 50% on IT costs, or more; 3) it opens the door to revenue opportunities telcos never knew existed.

Who’ll be the bold telco? Personally, I’m watching Deutsche Telekom, which has already closed 76 datacenters in its shift to the public cloud. With its move of 60% of its applications to AWS and Azure, it predicts triple digit million-euro savings, annually. Telcos that move like DT and do this successfully will be the ones that survive the huge change that’s coming to our industry.

2. Some telcos will take the wrong approach – and fail

We’ll also witness public cloud failure in 2021. Without a proper understanding of the cloud ecosystem – and what ‘public cloud native’ means – telcos will have some spectacular failures. If you want to avoid being that telco, look for my blog in January where I’ll clarify how you should be thinking about your cloud transformation and explain how each part of the telco software ecosystem can benefit.

It’s common sense to move to the public cloud, but there are still so many misconceptions that telcos will get bound in. It’s not just about infrastructure and IT, for instance. It requires a top-down, organization-wide cultural change. It requires clear communication.

Moving slowly or taking half measures is a sure way to fail. Let’s take Bank of America, for example. For almost a decade, the institution was adamant that the public cloud was not a fit and instead built its own private cloud. Boy, was it wrong. In 2019, Brian Moynihan, BofA chairman of the board and CEO, admitted that although it had been pursuing private cloud – and spending on private cloud – third-party cloud providers are 25-30% “cheaper.” Oopsie.

Other financial services companies took the right approach from the start, avoided failure, and then basked in all of the benefits of the public cloud. Capital One closed all of its data centers and is now relying solely on AWS. JP Morgan Chase is also using AWS, and, according to the company, is accelerating cloud migration by leveraging reusable Cloud Blueprints: standardized, automated, secure, and repeatable cloud architectures that can be deployed for common use cases.

But back to telco. Remember the cautionary tale of Verizon, a company that thought it was a great idea to spend $1.4 billion on data center provider Terremark, then realized it couldn’t compete with the might of the hyperscalers, bailed, sold its entire stake and dumped the business on Equinix. Probably not the best move ever.

3. People will fall for IBM’s #fakecloud

I’m sure Oracle is panicking with all the movement to public cloud databases. You know who else is in a panic? IBM.

In November, IBM launched its cloud-for-telco play. Unfortunately for telco, Big Blue launched a whole bunch of #fakecloud. IBM is now in full tilt panic mode, trying to get in on the cloud game after not building a public cloud at all. IBM’s message: move to the cloud (the intentionally ambiguous cloud, that is) and we will manage it all for you. Telcos that fall under its spell and move to a private cloud will learn the hard way that it is more expensive and not at all more beneficial – and fall far behind their competitors that went the direct route to the public cloud. Telcos: don’t fall into this trap. Stay focused on the public cloud and make the transition. You don’t need IBM’s help.

4. OpenRAN will explode

The tail end of 2020 saw OpenRAN start to bubble rapidly to the surface of telco conversations. In 2021, it’s gonna explode. You know it’s a great idea when you have network vendors writing blogs about how crappy it is. OpenRAN is a serious threat to their future. Ericsson’s revenue will slip even further through its fingers – something it already admitted last year, when CEO Börje Ekholm said he expected OpenRAN market developments to “impact revenues” from 2023 onwards.

Other vendors will hemorrhage revenue as telcos realize that there is (finally!) an alternative to overpriced infrastructure and hardware vendor lock-in. More features will be driven into software, allowing upgrades to be delivered seamlessly without having to invest in new hardware. Networks will be easier and cheaper to maintain, easier and cheaper to upgrade. Spend on RAN will go from historic levels of around 90% of capex to 50%, based on Rakuten’s claim that operators can reduce capex by 40% with its telco-in-a-box network. It might not be next year, but the development and industry excitement around disaggregated network components will certainly define the trajectory of telcos’ decision making next year.

Want proof? Vodafone has also been staking its claim in the OpenRAN space. In November, it announced it would be deploying OpenRAN technology at 2,600 mobile sites across Wales and the South West of England. More recently, O2 trialled OpenRAN for indoor 4G and 5G coverage, while Telefonica Germany began to roll out OpenRAN by piloting a multi-vendor system at three sites in the country.

Experimentation is the name of the game here. There might be failures along the way, but telcos need to be less afraid of dipping their toes in the OpenRAN water. This will gear them up for taking a plunge in the public cloud ocean down the line.

So there you have it! A wrap up to a year no one will soon forget and some great advancements to watch for in 2021. I hope you have a great holiday and I wish you a very safe, incredibly prosperous, and of course, a super healthy new year!

xxxooo,

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