Network Service Providers’ Opportunity with Cloud Services
NSPs are looking at new areas to boost revenue growth, and cloud computing is one of the key areas they are looking at. Based on research from STL Partner’s Telco 2.0 report, the Hosted Private Cloud market is expected to grow 34% annually to $6.5 billion by 2014. Since they already own the network, as well as the infrastructure around it including the billing and management systems, NSPs are in a good position to monetize the cloud opportunity. While the cloud services market is highly competitive, there is an opportunity for NSPs to differentiate their service offerings by leveraging their enterprise-grade VPN infrastructure to provide Hosted Private Cloud services with enhanced end-to-end security and service-level guarantees.
Public cloud services lack the SLA and QoS guarantee levels that enterprises have grown accustomed to with their VPN networks. Recent power outages associated with major public cloud service providers have impacted many popular sites and highlighted issues associated with reliance on public cloud services. As a result hosted private cloud services are emerging as a cost-effective and robust solution that offers quality and reliability for enterprise applications. Network service providers (NSPs) are embracing cloud services to grow new revenue streams and increase customer retention.
The Juniper Solution for Hosted Private Cloud over VPN
The Juniper solution leverages the VPN services of NSPs, while addressing the needs of their enterprise customers to get better than “best-effort” over the Internet. NSPs can provide end-to-end performance assurances with service-level agreements (SLAs) and security for cloud-based applications services hosted by them. This solution is particularly appealing to large enterprises with sizable VPN networks as they can incorporate security and QoS features for all components of an end-to-end enterprise network.
The Juniper solution seamlessly extends the customer VPNs to cloud data centers by using Integrated provider edge (PE) MX Series routers and Layer 4 to Layer 7 services at NSP service point of presence (POP) with massive VPN scale and port density, collapsed layers of data center routing, switching, and security devices with Juniper Networks MX Series 3D Universal Edge Routers, as well as simplified management of thousands of data center servers and storage interfaces over Juniper’s top-of-rack switches and security extended to virtual machines.
Revenue Analysis of Hosted Private Cloud Services
In order to estimate the impact of bundling cloud services with existing VPN services, Juniper commissioned an extensive accounting and economic analysis focusing of leading U.S. and global NSPs. This was done by the Foresight Valuation Group www.foresightvaluation.com in a case study that combined the revenue models, for VPNs and Cloud Hosting. They calculated that by 2017, Tier 1 service providers can realize over 50% revenue increase over their basic VPN services by providing premium cloud service delivery. They also looked at the impact of Hosted Private Cloud service revenues and calculated that by 2017, Tier 1 service providers can realize around 10% revenue increase by providing premium cloud delivery.
This analysis leaves no doubt that Hosted Private Cloud services represent a new wave of revenue potential for service providers who are offering business services to enterprises and by leveraging MPLS VPNs, they have a readily accessible insertion point to add Hosted Private Cloud services while ensuring SLA guarantees to their enterprise customers. To learn more see, Monetizing the Business Edge with Hosted Private Cloud Services.