{"id":75216,"date":"2024-06-10T11:24:42","date_gmt":"2024-06-10T09:24:42","guid":{"rendered":"https:\/\/intellias.com\/?post_type=blog&p=75216"},"modified":"2024-07-22T04:24:20","modified_gmt":"2024-07-22T02:24:20","slug":"telco-cloudification-unveiled-navigating-the-future-of-network-evolution","status":"publish","type":"blog","link":"https:\/\/intellias.com\/telco-cloudification\/","title":{"rendered":"Telco Cloudification Unveiled: Navigating the Future of Network Evolution"},"content":{"rendered":"

In the rapidly evolving telecommunications landscape, core network cloudification<\/a> and virtualization represent transformative gateways for telcos and media providers. The shift of mobile networks to the cloud (and especially the adoption of a cloud-native 5G core) is a major force driving telco cloud transformation<\/a>. With the network core already in transition, telcos are now expanding cloudification to edge, radio, and transport networks.<\/p>\n

This shift fuels practical applications like automated smart factories, private 5G networks in vital sectors, and predictive maintenance through sensor networks. Benefiting from 5G\u2019s high speed and low delay, cloud-native networks become a powerful replacement for older systems driven by 5G standalone core architecture. Telcos are drawn to this transformation not just to meet rising costs but also to tap into the inherent benefits of cloud-native networks in transforming how telecommunications work.
\n\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

While challenges persist, such as monetizing 5G<\/a> services and ensuring the reliability of certain network functions on cloud infrastructure, the potential benefits of transitioning to cloud-native networks are too significant to ignore. Overcoming these challenges requires not only technical adjustments but also shifts in business, operational, and recruitment models, emphasizing the need for a sensitive cultural transformation within the organization. As telcos consider the inevitability of this transformation, key questions emerge: Why embrace cloudification of the telecom network? What investments should we make? How can we maximize cloud benefits in telecommunications?<\/em>
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Mastering Telecom Infrastructure<\/div>\n\t\t\t\t\t
Cloud vs. Off-Cloud Strategies<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Download now <\/span>\n\t\t\t<\/div>\n\t\t<\/a><\/div><\/p>\n

Future perspectives of telco cloud growth<\/h2>\n

The telecom cloud<\/a> sector is on track for robust 50% growth in the next five years, with 31% of global telco network capacity (across 4G\/5G networks) currently serviced by cloud-based platforms and this figure projected to reach 46% at an 8% CAGR. Concurrently, 29% of global network functions are virtualized, driven by scalability (52%), reduced network complexity (48%), and increased operational efficiency (39%).<\/p>\n

\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

Private cloud is emerging as the favored deployment model, embraced by nine in ten telcos across network domains. Over the next five years, telcos plan to invest an average of $206 million per year in the cloud, realizing substantial financial benefits including potential cost savings of $260 million to $380 million per year and additional revenue ranging from $110 million to $210 million.<\/p>\n

Beyond financial gains, telcos undergoing cloud transformation anticipate a 5% reduction in greenhouse gas emissions over the next three to five years. The success of leading telecom companies in harnessing the cloud underscores the importance of adopting a five-point plan, emphasizing early adoption, comprehensive strategies, efficient monetization, talent and automation use, and strategic partnerships. This transition to the cloud signifies not just a technological shift but a cultural transformation within organizations, ensuring a holistic approach to innovation and agility.<\/p>\n

Telecom cloud ecosystem: components and architecture<\/h2>\n

Embarking on telco cloudification, a transformative journey for communication service providers (CSPs), involves a fundamental shift without the need for extensive infrastructure changes. At its core, telecom cloud services<\/a> refers to using network resources and services in the cloud, offering private, public, or hybrid solutions. These cloud levels \u2014 cloud-enabled, cloud-based, and cloud-native \u2014 aim to optimize connectivity services<\/a> and cloud offerings (IaaS, PaaS, SaaS).<\/p>\n

Constructing the telco cloud involves crucial components and architectural steps. Initially, networks undergo virtualization and softwarization through network functions virtualization (NFV) and software defined networks (SDN). NFV breaks down network functions into virtualized network functions (VNFs), replacing traditional hardware with flexible alternatives. Simultaneously, SDN streamlines network control, enabling centralized routing through software. The collaboration of NFV and SDN forms the backbone of an agile architecture, essential for effective cloudification of telecom networks.<\/p>\n

\"Telco
\nSource: Stanton Chase<\/a><\/em><\/p>\n

This cloudification journey<\/a> extends to the edge, incorporating edge computing to address challenges posed by the Internet of Things (IoT)<\/a>. Edge clouds, composed of local micro data centers, optimize network performance by handling localized tasks. The success behind cloudification of telcos lies in aligning strategies with business needs, adopting NFV and SDN, integrating open-source software, embracing practices like DevOps<\/a>, and incorporating automation<\/a> and artificial intelligence<\/a>. This transition positions CSPs as digital service providers (DSPs), streamlining new service design and rollout, unlocking opportunities presented by 5G and IoT, and contributing to sustained growth in the telecom sector.<\/p>\n

\"Telco
\nSource: Stanton Chase<\/a><\/em><\/p>\n

In essence, embracing telco cloudification not only simplifies network infrastructure but also proves advantageous for businesses. Cloud solutions offer flexibility, scalability, and cost-effectiveness, allowing CSPs to innovate without the burden of extensive hardware changes. The cloud\u2019s inherent benefits underscore its pivotal role in enhancing connectivity services and fostering digital transformation<\/a>.<\/p>\n

Leveraging cloud potential for telcos<\/h2>\n

Our extensive collaboration with major global telco operators in their cloud journey and in-depth research into telco cloud solutions have led us to develop a five-point plan, providing a roadmap for telcos to fully leverage cloud potential.<\/p>\n

\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

I. Devise a comprehensive telco cloud strategy<\/h3>\n

According to Capgemini<\/a> survey, approximately 9% of telco executives reported having a comprehensive telco cloud strategy. Fifty-two percent stated that their firms had some telco cloud initiatives but lacked a comprehensive strategy. Delaying cloud transformation could place CSPs at a significant disadvantage. Deutsche Telekom exemplifies a strategic approach, systematically digitalizing its operations and evolving into a global \u201cdigital telco.\u201d The timing of telco cloud transformation<\/a> is crucial, often aligning with the deployment of the 5G standalone (SA) core, which acts as a catalyst for cloud implementation.<\/p>\n

II. Aim for rapid, efficient monetization of new services<\/h3>\n

Swiftly monetizing 5G services is paramount for recouping telco cloud and 5G technology investments. Service monetization should be a core element of the telco cloud strategy, involving strategic stages such as devising a strategy, identifying core services to monetize, assessing market demand, and preparing infrastructure for scalable cloud-based services. Early market capture, exemplified by partnerships like that between Orange and Nokia, who deployed a 4G\/5G private network with network slicing, underscores the importance of innovative service offerings.<\/p>\n

III. Leverage new talent and automation for innovation and agility<\/h3>\n

The skills required for successful cloud transformation often necessitate significant investment in upskilling, reskilling, and hiring. Telcos plan to invest 8% of their overall cloud transformation budgets towards workforce-related expenses, emphasizing talent acquisition in areas like Kubernetes, DevOps<\/a>, cloud management, and data analytics<\/a>. Automation, a significant outcome of telco cloud transformation, not only enhances operational efficiency but also directs the network workforce towards innovation and agility.<\/p>\n

\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

IV. Seek to forge strategic partnerships within your ecosystem<\/h3>\n

Telco cloud transformation opens avenues for multiple vendors and partners, emphasizing the need for a symbiotic relationship. Orchestrating ecosystem partnerships requires clear governance and terms of agreement with clarity on cloud costs and their evolution. Assigning a leader responsible for end-to-end transformation, along with systematic governance involving representatives from all partners, ensures alignment and prioritization.<\/p>\n

V. Manage cultural alongside technological transformation<\/h3>\n

Cultural challenges, cited by 52% of telco executives as the biggest barrier to telco cloud transformation, underscore the need for a fundamental rethinking of organizational culture. Regulatory concerns, data protection, cloud sovereignty, and cybersecurity are additional top concerns. Change management, critical for a smooth transition, is an investment area often overlooked, with only 18% of executives considering it among their top three cloud investment priorities. As telcos evolve, reorganization and collaboration across functional boundaries become imperative.<\/p>\n

\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

This holistic five-point plan serves as a guide for telcos in navigating the dynamic cloud landscape to ensure a strategic, agile, and culturally aligned transformation.<\/p>\n

Unlocking telco cloud innovation: Landscape overview<\/h2>\n

In the dynamic realm of telecommunications, the evolution towards telco cloud is reshaping industry landscapes, and within this transformative journey, telcos exhibit varying levels of readiness and strategic implementation. A comprehensive analysis classifies telcos into early adopters, telco-cloud followers, and laggards, revealing a spectrum of preparedness for cloud-driven transformation.<\/p>\n

Early adopters, constituting 23% of telcos, stand at the forefront, showcasing a holistic telco cloud strategy, substantial network function virtualization, and a short-term timeline for timeline for transitioning network capacity to the cloud. Their strategic prowess not only propels the state of their transformation but also translates into tangible benefits, focused investments, and ambitious aspirations, underscoring their pivotal role in shaping the telco cloud narrative.<\/p>\n

\"Telco
\nSource: Capgemini<\/a><\/em><\/p>\n

The benefits realized by early adopters surpass those of their counterparts, with enhanced risk-sharing capabilities and a holistic approach to innovation through research and development (R&D), cloud management, and product\/service innovation. As we delve into case studies, it becomes evident that early adopters are not merely pioneers but catalysts, driving innovation and setting benchmarks for the industry.<\/p>\n

Realizing potential: Case studies in telco cloud innovation<\/h2>\n

The cloud is revolutionizing telecommunications, reshaping businesses, and fueling innovation. These real-world case studies, guided by a team of seasoned Intellias experts, reveal how the cloud becomes a strategic cornerstone in telco providers\u2019 journeys of transformation.<\/p>\n