Information age

While many companies see ever growing amounts of digital information as a problem, storage specialist EMC highlights the opportunities data demand is creating for telecom operators.

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By  Roger Field Published  May 13, 2009

While many companies see ever growing amounts of digital information as a problem, data storage specialist EMC used its recent Telecoms Summit for the Middle East, North West Africa & Turkey to highlight the opportunities data demand is creating for telecom operators.

For companies and individuals alike, a growing mass of digital information is becoming an increasing headache. Most companies need to store emails for a certain period of time, while other organisations need to store important data, such as individual's medical records in a way that guarantees security and easy retrieval.

This rising tide of information is not only being driven by a growing population that is ever more reliant on digital data. Legislation from many governments is also forcing companies to store more data such as emails and phone records, often for security purposes.

For Bill Teuber, vice president of EMC Corp, this trend has created an interesting dilemma for many companies, particularly amid a contracting world economy. Indeed, as most business performance indicators such as profits, revenues and consumer demand decline, the amount of digital information that businesses have to deal with increases every year.

But while Teuber, like his counterparts in most companies, laments stalling business growth, he is convinced that telecoms and IT companies can profit from the flood of information, and the need to handle it intelligently.

The opportunities open to telecom and IT companies were the focus of EMC's telecoms summit, which was held in Istanbul, Turkey in April. While EMC, which has about 30 years experience in the data storage sector, is well aware of the challenges posed by the need to store huge and fast growing amounts of data securely, it is also keen to dispel misconceptions that data is a problem.

"We recognised a few years ago that just storing information wasn't enough, because we recognised the game was changing," he said. "The IT infrastructure was changing and we chose to lead it. A number of years ago we saw that security was an enormously important part of IT infrastructures, the security of the data, not just keeping the bad guys out but keeping the data secure within the infrastructure.

"When I say security, it is end-to-end, helping companies around the world classify their data so they know what is critical and what's not, and what is happening to that data in their infrastructure."

Tapping data demand

For Teuber and his colleagues at EMC, the message is simple. Information has value if it is handled in the right way, and if data services are promoted in the right way to potential customers.

And this is where telecom operators also come in. Indeed, EMC is keen to stress that telecom operators, with their huge customer bases, long-standing customer relationships, and well established billing systems, could prosper by offering their customers data management solutions.

It is an idea that Chuck Hollis, global marketing CTO with EMC Corp, is familiar with. Hollis, who has 14 years experience working at EMC, told telecoms delegates at the summit that they have "an enormous business opportunity in the next five years" if they are able to tap demand for data solutions.

Telecom operators are ideally placed to benefit from a burgeoning demand for content backup and management from consumers and businesses. But they could miss out unless they move quickly, according to Hollis.

"It is just a minor extension of their existing business model, they have the network, they have the billing relationship and in many cases they have the trust of the customer," he said. "The question in the information economy is who is going to be your banker. Who owns your information," Hollis says.

"A lot of it is to do with self perception. So many people in telecommunications think of themselves as the network and device people as oppose to seeing the value of moving information."

Building on trust

Hollis compares the position of telecom operators today to that of banks a century ago. Just as banks transformed themselves from "buildings with vaults in" to become financial services companies, so telecom operators must shift their business models to offer more sophisticated services such as content storage and management, to both corporate and consumer customers.

By making this transition, operators stand to benefit from greater customer retention and new revenue streams, according to Hollis. "For me to switch network provider is pretty easy. But for me to switch from an operator who owns all of my information is more difficult. It's a very sticky relationship.

"We are advising telecom companies to start establishing trust relationships and trust brands rather than just cool technologies. Banks market on trust and if you don't trust them you won't give them your money. If you don't trust a telecoms company, you are not going to give them your information."

And while many telecom operators may lack the ability to offer specialised data management to their clients, they could offer such services by working with partners such as EMC. The operators could then leverage their core assets - their customer bases and billing system - to offer services provided by data specialists.

The market for consumer data back up and management is potentially huge, with personal photographs a typical form of data that people should back up. EMC already backs up data from mobile devices for some of its carrier clients. While the fees for such a service would be small, the potential gains are huge when the number of telecoms customers are considered.

"It's small money times billions of people. I see this as the first step of a trust relationship, this is not about a commodity network service - I am now trusting you with my stuff. It is a sticky relationship.

"I would say that less than one tenth of 1% of all personal data gets backed up on a server which makes 99.9% up for grabs," says EMC's global marketing CTO.

But operators could risk losing out if they don't move swiftly. One of the challenges operators face is that there are simply too many opportunities open to them, making it difficult to identify those with the greatest potential. But if operators fail to move quickly this business could go web based services, according to Hollis.

"Telco operators have scale, they have billing relationships in place and easy access to billions of customers, so they don't have to be first," he says. "I think in the next three years they better get after it or else someone else will get it. With so many of these things, it is early days.

"They are opportunity challenged in that there are so many opportunities in front of them that they are not so much asking ‘what are the next opportunities?' as ‘what are the five things that I am not going to do?'"

"If you are a telco, you need to get into areas such as fibre to the home and next generation networks...I use the phrase opportunity challenged because there are too many cool things for them to do."

The market potential in the corporate sector is equally attractive, with companies spending billions of dollars a year on IT and software. Hollis is optimistic that telecom operators can take a share of this sector, as a growing trend towards virtualisation and cloud computing drives demand for companies to outsource their IT software and hardware rather than owning and managing it themselves.

"There is a clear road map of more and more IT services, you package it up the right way, build a trusted relationship. Nobody wants to own a bunch of computers and software, you would much prefer to consume, and we see a number of large telecommunications operators to offer that. On the consumer side the same thing, we are all target markets for these kind of services.

"The big theme here is to change IT from something you by to something you rent, and as long as service providers and telecom operators realise that there is a secular trend in the industry then they will do just fine," Hollis adds.

Path to virtualisation

For Hollis, operators that are able to tap the burgeoning market for data services could also move further into the virtualisation sector, offering software and even virtual IT hardware to their customers. As more mid-size companies decide to outsource their data centres, telecom companies could act as an important link between the virtualisation service provider and the end customer.

"The very largest companies will make their own investments in IT and infrastructure but there is a huge mid-market, especially in developing economies in the Middle East," Hollis said. "If I am a manufacturer in the Middle East do I really want to stand up data centres, hire IT guys and do all that, or do I just want to put a thin layer over some very nice services from the local guys. People want the value they, don't necessarily want to own all this stuff."

Eye on Middle East

EMC chairman and CEO Joe Tucci said that EMC will align its investment priorities to take advantage of the opportunities in Middle East.

Speaking in Dubai in April, Tucci said that the Middle East region has been the best performing region for EMC in recent years, with growth of around 30-40% each year.

"Our business in the Middle East has been the fastest growing region any place in EMC, and we operate in 85 countries. We have had the fastest growth here for the past several years and we expect that to continue," said Tucci.

"We are making a significant financial commitment on the back of that success, we are working with a number of partners to make sure we service our customers to the highest degree of excellence, and we are working with our partners to build out centres of excellence, so that customers can use this vast investment we make in technology to get business benefits," Tucci added.

Tucci added that while prospects for growth remain good, and volumes of stored data continue to expand at a rapid rate, the storage industry is feeling the effects of recession like any other.

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