1. Cloud Services To The Rescue - Next Generation Cloud Technology Helps Service
Providers Compete In Business Broadband For SME And Distributed Enterprise
by Paul Sidorenko, JD, September, 2011
Presented at the Broadband World Forum in Paris, at“Evolving Business Models - Gaining Strategic
Advantages with Cloud Based Enterprise Services” 28 September, 12 PM, Darwin 5 Room.
The ripple effects from recent global financial turmoil has confronted network service providers
with a host of short term macroeconomic assaults: broadband customers are going out of
business, economic and regulatory uncertainty makes strategic planning difficult and increased
competition from upstart newcomers targets your bottom line. However, the long term challenge
for providers of business broadband services remains the same: price erosion and
commoditization of broadband services. As broadband has shifted from being a technological
breakthrough to a price driven commodity, service providers have been facing a “race to the
bottom” on pricing, impacting revenues, share price and overall financial performance. In
today’s challenging market, customers, particularly those in the most price sensitive segments -
SMEs and distributed enterprises - are much more likely to select their business broadband
service from the lowest cost provider with little or no regard for brand loyalty or their length of
relationship with their current provider. Even when these customers stay, they often demand
financial incentives and discounts to stay with their current service provider. These challenges
will persist regardless of short term macroeconomic conditions - they are a natural consequence
of the maturation of the business broadband market.
This trend has prompted some service providers to shift from market innovation to mergers and
acquisitions as one way to add scale and drive growth. However, as acquisitions rarely achieve
their anticipated financial results, virtually all network service providers have focused on data
centers and the cloud as primary growth strategy to both enhance their core broadband offerings
and to create new revenue streams. For the SME and distributed enterprise market, this focus has
been on network security and infrastructure management services. While cloud services
represent one of the most significant market opportunities to profitably deliver these services,
executing effectively can be an elusive goal if the pain points, decision drivers and technologies
required to deliver the services profitably are not carefully considered. While the first two are
generally, understood, the main challenge with implementing an effective cloud strategy is the
technology used to deliver these services. Simply stated: traditional technologies for enhancing
broadband with Value Added Services are too complex, too expensive and not scaleable enough
to efficiently and profitably deliver these services. With the next generation of cloud service
technologies driving new efficiencies, a paradigm shift has been created where efficiently and
profitably delivering cloud services are now within reach for savvy service providers. By
strategically employing these new technologies, they can avoid the “race to the bottom” by
offering their customers a truly differentiated broadband offering - not a commodity, but an
indispensable and strategic business asset for their customer. Those that succeed will preserve
their competitive edge, increase market share, reduce customer churn and maximize average line
ARPU. Those that fail to heed the market demands, do so at their peril.

2. Knowing Your Market - Cloud Services for SME and Distributed Enterprise
To understand what an effective cloud strategy must deliver, it is first important to understand the
pain points and decision drivers of the SME and distributed enterprise market when it comes to
managing and securing their business networks. As smaller and highly distributed businesses
increasingly rely on the web to run applications and move information between their offices,
tele-workers, travelers, trading partners and mobile users, they also face greater challenges with
managing and justifying the cost of infrastructure required to accomplish these tasks.
Maintaining disparate network, hardware, software elements are complex and the costs to
maintain, secure and manage mission critical network environments are high. While these
concerns are not unique to SME and distributed enterprise, they are particularly relevant to this
market segment because their reliance on cost efficiency makes them particularly sensitive to the
resource commitments required to manage them properly. This is a global problem for all SME
– there is no one particular geography or vertical market that is not effected.
While it is not surprising that smaller businesses have to manage with less resources, it is in the
realm of IT infrastructure that these companies are most typically understaffed. As a result, their
offices and locations typically lack the expertise to manage IT infrastructure properly. However,
even as they lack the expertise to manage these assets, they increasingly rely on the Internet to
communicate, conduct commercial transactions, and interact with their customers, partners and
suppliers. They are sharing and exposing more data over the public Internet than ever before.
This cycle exposes them to an ever increasing level of business risk by the very Internet they
embrace as the life blood of their commercial enterprise. Unlike larger enterprises, SMEs do not
set aside capital expenses for network infrastructure in a structured manner and cannot amortize
the costs of that infrastructure across the enterprise as effectively as larger companies. With
efficient deployment of cloud services, the network service provider supplying business
broadband to this customer is in the best position to deliver these services. Addressing these pain
points will differentiate that service and attract and retain these business broadband customers.
Critical Success Factors for Cloud Security and Infrastructure Services
With financial, technological and resource limitations, SME and distributed enterprise customers
require robust solutions that solve their problems but can be efficiently and profitably delivered
by the service provider. Because they typically have no IT support, the services must be highly
automated. Because they typically have limited IT expertise, the services must be pre-integrated,
comprehensive and easy to manage. Traditional methods of delivering these services - even so-
called cloud services that are only backed up by a data center, fall far short of the mark when it
comes to efficient and profitable service delivery - cannot succeed without the critical success
factors that are embraced by the the new generation of true cloud services.
At a high level, the most critical characteristics of true cloud services are ease of implementation
and use, elasticity and scaleability. However, as one considers the real world of customer
implementation and service delivery, two critical success factors of a differentiated cloud

3. architecture become paramount: the ability to be flexible in implementation so that disparate
customer requirements and environments can be accommodated and the ability to deliver these
services in a unified and centralized manner. Service requests must have the ability to be made
from any browser, including mobile devices. It is this lightweight, service-oriented approach that
is the hallmark of cloud computing.
By employing these critical success factors, service providers looking to take tap into this large
and lucrative market will be able to deliver high volume security services efficiently and
profitably. The reason is simple: by leveraging the shared infrastructure and highly distributed
nature of cloud-based service delivery, all these benefits can be delivered on demand at a fraction
of the cost of traditional managed services or traditional appliance-based, on premises solutions.
Essential Attributes of the Cloud Model
The following characteristics should be considered essential when implementing any cloud-
based security solution:
Flexible Service Delivery Infrastructure
An efficient cloud services architecture can take advantage of a wide range of service delivery
options in order to simplify service delivery while minimizing its cost. To reduce service
delivery costs and increase scaleability, cloud service providers at the forefront of the technology
curve maintain the ability to provide hybrid cloud services to either manage a gateway at the
customer premise or entirely in the cloud and deliver it as a single, integrated service. These
providers accomplish this by leveraging their shared back end systems with on-site hardware
that sits at the customer’s premises in a distributed delivery model. By employing the on site
systems to manage local processing capabilities and management tasks while the back end
shared infrastructure provides software and firmware updates, systems management and
monitoring, an extraordinary level of service delivery can be achieved at minimal cost.
Conversely, by offering up virtualization combined with remote access capabilities, cloud
services can be delivered to any user in any location regardless of the local IT infrastructure.
End to End Service Delivery Capability
The scope of any cloud-based security service must encompass much more than just the basic
security elements - it must provide an integrated platform covering the entire network
infrastructure requirement, including Unified Security, Remote Monitoring, Service Automation
and Infrastructure Management.
Any effective cloud security service must also possess tight integration with other infrastructure
components as a unified network management solution – this is essential. This can include
infrastructure components including wireless LAN management, integrated switching, load
balancing, router management, remote access and managed NAT/PAT, LAN DHCP, and WAN
QoS – these services must also be manageable from the Cloud.

4. Another key attribute of of a comprehensive cloud services platform is efficient service delivery
through the integration & automation of the customer lifecycle. This includes integrated
ordering, work-in-process management, configuration & post installation support capabilities
and help desk that are all necessary to ensure service delivery is seamless and cost effective.
Customer’s must have the ability to self-service.
Another key element to efficient end to end service delivery is the ability to remotely monitor
and manage delivery systems and applications, including the reporting and proactive notification
systems to ensure that services are performing optimally. These capabilities must offer the end
user both visibility & control of their environment.
Automated Configuration and Management
The benefits of a true cloud service model go well beyond leveraging shared infrastructure. An
essential characteristic of a true cloud service includes a high level of automation, pre-integration
and ongoing system intervention that keeps things running without active user management.
This can include automated provisioning templates, system-activated maintenance protocols,
proactive network monitoring and implementing “keep alive” technologies that maintain system
performance and guarantee up time. Maintaining such a persistent “self healing” environment
without user intervention enables the centralized cloud based asset to deliver tangible cost
savings for both the service provider and the end user customer. Putting this intelligence in the
cloud enhances the efficiencies of the shared back end infrastructure with an end-to-end service
delivery wrap that truly leverages the power of the cloud and delivers a truly differentiated
service.
Centralized Management Capability
The next logical step after implementing a highly efficient and automated service delivery
architecture is delivering a centralized management environment that is easy to use. Because
cloud-based systems can aggregate and pre-integrate numerous security and infrastructure
services more efficiently, it follows that the management of these services should also be
integrated. This approach simply makes sense for a variety of reasons:
• Deployment and provisioning is faster. IT administrators can pre-set deployment and
provisioning templates (if available) and manage deployment in a centralized manner, saving on
site configuration time and headaches.
• Policy management is simpler. IT managers must manage security policies (e.g., what
types of content is allowed to reach end users, what groups are allowed to view certain types of
content, what computers/locations may connect with other computers/locations, etc.). If security
is managed through a single interface, policy management is simpler than if administrators must
manage policies through multiple interfaces.
• It is easier to provision new users. If a new user can be added to the system and
provisioned through a single interface, administrators’ jobs are made easier. Similarly, it is easier

5. and more efficient to manage existing users when policies need to be updated, or if a user is
assigned a new role and their profile must be updated.
• More granular control is available. Management through a single interface can provide
more granular control over policies than if multiple interfaces and systems must be managed.
Similarly, system monitoring and reporting functions can be more accurately managed when
done through a single interface.
• Content is managed in one repository. Managing content in a single repository can make
life easier for administrators than if separate repositories must be managed.
• Overall costs are lower. When multiple products or functions are procured from a single
vendor, there are synergies that can be realized if security is sourced and managed in a
coordinated fashion, reducing the overall cost of managing the infrastructure.
• Coordinated management can provide a better roadmap for future services. Coordinated
management can position an organization for easier and faster provisioning of future services as
these become available. For example, a customer of security functions from a single vendor can
implement an email and network policy more easily than if the policy must be implemented in
multiple vendors’ security systems.
Multi-Tenancy
The most significant aspect of a true cloud model is multi-tenancy. Multi-tenancy remains the
characteristic that delivers the greatest economic advantage. Multi-tenancy is an architecture in
which a single instance of a software application serves multiple customers (tenants). Tenants
may be given the ability to customize some parts of the application, such as the view, login or
management permissions in the user interface, but they cannot customize the application's code.
Multi-tenancy is the fundamental basis for the improved economics of cloud services because
software development and maintenance costs are shared across the customer base. It can be
contrasted with single-tenancy, an architecture in which each customer has their own version of
the software and updates must be proactively managed by the customer. With a multi-tenancy
architecture, the provider only has to make updates once and that change propagates out to all
users immediately. With a single-tenancy architecture, the provider has to touch multiple
instances of the software in order to make updates.
Unique Challenges for the Service Provider
Service Providers have traditionally struggled with delivering affordable managed services into
the small business segment yet recognize that cloud services are the way to bridge the
affordability gap for this underserved market segment. One key attribute to building a successful
cloud services offering into this market segment is to cover all of their customer constituents
within a single unified solution all managed from the same portal. Hardware must be managed
from the cloud for corporate & larger branch office locations while virtual gateways residing in
the cloud must be leveraged for smaller branch offices, home workers & telecommuters.

6. Mobility management must be fully integrated into this environment to manage mobile users that
require security and access to corporate resources in the cloud or at corporate locations.
Conclusion
In an era of shrinking IT budgets and rapid technological evolution, business customers are
looking to manage their network security as inexpensively as possible and are quick to embrace
new technologies that can drive their security costs down. These challenges make decisions on
how to approach this market extremely important to the service providers that service small
business customers. The highly distributed nature of these customers and their limited IT
budgets require that service delivery costs and logistics be minimized and simplified,
respectively, if cloud-based services are to be delivered in an efficient and profitable manner.
Moreover, the constantly evolving technologies leveraged to deliver cloud services make the
choice of technologies and service delivery partners a critical one for service providers.
Service providers looking to leverage cloud technologies to deliver services profitably must
make some careful decisions up front in order to avoid expensive and irreversible pitfalls. By
leveraging the efficiencies of automation, shared infrastructure and pre-integration, a service
provider can deliver security and network infrastructure at low, predictable costs. By leveraging
centralized service delivery, management and virtualization of network infrastructure, the service
provider can deliver a lower cost security solution in every respect as compared to on-premise,
traditionally managed or multi-vendor counterparts with much more predictable service and
ownership costs – particularly with regard to minimizing start up and integration costs. Finally,
service providers need to consider the option that gets them to market quickly and profitably.
In selecting the correct path, service providers also need to consider the practical aspects of
customer use cases and implementation. These include the ability to be flexible in
implementation to accommodate customer requirements and delivering these services in a
unified and centralized manner. Above all, the following critical success factors must be
employed in any coherent cloud services strategy:
• A multi-tenancy architecture that delivers the greatest economic advantage;
• A flexible service delivery architecture;
• A configuration and management system that includes a high level of automation, pre-
integration and ongoing system intervention;
• A centralized management environment that is easy to use;
• An end to end service delivery capability that is tightly integrated with other service delivery
and infrastructure components