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SP360: Service Provider

Cloud computing has raised a lot of questions with service providers (SPs) and enterprises alike. Because the Cisco Internet Business Solutions Group (IBSG) is in the business of answering questions, we talked to IT decision makers across several verticals in the United States, the European Union, and India to see what companies are thinking.

We found that cloud is happening faster than most people imagine. Almost everyone we interviewed is in the process of evaluating cloud computing. We estimate that by 2013, public cloud computing services revenue will reach nearly US$44 billion, and more than 12 percent of enterprise workloads will be running in the public cloud. A trend toward convergence of the IT and networking departments will ease this transition.

Companies are not jumping wholesale into a cloudy future - decisions are being made on an application-by-application basis. The factors driving enterprises to the cloud include variable workloads (tax season for financial firms comes to mind), and the ability to quickly set up and get running. Also, some apps just run better in the cloud, such as data entry or process interfaces to partners or suppliers.

Inhibiting cloud are the usual suspects: security, legacy architectures, and sunk costs.

The good news for SPs is that they are well positioned to become preferred cloud providers over OTTs, systems integrators, or server vendors. This is because enterprises appreciate that SPs already have the requisite infrastructure, they know how to deliver managed services, they understand end-to-end SLAs, and their billing systems are enterprise-ready.

The challenge is that companies aren’t sure that SPs are flexible enough, and may lack application expertise. SPs can counter these perceptions by forming appropriate partnerships to shore up areas of lesser strength.

The overall silver lining for SPs? They can extend into cloud computing services as a new route to generating profitable revenues - and their customers are ready and eager for them to do so.

For more detail on Cisco IBSG’s survey, please download “Network Service Providers as Cloud Providers: Survey Shows Cloud Is a Bright Option.”

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