Telstra and Accenture team up for enterprise cloud

Steve Hodgkinson, Research Director, Ovum

AUSTRALIA: The enterprise cloud computing market is still nascent in Australia, but it is starting to pick up. Existing domestic IT outsourcing and managed services players such as Macquarie Telecom and Melbourne IT are in the market, along with some of the global vendors such as CSC and Fujitsu.

Optus recently announced the launch of an infrastructure-as-a-service offering called Elevate – partnering with its own Alphawest subsidiary for implementation. Verizon has announced its intention to bring its global computing-as-a-service offering to the Australian market in 2011.

A particular issue in Australia is a strongly stated preference by enterprise and government customers for data to remain onshore within Australian legal jurisdiction. This is compounded by the knowledge that the elastic properties of cloud require scale – no CIO wants to be a big customer of a small cloud provider.

In this context, the enterprise cloud market in Australia remains largely unexplored territory – a market awaiting a dominant leader.

Network computing services – cloud is all about the network
Telstra has a long relationship with Accenture as a systems integration partner, and has worked closely with the company in recent years to virtualize and automate its own internal ICT operations as part of a major IT transformation project.

This new operational capability combined with its managed IP network services has led to the operational platform that Telstra has now launched as its infrastructure-as-a-service offering, called Network Computing Services.

An early test of this new capability was announced last year when Visy Industries migrated its applications into Telstra’s infrastructure under a utility computing arrangement. Komatsu Australia was a second major enterprise win earlier this year. These are substantial infrastructure-as-a-service proof points – both companies are running their SAP systems in the Telstra Network Computing Service.

Nerida Caesar, Group Managing Director of Telstra Enterprise and Government, indicated at a recent Telstra analyst event that $50 million has been invested to date in tools to standardize the Network Computing Services, and that a further $200 million is being allocated during the next two years for people, processes, and technology to build out this offering. Caesar commented that the Telstra board is backing network computing as a key area of growth.

Telstra is reputed to have signed up several other as yet unannounced enterprise and government customers to the new service.

Cloud remains a “relationship sale” at the enterprise level
It is worth noting that the go-to-market approach that Telstra and Accenture have adopted, at least in the first instance, is based on relationship selling, rather than the often-hyped self-service cloud portal (through which cloud services just “sell themselves”).

The focus is on strategic and major sales and on protecting/deepening existing network-centric customer relationships, as opposed to selling cloud computing as a stand-alone IT utility service to new customers.

This is a sensible approach given the cautious nature of the market – selling cloud computing is all about persuading enterprise and government CIOs and IT managers that they can trust this new model of sourcing ICT services. The sales process requires considerable “handholding” to demonstrate the value, to plan and manage the transition of services, and to assist CIOs to manage the new cloud-sourcing model.

Telstra’s main challenge will be its ability to adapt its telecoms-centric marketing and sales operations to selling and servicing this more complex IT-centric relationship sale. This will take time to develop.

Partnership with a systems integrator such as Accenture fast-tracks Telstra’s ability to sell and implement these deals. For Accenture, Telstra has the massive computing and telecommunications infrastructure required to ensure that the reality of the cloud lives up to the promises made during the selling.