ITU Workshop on Cloud Computing Tunis Tunisia 18

ITU Workshop on “Cloud Computing” (Tunis, Tunisia, 18 -19 June 2012) Enabling innovative cloud services An IBM point-of-view for Communications Service Providers Selma Turki, • Click to ITS edit. Services Master subtitle style Executive IBM North-West Africa selma. turki@tn. ibm. com Tunis, Tunisia, 18 -19 June 2012

Cloud Market overview The cloud marketplace is real; the cloud marketplace is now; and CSPs are well positioned to take advantage of this opportunity • Click to edit Master subtitle style

Future success requires execution on three key imperatives Based on market research, the CEO Telecom Survey, Telco 2015 Study IBM CEO Survey Recommendations for Telecom 3 Key Imperatives to Smarter Communications Embody creative leadership Reinvent customer relationships Build operating dexterity IBM Telco 2015 Study Common Critical Success Attributes Cost-effective ultra-fast broadband deployment strategy Enable New Services & Business Models Differentiate the Customer Experience • Click to edit Master subtitle style Network / customer insights to enhance experience & optimize cost Culture of collaboration Agile, flexible and reconfigurable processes and infrastructure Cost containment Improve Operational Efficiencies & Reduce Costs

Public cloud service revenue is growing in importance and CSPs are in the strongest position to capitalize on this opportunity 1 Public Cloud Initiatives Verizon buys Terremark Worldwide, a Public cloud provider, for $1. 4 B Telstra: $1 B in 2011 Rackspace: $100 M in 2010 5 Comprehensive network capabilities Owning the complete end-toend delivery chain is a big advantage 2 Large enterprise customer base Advantages for CSPs as a Cloud Service Provider 3 • Click to edit Master subtitle style Strong brand Salesforce: $2. 3 B in 2011 Amazon: $1 B in 2011 Publically available information sources recognition 4 Extensive marketing experience with many sales channels

Cloud Computing Market Breakdown $126 B Business services CAGR BPaa. S 27% Saa. S Infrastructure services Paa. S 40% Iaa. S Largest segment Low barriers to entry Focus of SMB e. g. email, CRM, industry processes Highest growth e. g. Web apps, DB, DR Highest margins (today) e. g. Dev / Test, Compute, Storage 70% of public cloud market is in SMB market • Click. HWto edit Master subtitle style Enterprise Components 23% SW Services 2008 Source: IBM (MI), IDC, CIO magazine, BCG analysis 2012 Clients buy products and / or implementation services clients building private cloud Hybrid Private cloud + selective use of public cloud services

Analysts suggest that the most significant opportunity for cloud services will be applications 2012 2013 2014 Share Applications 15, 332 17, 470 20, 580 37. 1% Development 4, 325 6, 075 8, 618 15. 5% Systems Infrastructure 7, 194 8, 877 11, 345 20. 5% Servers 4, 960 6, 000 7, 548 13. 6% Storage Total 1. Applications will be the largest segment representing 37. 1 % of the $55 B market by 2014 2. The Applications segment includes messaging, conferencing, and team collaboration software and business applications (e. g. , CRM, ERP, financial, HCM, PLM, and SCM), delivered via the cloud services model 3. Communications and collaboration applications lead the way for market entry – followed by opportunities for business applications • Click to edit Master subtitle style 4, 098 5, 414 7, 366 13. 3% 35, 911 43, 837 55, 457 100% Source IDC April 2010

Proposed Cloud-Based Opportunities We have highlighted five categories of cloud-based services that are suitable for Telco cloud offerings. Guiding Principles Enhance existing services Become an early entrant into cloud ‘intelligence’ space Take market share in the ‘communications’ space Build value add capabilities to enable ecosystems Focus on industry verticals, leveraging key relationships and acquisitions Enhanced Cloud Service Computing-as-a-Service Current Offering: Table stakes Infrastructure (Iaa. S) Platforms (Paa. S) Public Cloud Communications-as-a-Service* Current Offering: Differentiator Unified Communication Services IP Voice Conferencing Contact Center Videoconferencing New Cloud Service Enhanced Cloud Service Applications-as-a-Service Current Offering: Value Added Service Targeted at SMB Hybrid Cloud Public Cloud Enhanced Capabilities: Private Cloud Mobile-enabled New industry verticals Intelligence-as-a-Service Groundbreaking Monetize ‘data’ as consumable services Private Cloud Hybrid Cloud • Click to edit Master subtitle style Enhanced Capabilities: Infrastructure solution for SMBs Enhanced storage & security capabilities Virtual desktop for midmarket customers Additional capacity/power from new data centers Enhanced Capabilities: Add’l conferencing features Contact center and IVR Network Services Unified communications services targeting healthcare providers, government and SMBs New Cloud Service Business-Process-as-a-Service Remote business process management Streamlines transactions Targeted at SMBs, Industry verticals Public Cloud

Our Customer’s Business What Did We Do? SK Telecom is a unit of SK Holdings, one of South Korea’s largest chaebol conglomerates Korean language portal based on API extensions to CSP 2 Service Portal SK Telecom has #1 market share in the domestic wireless market, and #2 market share in the domestic fixed line market Development Platform-as-a-Service offering to allow Business Partners to quickly test, develop, and publish new end-user focused WAP services available on SK Telecom network SK Telecom is perceived as a technology leader in South Korea Cloud Business Benefits Service Management-enabled Cloud Delivery platform to run new WAP services in a workload optimized fashion. • Click to edit Master subtitle style Reduction of new service development time, achieving faster time to market Efficient management of resources, delivering reduction in capex & opex

Our Customer’s Business • Dutch. Cloud is a leading ISP based in the Netherlands, focused on SME customers in a few key industries (Healthcare, Electronics). • Dutch. Cloud offers a range of Cloud based services from fully managed Iaa. S through to disaster recovery solutions. • Customers select Dutch. Cloud for the quality of service delivered and its service assurance. Cloud Business Benefits • The Business Challenges • Dutch. Cloud was looking for a light-weight, highly functional solution for core cloud service delivery. • Current challenges are to improve the delivery of Cloud services in terms of cost, speed, agility, minimized operations and industrial strength solutions. • Scale delivery costs to business volumes. • Support delivery through a Reseller model. What Did We Do? • Implementation of IBM Smart. Cloud Provisioning as the • Click to edit Master subtitle style core delivery platform across multiple compute and Rapid deployment of new services in seconds rather than hours. (Deployed 100’s of new VM instances in under 5 minutes). storage nodes. • No/low maintenance, minimized operational administration, and no outages required for upgrades. • KVM hypervisor delivery for VMs supporting minimized license cost. • Changing the delivery of DR services from coldstandby (capital intensive) to rapidly deployed (utilization efficient) and significantly more cost effective for customers and CSPs. • Customer, management, and VLAN separation for multi -tenant isolation at the network and presentation layer. • Integration with IBM V 7000 Storwize storage and Smart. Cloud Provisioning to offer customers variable SLAs for storage.

Cloud Service Provider in action: Dynamically creates secure virtual, infrastructures for local businesses in hours The Business Challenges VNTT wanted to create a shared central infrastructure to deliver flexible infrastructure and software services to small - and mid-sized companies, on a pay-as-you-use pricing model. What Did We Do? • Launched the VNTT Cloud Center, built on IBM Service Delivery Manager cloud solution and featuring IBM System x and Blade. Center servers, enabling the dynamic creation of secure virtual infrastructures for local businesses. • Dynamically creates secure virtual, infrastructures for local businesses in hours The benefits: • Click to edit Master subtitle style $75 million in savings “Our vision was to create a platform to foster innovation and growth in the Vietnamese economy, taking advantage of our economy of scale to deliver highly cost-effective enterprise-class IT services to small- and mid-sized businesses, ” says Nguyen Minh Tan, CEO, Vietnam Technology and Telecommunication. ”We chose IBM as our trusted partner for delivering commercial cloud services, based on its comprehensive portfolio and proven track record in other client engagements. We knew that IBM had the expertise and the local support to help us leverage cloud in a way that is safe, reliable and efficient for our business. ” Nguyen Minh Tan, CEO, Vietnam Technology and Telecommunication over five years 370% projected ROI in the first year alone

Cloud-Based Solutions Maturity Model Making money in the cloud space requires careful planning Early Adopters are Building Market Share but are also Learning Valuable Lessons 2007 2008 2009 “Risk of inaction” As Iaa. S and Paa. S become mature, there will be a Rush to build Vertical Solutions 2010 2011 2012 Late Majority 2013 2014 2015 201 6 2017 201 8 • Click to edit Master subtitle style WSJ: 9/28/2010: SAP committed to 10, 000 By. Design customers by 2010, but due to issues the number is 100. . . not as successful as expected Early Majority Picking the right Plays with limited investment dollars is crucial 2019 Laggards 202 0

To succeed with Cloud Services, CSP’s must be prepared to challenge themselves and the way they ‘think’ Mental Model Possible Thinking Must include. . … Economics We can rent our way into the business We can manage it in house We ‘white label’ where we can to accelerate entry into the cloud market We invest in strategic ‘cloud-enabled solutions’ where we can capture market share and offer clear economic differentiation to our customers We build an ecosystem of partners (suppliers and wholesalers) Customers CSP’s value add is brand strength We need a killer app Build it and they will come We need to know our end customers’ value chain and their priorities Our differentiation is superior, integrated with vertical customer experiences. Our ability to integrate with our existing wholesale solutions portfolio and customers with new types of business solutions. • Click to edit Master subtitle style 12 Technology Cloud is a technical offering Platform is Decision #1 Cloud is more of a business transformational model than it is a technology solution While platform is critical, customer experience, industry specific solutions and speed-to-market are more important than the platform, as platform can be outsourced Time to market “We want to wet our toes” We follow existing processes to launch new cloud services Capturing market share early for the lucrative applications space is important. High profit industry solutions cannot be white-labeled. CSP’s needs an ecosystem where they can rapidly deploy new services in a matter of few weeks from ideation to deployment. Agile and nimble processes are critical to success IBM Confidential

You can leverage lessons learned from IBM’s experience with CSPs around the world and from operating our own IBM public cloud Cloud providers must offer a a full suite of services to be taken seriously. Provide entry level and premium offerings for each service. Self-service storefront with integrated marketing will drive demand reduce churn. Market & Marketing A combination of premise based and aggregated cloud services are required for maximize flexibility and control Solution & Operations CSP Building your own Cloud ecosystem is time consuming leverage existing storefronts and ISV relationships to get to market quickly. • Click to edit Master subtitle style Develop “A Single Strategy” for cloud that covers multiple segments. Business Model Owner economics will win for CSPs. Think through offer management. An application can have of multiple offerings and can participate in multiple bundles.

Cloud-based Transformation Models Telco’s cloud-based business model will be a combination of a service innovation model, as well as the creation of a two-sided business model Service Innovation Key Questions Two-Sided Business Model Key Questions 14 What services should we offer? How should we sell these services? How should we price such services? How should we deliver such services? How much are we willing to invest in such services? Should we build these services ourselves? What is the value of such services to Telco? How soon are we looking to launch such services? How does the two-sided business model work? How does the money flow? How do we charge customers? How do we target our customers across various cloud industries/customer segments? What types of investments do we make, if any? What types of events do we need to think about? How do we get started? What is a realistic timeline?

IBM Cloud Service Aggregation Platform - designed to empower CSPs to CREATE, MANAGE, & MONETIZE a broad portfolio of cloud services fast. CREATE MANAGE MONETIZE Infuse Creativity Into the Service Portfolio Aggregate a Wide Variety of Cloud Services Optimize Sales With Self-Service Web Storefront • Click to edit Master subtitle style Rapidly Launch Partner Applications Delegate Administration to Enterprise customers Provide Web 2. 0 enriched shopping experience Market White Labeled IBM Cloud Services Leverage Robust and Secure Cloud Service Integration Leverage Intelligence for Differentiation Ignite Innovation and Differentiate the Service Portfolio Deliver a broad portfolio of cloud services through a common platform Energize Cloud Sales & Optimize the Customer Experience

IBM's approach is to match our client’s choice of deployment models & entry strategies Foundation Solutions Services Business Process as a Service Software as a Service • Click to edit Master subtitle style Business Analytics and Optimization Smarter Commerce Easily build and rapidly scale private cloud environments with unparalleled time-tomarket, integration and management Tunis, Tunisia, 18 -19 June 2012 Unprecedented choice, security and portability of applications on IBM’s Smart. Cloud service delivery platform Social Business Smarter Cities Software as a service coupled with deep industry insights, business process skills and analytics Commitment to open standards and a broad ecosystem

IBM’s Smart. Cloud service delivery platform is a platform for business innovation and growth A robust set of business solutions that leverage IBM’s deep industry and process skills including migration of existing hosted business applications A growing set of infrastructure services and solutions coupled with our deep architecture, integration and implementation skills The choice and control to enable clients to develop, deploy and manage custom services IBM Services Client Defined Services Partner Services Application Lifecycle Application Resources Application Environments Application Management Integration A broad ecosystem of ISVs leveraging the IBM Smart. Cloud as a platform for running their business • Click to edit Master subtitle style Infrastructur e platform Enterprise data center Managed private cloud Managemen t and support Availability and performance Enterprise Security Enterprise A Hosted private cloud Payment and billing B Shared cloud services

IBM is building a robust ecosystem designed to address a broader set of enterprise requirements Cloud Application Providers Client defined service s Industry services Data and Analytic s Cloud Services Solution Providers Workplac e Securit y Resilien ce Enterprise applicatio ns Partner services Application Services Cloud Infrastructure Providers Cloud Technology Providers • Click to edit Master subtitle style Enterprise data center Managed private cloud Enterprise A Hosted private cloud Cloud Builders Tunis, Tunisia, 18 -19 June 2012 Enterprise B Shared cloud services

Protecting and risk management in the cloud building on traditional approaches, applied to new models. Each model has different aspects to consider. IBM Cloud Security One Size Does Not Fit All • Click to edit Master subtitle style Different security controls are appropriate for different cloud needs - the challenge becomes one of integration, coexistence, and recognizing what solution is best for a given workload. 19

Brokering a range of services is a compelling value proposition for enterprise customers who are looking at Cloud to reduce IT complexity “The future of cloud computing will be permeated with the notion of brokers negotiating relationships between providers of cloud services and the service customers. ” Market Implication: “Customers will be able to consume multiple cloud services in a more user-friendly fashion, with the complexities of managing service the supply • multiple Click to edit providers Master throughout subtitle style chain reduced significantly, if not removed altogether. ” In a 2011 survey, Gartner found that 46% of enterprise customers indicated that the Cloud Service Broker model was relevant to their selection of cloud service providers. Source: Gartner

Complexity drives the need for Cloud Service Brokering. . . and provides an opportunity for differentiation On Premise Cloud Applications Data Center Infrastructure CSP • Click to edit Master subtitle style White Label Infrastructure Companies for illustration only Cloud Applications Cloud Storefronts

Cast Iron demonstrates IBM’s commitment to a Smarter Services platform. Leverage your existing capital expense investments while avoiding technology lock-in Comprehensive range of supported hypervisors Fully extendable via an Open API Advanced hybrid Cloud integration Hardware vendor agnostic Deploy on IBM systems for optimal service management visibility, cost and control • Click to edit Master Accelerate subtitle style on-boarding of new partner provided services with preconfigured templates and policies 22

A quick start for Cloud: Building a private cloud in your enterprise IBM provides options to Customers on how private clouds can be delivered. Which option is right for you? Flexibility Time to Results Install Base Workload Skillset • Click to edit Master subtitle style Custom Private Cloud IBM Cloud. Burst Pre-Integrated Bundles 4 Standard Configurations Pre-Built at Factory Integrated Support 10 day installation Self contained & expandable to heterogeneous infrastructure and custom components Starter Kit Pricing Unlimited Configurations Custom Build Product Level Support Longer installation Installed to support multiple platforms and custom components Enterprise Pricing

IBM Centers Deliver & Manage Cloud Services Around the World IBM Worldwide Support Centers 7 11 57 54 Toronto Boulder, CO Silicon Valley, CA Dublin Cloud Data Centers Cloud Labs Global Delivery Centers Global Command Centers Wroclaw, Poland Ehningen, Germany Beijing Raleigh, NC Seoul Tokyo Hong Kong • Click to edit Master subtitle style Hanoi Bangalore Singapore Sao Paulo Johannesburg IBM Cloud Lab IBM Cloud Data Center

Driving client-focused open standards and interoperability. IBM solutions are built on a comprehensive, open reference model. Provides guidance to the multiple cloud standards-defining bodies. Establishes the criteria for openstandards-based cloud computing. Delivers content in the form of best practices, case studies, use cases, requirements, gap analysis and recommendations for cloud standards. • Click to edit Master subtitle style companies are participating. operate outside the IT realm.

Lessons Learned from Global Cloud Initiatives Focus, Success, Scale Establish a cloud SP strategy, in alignment with your business and market and then transform your IT in consequence Get into the market – it takes time to build critical mass in your company Self-service ease-of-use is critical to success Do what you do best first – infrastructure, communications, collaboration • Click to edit Master subtitle style Continually refresh product catalog to maintain customer interest – draw customers into an expanding set of services Support multiple offerings per product – different buying behaviors SMB most lucrative market for cloud services Some business applications are complex – channel strategy is critical – start small, grow fast