Telcos are facing increased challenges from younger, nimbler rivals when it comes to securing enterprise contracts.
Earlier this year, for example, cloud services platform operator Interoute was ranked number one in Gartner’s survey into Cloud Enabled Managed Hosting in Europe ahead of incumbent telcos.
Interoute has 12 data centres, 14 virtual data centres and 31 colocation centres, with connections to 195 additional third-party data centres across Europe.
Its services include a portfolio of managed and outsourced services for enterprises, including major organisations such as UEFA.
It boasts computing services with infrastructure and management options, enterprise VoIP and wholesale voice and connectivity services such as cloud, VPN, internet access, outsourced network services and IP Transit.
As CTO Matthew Finnie explains, it starts on the basis that enterprises will unlikely move to a fully outsourced ICT and cloud model in one go.
“We allow customers to move towards it one service at a time, each one integrated with the last, at a pace which suits their requirements, altering the solution continually as their business evolves,” he says.
Another key challenger is GTT - a global Tier 1 IP network helping multinational clients reach the cloud.
It has over 250 Points-of-Presence in 300 countries and offers managed services such as security and remote access and VOIP.
It recently reported third quarter revenues of $97million (€90 million), up 97.3 percent on the same time last year and the acquisition of One Source Networks – which provides global data, internet, SIP, trunking and managed services to Fortune 1000 companies.
It aims to grow from $400 million (€372 million) annual revenues today to $1 billion (€931 million) within the next five years.
Both Interoute and GTT describe similar characteristics in their battle to win share from telcos.
“Enterprises are ignoring the incumbents like BT. They like our ability to exploit the opportunities they see in digital transformation,” claims Interoute’s Finnie.
“We have better agility and speed to market. We have a very strong ethos of integration. Telcos should be good at this but you have to leverage your assets and integrate cloud services with your network capabilities. Telcos have not integrated.”
Citing BT, Finnie says that most of the traditional telcos are more focused on their domestic consumer markets currently.
“It is football not enterprise [that is the priority],” he explains. “I see our major challenges coming from the likes of Amazon not the telcos.”
Rick Calder, Chief Executive at GTT, agrees that telcos are looking at consumer mobile more.
Consequently, he sees a huge growth opportunity in Europe where his company is going toe-to-toe with incumbents such as Orange.
“We can reach the cloud and we can go anywhere in the world. The incumbent telcos can also say that but the main difference is in our values of simplicity, speed and agility,” he says.
“We want to say yes, not no to a client and we can change business processes much quicker. Clients are using us and responding to our services, prices and passion about fixing their problems.”
Not everyone is so dismissive, however. Nik Willetts of industry body TM Forum says telcos remain “well placed”.
He explains: “They have a trusted relationship with enterprises and a strong, physical workforce to get to an enterprises location.”
But he adds: “They are competing with flexible cloud providers with easy to use platforms. They are more agile so telcos need to be more agile.
“A product cycle of 12 to 18 months must change to days and weeks.
“Most operators are on this path but others see it as an IT change project. That is not enough. It needs a wholesale internal digital transformation.”
Oscar Olvera-Irigoyen, Product Marketing Manager, Global Enterprises at vendor InfoVista, outlines what this means in practice.
“In Europe enterprises are looking for extensive managed offers. They want to avoid WAN and cloud becoming bottlenecks.
“Enterprises require getting very rapid ROI through fast provisioning of WAN links, MPLS and internet, implementing hybrid WANs, SLA monitoring, SaaS acceleration for UCCs, Office 365, salesforce, WAN security and other managed services,” he states.
“Next generation CSPs need to compete in the emergent cloud-based and XaaS marketplace. So, CSP offerings should include overlays to orchestrate the WAN, to provide direct-to-the-cloud connections and to be ready for the new hypercompetitive SD-WAN ecosystem.”