​Network On Demand is now a thing

Suppliers and customers can share the risk

Source: edward stojakovic (Flickr)

Source: edward stojakovic (Flickr)

Cloud. Arguably, THE biggest buzzword in the technology industry of all time.

So when would you say the first cloud was deployed? In the mid-2000s when Amazon and Microsoft announced early versions of its AWS and Azure products? Some people may even argue it was the 1990s when VPNs came into existence.

However, I’d propose a different way of thinking about the Cloud and by my thinking I propose that the first public commercial cloud came into existence in the early 1900’s and it was called the electricity grid

Allow me to explain. Before the advent of the electricity grid, those who could afford electricity owned and operated all the “hardware” themselves. They owned the generator, performed the maintenance and they wired their house to distribute the electricity throughout. It was reserved for the richest of the rich as the TCO (Total Cost of Ownership) of that hardware was extremely expensive.

However, the grid was the one innovation method that led to widespread adoption of electricity as it enabled customers to draw from the grid when (and only when) they needed electricity.

Although paying on consumption for electricity seems obvious to us now it was once a game changer. In fact, it is based on this premise that we, ALE, are defining the cloud – and it’s this view that is shaping our approach to business communications in 2016.

So how can we apply this electricity grid, viewed as the original cloud approach, to what we are doing in the Telco industry? Well, if the generator is the data centre, then we work with the lights and the heaters. Or in our case, the network ports.

One model is called Network on Demand (NoD) which enables customers to pay per utilized port – measured hourly, calculated daily and billed monthly. From a business perspective, what this means is that risk is being shared with customers and partners, just like those first electricity companies that built the grid were doing. If the customers don’t use the network, they don’t pay.

Many, many businesses today are cyclic in nature and it’s these industries that the NoD model will help to transform. Typically, these kinds of industries would need to ‘play-it-safe’, by purchasing enough network capacity to cope with the absolute busiest times. However, the reality is this capacity invariably goes under-utilized, adding to the TCO of the business.

Let’s go back to the earlier statement about sharing the risk with our customers. When thinking about the vertical markets we have looked at how these businesses get judged by their boards, by their shareholders. If a venue (stadium, theatre, etc.) is measured by how many patrons they get through the turnstiles on a given day, why can’t we align with them so they only pay per user, per day.

Similarly, there are industries that have the potential to see completely unexpected but sustained growth in their measurable business outcomes. Health or aged care facilities, as well as, start-up businesses often find it hard to predict just how quickly they will grow. With NoD, just like compute and storage as-a-service, they can scale their cost, rapidly and efficiently, in line with their business.

Our goal is to carry over this way of thinking about the cloud and further shape our strategy across our range of technology offerings to help customers deliver a personalized connected experience to their employees and customers.

We now have initiatives which align with our customers desire to purchase technology for business reasons, not technology reasons. We are working with our business partners and customers to embrace the commoditization of telephony, and of the network infrastructure.

Steve Saunders is Senior Director Cloud Services at Alcatel-Lucent Enterprise

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