What if there were a better class of cloud?

Sponsored by Alcatel Lucent

Speaker: David Frattura Moderated by Alex Speir

WHAT IF THERE WERE A BETTER CLASS OF CLOUD?

1 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

Alex Speir: Hello and welcome to todays presentation; What if there were a better class of cloud? My name is Alex Speir and I am going to be the Moderator for todays presentation. This presentation is being brought to you by Alcatel-Lucent. Before we begin, please note that the slides for this presentation will be pushed to your screen automatically. All audio will be streamed through your computer speakers. If you have any questions today, you can enter them by clicking on the Questions button on the lower part of your screen and click Submit Question. Your questions will be addressed at the end of this presentation. With that said, its my pleasure to introduce our speaker for todays presentation. Joining us today is David Frattura; Senior Director of Strategy for Alcatel-Lucents Cloud Solutions Enablement Group. David, welcome and thank you for joining us today, I am going to hand things over to you now.

David Frattura: Thank you Alex. Today, we are going to be reviewing this concept called Better Class Of Cloud, more specifically this concept of a carrier cloud. AlcatelLucent has been developing solutions in conjunction with our partners to enable service providers to both offer a better class of public cloud service to their customers as well to further enable them to exploit cloud for their own business benefit.

ONE THAT TRANSFORMS HOW YOU DO BUSINESS

CapEx
Savings

OpEx
Savings

TCO
Savings

80

Up to

of a providers service delivery infrastructure can be positively impacted.

2 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So to begin with, most organizations in the enterprise world have in some way share; perform embrace cloud computing, whether they are doing it on a large scale or small scale, they are looking at it in terms of sea change of opportunities for them to better operate their business. CIOs started with consolidation of data centers, then they moved to services oriented approach, all with this, all this in mind with boring the cost of operations of an IT environment. So when you think of carrier clouds, we think of how do we leverage the same opportunities, how do we bring to service providers the advantages that a cloud environment can bring to any enterprise, and we are looking into the carrier context, we see that there is an opportunity to first and foremost consolidate or transform into a fewer number of hardware platforms, so help to save on capital expenditures and more importantly by unifying the service providers operating environments around more of a software defined context. We see many opportunities to improve the overall operational expenditure position generally lowering cost, both in CapEx and OpEx. Dell labs as part of the Alcatel-Lucent cloud enablement program has done a number of comprehensive studies, opportunities to improve costs in many areas and its shown that there is up to 80%, 80% of the providers environment can be positively impacted by cloud.

So what does this mean? Today service providers often are defined by a number of products that are generally developed in a very siloed manner, so say a business services wide area network offer, a managed services voice software, IMS, IPTV all these products and technologies are built, designed architected in the individual context of our products they deployed and provisioned, is what customers again in an individual manner. So what this means is for service provider, if I have 15 different major products I have really 15 different engineering activities, I have 15 different support organizations, I have 15 different OSS/BSS integration, the silos restrain the service providers ability to aggressively attack the market, slow down its level of innovation and generate more significantly higher costs. One major European customer of Alcatel-Lucent has shown that on average it costs them in terms of man years, 18 months worth of actual effort for a team to integrate new products into their OSS/BSS. To put things in the terms of cloud, customers expect things that are instantaneous and dynamic. So when Dell Labs looked at what were the opportunities for optimization of a providers environment how could cloud make them more efficient, we looked into a number of areas.

WHILE MAKING YOU MORE EFFICIENT

ELASTICITY

IMS core utilization, typical load over the day

SCALABILITY

Cost of adding incremental subs

MULTI-TENANCY

SP savings in IMS core HW by virtualization

Source: Bell Labs - The Value of Cloud for a Virtual Service Provider Study October 2011

3 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So first and foremost we looked at elasticity. Today if you have a product that is specific to service x, and its running a 10% utilization that network infrastructure that compute infrastructure, that 90% of unutilized operational cycles is essentially invested and wasted and then you have another product sitting right next to it that happens to be running at 90% utilization, wouldnt it be in the ideal world better that service provider could spread its consumption of capacity in its infrastructure across multiple domains to A; better utilize its assets but B; ensure that there are no challenges in bringing new customers on board or what if we could actually take excess capacity thats not utilized and we sell it. Find a way to monetize that asset, so maybe at night if you see here in this drawing on an IMS core utilization, most of the day its actually sitting idle.

So what if we could actually repurpose that idle time and allow the service provider to sell that asset that unused resources to customers. So for one it gives them better productivity out of an asset and more importantly it gives them the opportunity to further monetize an investment in areas that not that were not part of the original investment. Scalability; many of our customers talk about the need for having solutions that scale to potentially you know hundreds of thousands of millions of subscribers, and when they define a scalable infrastructure often the engineering that goes into defining that environment starts well before products released, often there is a significant amount of capacity planning that goes into the effort for new product deployment, that capacity is actually procured upfront through you know capital expenditure and that service provider then have to hope that they will have the right number of subscribers that will consume that plan. They dont, they wind up actually having excess capacity that goes unutilized or wasted investment, or if that product takes off all of a sudden they have capacity problem. They dont have enough capacity to meet customer demands and ensure customer satisfaction, and as you see in this graph here we see you know the traditional step function. I have a big upfront investment and as long as they stay within my capital plan, I will have enough to support my customers needs, but come that day when one user over my capacity plan, I have to make another big capital expenditure. This graph compares against the cloud model which says I have a generic unified infrastructure that is available for different types of services when I need it. So I make my upfront capital expenditure, but its spread across lots of systems, lots of services and as I need that capacity for an application or a service, I am consuming from an existing resource form, existing hold, so I do not have this step function when I have to rollout new resources. Now another major important aspect of dynamic scalability is time to market. If you need to support new subscribers its a lot easier to leverage a cloud model like in software wise, expand my subscriber base by bringing up more virtualized systems and then it is to actually procure additional hardware, install it in an environment burn it in and bring it up. So time to market in a growing region or growing market is better supported and then there is concept of multi-tenancy. Basically if you look at todays model of one product, one service, one infrastructure, you have a very nice and simple model for deploying a service but on the flip side you wind up having like we said before maybe not as good utilization of assets. So if I can have more and more systems leveraging in assets say IMS and IPTV and enterprise managed voice services, all riding on the same infrastructure, I gain significant savings over a period of time because I run on a shorter, smaller number of spares. I only have to inventory certain amount of hardware; I have fewer teams to train in terms of support. So overall there is some significant savings because I can better leverage and utilize more generic infrastructure.

AND ABLE TO BRING NEW AND BETTER DIFFERENTIATED SERVICES TO MARKET MORE QUICKLY?

Months
Carrier Cloud

time to market

FASTER

Years
Traditional IT

Source: Bell Labs - The Value of Cloud for a Virtual Service Provider Study October 2011

4 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

Time to market; most service providers we talk to are constantly challenged by the amount of time it takes to bring a new product or service to market. When we think about cloud computing, the goal of leveraging a dynamic automated infrastructure was always simplification. So if I can leverage this generic automated environment on board, complex telecommunication services, could I also gain the benefit of faster time to market? So we have seen in studies that depending on the kind of environments already available inside of the provider landscape, a very cloud oriented service assuming that you have you know the ability to, the capability of building forward and inventorying cataloguing it in a cloud model versus a procured dedicated model is dramatic reduction in time to market, even as far as up to 70% faster, and I used an analogy before the process to go and plan the services, the capacity plan I have to have to have a business model, they want to target. I have an engineer and then deploy after procurement, I burn it in, assuming its already built into my I/O with this BSS, I am ready to start bringing on users. A number of service providers have actually said they can take up to 12 to 18 months for a lot of their more complex services. Well clouds, I short-circuit the resources and the installation and the procurement planning stages, I am actually placing those assets in a cloud environment to be utilized by lots of systems. So if I am not Greenfield but I am already an established environment I can actually assume I will have resource capacity to handle new services and then if that resource capacity is there, if I am choosing an existing vendor where I already understand their technology, really the challenge for bringing out a new service is actually on boarding it on to that cloud, having those first few say calls you know first few voice calls connected or first few video streams delivered, but the key point is I am validating

the software provisioning and configuration as opposed to running a whole procurement cycle, and then depending on how your business operates, the savings can be really dramatic in terms of the time to market and the advantage you can have entering new markets. So time to market is the key enabler point, enabling point of cloud.
A NEW CLASS OF CLOUD

The Carrier Cloud

The Carrier Cloud will:
Create new business models, revenue, and profit while increasing agility Transform service provider, streamline operations, monetize current assets The Carrier Cloud delivers: New enterprise and consumer compute and communications experiences Broad application and real-time application support Open, dynamic, and easy to use CLOUD
NETWORK

CARRIER CLOUD

5 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So to address these challenges what is Alcatel-Lucent doing? So we have this concept of the carrier cloud, and the carrier cloud with service provider means that its a cloud that you will be able to create new business models out of. Its a cloud that will also allow you to create new products to generate new revenue increasing the top line. Its also a cloud that will allow you to better monetize the existing services you have in your inventory or your catalogue. So what does this mean in terms of actual what is the carrier cloud? Well the carrier cloud is a service environment that combines the aspects of networks, program ability I mean provision you know ease of provisioning with IT systems and cloud based orchestration automation. The idea is we can create a canvas, a framework on which you can build new services whether its, you know the traditional, things like voice and IMS or IPTV, or new types of services like infrastructure-as-a-service and software-as-a-service all leveraging that same infrastructure. Its also carrier cloud because not only are we delivering this ability to deliver lots of types of services including traditional TELCO one, but its also carrier cloud because its also designed to adhere towards additional principles of any service provider carrier grade five-nine highly available. It gives service providers the opportunity to again as we have evolved to software based models, improves the overall operating margins and profitability by gaining more efficiency and leveraging cloud computing to gain all the attributes we talked about before scalability, elasticity, better time to market but it also provides an opportunity for

service provides to create differentiated cloud services, a differentiated public cloud services by leveraging their network itself, its not just about selling infrastructure-as-aservice without serving an infrastructure-as-a-service offer thats highly coupled to differentiating ability of your network.

THE NETWORK MAKES THE CLOUD

CAPACITY COVERAGE RESILIENCY GOVERNANCE

CARRIER CLOUD

NETWORK

DISTRIBUTED CLOUD NODES

SECURITY

AGILE
Widespread Access Highly Available Highly Scalable and Elastic On Demand Open/Dynamic

RELIABLE
Meet or Exceed five nines Fast Fault Recovery Secure

TRANSFORMATIVE
Network-Oriented Pay Per Use Application Aware Fixed and Mobile Federated

6 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So how do we get there? So as I previously mentioned the idea of a carrier cloud is one that combines the network with distributed cloud infrastructure. So when a service is created, no cloud service can get to a customer without a network, so the first and foremost the network is the cloud. Now if I look at development of a platform that can handle both IT Services as well as you know traditional TELCO or cable operator or mobile operator services, it needs to be one with the environment, the management the provisioning, the OSS/BSS environment, understands the whole framework and could then develop a service environment that combines all aspects of the networking clouds. So what does this give in terms of attributes? Well it gives us dynamic capacity. When we talk about cloud assets or computing assets or IT assets, we think of cloud as data centers that maybe centralized but it could be fully distributed. So capacity is put out throughout your environment and it could be utilized both on the network side and the compute infrastructure side to meet the demands of complex applications. Resiliency; how a distributed frameworks or environments are inherently resilient and leveraging traditional carrier type methodologies, whether its network or I should say network high availability in conjunction with high performance, highly available compute, faith of platform for five-nines capabilities, things like service or governance and security are inherent in the system where all components of a communication flow are controlled. So in the case of a business services operator, thats offering an IP/MPLS

service, I can control that communications from the customers premises right up to the working machine. If I look at offering services I can adhere to the strictest government legislative mandates. It requires one that would have completely controlled end to end. Now this framework to give you these characteristics, the capacity, convergence, resiliency and then of course governance and security requires systems that will be based on agility, reliability and transformative ability. So what we are doing at Alcatel-Lucent is focusing on how to make this network and cloud compute environment come together a holistically operate as a single system with general attributes that will promote both the creation of new services, as well as the refinement of existing services.

WHATS THE DIFFERENCE?

CONVENTIONAL CLOUD

CARRIER CLOUD

Not distributed Limited to cloud nodes Constrained performance,

Just another service

offering

availability, & security

Highly distributed Encompasses both cloud nodes & network End-to-end SLAs A new way of doing business

7 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So some differences and comparisons; so the term cloud, generally you know overuse there is lots of different types of cloud. So when we think about conventional cloud here, could be the private cloud an enterprise operates or it could say a public cloud service. Today there is a number of Internet type providers that have large scale data centers that they provide services over. So when we think of conventional cloud, we think of those large centralized environments, they generally dont exploit things like distribution. They are limited to compute, so Alcatel-Lucent in terms cloud node really equals the data center or compute environment. The performance is constrained generally by the physical capacity in and out of an environment. So a large data center that happens to be operating in Montana has only as much capacity for most customers as what can come in and out. So you are trunks into that site are constrained and then from the availability point of view, what we can do things inside the same data center to create availability zones and security zones, but again its still the same physical environment. It doesnt provide for you know the highest

level the physical availability and then sometimes depending on you know what kind of provider you are looking at, there is also this concept of IT services that are very basic, its just another service. When we think about the carrier cloud on the other hand we believe that service providers can take advantage of this concept of distribution. So in some returns if someone say well its always easier for lower cost operated single data center with a smaller team. On the flip side this idea as a service provider has generally a large footprint of our central offices, head ins, you know point of presence environments. Most of these environments in and themselves are data centric grade and have lot of capacity that could be physically exploited, highly distributed provides a couple of different advantages. One is you have you know better management of your back wall, you dont have to move everything to a single data center that happens to be in Montana, if you have a calling region or service region that spans the entire United States. It also provides an opportunity to provide differentiated services by being able to coalesce services close to your customers.

BRINGING THE POWER OF THE NETWORK TO THE CLOUD

VIRTUAL TELCO

SERVICES

Comms

Video

Network

Data

Everything as a service

Cloud Management System

NETWORK

DISTRIBUTED CLOUD NODES

8 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

When we think of a carrier cloud, as I mentioned previously we also talked about the cloud and the network being integral to each other. So a carrier cloud is a network and a cloud computing environment brought together to be able to deliver a combined service of both compute and network, or an environment when you are operating real time telecommunications applications, you really need high coupling with the network applications that may have a few milliseconds latency requirement from point A to point B, you cant just do it on the best ever Internet type model, you need to environment that

actually can guarantee SLAs, whether they are external or internal, so the network is a key fundamental component of this carrier cloud concept. End-to-end SLAs provide public service, public cloud customers the opportunity to leverage cloud computing services is really appealing and a lot of these cloud operators can offer SLAs in their data centers. So if you want to put your virtual machines in your ERP software in a data center, I as the data center operate guarantee an SLA up to my door and then you the customer, well there is a couple of providers of Internet or lets say networking services that you can leverage or call upon and then they can build you an SLA. You as the customer though what you really concerned about is that ERP system operating in that cloud environment. So for carrier grade cloud, the carrier cloud the opportunity is they have a service provider to have SLAs that are compound or unify all the aspects of what an enterprise needs to run a service, and so the enterprise is service equals ERP. Its one of the bunch of the different computers and maybe couple of different data centers for disaster recovery link to that enterprises offices and locations via a five nine fully resilient MPLS service network, and so your SLA of the CIO is composite, its encompassing everything that partner of yours can actually provide. There is no finger pointing, there is no call service provider A if you are having a problem with something operating in service provider B data center, no finger pointing one that is strangle and for a customer has a lot of appeal and then actually a carrier cloud should not just be about selling infrastructures-as-a-services as SaaS or software-as-aservice, but it should be a vehicle for the service provider to reliably evolve the way it runs its service environment or deploys new services and technologies in an environment now thats actually a canvas for running multiple systems in parallel. It should be able to allow a service provider to knock down walls between businesses. It should be able to give the provider agility, to bring new services to market and most importantly its one that will be as robust, the operators your bolder legacy systems that will have dramatically better cost in terms of operation.

A DYNAMIC INNOVATOR
CARRIER CLOUD

IDEATION

Deliver lower cost, highly flexible cloudready applications

TEST

9 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So what is Alcatel-Lucent doing to bring this vision to reality? So we are focused on development of cloud orchestration and automation systems that can dynamically control networks and data centers of all types and simultaneously on board complex telecommunication systems, we call this virtual TELCO instead of thinking about today buying IPTV on dedicated hardware what if it was purely software and it can go on a cloud that was designed to be five nines and carrier grade, simultaneously I can also on that same platform offer you know traditional cloud services.

So we also look at cloud as improvement on overall time to market. So if you think about building a platform that makes this network and cloud computing environment operating together seamlessly, and we know we can have on board different types of applications, whether its traditional IT or complex telecommunications applications, could this environment also become a, could we make this environment one that is further enables service provider to create new services that leverage aspects of different types of services which say maybe silent, can they bring together different technologies, different products and different offers to create new types of services that have never been seen before? Think about the speed at which the Internet providers come up with new service offers. Well if I could again break down those walls between different groups I could cross pollinate ideas of service concepts, push that out into an environment that physically from a CapEx expenditure point of view is already there, you already mean investments in data centers and compute and network technology, evaluate it where I physically evaluate when the technology works or actually innovate more simply focus on how do I test the new service in some test markets. If I have to go out and build a big CapEx expands or plan for big CapEx expands in installation, burn it in an operation just to test project x in

a region that time that the way that it takes you to stand up in an environment for just the evaluation of a test concept is a significant way in terms of time to market and more importantly forces capital expenditure for an idea that may not pan out. So the idea of coming up with an idea across different silos, being able to test on a single environment that already probably exist has you know significant advantage because you can tell relatively quickly whether it would work, whats your take right and once you know that its got a good take rate you can hit the full launch button and then start rolling you out on other regions, because you have already built on a standard framework and a standards software environment that happens to run on a standard compute, and network platform that the provider already has in most of its regions. So the time to market for new ideas is dramatically improved.

THAT CAN GUARANTEE END-TO-END QUALITY OF SERVICE.

IMMERSIVE COMMUNICATIONS

M2M

VOICE

VIDEO

DATA

10 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So the carrier cloud is also one about end-to-end quality of service. Now today quality of service or quality of experience are usually defined based on the narrow silos of the individual function that make up an environment. So an example before I talked about enterprise who has pushed an ERP system into a cloud computing environment. Quality of service metrics or guarantees is usually siloed into each area while I am interacting with different department in a service provider or I am interacting with different service providers. For an enterprise or for even a service provider consuming its own resources, the idea that a service stops at different boundaries really is not with that customer wants. It wants to have the end-to-end experience. It cares about running of the ERP system, you run; it cares about ensuring that his IMS environment is there just for his customer. So carrier clouds are ones that link inherently you know quality of service metrics across multiple technology domains. So the customer role has a quality of experience or quality of service characteristic for the service that matters in the case of IT organization or the

ERP system, not the individual silos and the quality of service commitment on the IP/MPLS circuit and the quality of experience requirement on the first mail broadband GPON environment, and I also have another data centric quality of service experience for me on the CIM, my quality of experience is defined by my customers using that service thats my enterprise end users and it should be from edge to data center virtual data center. That should be one environment because thats what I care about. So understanding some of these concepts we wanted to go out there and validate whether these you know technical and strategy visions that we have developed at Alcatel-Lucent really would resonate with customers. So we actually invested in pretty comprehensive study of IT decision makers and their buying criteria, their concerns and challenges about how they would look at cloud-based systems. So the idea was we went through 33,700 plus enterprises ranging from the mid size business, say 100 something users up to the very largest Fortune 100 or Global 500 type companies, companies with tens of thousands of employees and oh yes then were you know questions around What would really drive you to adopt cloud computing? They all, all CIOs look at cloud computing as a great opportunity to you know minimize costs, add agility to what they do and bring out these services for their end users but they all have concerns.

ENTERPRISE IS READY FOR THE CARRIER CLOUD

AT THE TOP OF IT DECISION MAKER CONCERNS

Performance Data Security Ease of Use Cost

Source: Alcatel-Lucent Global Cloud IT Decision Maker Study | September 2011

11 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So in the slide we talk about you know what are the biggest concerns of IT decision makers when they look at cloud systems and this is public cloud systems and their willingness to adopt could be that infer from it, so as we see here you know security is always a front end sensor issue for any IT organization and you know adjacently, they are risk management department you know they all look at what is it you know by not have absolute control, and so security is always up there but actually interestingly when you look at the sub components of this concept or performance, actually overall all things required for good customer experience actually generally average higher as a concern

than security and so performance of things is simple as, Will my end user who used to have that server sitting inside of the data center in the building he works still have the same quality of experience you know the experience that users used to you know go away? What about overall performance from server to server, how do I ensure high availability because performance degradation through failures is just as bigger concern? So in general this idea of public clouds with lesser degrees of guarantee performance quality of service, availability generally lead to low overall performance and for the customer, their concern is again always governed by that end user you know CIOs end user will they have the same quality of experience or performances front and foremost in their minds? Now if we think about a service provider, service provider controls that network control the data center they can build them out. It could also put data centers throughout their physical infrastructure. So instead of having data center in Montana servicing a customer in Miami, Florida, from a service provider that happens to have a point of presence in say Tampa Bay, St. Petersburg maybe I may make that available to my customers in that region. So the latency to go couple of hundred miles is dramatically lower than the latency to go a few thousand miles, and that latency actually translates into customer experience. So again there is a benefit to having performance as a key concerns of IT decision makers because its one that service providers can exploit because they have control over the entire experience from the data center all the way through the network.

ENTERPRISE IS READY FOR THE CARRIER CLOUD

AT THE TOP OF IT DECISION MAKER CONCERNS

Performance Data Security Ease of Use Cost

Source: Alcatel-Lucent Global Cloud IT Decision Maker Study | September 2011

11 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

We took this idea of you know key concerns then asked another question which said. Would you be willing to pay more for a public cloud service from carrier or service provider, I should say communication service provider versus what you would pay for any of the public cloud service offers out there in the market? So of course customers always wants you know better performance, better high availability better you know

overall experience but they are generally not willing to pay more for that general you know that plain vanilla virtual machine that cost to infrastructure-as-a-service offer. So in reality you cant charge more, so you still have to have the same you know economies to scale and the ability to have a cost effective compute virtualization environment, but when you ask the question will you pay more for things like latency guarantees, availability of bandwidth, rapid VM installation where you can basically on board from your data center into a service provider environment maybe even you know that entails having dynamic bandwidth contracts to open big pricing copy the data into the providers data center, all these attributes become attributes customers want and they are willing to pay for you know willing to pay for more. So what we have seen is the carrier has, the communication carrier has a far greater revenue potential than just selling virtual machines. They, we in the study we saw up to ten times more revenue significant, significant advantage and then in general when you ask these customers you know which is the more appealing environment, one thats just the virtual machines or one that is environment that combines the network, combines the single point of support, combines the network attributes like low latency and high bandwidth they are starting to generally many multiple more appealing to them to procure that kind of service in todays over the top you know Internet delivered non guaranteed services.

DEVELOP AND DEPLOY DIFFERENTIATED SERVICES THAT ATTRACT CUSTOMER LOYALTY

($ in billions) Revenue

Annual Revenue for Online Content and Conversation Providers

Source: Nielsen, Citi Investment Research and Analysis, comScore, IHS Screen Digest, eMarketer, Crunchbase, Apple, Hulu

13 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So one of the things thats also a key point about carrier cloud is this idea of attracting customer loyalty. So if you can define a service that is fully available all the time, it has characteristics that cannot be displaced, things like having more latency because of network proximity, or because they have bundled it in with my IP/MPLS service or I have the ability of dynamic bandwidth to control that first mail regional access. For a customer enterprise customer the ability to you know find the value from this kind of

environment versus over the top environment it most certainly creates a stickiness and just something others cant give you know attritional cloud service provider cannot offer the level of services that a network service provider can. Additionally, if you combine services, so your IP/MPLS service becomes a vehicle to deliver, also data center services and so that data center services right on the backbone of that enterprise customer because its running a nail wind. Again you know less likelihood to find a reason to leave that provider because you always give a more secure and better level of service for the connectivity of your virtual data center, if you are coming in over your core corporate backbone as opposed to over the Internet.
Agile

Reliable

CARRIER CLOUD
Distributed Cloud Nodes

ALCATEL LUCENT

The Network Makes the Cloud

CLOUDBAND

Transformative Network
14 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

So turning back to this concept that the network makes the cloud, I talked about concepts already of distribution and that the cloud needs to have a high control with the network or I should say be tightly coupled with the network to give you the service provider the ability to more, to with more agility bring on new services, leverage your historical skills and engineering very highly reliable systems to both offer a new kind of cloud service that is end-to-end, to customers looking for public cloud as well as leveraging technologies and methodologies that you used to engineer your services on a more broader scale, so taking that engineered IMS service paradigm, applying it to a cloud environment where that IMS function now lives you know this carrier cloud has to take account all the aspects of what it takes to operate its service. So again reliability is again key attribute of what the network linkage to cloud provides. Then lastly the transformative; you know as you move from dedicated systems to software definable systems, systems that are more agile and they are provisioned, provision, the ability to provision or agile in the way that they actually can test in your regions, I create new avenues and new opportunities to create new business models that

didnt exist before. So longer about procuring you know significant enough environment to handle ex-millions of subscribers is now an environment where maybe I basically plan to have some high margin, high value of services in a region where it makes sense, but not necessarily have to build a global you know environment to get economy as a scale. Also from a transformative perspective, one customer talked about one of the big Internet providers, and they talked about the way they operate the network, they talked about having 1000 that Internet base provider with that searches, they have roughly 1000 devices in spares inventory, this wireless operator has 40,000 spare devices and inventory. So now the opportunity is not even just to transform the way you self services, in the way you operate services from general perception or its the general model, but its also transformative in actually how the way in the way you maintain your environments, troubleshoot your environments interact with your providers. The cloud becomes the network to cloud and because of that high connection, you reinforce its ability about agility to bring services to market that are highly reliable that delight your customers and transform your operational models to maximize your profitability.

So Alcatel-Lucent what are we doing to actually make this real? So Alcatel-Lucent is developing software systems and technologies that will enable this unified networking cloud infrastructure. Alcatel-Lucent is also developing computing blue prints, so its computing storage systems that are optimal for deployment in service provider environment. Alcatel-Lucent is well knows as a company that builds network communications equipment. So exploiting new functionality and features in hardware infrastructure elements that are optimizing the cloud services delivery, as well as building software tools that allow us to evolve our traditional services products and move them into a cloud environment as well as enable service providers to bring in any new technology whether its you know CRM-as-a-service, UC-as-a-service, the infrastructureas-a-service, and leverage that same infrastructure that delivers a voice service and of IPTV service as one that delivers say the next generation CRM-as-a-service or office in a box.

ALCATEL-LUCENT CLOUDBAND ARCHITECTURE

VIRTUAL TELCO Comms Video Data Network SERVICES Everything-as-a-Service IT

Internal

CARRIER PaaS (service on-boarding / management)

PORTAL

BSS
Product Catalogue CRM Billing

CLOUDBAND API CLOUDBAND MANAGEMENT SYSTEM

(orchestration/automation)

CLOUDBAND NODE DRIVER

CLOUD NETWORK DRIVER

OSS
Service Catalogue Inventory Order Management Network Activation

Alcatel-Lucent CloudBand Node

Public Cloud

Network Management System

Network

15 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

There is architecture we call cloud band and cloud band has as I said before a couple of key elements. The first one is this cloud band management system. Its a multi cloud orchestration system one thats designed to interact with lots of different IT infrastructure environments whether its open stack, whether its cloud stack, whether its working with HP and cloud system service provider, its one thats designed to understand the resources that are available on a distributed service provider environment, composed of different types of systems and one that also knows what an IP/MPLS infrastructure is, what is a photonic infrastructure, how do I link those services together.

ALCATEL-LUCENT CLOUDBAND NODE

Features
Integrated cloud hardware and
software designed for service providers distributed cloud management system

Pre-integrated, mounted, tested

before delivery

North bound API with the cloud Delivered in predefined form factors
(small, medium, large)

Using 3rd party available cloud stacks Network equipment A logical cloud node that can be in
any existing cloud outside the service provider (e.g. Amazon)

BASIC CLOUD BUILDING BLOCK

Different packaging from rack-

mounted servers to fully validated shippable containers

17 COPYRIGHT 2011 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

The cloud node; we recognize that service providers have large IT organizations that are very skillful in building cloud systems or its the computing systems. They also recognize though that there is place for loop prints that opt or are optimal for deployments in non traditional IT data centers, think of the special challenges related to deploying IT infrastructure systems in a central office. You may not have fully, I should say, fully certified IT support personnel or personnel that you probably have to from traditional TELECOM personnel. So the idea with the cloud band know it is that come up with blue prints that create and optimal footprint for optimal revenue generation based on that idea before that your customers dont want to pay more than they would pay for the over the top providers. So how can you have economy to scale on the cost effective, but at the same time greatly reduce the complexity of rolling out a system in a non traditional environment, things like self commissioning putting a node into a central office, plugging it into the network, plugging in the power, plugging in USB key that happens to contain the base configuration and then allowing the system to auto mission over you know few hours what would take many IP providers leak switch service consultants time operating in the region we are trying to focus on how do we streamline this process so that takes hours with minimal IT consulting or service support. So at this point I would like to summarize what we talked about so far and why AlcatelLucent leaves the carrier cloud offering significant advantages to carriers and their customers. So we talked about this dual ability to leverage cloud for dual benefits. One is the transformative effect of cloud, the ability to see the evolution of traditional systems, traditional service systems evolving to offer the same types of services, but in a new agile better utilized software definable environment, the private cloud as a carrier and then we

also talked about this idea that cloud can offer differentiated value for a carrier when it offers that service that combines both public cloud infrastructure elements that customers are willing to pay a specific amount for with the network that creates differentiated performance guarantees and security guarantees. So this idea of cloud being able to basically fix or improve the bottom line by making your operations more productive and efficient while at the same time creating a new top line benefit by creating new differentiable products, we believe that carrier cloud offers to service providers a significant opportunity across all areas of their business become more competitive in the market. To achieve this, Alcatel-Lucent believes in this concept of a carrier cloud which is one that has highly coupled the network operations with the compute and storage IT infrastructure availing for a service provider offer compound services and systems, one where there is no wall between different organizations, one where a high availability five nines SLA can be defined all the way from the virtual machine running in a data center all the way to a customers premise where that customers demark is located, and this creates you know multitude of advantages for the service provider both in differentiation as well as in the ability to offer new services. To achieve these things we talked about whats cloud bands, the portfolio is inside of Alcatel-Lucent cloud band is focused on enabling both of these double benefits that the social provider can receive and enabling these operators, service providers to maximize their overall ability to bring new products to market quickly. We define solutions to simplify the chore of running and developing a new cloud and most importantly provide a tight linkage between the network and the cloud to allow providers to innovate and come up with new solutions on their own at a pace that is competitive with the market they are in and with that, I like to pass it back to Alex, thank you very much. Alex Speir: Thanks David. I would like to take this time to remind everyone that you are participating in the presentation; What if there were a better class of cloud? brought to you buy Alcatel-Lucent. We are now going to move on to the Question & Answer portion of todays presentation. You can answer your questions by clicking on the Ask a questions box in the lower left hand, lower right hand corner of your screen and click Submit. We will respond to as many as time allows. So I already see a few come in, I will just go with the first one off the top head. This person asks; why does the enterprise need carrier grade cloud services? David Frattura: So Alcatel-Lucent has always believed that the cloud opportunity would be significantly greater if enterprises could have an environment that loses up to what they are already used to in terms of how they interact with service providers. Today the wide area network is five nine service most enterprises you know take advantage of that five nines environment is the life blood or the nervous system of these companies without that they can operate. So as you look at the opportunity for enterprises to leverage public cloud services what we see is a disconnect between what is generally offered out there by the Internet class companies and what companies or CIOs are used to in terms of how they consume service provider based services. We went out and did the study that I mentioned before that validated that some of their key concerns about

adoption of cloud based on things like security, high availability, overall performance and these inhibitors are really impeding their ability to consume public cloud services. So the need is there, the desire is there, all CIOs have pressure from their CFOs about saving money, lowering costs, they are giving more, creating more positive support for the business. So if the need there but the environment is not really capable of meeting their requirements, they dont take advantage of. So we believe that the carrier grade cloud is absolutely in need by enterprises because most of them definitely have a financial incentive to leverage cloud computing but they are, have a risk adverse and if that, if those risks were mitigated through a carrier grade type model which has already improved in the wide area, products that have been offered you know all throughout the world enterprises more certainly would gain the benefit of leveraging shared infrastructure while at the same time be assured that the services they put out in the environment maintain the same level of quality experience and availability that they have in their own environment. Alex Speir: Great thank you. Someone else writes into, what is the advantage of this, does the communication service provider have that can be leveraged to support superior cloud services? David Frattura: Okay. So earlier in the presentation we described this concept of distribution that most certainly is one. Usually I use example of a big Internet data center in North America. So say you are in Silicon Valley or the Bay area and you are servicing customers all throughout the United States, depending on the kind of application, you wind up with potentially significant latency issues or bandwidth issues. So service provider, servicing a customer in Miami who has to access his data in the Bay Area would find that maybe the performance of that application is not particularly good, if its an Infrastructure-As-A-Service to offer most certainly that cost of bandwidth would be a big inhibitor for the customers to take advantage of the environment. So have a communication service provider that happens to have you know very well distributed footprints, and I can put service environment close to where my big markets are, I can most certainly have differentiation ability by exploiting latency. Its a lot easier to service a New York City customer from a central office or a mini data center in a pop in New Jersey than it would be across the country. I can also exploit the fact that I have lots of bandwidth in regions and I can sell it for dynamic access. So again the service providers you know strength is you know distribution and the network and the way they can exploit the network whether its better dynamic bandwidth, lower latency guarantees and five-nines we will create you know superior advantage for that service provider over providers that have static environments that are centrally located and that are bandwidth resource constraint. Alex Speir: Excellent and I see a few more questions coming in, maybe we should take a couple more. This one asks; what types of differentiated cloud services can the service provider offer through the carrier cloud?

David Frattura: Okay. So this definitely builds on that last question. We talked a lot about latency and dynamic bandwidth before. I think if you look at the landscape or potential differentiation you actually quite a few but lets start of with the basic mundane one which is, you know differentiation to single cloud network infrastructure would allow me to have bundle services. So me as a service provider could offer single environment, single support organization, an SLA that is composite, that overlays both of the service that are being offered. I can offer enterprises low latency services, so if I am a New York City financial institution and I wanted to do financial simulation I could offer a low latency service that says I will allow you to point or provide, I will provide you compute assets that will meet you know very structured and fixed low latency guarantee. If I am in Europe or in regions where there is an obligation for geo-fencing where you can say data lives only in this region, it cant be exploited outside of here because the service provider has control of where traffic or communications traffic is allowed to flow, it can even control actually where that data gets to go even within the business and then you know there is lots of other things like bandwidth on demand the ability to allow say seasonal need to be supported beyond the average. So if I think about Christmastime in the United States retailers may need more network capacity and more data center capacity for what is essentially three months of the year and the rest of the year its pretty much quite time. Service provider could actually allow for dynamic bandwidth during those times of the year that operators such as you know Internet based ones would not be able to allow because you have to have a separate contract with different service providers to get that bandwidth. So again a lot of the advantages will come through the exploitation of their networks and if you can couple the systems together to create blended services with single points of contact, with single support organizations and single SLA, you will have, you will cover the spectrum of opportunities for differentiation versus single product offer companies like Internet based cloud service providers. Alex Speir: So why should a service provider look to Alcatel-Lucent for help with their cloud strategy? David Frattura: So Alcatel-Lucent has a wide array of capabilities to enable service providers to bring to market, an advanced cloud service environment. Traditionally many would focus on the IT type providers to you know well known and have lots of skills in terms of bringing together compute applications and storage. We also could look at things like OSS and BSS providers and they had to bring together different types of provisioning in management frameworks and there is networking vendors course for networking and service, network switches and routers. Alcatel-Lucent combines all those attributes. We have the ability to provide a top down infrastructure that allows you to build any type of network that is anywhere capable of delivering services. Its like guys I need to redo this question because I didnt actually expect this one. So let me think about this

Alex Speir: Well actually we will pass. David Frattura: Yeah. Alex Speir: Do you want to answer this question or do you want to answer a different question? I think they have, we are about an hour into it so dont want to ask too many more questions? David Frattura: We are 59 minutes, I dont have easy answer of the top of my head and this one just could go really long. I could talk about my specific products but then that doesnt address Alcatel-Lucent, so I would rather actually probably skip this question. Alex Speir: Great and we can do that which other question would you want to answer? David Frattura: Customer shift transitioning cloud actually what are all the bigger challenges services providers face in moving their service delivery environments and operations to cloud, I should say enterprise service grade, move out to the first four. Actually how about; what kind of, what kind of internal optimization and cost savings can a service provider achieve through the implementation of carrier cloud across their own businesses? Now I can answer this and I actually want to put up a slide thats not on this one. Yes I have which gives me details on this. Alex Speir: Okay. David Frattura: So I can actually read some stats you know off the top of my head. Alex Speir: Do you want to ask or answer this question and then another if you want to me ask like that and about that question. David Frattura: Lets ask; lets go on this question because this I think we are supposed to sit now for an hour right so Alex Speir: Roughly I mean there is no hard stop where it could go actually its only a question of how long will people stay engaged. David Frattura: Yes. So Cindy are you there, you have been on mute or did you hang up? Cindy: Yeah I am here, I am here. David Frattura: Yeah and actually got to bring up the Dell Lab Study and I am just going to quote some numbers off of this one. Cindy: Okay thats fine. David Frattura: Okay.

Alex Speir: Yeah. David Frattura: And let me just put that up, okay. So the question was, what kind of benefits and savings right? Alex Speir: What kind of internal optimization cost savings? David Frattura: What kind of internal optimization cost savings in a service provider, okay good? Alex Speir: Okay so I am going to ask this as this is the last question. David Frattura: Okay. Alex Speir: Great. What kind of internal optimization and cost savings can a service provider achieve through the implementation of carrier cloud across their own business? David Frattura: So the savings will vary slightly from type of service provider whether you are a quad play large operator or MSL or mobile operator. What we have generally seen on average as I mentioned earlier in the presentation was that there was at least 80% impact and what that means is of the environment that makes up a service provider environment which includes the operational as well as the capital expenditure side, 80% of that investment could be positively impacted through the use of cloud. So from that what do we really derive in terms of cost savings? So we see on average on the operational side, we certainly use more than the capital expenditure side. On the OpEx side we see anywhere from 50% to 60% of that operators expenses being impacted positively by cloud and on the network side even up to 70% as we evolved from hardware only platforms to in the future down the road we will see more and more products become software. So what does this give you in terms of real world savings you know like the virtualization as example of customer premise equipments and CPEs or set-top boxes could yield 30% savings. The investment in capital or incremental capital investment to adding subscribers I used that example before of step function where I basically go through my first invested environment for say x amount of subscribers have to do big CapEx expense that I can go around involve, do leveraging cloud you are into flattening out that investment that investment window and overall because you are using the same infrastructure thats leveraged by lots of different products, you get better productivity which will role helps to reduce the overall cost of adding new subscribers. You can add subscribers based on the actual number not big step functions in terms of you know large hardware to support the next phase. In terms of maintenance, you know depending on how your partners provide maintenance contracts on systems, you can see reduction just in maintenance charges because

obviously if you are going away from you know large model with the hardware systems to software based systems you will see a reduction in terms of the maintenance charges to get hardware because you will have less hardware types, but then even additionally their savings you have seen up to 45% in the reduction of you know the operations and support of an existing infrastructure, things like spares fewer number of spares, more educated workforce you know fewer number of components in the hardware inventory means you get to consolidate your core organization. We have also seen that you can have significant savings in terms of just overall operations of you know data center. So by moving away from just IT silo to a cloud environment that provides both the internal IT or virtual provider environment the virtual TELCO environment and the environment that can also deliver cloud services by consolidation we have seen even your IT data center operations can be reduced by 40% and then overall you know there is things beyond savings. So we think about time to market increased market share because the ability to enter market is significantly increased or the ability to delight a customer by being able to scale up more quickly when they need to increase their overall demand on your environment those are harder to measure but they will you know they all are recognizable facts that you know customer to actually translates in the customer satisfaction which translates into you know customer stickiness and the ability to get into a market before another customer because you have you know all these things we talked about before savings, dynamic environment, automation means that you are actually prepared to enter markets more quickly when your services and you know the first vendor that enters the market usually is the one that retains the most market share. So its more than just cost savings, its actually its also the opportunity to grow market share and grow customer seize that. Alex Speir: Great. That ends our Question & Answer time. I would like to thank todays speaker David Frattura for taking the time to join us today, and I would also like to thank todays sponsor Alcatel-Lucent for making this event possible and as always thank you the audience for taking time to join us. This is Alex Speir, have a great day.