By Sramana Mitra and guest author Shaloo Shalini
SM: In bringing all of this together, what do you see as entrepreneurial opportunities? What are the blue-sky needs for newer solutions in cloud? It sounds like you have done something entrepreneurial yourself by taking this whole order to cash management to the cloud and spun it out of GCI. What is your thinking behind that decision?
JD: As we moved into this environment, frankly, it opened a completely new world of opportunity in my eyes. As I look out there, most CIOs have certainly heard of the cloud, and we have been attending seminars on clouds over the course of the years. But so far, really, it has not been a reality until now. It has been something nice, as a concept floating out there. It has not made its way into the production life for most of us. I believe it is rapidly becoming a viable solution for mid-tier companies, but it requires you to re-educate yourself, your workforce, your infrastructure team, and your architecture team about a new operating model based on clouds. What I think will happen with cloud computing is a natural rapid evolution of new requirements for products and services that do not exist today for the end user. It will not necessarily be just for the benefit of cloud computing environment providers, as we talked about earlier. But new applications and new services would certainly show up that are required by the end user and could not be viable until cloud computing started to become an option. Do I know what those are yet? I do not.
What I can tell you is that it seemed to me that as the model becomes more pervasive, though I don’t understand how it will scale, as it scales I am certain there will be requirements for new products and services in that scalability domain itself.
SM: What insights do you have for telecom as a vertical? Telecom is an area you understand very well and may be the utility operation order to cash side really well. That is relevant not just in telecom; it spans the energy sector as well. What do you see within that vertical environment? What and are the missing pieces, and where are they?
JD: In terms of specifics, I can tell you what is happening especially in the wireless and in the cable modem industries. One thing I would like to mention is a trend that is so pervasive in those two segments of the industry. It will soon be equally pervasive in the utility industry. I am talking about the data usage volume. Data usage is sharply increasing. It is causing all of our assumptions around processing power associated with data usage to go haywire. By that I mean data usage on mobile phones, cable modems, and now the data coming out of the energy management environments. These new energy management environments are part of new, modern utility sectors. Data is ballooning and expanding at such an exponential rate that we have not anticipated what is the computing power requirement in order to take full advantage of all that data or to simply process it for billing and rating. One of the most interesting aspects of the impact of cloud computing could be a more flexible model where as you move into a new market, acquire a new company, or roll out a new product, you have a model where you truly have the flexibility of an on-demand increase in your computing power. Flexible in terms of scaling it up or down as your understanding of that product or market changes from a usage perspective. That area was always a struggle for us in our own environment. In the case of your own environment, you have to project how much your usage is. The reality is that usage is exploding at such an exponential rate, you could never properly calculate or forecast it. With the introduction of cloud environments, I felt a little bit of relief that I can shift that burden of exponential growth to someone else. Usage is one area that I think will be dramatically affected by cloud computing.
SM: Yes, you can offload some of that flexible scalability to your infrastructure vendor. However, let me ask you something else. Take the example of what is happening with the iPad. In general, the tablet category is going to escalate this problem. People are watching videos and movies on the iPad continuously. AT&T is the carrier for the iPad, and it is charging a flat rate. Is it viable for telecom carriers to continue to provide flat-rate service at this kind of consumption volume from a bandwidth point of view?
JD: No, it is not a viable long-term model for telecom carriers to use flat-rate pricing. In fact, every telecom carrier I know of in the world is under the same pressure irrespective of whether it is wireless or fixed data.
SM: Exactly, and we are doing the same thing on our desktops. We are watching many videos and creating all that pressure on the infrastructure. It is causing an overall degradation of service quality, don’t you think?
JD: I agree with you, and anybody who is in this industry will agree, too .
SM: To be able to manage that transition from a flat-rate billing model to something that is more flexible billing, is that capability missing? Or does it exist in some form in your telecom shops?
JD: It is just starting to exist. Moreover, you are right, the learning curve for going from flat rate to “time of use” billing is a sharp and steep learning curve, both from an infrastructure and a process perspective.
SM: Is that more along the lines of the energy industry model?
JD: Absolutely, it is. The utility industry is an industry that we think is just fascinating. Players are not just getting to take advantage of all the transition that has taken place in the computing field over the course of the past twenty years, they have also all this enormous pressure associated with change in their marketplace, whether it is the price of fuel, green power initiatives, or co-generation. The utility sector is going to look very much like the telecom sector in terms of complexity but more quickly. It is not going to take twenty-five years for that sector to mature and understand that people are using their data associated with their usage in the same way that it has taken us a long time in the telecom sector. That will happen in a very few number of years simply because of the dynamics of the market.
Therefore, given the synergies between telecom and utilities, we think their market will look a lot like ours and will require unique billing plans and usage models. Today, utility billing looks nothing like telecom. The models we think are very similar, but you are going to see a rapid transformation in the utility sector. This transformation is going to take on a life of its own and breed an entire industry of people servicing the utility sector in a much different way from how they have in the past.
SM: What kind of people do you see in that picture?
JD: Well, part of the reason we took this entrepreneurship route and set up this new subsidiary Cycle30 from the parent company GCI is because we believe the utility sector is much underserved in the order to cash arena.