Capacity Management for Telecom Companies in the Cloud: What You Need to Know

Most telecom providers rely on a large computing infrastructure running a diverse set of applications to deliver, manage, and bill services. Migrating to cloud can reduce internal computing resource needs and release the excess for use by paying customers. Doing so reduces internal costs and increases revenue streams — a win-win situation for a telecom cloud provider. By considering some key items ahead of time, telecom providers can ensure that they can deliver and sustain quality cloud services to their customers.

Cloud computing looms large on the horizon. It is one of the most talked about business models for enterprise computing in recent history. Is it all hype? What is cloud computing? Why is everybody talking about it? What does it mean for your IT operations?

A 2018 IDG study shows that 73% of companies have at least one application or portion of cloud infrastructure running in the cloud. 17% plan to do so in the next 12 months. While there is an enormous amount of hype surrounding cloud computing, certainly more than for any business model in a long time, it’s hardly a fad, and cloud services will continue to grow in both adoption and availability.

Currently, typical applications of cloud computing include:

• Test and development
• Functional offload such as batch processing and/or storage
• Cloud bursting or overdraft protection to handle peak workloads
• Web application development and hosting

Whether implementing internally or contracting externally, cloud computing offers the promise of lowering infrastructure spending by allowing resources to be shared and used more efficiently; permitting businesses to pay for only the amount of service they consume. This sharing of compute resources across all business units and optimizing utilization of resources in the data center is appealing to CTOs and CIOs and serves to keep cloud costs down.
Early cloud adopters are pursuing these benefits:

• Cost economics (OPEX vs. CAPEX and reduced TCO, personnel, and support/maintenance costs)
• Flexibility and Agility
• Scalability
• Speed to market

But what about the risks?

In order to avoid these risks and reap the benefits of the cloud, proper planning is an absolute necessity. Without good plans, significant business and technical problems may occur. Poor virtualization and failover plans can put your organization in a position where the failure of just one server results in service disruptions, lost transactions, dissatisfied customers, reduced revenues, and damage to the company’s reputation and brand.

Before you can formulate the plans needed properly implement cloud, a provider needs to assess where they are now in terms of service delivery performance and capacity. Once plans are underway and a cloud project is underway, further monitoring and analysis is needed in order to ensure that implementation is proceeding according to plan. In other words, measure twice: before the planning exercise and after implementation. You can’t manage what you don’t measure.

Leveraging the Cloud for Service Provider Benefits

The initial entrants into the cloud computing service provider space are primarily offering Infrastructure as a Service which offers customers the ability to purchase compute power based on consumption, much like electricity. Almost all early entrants to the market use virtualization technologies and support a variety of operating systems and applications. Virtual servers can be allocated dynamically and assigned to cloud subscribers.

An IaaS cloud provider needs a good understanding of capacity and an ability to predict capacity and deal with huge fluctuations in demand. When wading through hundreds or thousands of opportunities for performance improvement, predictions may be based on rough “rules of thumb” estimates and linear trends, but ultimately capacity plans should be based on a more accurate prediction method. We recommend of the use of analytic modeling technology based on proven queuing theory, because this can facilitate fast and accurate predictions.

From the perspective of the cloud service provider, performance management and capacity planning best practices and software tools can enhance your cloud-based business models by offering solutions to ensure subscriber satisfaction and provide premium revenue generation options. Below are strategies that can help you maximize profitability and customer satisfaction for your cloud computing service.

Premium Revenue Generation

In the highly competitive communications industry, you need to consider all potential revenue generating strategies for your cloud computing business. To date, the market’s pricing models and associated Service Level Agreements (SLAs) are fairly uniform. As the famous Henry Ford quote goes, “You can have any color you want as long as it’s black.” However this philosophy will not last long, so cloud providers need to position themselves to be able to quickly react to a changing marketplace.

By integrating performance and capacity management technologies into your operation, you have the ability to provide differentiated services and SLAs that will give your customers more service options and provide you with additional revenue streams. You may consider adopting one or more of the following services for your business:

• Tiered SLAs (Platinum, Gold, Silver, Best Effort, etc)
• Storage & management of historical performance & capacity data
• Workload performance & IT resource utilization reporting
• Co-planning: Hybrid cloud architecture performance analysis & capacity planning
• Analytics-as-a-Service
• Predictive modeling: performance vs. demand projections
• Pre-deployment planning
• Application performance benchmark vs. load profiles
• Performance analysis and capacity planning

Avoid SLA Penalties

Are you meeting your negotiated performance thresholds in contracted Service Level Agreements (SLAs)? How do you know if the SLAs that you’ve set are reasonable? What is the basis for defining acceptable compliance penalties? What reporting mechanisms are you using for your real-time, weekly, and/or monthly SLA compliance reviews? Do you have alarm and alert mechanisms to warn you when you are nearing SLA threshold violations? With state-of-the-art capacity management software tools you can provide visibility to the performance of your customer’s applications in your cloud infrastructure to ensure SLA compliance, maximize customer satisfaction and minimize SLA penalties.

Oversubscribe Your Cloud

Oversubscription, or overselling of your network is standard operating procedure. It’s been around as long as the telecommunications industry has been selling dial-tone. So why shouldn’t you oversubscribe your cloud compute infrastructure too?

In order to stay competitive and maximize the utilization of your investments, you must think in terms of overselling your cloud infrastructure. Oversubscription provides you the capital and cash flow to continue to grow your infrastructure. What are the chances that 100% of your customers will be using 100% of their provisioned capacity at any one point in time?

No matter how you’ve architected your cloud and what your business model is, determining the optimal capacity and having the tools and processes to monitor, analyze, report and model is mission critical to the success of your cloud computing infrastructure and business model.

Capacity management best practices and tools allow you to manage the risk of oversubscription with the financial benefits of optimized cloud infrastructure utilization.

Measure & Report Relative Usage

Is your cloud deployment a multi-tenant model? Are many customers sharing the same physical resources through virtualization technologies? If so, how are you determining which customers are using what in multi-tiered environments (Web, application, and database) on your cloud? How do you track all your customers and ensure users are operating within contracted limits? With the right performance analysis technologies you can measure and report on customer usage, and determine if a customer is bursting beyond their contracted capability.

Don’t leave money on the table. Having tools that provide the visibility into your cloud to measure and report on actual capacity usage per customer will set your cloud apart and ensure that you are maximizing your profitability.The right capacity management strategies for your cloud computing business are dependent on your target customer profile. Who are you selling to and what is the core business value that you are delivering? Are you offering web-site hosting, cloud bursting, test & development, functional offload, or other? Understanding your core competencies and those of your target clients will help you more accurately predict your customer’s capacity requirements. No one size fits all, but with capacity management best practices and state-of-the-art software tools, your probabilities of success for your cloud computing service will be maximized.

Why Vityl Capacity Management (formerly TeamQuest)?

Vityl Capacity Management enables telecom companies to plan for future capacity while optimizing the use of existing infrastructure investments. How?

With Vityl, you can run your cloud infrastructure closer to the edge of your performance and compute capacity thresholds without risking application performance bottlenecks or down time. By applying capacity management best practices using state-of-the-art software like Vityl, you can better assess the optimum amount of oversell to maximize revenue potential. Vityl allows you to collect real-time performance statistics and apply highly accurate predictive modeling to give you a clear picture of how the cloud systems will perform in advance. Vityl will also help you set alarm thresholds to give you advanced warning before costly service levels are violated which will help you keep costs at a minimum and customer satisfaction at a maximum. Vityl can also help with the measurement and reporting of relative cloud usage, allowing for accurate apportionment of charges. Again, you can’t manage what you don’t measure.

Companies in the telecom industry must predict IT service performance and determine optimal configurations to assure availability and minimize cost while meeting demand. Maximize the revenue potential of your cloud computing business and ensure customer satisfaction; invest in performance and capacity management tools. Optimize your cloud environment. Validate performance against SLAs. Offer premium revenue-generating services.