T-Systems Globalizes On-Demand Computing

| Aug 19, 2008 | Business Telecom Services - Europe | Competitive Update

| Analyst: Dustin Kehoe

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

August 19, 2008 – T-Systems has globalised its Dynamic Computing platform and can now deliver SAP on Demand from its data centres in the USA (Jacksonville, FLA), Brazil (Sao Paolo), Singapore and Europe (Germany) and can provide local service delivery and support in all regions. It has also achieved certification from SAP for global hosting and application management. The SAP On-Demand solution also includes an online platform for online monitoring and provisioning.

Analytical Summary

• Current Perspective: Positive on T-Systems for rolling out its Dynamic Computing platform on a global basis as the company can now offer on-demand services, principally Dynamic Services for SAP, from its data centres in the USA, Brazil, and Singapore which complement its two facilities in Germany. This is important for giving customers more flexibility in their IT systems in moving from a dedicated to a virtual environment. Customers can also expect cost-savings and new efficiencies while maintaining the same level of quality.

• Vendor Importance: High to T-Systems because the company needs to exploit its first-mover advantage in this space by developing a global offer for dynamic computing and SAP to support its corporate customers. This comes at a time when it has won a number of large data centre outsourcing deals such as Shell and Centrica. Offering the ability to migrate customers to an on-demand platform is important for increasing contract values and customer stickiness and there is evidence that this strategy is going to pan out.

• Market Impact: Moderate on the on-demand computing market as T-Systems is still very much an early mover in this space. AT&T and Verizon Business have set their sights on following through with a similar strategy, but are well behind T-Systems in terms of services that can be delivered today. The fact that T-Systems now has a global delivery platform will force competitors to react.

Recommended Competitor Actions

• While AT&T rolls out its Synaptic Hosting capabilities on a global basis, it can differentiate with T-Systems by pointing out its significantly larger global network, but also its plans to roll-out VPLS across its infrastructure with the first locations in Europe going live this summer. It can stress that T-Systems has communicated no such plans for global VPLS. It should also highlight that unlike the German operator it has a standard online management and monitoring platform to give customers visibility for all AT&T ICT services.

• Incumbent operators should consider launching on-demand computing solutions within their respective national markets. Unlike many alternative carriers, they can offer stronger in-country network reach, data centre presence, customer base, scale, partnerships, sales and operational support. All of these elements play to the incumbents’ advantage and are essential for targeting SMEs and large enterprises on the national level.

• Network operators can also position themselves as the delivery platform for enabling Software as a Service (SaaS) applications. They should do so by pointing to their respective IP backbone, data centre presence and understanding of client/server environments. Operators can position on-demand services as a new delivery model and point to existing services such as hosted e-mail, IM, presence, and Web conferencing that can be offered as a SaaS solution today.

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Competitive Positives and Concerns

Recommended Vendor Actions

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