T-Systems' New IaaS Offering Balances Corporate Requirements and Cost

G00209297

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Summary

Adoption of T-Systems' infrastructure-as-a-service offering is likely to grow successfully because enterprises are ready to pay a premium for emerging cloud services that meet their security and compliance requirements.

News Analysis

Event

On 22 November 2010, T-Systems launched Dynamic Services for Infrastructure for corporate customers. T-Systems will pilot the new service with existing customers for free from November 2010 to February 2011.

Analysis

This new offer and its free pilot give T-Systems and its customers a first-mover advantage in the IaaS space because only a few other pure-play providers are making similar introductory offers for emerging cloud services. T-Systems’ existing clients can take the opportunity to test the transition from traditional infrastructure outsourcing services into infrastructure as a service (IaaS).

T-Systems’ approach to rolling out its IaaS offering is sound and will extend its infrastructure utility services (IUS), which have already proven successful (see "T-Systems Accelerates Move Into Infrastructure Utilities and Cloud Computing" and "Magic Quadrant for Data Center Outsourcing and Utility Services, Europe" ). T-Systems, whose headquarters are in Germany, has designed these cloud services to comply with the privacy and security expectations of European businesses. In fact, Germany has some of the most stringent privacy and security legislation in Europe.

The security and compliance features of T-Systems’ IaaS will keep the price of this offering higher than consumer-grade services. Consumer-grade services are low-cost, but they cannot support most production environments due to a lack of basic security and privacy compliance. We therefore expect that T-Systems’ IaaS will be about 30% more expensive than similar services such as Amazon Elastic Compute Cloud and Amazon Simple Storage Services. German businesses are likely to accept the premium price of T-Systems’ IaaS in exchange for their required security and compliance specifications. As geographical availability of the offering increases, other European businesses will adopt the service.

T-Systems’ announcement is an example of a traditional service provider leveraging its understanding and experience of corporate requirements to develop new offerings that combine the positive aspects of traditional outsourcing and cloud computing into the category of services defined as IUS (see "Forecast: Infrastructure Utility Services, Worldwide, 2009-2013" ). An increasing number of business providers, such as outsourcers, telecom companies and system integrators, are developing IaaS offerings and this will result in a broader range of more industrialized IT services for enterprises (see "Infrastructure Utility Services: The Business Between Outsourcing and the Cloud" ).

Recommendations

All potential buyers of IUS:

  • Determine how ready your organization is to buy standardized solutions.

  • Establish clear and strict demand management procedures with your business units to determine your demand for IUS so that you can maximize the cost advantage you would achieve from a pay-per-use service.

Existing T-Systems clients:

  • Take advantage of T-Systems’ free introductory offer to start a three-month project.

  • Understand T-Systems’ midterm product road map to assess the potential of the solution for your existing deals.

Potential T-Systems clients:

  • Only accept the current premium if the service, processes and location satisfy your specific security and privacy requirements.

  • Thoroughly analyze the compliance risks and benefits of this IaaS offering before deciding to adopt it.

  • Compare standard IaaS solutions on the market in terms of solution features, terms and conditions, and price.

  • Assess your current and potential IaaS provider to determine if it has the capabilities to meet your data security and privacy requirements.

Recommended Reading

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