Telco Moves Into Cloud Services

Dimension Data, a unit of Japan's NTT, picks up operational expertise and a software stack by acquiring infrastructure as a service and managed hosting services provider OpSource.
Dimension Data, a subsidiary of Japanese telecom giant NTT Holdings, is acquiring Opsource as the core of a new Cloud Solutions Business Unit.

OpSource is a nine-year-old infrastructure as a service and managed hosting services provider with 150 employees in Santa Clara, Calif. Under CEO Treb Ryan, OpSource has become a proponent of "enterprise cloud," where its infrastructure services can be purchased with extra security features and virtualized network characteristics for running enterprise applications.

Dimension Data is buying "operational expertise as well as the software stack" for infrastructure as a service, Ryan noted in an interview Thursday. OpSource's infrastructure is currently located in NTT data centers in Virginia and California, with another NTT data center location to be added in Europe in the third quarter.

It has served as the host service for several independent software vendors offering their applications as a service and it supplies consulting to other telecommunications companies that wish to establish their own infrastructure services, Ryan said. As part of Dimension Data, OpSource will continue to be a cross-teleco service supplier, not a captive, in-house NTT service supplier, Ryan said.

OpSource cloud operations know-how and software could accelerate the trend that's bringing telcos, with an established set of worldwide data centers, into the infrastructure as a service business. The pioneer of IaaS was Amazon Web Services, which now runs the retail operation of in its infrastructure.

Dimension Data is a Johannesburg, South Africa-based systems integrator and integrated communications technology supplier founded in 1983. It had 11,000 employees and revenues of $4.7 billion in 2010 and operates in 49 countries.

As part of Dimension Data, "We now have the leverage. The cloud is a game of scale," said Ryan.

Dimension Data's purchase of OpSource represents another sign of how determined the large telecommunications companies and their subsidiaries are to get into cloud services. Verizon Business purchased an enterprise and government cloud supplier, Terremark, in January for $1.4 billion. CenturyLink acquired Savvis for $2.5 billion at the end of April.

In addition to being an "enterprise cloud" supplier, OpSource is also a managed services provider. Companies turn over their applications to it to run in its facilities. Ryan said the line between infrastructure as a service and managed services is beginning to blur. In the former, companies used to initiate workloads and monitor and manage them remotely. Now, in some cases, "it's funny but some customers are establishing their applications in our infrastructure, then buying managed services to manage their cloud servers," he said.

OpSource can supply disaster recovery services that are 70% less expensive than traditional disaster recovery services and sit atop strong networking resources in the NTT data centers to supply quick recovery. It can also supply services that are Payment Card Industry Data Security Standard Level 1 compliant, and it can meet SAS 70 Type II requirements.

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