AT&T and CSC announced a deal recently that pairs AT&T’s network with CSC’s cloud services, specialized consulting and applications expertise. Both companies characterize it as a “global strategic alliance to develop next-generation technology solutions for enterprise businesses.” On the surface, this deal may represent just one of many similar deals made by companies like AT&T and CSC, but I believe it’s illustrative of an important approach that telecom carriers should take note of.
“By harnessing AT&T’s global network and cloud infrastructure platform and CSC’s consulting and applications expertise, companies can now manage their operations better and create new ways of transforming the experience they deliver to their customers,” said Andy Geisse, CEO, AT&T Business Solutions in a press release announcing the deal.
A conglomerate the size of AT&T already has significant cloud assets and already generates significant revenue from cloud services. One could argue they certainly don’t need a partner like CSC. They have the resources and bandwidth to build the capability to do what CSC does themselves. Why partner?
It’s an argument I hear often within telecom carrier circles. Why partner? I’ll just try to build the capability myself. That way, I maintain control and conceivably capture more margins. While this approach may make sense in certain situations, it certainly does not make sense in all. In fact, the rapidly evolving cloud and hosted communications segments dictates carriers look for partners, especially smaller tier 3 carriers who can’t build or acquire the capability easily on their own.
Cloud and hosted communications applications require scale and also are subject to a blinding pace of innovation. Building this capability requires time, and in today’s competitive market, time may be the most precious commodity. Going it alone, given these market factors, can create significant obstacles to long term success.
Even a company the size of AT&T, who can manage these scale and other marketplace challenges, still recognizes the value in partnering with the right company. By partnering, they can get to market faster, broaden their addressable customer base, and more easily expand their product portfolio. In this context, the appropriate question should be, why not partner?