Verizon Business rethinks cloud, data centre plans

Verizon Business is quietly shifting resources into managed IT services following its acquisition of US cloud computing pioneer Terremark.

According to area vice president John Karabin, the company has no plans to scale back its legacy investments in networks or security. Instead, these capabilities will be used to complement new investments in cloud services made available via the Terremark acquisition.

Verizon Business' Australian network and security operations hail from its acquisitions of MCI in 2006 and Cybertrust in 2007 (which had previously purchased SecureNet/Baltimore Techologies in 2003). 

An extensive global IP network still makes up the bulk of Verizon Business' revenues, while the Cybertrust security brand has been responsible for most of its recent growth.

But it was the Terremark buy that has given the company a new focus, Karabin told iTnews.

Not only does Verizon plan to keep the Terremark brand; it may potentially fold its security operations under it.

This could potentially provide a key differentiator for Verizon Business in a market saturated with telcos and systems integrators eager to prove their cloud computing credentials.

Terremark brings to the Verizon fold a market-tested front-end interface and service orchestration engine for cloud services.

Combined with Verizon's IT infrastructure - increasingly based on Cisco hardware and VMware software - and connected to Verizon's extensive global network and security services, Karabin feels the company has a new value proposition.

"The world used to split application management and security apart," Karabin said. “Today, you can’t pull them apart."

Data centre re-think

Karabin said Verizon’s utility computing plans are unlikely to compel the company to invest in more data centres in Australia.

He expressed a commonly held view in the industry that the number of new independent data centre builds financed in the past twelve months should more than satisfy local market requirements.

The company is undertaking a strategic re-think of the five data centres it operates in Australia, part of a network of 200 globally.

Karabin said he no longer saw operating data centres as a differentiator, as vendors, telcos and independent data centre operators sign partnerships for the delivery of managed ‘cloud’ services.

"The real estate is expensive, and the co-location model is being replaced by vendors coming in and racking up some expensive gear from which they can offer a service,” he said.

“Customers are less interested in coming in and asking for 50 square metres, with 3MB of bandwidth and five racks.

“I don't think buying data centres will be our gig so much in the future."

The decision as to whether to build or buy data centre assets is now purely an argument based on speed to market, he said.

The company will focus its efforts on high-margin "strategic advanced services".

Security will continue to be a key ingredient in Verizon's cloud proposition, especially to the Government and resources sectors, Karabin said. The company’s IP network will also be used to provide a consistent service to the operations of multinational customers.