China Telecom dials up pressure on the competition

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One of only three telecommunications operators in China, China Telecom’s Jiangxi Subsidiary is a full-service integrated information service operator and the world’s largest wireline telecommunications and broadband services provider, with 53 million broadband subscribers at the end of 2009. Offering services including basic and mobile telecommunications, internet access and information services, China Telecom has locations in ten provinces in China. 20,000 of the company’s 312,520 employees work in the Jiangxi subsidiary.

In the fiercely competitive telecoms market, innovation is everything. China Telecom is constantly under pressure to bring new products and services to market faster than its competitors, to increase the chance of garnering a larger market share.

Dr. Lifeng Liu, Assistant General Manager in the Network Development Department explains: “Traditionally we followed a set process to launch a new business application. Our marketing departments would identify a potential customer need, define a response and pass this back to the back-end departments to assign the necessary IT resources to turn this into a real product or service. We had a relatively mature and segmented workflow in place, which worked well—but we felt it could be faster and more efficient.”

As the company continued to grow, it found scaling up its resources problematic. The high cost of data center floor space and energy presented a further obstacle to speed to market, as China Telecom traded off the speed of new products going live against prohibitive operational costs.

There is also an increasing demand for products which connect with multiple services and devices, introducing a considerable challenge for China Telecom.

“Because our departments each had their own pool of resources, developing a product with numerous functionalities was often very complex,” says Dr. Liu. “For example, we offer SMS services through both our mobile telephone network and our website, but we had to exploit a lot of resources to get this up and running, as it involved two separate departments.”

Selecting IBM

China Telecom began to consider developing a private cloud computing model, leveraging virtualization to optimize use of resources. The Jiangxi subsidiary was one of four sites selected for the pilot implementation.

“Cloud computing is a very popular idea in the industry at the moment: many companies are speculating about the benefits it could provide, but are also worried about the risks inherent in new technology,” comments Dr. Liu. “We knew, with the right partner, we could seize the opportunity to get ahead of the competition, while protecting our shareholders’ investment.”

Following a lengthy exploration of competing offerings, the company selected IBM technology.

“There were a number of reasons for China Telecom choosing to partner with IBM on this innovative project,” explains Dr. Liu. “We were impressed by their reputation, as they seem to be the leader in the field of cloud computing, and we had access to many case studies and customer references that confirmed this. Also, since they have a specialized telecoms unit, we felt that they truly understand the telecoms business—better than HP or Microsoft—which is a great advantage.”

Sharing resources with virtualization

The company worked with IBM Lab Services and IBM Global Technology Services and IBM Business Partner HCF to deploy IBM Power® 570 servers at four sites including Jiangxu. IBM Systems Director VMControl™ is used to help China Telecom simplify the build-up and deployment of virtual servers, manage the virtual pool as a single system, and move workloads and adjust resources dynamically. IBM PowerVM™ Enterprise Edition is used to divide the servers into multiple virtual partitions, creating a private cloud.

“Ultimately, virtualization gives us the tools to transform our rigid workflows into a much more fluid and flexible business model,” says Dr. Liu. “We can efficiently form shared pools of resources, dynamically adjusting the server capacity assigned to each department to meet changing workload demands.”

China Telecom also chose IBM System Storage® SAN Volume Controller (SVC), which provides highly flexible access to storage resources. SVC allows storage from multiple devices, including non-IBM systems, to be pooled and presented as integrated volumes to applications.

“The IBM SAN Volume Controller gives us complete control over our storage environment,” comments Dr. Liu. “It has really impressed with its reliability and security, leading us to believe it is truly an enterprise-level storage product. It enables us to move data within the virtual space without the need to stop operations, leading to greater continuity of service.”

IBM Power 570 servers provide industry-leading performance at a reasonable price point, with superb availability and scalability enabling China Telecom to do more.

“The performance-price ratio of the IBM Power 570 servers is very impressive,” says Dr. Liu. “We have experienced increased availability and reliability since deployment, as well as improving response speed of the system. It is also highly scalable, enabling us to grow efficiently and without disruption to services.”

Significant savings

China Telecom has achieved considerable cost savings since implementing the new solution, generated through higher utilization of hardware resources.

“Our primary estimate is that the IBM solution has improved hardware utilization by over 50 percent, although this may in fact be higher,” comments Dr. Liu. “Sharing resources through the internal cloud has allowed us to consolidate hardware, translating into 50 percent cost savings in terms of CPU and storage.”

The increase in consolidation has led to China Telecom requiring less data center floor space and power. Built-in energy-saving technology in the IBM Power 570 servers helps to lower energy costs without sacrificing performance or business flexibility.

“The built-in load balancing and energy-saving capabilities in the IBM Power 570 servers enable us to use resources as efficiently and effectively as possible with minimum effort,” says Dr. Liu. “The centralized cloud computing model also allows us to take a more economical approach to maintenance, using virtual teams of just three to four people to manage the entire system, whereas before this took at least ten people. Consequently, labor costs have reduced considerably.”

Opening up new markets

By leveraging an innovative cloud computing model, China Telecom has gained a key competitive advantage, accelerating the time to market for new products and services.

“As far as we know, we are the only company in our market to adopt this kind of approach to infrastructure,” says Dr. Liu. “This made it a risky endeavor, but one we feel has paid off, giving us a real edge over the competition.”

“It is so much easier to get new products through the pipeline now, since different departments can work together and get access to the capacity they need pretty much as soon as they want it. It used to take us three to four months to develop a new business application, now it is only two to three days, giving us a much better chance to corner the market before our competitors have a chance to enter the fray.”

Looking to the future

Currently, the internal cloud is only in use at four pilot sites, including Jiangxu—although the success of the project has led to plans to extend its use throughout China. Furthermore, there are plans to exploit idle resources by introducing a new “resource rental” service to other companies.

“Embracing cloud computing has opened up many new opportunities for China Telecom, which we are keen to capitalize on,” says Dr. Liu. “We really feel it is the future of computing, and are proud to have worked with IBM to deploy this solution while it was still relatively new and innovative.”