Colt, The Cloud Conductor

Last week I met up with Colt, the European IT services company.

But wait: “Colt the what?” you are probably thinking: Surely some mistake – don’t I mean Colt Telecom, the cables-in-the-ground backbone infrastructure firm?

Well, actually, yes I do. But Colt is undergoing a major shift in strategy, and portfolio, away from its legacy (=low margin) telecoms business, towards a focus on network services and IT services. Today IT services accounts for around 11% of Colt’s €1.6 billion revenues. PAC thinks that this proportion can double over the next four years. Growing at this rate would put Colt’s IT services revenues in reach of Europe’s top 20 infrastructure services players. Colt is an excellent example of the disruptive force of the Cloud. Cloud not only drives everyone to be a services provider, but also makes everyone dependent on the network for service availability. And if you happen to own a pan-European network and a bunch of data centres, then it puts you at the heart of the Cloud ecosystem. Which is where Colt finds itself.

Colt sees its IT services play primarily in the infrastructure-as-a-service (IaaS) and cloud orchestration domain. Orchestration is one of those words that the IT industry sometimes latches onto, to make itself sound more fashionable or sophisticated (or expensive). The musical analogy is apt: Cloud involves the co-ordination and provisioning of a wide variety of applications, infrastructure and SLAs, all under the control of the conductor. And Colt sees itself as that conductor.

The trouble is, lots of other companies also want to be the conductor. Just last week I wrote on Capgemini’s new orchestration play with Microsoft. An orchestra with more than one conductor doesn’t function well, so Colt will find itself in competition with players from all angles: systems integrators, software vendors, cloud platform providers and network firms like BT Global Services.

That’s not to dismiss Colt’s chances of success. It has built a strong management team, has a clear and focused vision and has a wealthy financial backer (Fidelity). By playing to its strengths and adding some strong partnerships, particularly in the apps area, we see no reason why it can’t achieve its ambitions.

This post was originally posted on the PAC Blog. This post was written following a Colt Analyst Relations event.