BROWSE ARTICLES

INDUSTRY

Retail Energy Manufacturing Financial Services Government Technology Health Care Transportation Other

FUNCTION

Finance Marketing Operations Economics Strategy Human Resources

ISSUES

 

Business Impact of Cloud Computing in India

with Sudhir Murthy, Manager - Cloud Services, Wipro India

 
Cloud services have reached the maturity phase of growth in the developed economies of the world. Therefore cloud-service providers are shifting their focus to emerging economies like India for future growth. Several large companies like Google see a significant growth potential in India for cloud services. 1 In this interview with Mr. Sudhir Murthy, Manager - Cloud Services, Wipro India, we explore the potential opportunities for Indian companies in this booming industry.

    Drivers and Scope of Cloud Computing

    tejas@iimb: The cloud computing space is developing rapidly in other parts of the world. Could you give us an insight into the prospects of cloud computing in India? What are the services that companies can look to offer?

    SM: I would say that cloud computing is already an evolved technology. As you know, cloud computing is useful in reducing capital expenditure and operational costs. It basically builds flexibility by not treating the hardware resource as an investment. Before this technological advancement, there was sub-optimal utilization of hardware resources in datacentres. One had to invest in hardware for even one-time use. This is where IaaS (Infrastructure as a Service) comes in handy by providing flexibility in terms of need dependent hardware usage. For example, if a new product or feature is going to be announced for a website, the company can get additional servers for just 1-2 days when the traffic is expected to be high. It needs to pay towards hardware expenses for just 2 days. Similarly, during night when the load is less, one can reduce the machine configurations and increase it during daytime. Google, Microsoft etc. have gone one step ahead by providing PaaS (Platform as a Service) where one can deploy customized applications on their environment.

    tejas@iimb: Can you throw some light on the drivers and scope for the adoption of cloud computing technology in India? Is the adoption of technology taking more than expected time and disadvantaging Indiaís position?

    SM: The major barrier for adoption is lack of control on the data. Companies are worried about the security, reparability and accessibility of the data. Basically, the issue is whether one can get the right benefits and have control over all the issues which is not possible in case of shared infrastructure. While security continues to be the prime concern, there is a lot of progress being made on this front. We feel that adoption in the Indian market will follow after adoption in the American and European markets. However, companies have started using cloud extensively in India as well. The much talked about UID project of the Government of India is entirely based on cloud technology.

    Cloud Services and potential targets

    tejas@iimb: Given that Wipro is very different from product based companies like Google and Microsoft, what kind of services can it look to offer in India? Also, what kind of companies would be its potential target?

    SM: There are two key aspects from an ISVís (independent software vendor) perspective. Microsoft or Google just provides the environment and the platform but someone has to go and implement it. For example, for building a Java application, somebody has to go and implement it to work on a Google platform. Now, all these vendors require ISV support to popularise their platforms. ISV is the driver for cloud adoption as it talks to the customers and advises them on the suitability of cloud, cost savings; selects the right platform and points out its advantages. Even among the customers, there is mix and match in the sense that within the same company, some prefer Java platforms while others may prefer Microsoft platforms. Hence, ISVs play a very critical role and currently there is a lot of investment being done in developing cloud expertise. With its inherent advantages of flexibility and risk mitigation, cloud has become an essential part of our service offerings. Lack of expertise in this domain may result in lost sales to other ISVs who have greater expertise. ISVs can also look to provide consulting services as all applications in a company cannot be moved to the cloud. There may be industry regulations or government regulations which may act as barriers. So the ISVs can point the salient applications that should be moved to the cloud and so on.

    We feel that customers are increasingly becoming aware of cloud services and becoming more demanding and knowledgeable. So we as ISVs need to develop expertise in cloud technology if we want to retain and grow our customer base.

    tejas@iimb: What are the major domains or customer-profiles which the ISVs look towards while offering their cloud services?

    SM: Cloud model may be applicable for any type of customer, large or small. Companies like Wipro or Infosys always try to win accounts of large customers because of their larger portfolio of applications. There are always some things that can be moved to the cloud, maybe some supporting applications, in-house applications or applications that donít belong to the core activities of the company. In a nutshell, we can always approach a company to provide them better services for the tasks they already do. It depends upon the vertical or domain one is approaching. Banking and financial institutions are obviously hesitant to adopt cloud services as security is a major concern for them. But companies in healthcare, manufacturing or telecommunications domains shift to cloud quickly. Primarily a customer goes back and tries to analyse the adoption of cloud computing in its domain in the industry. If a company sees a big company in its domain moving to cloud, it also adopts it thinking this must be the right way to do as the domain experts are also doing the same.

    tejas@iimb: Apart from the consulting and advisory business model of the ISVs, is there scope for providing services of server management for companies in ISV datacentres?

    SM: Absolutely, there is a lot of scope. While all the IT companies may not be able to do it due to the heavy investments involved, most of them do. In fact one of the key reasons for Wipro winning the UID contract was the availability of very good datacentres, where we could host a lot of applications. Clients want infrastructure from us instead of getting hardware resources from say Amazon, because they feel secure. They feel more comfortable in getting it from an ISV as it is rather like an extension of the traditional ODC (offshore development contract).

    Business model and addressing security concerns

    tejas@iimb: Is the cloud services business driven from top to bottom? Do clients approach ISVs with specific requirements related to cloud or do ISVs take a major step by identifying key potential targets and pitching to them?

    SM: Usually it is the client who is very clear regarding their requirements on cloud. A recent deal that we won was primarily due to Wipro providing a datacentre option which became a differentiator in our service offerings. So, nowadays customers are very clear about what they want from an ISV offering cloud services. However, sometimes a customer may not be fully educated about an ISVís capabilities or its datacentre hosting models. In either case, we usually propose to the client regarding the value proposition of datacentre hosting facility.

    tejas@iimb: We wanted to delve a bit deep into the security concerns, specifically, to know how the companies are actually trying to mitigate those risks. Do we have some parallels with the security concerns with Blackberry, where the location of the server was an issue?

    SM: This is definitely one of the key discussion points whenever cloud comes into the picture. There are three perspectives one should look at regarding security. From the vendorís perspective, say Amazonís, it is important to look into the security measures that it has taken to secure its infrastructure. There are several international bodies who give certifications to host companies based on the security environment. Thus all the big players are certified in terms of security. They donít compromise on security at any cost. This is more of a standard now rather than a point of differentiation.

    The second aspect is the application specific security of a company. Many companies like to use software security services like encryption/decryption algorithms. Sometimes it becomes a barrier if a company is unable to offer such services to clients. Security is also about perception. A client might be concerned that its data might be shared with its competitors as they use cloud services from the same vendor. This perception has slowly fizzled out. The third aspect is the communication security. This is a combination of risks by both the client and the vendor.

    Future Outlook

    tejas@iimb: We know that the internet penetration in India is very less compared to the developed economies of the world. How is this going to impact the business environment in India and would it cause only the Tier-I or Tier-II cities to be targeted?

    SM: There are a lot of private companies that are interested in adopting cloud like Tata Communications, Bajaj Allianz etc. Even for the UID project under Mr. Nandan Nilekani, it was decided to use cloud computing right from the first day. They didnít want to invest anything on infrastructure, real state or services. However, I would say that the awareness of cloud in India is very little, even in Tier-I cities. Service provider companies organize many events and seminars to spread awareness, and invite all the top tier companies to attend them. They let the companies know about the advancements in the cloud computing domain and how it can be beneficial for their businesses.

    tejas@iimb: Do you foresee chances of new and small entrepreneurial firms also coming up in the cloud space apart from the big 4-5 IT services companies like Wipro? If yes, what strategies should these small companies adopt to compete with the big giants?

    SM: There is a lot of innovation that is happening in the cloud space. All the big IT players have an added advantage of aggregation of services like in having their own datacentres. They have accelerators that fasten the overall migration to cloud and expertise to solve problems on any of the platforms (Microsoft or Google). They also have a good pool of talented resources. Yet, there are also a lot of small players who offer niche services to these big IT companies. Amazon, for example, requires a lot of supporting tools like data extraction, data monitoring, data transition etc. to support its services. In many cases, the small players offer a more efficient and optimal solution than the big companies, as they specifically focus on only one type of specialized solution. Hence, there is sufficient scope for small and medium companies as well. The only issue is that they have to spend some time in analysing how they can bring a differential product to the market which can be sold to clients. They should try to complement the big IT companies instead of taking them head-on, as it would be hard to fight with the latter due to their gigantic volumes.

    tejas@iimb: Is the Indian business solely driven by ISVs without a push from multinational companies like Amazon or Google for its promotion? Do you see a similar pattern in the future as well or is there a scope for an intermediary player to come in picture?

    SM: All the big companies like Amazon or Google will definitely come to India. It is just a question of timing. Right now, their major focus is on American and European markets due to better penetration of internet and awareness with regards to cloud computing. They get a huge volume of business from these regions. But, as the market saturates, they will shift their focus to emerging markets like India.

    Conclusion

    From the interview it is quite evident that the portfolio and quality of services would be a differentiating factor in this industry. Also, security as a threat is overrated, as all the major ISVs have standardized security certifications. The Indian companies should target the SMEs and government based projects as they are going to be key drivers of revenue in the future.

    Profile

    Sudhir Murthy is the Senior Architect in Cloud Computing Division of Wipro Technologies. He has over 11 years of experience in the IT industry and is an expert in application infrastructure and cloud computing technologies. Murthy did his Batchelors in Telecommunication Engineering from Bangalore University and was a participant of the Executive General Management Programme in IIM Bangalore.

    References

    1. http://www.moneycontrol.com/news/business/google-sees-huge-potentialindia-cloud-services-market_537809.html, Shailesh Rao, Google sees huge potential in India Cloud Services Model, Last accessed on 10th January, 2012

    FEATURED VIDEOS


    Mr. Sanjay Kalra, Former CEO, Tech Mahindra

    Sourav Mukherji, Associate Professor, on Knowledge Management in Indian Software Firms

    Dr. Catherine Nickerson, Associate Editor, Journal of Business Communication (Sage)

    Dr.Trilochan Sastry, Professor, IIM Bangalore

    Dr. Padmini Srinivasan, Assistant Professor, IIM Bangalore

    Dr.R. Srinivasan, Associate Professor, IIM Bangalore

    Dr. Vijaya Marisetty, Associate Professor, IIM Bangalore

    Dr. Rajeev Gowda, Professor, IIM Bangalore
    All materials copyright of the Indian Institute of Management, Bangalore © 2014
    Feedback . IIMB Website . About Us. Guidelines for Contributions. Disclaimer