Cloud computing is emerging as a popular platform in India, with several business and enterprise verticals adopting the technology. A number of global IT and telecom vendors have entered the Indian market and are offering a wide portfolio of cloud-based services. According to Zinnov Management Consulting, India’s cloud computing market was valued at $860 million-$912 million in 2011. It is expected to reach $4.5 billion by 2015.
One of the key factors driving the growth of this segment is the need to reduce capital and operational expenditure. Besides, cloud computing provides benefits such as higher efficiency and flexibility to users. However, the lack of data security and privacy could pose challenges to the growth of this market. Business Software Alliance, a global non-profit IT alliance, has ranked India 19th among 24 countries in terms of the preparedness for cloud computing implementation. With an overall score of 50, India is ahead of China (47.5) and Brazil (35.1), but is ranked below advanced economies like Japan (83.3), Australia (79.2) and the US (78.6). This indicates the vast untapped potential in the cloud space in India.
tele.net takes a look at the key opportunities, trends and challenges in the cloud computing segment…
Cloud computing refers to a pay-per-use model of computing where applications and software are not owned by users and are instead accessed over the internet. It enables convenient, on-demand network access to a shared pool of configurable computing resources (such as networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. In addition, the technology helps IT organisations to reduce their expenditure on IT infrastructure.
Cloud computing applications/models can be broadly classified as infrastructure-as-a-service (IaaS), wherein companies provide virtual servers with unique IP addresses and blocks of storage on demand; platform-as-a-service (PaaS), under which companies provide a set of software and development tools hosted on the service provider’s servers; and software-as-a-service (SaaS), in which the service provider allows the customer to use only its applications. Businesses benefit from outsourced applications such as on-demand customer relationship management (CRM) and collaboration.
Impact of the cloud
Cloud technology will benefit all businesses, in particular those in the government, health care and education sectors. The Indian government can leverage cloud to bridge the communication divide, especially with the rural population. It will help in increasing interoperability among various government agencies, reducing redundancy and monitoring the effectiveness of government schemes. For the health care industry, cloud provides seamless management and access to electronic medical records of patients, which again will prove to be the most beneficial for the rural population. For the education sector, cloud will play a key role in overcoming the barriers of high costs of providing education and limited reach. The education sector is already using the cloud for email services and is now looking at extending its coverage to critical applications such as a virtual learning environment, learning management systems and student information systems.
Telecom operators are leveraging the cloud opportunity and evaluating their role in the emerging cloud value chain both as providers and users of the service. Cloud services are dependent on network performance and connectivity to a large extent. Thus, managing or delivering cloud connectivity seems to be the logical next step for operators that have established end-to-end connectivity infrastructure and mature delivery processes. They can position themselves as intermediaries providing managed connectivity among cloud users and third-party service providers or can partner with third-party service providers and bundle their own services with the latter’s SaaS and PaaS offerings. Besides, operators can avail of several internal benefits by using the technology as several business operations can be streamlined through the cloud to ensure flexibility, faster time-to-market and cost savings.
Adoption of the cloud has been the highest amongst small and medium enterprises as it reduces the cost of setting up IT infrastructure by facilitating service access through a usage-based pricing model.
During the past few years, enterprises have started experimenting with and evaluating public cloud services by deploying non-mission-critical applications that process non-sensitive data. They are incorporating cloud computing technologies to re-engineer their existing internal IT architecture. The small and medium business (SMB) segment has shown considerable interest in adopting cloud computing, especially SaaS.
Key trends
Several trends are emerging in the Indian cloud market. These include business modelling around long-term contracts, increased awareness about and acceptance of online payment options, and a focus on offline models. Acceptance of virtualisation and outsourcing has opened up avenues for cloud adoption in India. At present, the technology’s adoption is limited to applications such as email, collaboration and CRM/enterprise resource planning (ERP). There has been increasing preference for local infrastructure/data centres. The technology has witnessed increased adoption across verticals such as IT; IT-enabled services (ITeS); manufacturing; banking, financial services and insurance; education; retail; and health care as well as by large companies and SMBs. This has strengthened the channel partner ecosystem for the cloud.
Challenges
Though the Indian market is looking forward to cloud services, there are a few concerns. A major challenge is data security. Cloud computing implies that valuable enterprise data resides outside the corporate firewall, and thus the cloud infrastructure is susceptible to hacking and various attacks. Therefore, multiple clients would be affected even if only one site is attacked. As a result, organisations are continuously adopting new methods for encrypting log-ins, preventing unauthorised access and increasing the overall security level for information stored on the cloud. Several new companies are offering expert consultations and security services directly to cloud hosting providers, thereby allowing them to offer a higher level of security for corporate clients.
Further, adoption of cloud technology requires a complete overhaul of an organisation’s IT infrastructure. It significantly changes the functioning of these organisations’ IT departments and the manner in which they develop, deploy, maintain and support applications.
Other concerns include limited bandwidth availability and the associated costs. While cloud services help businesses in saving capex and opex on hardware, they involve large investments in bandwidth provisioning. The introduction of data-intensive, bandwidth-hungry applications will add to these costs.
In addition, the on-demand nature of these services poses challenges in the assessment of associated costs. The service level agreements do not guarantee bandwidth availability and network scalability. Businesses require a strong service quality guarantee to be able to adopt the cloud.
Inadequate development of applications and study on the return on investment in cloud computing are key deterrents to large-scale adoption of this technology. Other challenges include variations in data privacy standards across regions, no standard code for cloud, taxation issues and the limited availability of technical personnel.
In the coming years, these challenges will be resolved through advancements in technology, reduced operational costs, more supportive regulations and a change in the customer mindset.
Cloud initiatives
Recognising the significant opportunities offered by the cloud segment, Indian operators have started exploring the space through direct investments as well as mergers and acquisitions. The following are the key operator initiatives in this space:
• Bharti Airtel has partnered with Microsoft India to offer cloud computing services to SMBs. Under the agreement, Bharti Airtel delivers Microsoft’s cloud-based Office 365 business productivity solutions to these enterprises. The platform, along with Bharti Airtel’s digital subscriber line and internet leased ports and lines services, will give SMBs the option to create a website with their own domain name, access to the latest releases from Office 365, antivirus and anti-spam solutions, and anytime, anywhere access to documents and email. Prior to this, Bharti Airtel launched cloud computing services using Hewlett-Packard’s technology to provide software and related infrastructure to organisations based on the pay-per-use model. Through its cloud platform, Bharti Airtel has been offering hosted SaaS and IaaS applications to small and large enterprises. Going forward, the operator plans to introduce SaaS applications on the same platform.
• Vodafone India has also launched a suite of mobility products, connectivity services (like internet leased lines) and cloud computing for SMB customers. Initially, the company is offering only mobility and connectivity services.
• Tata Communications has been offering cloud-based applications including email and presentation tools to Indian enterprises through its partnership with Google since December 2010. The company has experience in the cloud services domain as it already offers cloud-based hosting and storage services to large companies using cloud storage and data management technology sourced from NetApp.
• Reliance Data Centre, a subsidiary of Reliance Communications (RCOM), is providing Reliance Cloud Computing services – a hosted infrastructure service – for customers based on the Microsoft platform. Through this initiative, RCOM provides enterprises and SMBs access to enterprise-scale IT solutions, applications and services based on the pay-as-you-go model. These include infrastructure services such as server hosting, data storage and archival, as well as business applications like email, ERP, workflow automation, document management, disaster recovery, firewall services and automatic security updates.
• Bharat Sanchar Nigam Limited has partnered with IT service firm Datacraft India to operate six data centres.
• Aircel has partnered with Virtela, an independent managed network and cloud service company, to offer cloud-based application acceleration services for enterprise users. The service provides enterprises 5-25 times faster access to their overseas business partners, branch offices and data centres. Aircel is leveraging Virtela’s enterprise services cloud and 50 local cloud centres to deliver cloud solutions to subscribers.
Meanwhile, the government is planning to migrate its critical information infrastructure to the cloud. It recently set up a committee to recommend a framework for cloud computing services in India. Cloud computing is also one of the key focus areas of the National IT Policy, which aims to increase IT and ITeS industry revenues from $100 billion at present to $300 billion by 2020.
The Department of IT is planning to set up a national cloud-based network connecting all state data centres to deliver business services through the internet. The department has invited proposals from IT companies like HP, IBM, Cisco and Dell to set up and maintain private clouds in each state. The initiative would require an investment of about Rs 1 billion, but will help in avoiding expenditure on duplicating resources. Data centres involving investments of Rs 40 million-Rs 50 million each are operational in about 16 states, especially in south India where several public services are being offered online. Overall, the national cloud network will help in saving money and time as IT resources like servers and storage will be shared by various departments, apart from providing elasticity and on-demand services.
However, the government is concerned about challenges regarding data integrity and confidentiality associated with the technology. Further, in a scenario where several participants rely on a single service provider,the risk of overconcentration and the failure of the service provider becomes significant.
Conclusion
The cloud promises several benefits in commercial and technical terms; however, there is a need for a well-planned strategy to address the constraints related to its adoption. Going forward, all businesses are likely to use this technology. Companies that have not adopted IT and do not have significant investments in data centres and servers are expected to shift directly to the cloud model.
There are major opportunities for the technology across verticals such as telecom, retail, manufacturing, banking, education, and health care. Moreover, 3G and 4G technologies will provide higher broadband capacity, which will support cloud-based offerings from telecom operators, and information and communication technology providers also have the option of full upfront payment or prepayment of one or more instalments.