Cloud has moved from hype to reality over the last few years and is currently brewing with intense competition, maturing channel ecosystem and growing ISVs, be it in public, private or hybrid cloud space
By Amit Singh
The advent of cloud-based services has changed the landscape across the industries. Numbers speak for themselves. The recent Cisco Global Cloud Index forecasts that 92 percent of the total workloads will be processed in cloud data centers by 2020. It estimates that overall cloud workloads will grow at 26 percent over 2015-20, predominantly driven by growth in the public cloud (35 percent). Private cloud will grow at 15 percent.
India continues to be a prominent market for cloud technology adoption. With multiple growth drivers like investments in local data centres, maturing channel partner ecosystem, and rapidly growing developer ecosystem, cloud spending will continue to dominate the market landscape and cross the $10 billion mark by 2020, including both public and private cloud spending.
Cloud war heating up
Cloud services providers like Amazon Web Services (AWS), Microsoft, Google and IBM are pulling out all stops to increase their market share in the country even as they are making significant investments in local cloud infrastructure. Most cloud companies have either set up local data centres in India, or are in the process of doing so to better serve the needs of Indian enterprises and SMBs.
Setting up local data centres serves two purposes: cuts latency and takes care of the regulatory requirements in sectors such as banking that mandate business-critical data to be hosted within India.
With 3 cloud data centers in Mumbai, Pune and Chennai, Microsoft has made Azure a top choice for the millions of organizations running Windows software. “Microsoft is the first and till date the only cloud service provider with a full range of offerings that include SaaS and PaaS, in addition to IaaS delivered from local data centres in India. Microsoft offers its complete cloud services—Azure, Office 365 and Dynamics CRM Online—from local data centres,” informs Meetul Patel, General Manager, Marketing & Operations, Microsoft.
AWS offers a customizable cloud with a rich portfolio of service options, wide support for third-party APIs and a strong emphasis on securing server instances. It has established a local data center in Mumbai last year.
Google is yet to build a data centre in India but has announced it will launch one soon. According to Gartner, Google Cloud excels in batch computing, Big Data migration, DevOps-style operations and cloud-native applications. Google Cloud is increasingly becoming a viable cloud alternative to Azure for enterprise customers, especially those looking to host traditional IT processes and workloads.
IBM, on its part, has been trying to up its bid for the public cloud market-in addition to its dominant play in the private/hybrid cloud markets-ever since it acquired SoftLayer Technologies, in June 2013. Although considered a relatively late entrant in the public cloud space globally, IBM, in India, seems to be leaving no stone unturned to capture the burgeoning cloud market. The company announced the opening of its first public cloud data centre in Chennai last year.
Further, Netmagic is building 2 new data centers and is expanding capacity to 1.3 million square feet. And Infibeam is opening a tier-3 data center in Gandhinagar.
“We expect technology companies to continue to make investments in innovative go-to-market strategies and partnerships to tap huge opportunities in the cloud space. In fact, large technology vendors are moving from creating products to developing platforms,” says Rajat Kohli, Engagement Manager – Digital Practice, Zinnov Management Consulting.
Further, local players will continue to engage with customers with their ability to influence local market. “Cloud market in India is slowly becoming more crowded and will drive intense competition. Those who can make their services innovative and interesting with unique value propositions will sustain. But over a period, some rationalization will happen as it will become increasingly difficult to sustain for some,” foresees DD Mishra, Research Director, Gartner.
Public cloud scaling new heights
As per Zinnov’s State of Public Cloud Landscape in India (2016), India’s public cloud market is likely to cross the $1.4 billion mark in 2017 and will see a growth of over 34 percent CAGR to become a $3.9-4 billion market by 2020. At $2.6-2.8 billion, Software-as-a-Service (SaaS) will continue to be the biggest spend category within public cloud followed by Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) cumulatively accounting for $1.2 billion by 2020.
While the mature enterprise ecosystem is driving significant demand, the vibrant SMB/ start-up landscape and government initiatives are indeed bound to increase the public cloud consumption going forward.
There is a significant shift towards the adoption of public cloud. “Even for critical workloads some customers are ready to try public cloud. The trust has gone up for sure and concerns have reduced as cloud is gaining more maturity. In India, we see that the adoption was previously driven by mid-market organizations but now large enterprises are also adopting public cloud. So there is a shift happening in terms of perception,” informs Mishra of Gartner.
Supports Vikas Arora, Country Manager, Cloud Business, IBM India and South Asia, “Security in the cloud is now one of the most robust and fool-proof. The data breaches and attacks that are reported on a near daily basis do not have their origins on the cloud. Hence, enterprises and small businesses alike are opting for public cloud.”
According to a Zinnov analysis, IT/ITeS and manufacturing verticals contribute over 50 percent of the total public cloud spend in India. Other contributors include verticals like media & entertainment, e-commerce, retail, BFSI and telecom.
Major traction is coming as most of the mid-market customers want to host applications and processes on public cloud and small businesses prefer to go for SaaS to avoid investments on applications and hardware. Most of them are moving processes like salesforce automation, marketing, service desk, emails and collaboration on cloud, says Sridhar Iyengar, Vice President, ManageEngine.
Indeed, for most of the businesses, preference for private versus public cloud is based on company size. “Private clouds are more likely to be used in the large enterprise, both currently and in the future. Mid-market and smaller organizations are more likely to move to the public cloud, with higher current usage as well as planned deployments as compared with the large enterprise,” shares Vipul Dutta, CEO, Futuresoft Solutions.
Hybrid cloud gaining ground
Hybrid cloud market in India is fast becoming a new standard for delivery of digital transformation. With greater flexibility and better data deployment options, Indian enterprises are increasingly intensifying their reliance on a hybrid cloud setup.
IT strategists recommend all organizations to adopt a hybrid-IT approach, and invest in private and public cloud to comfortably adapt with change. According to a Microsoft-Zinnov study, hybrid cloud deployment at a steady rate could result in cost savings of 5-30 percent for an enterprise.
As per the survey conducted as part of this study, over 40 percent of enterprises have planned or are planning to build a hybrid cloud infrastructure. The primary reasons cited for adopting hybrid cloud solutions include, lowering total cost of ownership (54 percent), facilitating innovation (42 percent), enhancing operational efficiencies (42 percent), and enabling companies to respond to and meet customer expectations more readily (40 percent). “The hybrid model is a ‘best of all worlds’ option that allows customers to benefit from the cloud on their own terms,” adds Patel of Microsoft.
The worldwide hybrid cloud market is estimated to grow from $33.28 billion in 2016 to $91.74 billion by 2021, at a CAGR of 22.5 percent. According to a survey, hybrid cloud adoption has increased up from 58 percent in 2015 to 71 percent in 2016 among enterprises. Telecom, retail/CPG and non-banking financial industries such as insurance and capital market are the ones that see an active demand for hybrid cloud.
“It won’t be surprising, if in just one year almost all companies will be embracing hybrid cloud workloads in some form or other. Fundamentally, hybrid cloud defines how people or organizations will deploy cloud, whether public, or private to best cater to their business requirements,” claims Makarand Joshi, Area Vice President & Country Head, India Subcontinent, Citrix.
In fact, hybrid cloud keeps data exposure to a minimum as sensitive data is not stored over the long term on public cloud. “Apart from large enterprises, hybrid cloud is ideal for startups and SMEs that struggle for resources. The need of the hour is a consistent management approach that not only preserves but also increases agility, while offering a superior level of visibility and control of both cloud resources and the business services that run in the cloud,” states Edgar Dias, Managing Director, ServiceNow India.
Maturing channel ecosystem
The cloud channel partner ecosystem has evolved significantly and India currently boasts of 1,600-1,800 capable partners fulfilling public cloud demands in the market. Of this, almost 15 percent partners focus completely on cloud solutions.
These partners provide extensive customer reach and technical capabilities to support cloud initiatives of cloud technology providers and are helping to grow the market significantly. In fact, we see the emergence of a new breed of SIs called cloud brokers who could effectively deliver hybrid cloud and optimize the workloads of on-premise infrastructure as well as public clouds.
Chennai-based 247 Computing Services, a subsidiary of Futurenet Technologies, has found success with its TechOnCloud integrated cloud platform that offers managed cloud services.
The company invested Rs 50 lakh in its own infrastructure which included a mini-datacenter, back in 2012. The company offers 4 services around managed email, back-up, remote monitoring and DR. “We have observed substantial growth over the last two years with significant demand for cloud-based services for productivity and cost optimization. We have also tied up with AWS to expand our backup and DR services. On the other hand, we are in talks with a private cloud provider to expand our in-house datacenter,” discloses L Ashok, MD, Futurenet Technologies.
In fact with businesses embracing hybrid cloud, organizations have reached a phase of cloud adoption where they are experiencing a cloud sprawl. “Importance of cloud management has increased as the same organizations could have emails on Office 365 or Google Cloud, ERP systems on SAP HANA or Oracle Cloud, CRM systems could be on MS-Dynamics or Salesforce.com and so on,” details Dutta of Futuresoft.
Hence, role of partners has increased with cloud management solutions designed to rapidly provision cloud resources while maintaining consistent management and multi cloud cost visibility to eliminate VM sprawl, he adds.
Growing ISV space
Cloud computing is acting as a leveller for Indian ISVs. They are now leveraging cloud and offering their products as a service. There is a very low entry barrier to achieve this. Because of lower costs associated with Software-as-a-Service (SaaS), they can be competitive against well-established ISVs across the world.
“ISVs today are looked at as holistic solution providers and clients are looking at value addition as they transform their business to keep in line with the changing technology demands,” shares Arora of IBM.
Vendors like Microsoft, IBM and Google are constantly transforming the way they work with ISVs and continue to focus on emerging technology and platforms. These include cloud, analytics, security, IoT, mobile and Blockchain. “Major cloud vendors are extensively working with ISV ecosystem or new-age tech startups to co-innovate, provide the solution/services across the entire value chain of an enterprise. On the other hand, startups are offering interesting use cases deployed on cloud solutions especially in SaaS space,” elaborates Kohli of Zinnov.
Experts say that the second phase of cloud will be to provide higher value to businesses. With the latest technologies available on the cloud platform like cognitive, artificial intelligence, IoT, blockchain, the challenge is to translate them into real business benefits and showcasing them to the enterprise. “It is here that most of the innovation is happening currently, and every day we see examples of sophisticated solutions to resolve many pain points in the life of the enterprise, both from an operational efficiency to creating new scope of growth,” adds Arora of IBM.
We firmly believe that complete cloud transformation will take some time and it’s a step that we need to take very responsibly as it will involve collaborative functioning in order to make cloud adoption and integration a smooth process, concludes Joshi of Citrix.