Private Cloud Market In India–Total Cloud Spend Expected To Reach 8.2%

Every large tech company is now claiming to be a cloud company; Google and Amazon being the front-runners, though the models implemented by the two behemoths are different. While Google has been promoting Google Docs and Google Apps for anyone to use but only through Google’s interface, Amazon has been renting out its Elastic Compute Cloud space for companies to provide infrastructure to host their applications and store their data. After two decades of highly successful desktop-based office suite, Microsoft has finally moved to Office 365 hosted in the cloud. Apple is also poised to launch its iCloud this fall that will seamlessly integrate all your music, photos, documents, and apps, so that you can access your content on all your devices.

The current position of cloud in India

Most large Indian vendors have built private cloud environments for their internal development and test provisioning environments, and have built public cloud services platforms to deliver mainly IaaS and SaaS  solutions. These public cloud services are just beginning to emerge. Large vendors such as Reliance, Tata Communications, Zenith Infotech, L&T Infotech, Mahindra Satyam, Wipro, TCS, MindTree and Infosys Technologies offer a range of cloud offerings. These services include public cloud services in IaaS, SaaS (including vertical-industry-specific solutions), building and providing managed services for the cloud and cloud services brokering and integration. Customers like Fortis Healthcare, KPIT Cummins, J&K Govt, and IIT Delhi are already using private cloud services.

Many mid-tier vendors are also gearing up to position traditional system integrator services to build and manage cloud environments for end-user enterprises. However, the adoption of cloud-based applications and infrastructures is at a very nascent stage in SMBs. Companies are still skeptical about deciding whether to opt for cloud-based solutions. Cloud is still synonymous with software as a service (SaaS) in India, with limited understanding and adoption of infrastructure as a service (IaaS).

The future of cloud in India

India is a fast-growing market, and the strength of the Indian economy is SMBs, which have a significant presence in manufacturing, pharmaceutical, chemical and other related industries. Typically, these are very small companies working out of industrial estates, and they have very small workforces of as few as 10 to 20 people. These companies do not have the resources to have their own data centers or to manage hardware and software. However, larger companies, such as automobile or steel manufacturers, that buy from these SMBs want them to be IT-enabled to provide increased visibility into and optimize their supply chains.

This scenario lends itself to the creation of community clouds typically managed or controlled by the main player in or supply chain owner of the supply chain. Hence, compared with the cloud adoption rate in the US and Europe, the adoption rate of the cloud in India is lower, but is expected to pick up within a couple of years. A recent study by EMC Corporation and Zinnov Management Consulting says the total cloud spend as a percentage of the total IT spend is expected to rise from 1.4% in 2010 to 8.2% in 2015.
As the next-generation IT delivery model, the cloud is a major challenge for IT vendors whose business models are fundamentally based on customization and old operating principles of complexity, integration and high-value-add resources. They will struggle to keep long-standing customers who are all looking at a long-term migration toward some combination of internal and outsourced cloud computing.

Public vs Private Cloud

There is a clear preference for private versus public cloud based on company size. Private clouds are more likely to be used in the large enterprise (500 employees or more), both currently and in the future.Enterprises with fewer than 500 employees are more likely to move to the public cloud, with higher current usage as well as planned deployments as compared with the large enterprise.

Customers are turning to cloud for cost reduction, to more efficiently use IT,and to improve the business environment. Within the price-sensitive Indian market, cost remains the largest driver for cloud services. Private clouds are generally cheaper, but they may have other apprehensions. With VC funding for startups not very difficult to obtain, cost becomes less of a deciding factor.

While private cloud has has issues relating to security, reliability and performance, users of the public cloud are concerned about the loss of control of data. Depending on what bothers an organization the most, the decision could me more inclined in favour of one over another. Cloud vendors are aware of these top concerns and are working to provide adequate solutions and further drive demand for cloud services.
As of now, very large Indian enterprises are not moving their core, mission-critical and latency-sensitive applications and infrastructures to the public cloud. Most current public cloud adoption has been for applications like mail, chat, collaboration and travel. It is easier to have applications with less customization in the public cloud. There have been ERP and CRM offerings in the cloud, especially from companies like salesforce.com and Ramco. Some Indian companies have moved their websites that disseminate information to be publicly hosted in the public cloud. Customers are looking at utilizing the public cloud for extra compute capacity, especially large media houses and customers that have seasonal requirements for extra compute capacity.

Realizing the advantages of public cloud from the experiences of large enterprises, many SMBs in India may move to the public cloud in the next three to four years. Which kinds of applications would move to the cloud depends on the credibility established by the service providers, and on peer behaviors. However, large enterprises like are already creating strategies to build their own private cloud, starting with development and test provisioning services. In the future, they may host a private cloud for themselves and rent out public cloud services for the public. The Indian cloud scenario is still evolving, there is still some time before it can reach maturity.

[Guest article contributed by Ashutosh Saxena.]

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