Cover Story
Cloudy Future
By Tabrez Khan
Cloud computing is changing IT service delivery models drastically and with that IT companies’ business models are also likely to undergo a sea change. It’s time for channel partners to take the plunge
An early definition of cloud computing was given by Eric Schmidt of Google, who said that data services and architecture should be on servers which would reside in the ‘cloud somewhere,’ and referred to this practice as ‘cloud computing.’
Today, research agencies such as Gartner have refined the definition to make it more contextual. Gartner’s initial definition encompassed anything delivered over the Web, but this was criticized as being too broad. It has since refined its definition. According to Diptarup Chakraborti, Principal Research Analyst, Gartner India, cloud computing has five essential characteristics: it should offer a pay-as-you-go model, be meterable by use, be scalable, be elastic and be multi-tenanted.
The services which are delivered via cloud computing can be grouped into three categories. First, Software-as-a-Service (SaaS), which means delivering an application to users via a Web browser. Second, Platform-as-a-Service (PaaS), which is a Web-based development and runtime platform for managing the creation, deployment and hosting of SaaS solutions or services. Third, Infrastructure-as-a-Service (IaaS), which is a subscription-based access to foundational computing infrastructure capabilities such as storage, processing capacity and memory.
While vendors and analysts adjust and refine the definition of cloud computing, the concept is already on its way to adoption among businesses, small and big, in various degrees. According to estimates from Springboard Research, India is already the fastest growing SaaS market in the Asia-Pacific (excluding Japan), and is expected to register a 60 percent CAGR from 2008 to 2012. The SaaS market, which was estimated at $54 million in 2008, is projected to be worth $352 million by 2012.
Gartner believes the overall cloud computing market in India will grow to $1 billion by 2014. Zinnov Management Consulting expects the Indian cloud services market to reach $1.08 billion by 2015 from the $110 million that it estimates cloud services to be currently worth. While most of this growth is now coming from SaaS, analysts feel that PaaS and IaaS will catch up.
Says Sanchit Gogia, Research Analyst, Springboard India, “About 90 percent of the current cloud-related spending in India is for SaaS solutions. PaaS and IaaS spending represent less than 10 percent of the total cloud market. This will change over the next several years as PaaS and IaaS-related spending increases rapidly from a very small base.”
So what’s driving the adoption of cloud computing, which, according to some, is still a hazy concept? The answer lies in the basic rationale of cloud computing—it offers a pay-per-use model of IT usage, enabling IT Capex to become IT Opex. Further, the flexibility to scale up or down as per the user’s requirements add to the appeal of cloud computing, especially in a hyper-competitive world where speed-to-market is an advantage.
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Vendors of the cloud
SaaS players: SaaS is currently the fastest-growing segment of cloud computing. It is also the quickest way for partners to cash in on the cloud because it requires little or no capital investment and data center hardware. While the number of players in the market keeps increasing, a few prominent ones are mentioned here.
Microsoft offers its Business Productivity Online Suite. The pricing for this service ranges from $3 to $10 per user per month. It also offers Microsoft Dynamics CRM Online.
Google offers a standard office productivity suite free to small businesses, while the overall Google Apps business productivity framework is available for a fee of $50 per user per year. It includes mail, calendar, voice, wiki and document management and collaboration applications.
Salesforce, a SaaS pioneer, has been offering CRM applications since 1999. Pricing varies from $5 per user per month for the standard version to $250 per user per month for the unlimited version. IBM offers LotusLive Web 2.0 and other collaboration tools in the cloud. Cisco offers a range of collaboration tools including WebEx meeting center, WebEx event calendar and WebEx mail.
PaaS players: Microsoft’s Azure Services Platform allows applications to be hosted and run at Microsoft data centers. According to the company, close to 4,000 apps by various ISVs are already running on Azure. Force.com by Salesforce is a widely-adopted PaaS platform which provides all the tools required for creating and hosting database-intensive business apps.
Google’s application development and hosting platform, Google App Engine, was first released as a beta version in April 2008. It is offered free up to a certain threshold. IBM’s Blue Cloud is a cloud environment for developers to create and test applications.
IaaS players: Netmagic offers several types of IaaS services, including entire IT IaaS, server resources on demand, and private cloud building services. The company is looking for channel partners to take its services to the market, especially in tier-2 and tier-3 cities. Amazon’s Elastic Cloud allows scalable deployment of applications by providing a Web service through which a user can boot an Amazon Machine Image to create a virtual machine, A user can create, launch and terminate server instances as needed, paying by the hour for active servers. IBM recently launched its IaaS offering, the Smart Business Development and Test Cloud. This service gives ISVs a virtual environment through which they can assemble, integrate and validate new applications.
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For several years now, while businesses have been sitting on a decision on whether to go the cloud way or not, last year’s slowdown prodded quite a few of them to take advantage of the lower cost that the Opex-based model of cloud computing offers.
“The recession has been a tremendous catalyst for cloud computing as businesses look to Web-based and hosted services as a means to reduce their IT costs. The number of enterprises signing up for some form of cloud computing service has been increasing, and in India many large enterprises and small scale organizations are turning to the cloud,” says Vamsicharan Mudiam, Country Leader, Cloud Lab, IBM India and South Asia.
On offer
Perhaps acknowledging this trend, IBM has introduced several cloud services options for its clients. These include a public cloud service ranging from LotusLive Web 2.0 collaboration tools to a cloud environment for developers to create and test applications. Additionally, IBM’s public cloud services provide specialized solutions such as data storage, recovery and virtual desktop services.
Cisco offers cloud computing in three areas—collaboration and communication, IaaS, and cloud trust and security solutions. Its applications such as WebEx meeting center, WebEx event calendar, WebEx mail and ScanSafe Web Intelligence Reporting are all available in a hosted model on the cloud.
According to Samir Kumar Mishra, Regional Manager, Advanced Technologies Channels, Cisco India and Saarc, the company’s cloud computing strategy is multi-pronged. “We are delivering products, solutions and services to organizations, so they can build their own secure clouds capable of supporting enterprise-class SLAs. We are also enabling service providers (SPs) to deliver secure cloud solutions and services to their customers. In addition, we are investing in advancing the market for the cloud by driving technology innovation, open standards and ecosystem development.”
Microsoft is making its cloud strategy increasingly visible globally. It recently announced its decision to form a team of 500 direct sales people in the US to support channel partners in taking its cloud solutions to the market. Analysts believe similar initiatives by Microsoft may be in the offing in India. The company currently offers Dynamics CRM Live and Business Productivity Online Suite (BPOS) which is a set of hosted messaging and collaboration solutions. Discloses Vikas Arora, Group Director, Cloud Services, Microsoft India, “We launched BPOS in India in November, and we have already acquired close to 800 customers in just the last few months.”
EMC, NetApp and Hitachi Data Systems are some other players active on the cloud front, offering storage as a service to customers as data growth spirals. “Currently, the digital information being created is 35 percent more than the capacity that exists to store it,” explains Manoj Chugh, President, EMC, India and Saarc.
NetApp’s cloud services fall under the PaaS category as it provides a cloud storage platform called Data OnTap. “Enterprise customers, global SIs and cloud SPs are leveraging NetApp’s Data OnTap platforms as the foundation for a wide range of their internal and external cloud deployments,” says Surajit Sen, Director, Channels Marketing and Alliances, NetApp India.
With companies such as Salesforce, Oracle and SAP already offering applications such as CRM and ERP in a hosted model, cloud computing would appear to have its portfolio ready to support the entire IT needs of an organization. However, there seems to be a divide as to what can be consumed from the cloud and what cannot, at least in the case of large enterprises.
Corporate concerns
The lack of control over where their data resides seems to be deterring some large enterprises from adopting cloud computing in its popular form. Consequently, critical applications are not being consumed from the cloud by large enterprises.
According to Cisco’s Mishra, “Although many third-party vendors of external clouds are seeing increased demand for their offerings, businesses report some concern regarding the infrastructure hosted by third-parties for mission-critical or highly confidential applications. Businesses and enterprises require security, service-level guarantees and compliance control, but with public clouds vendors and not customers are in control of these capabilities.”
Security is another concern. The perception that external clouds are not secure is proving to be a deterrent, according to Mishra. Arora has a contrarian view. “As far as midsized organizations are concerned, they realize that the external data centers of cloud providers are more secure than their own due to the vast resources available to cloud SPs. For larger organizations, it’s the policy and regulatory framework they have to adhere to—rather than concerns about security—which has so far hindered them from moving their critical apps to the cloud.”
According to Jeremy Cooper, Regional Vice President, Marketing, Salesforce, customers are realizing that the perception that the cloud is not secure is incorrect. “We have some of the largest financial institutions as customers, and if there’s one vertical where security of data is of paramount importance it has to be BFSI. If they repose their trust in our cloud-based services, it speaks volumes about their faith in the security offered by cloud computing.”
Public vs private cloud
Concerns about the external cloud and rebuttals to them notwithstanding, two models of cloud computing seem to be emerging. Similar to public cloud computing, vendors have evolved technologies which virtualize the IT infrastructure within an enterprise to deliver it as a service to internal users. This they call the internal or private cloud.
Major data center players such as Cisco, HP, VMware and EMC are strong proponents of the private cloud approach. In fact, Cisco, EMC and VMware have got into a Virtual Computing Environment coalition which is based on a shared vision of the private cloud.
According to Ganesh Arumagam, Director, Channels, VMware India, “Contrary to popular perception, a public cloud is not the only form of cloud computing available to users. As a matter of fact, the private cloud is the first step toward cloud computing, and it is here that the most critical applications of the enterprise will be hosted for quite some time. For non-critical applications, enterprises might use the public cloud.”
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Progression’s move to cloud computing
Vipan Sawhney, Head, Internet Data Center Services, Progression Infonet, tells of his company’s journey from being an SI to becoming a cloud services provider
Our journey to cloud computing started three years ago. From being a systems integrator to becoming an integrated service provider meant a major change in attitude and also technology deployment. This had its own set of challenges because suddenly cloud computing meant competition within.
It meant setting up a completely new business unit offering cloud computing as a service. It meant creating a new service delivery team, training them, putting systems and procedures in place, and scaling up services to a 24x7 delivery model.
Building a healthy and robust security practice was necessary as well.
It required significant investment in land, building and precision air conditioning. It also meant creating redundancies at all levels and having state-of-the-art compute and storage infrastructure.
Today, almost all the cloud computing at Progression runs on blade servers, and leverages the great reliability and performance benefits which enterprise-class storage offers. Investment was also made for 24x7 power availability. This meant putting in redundant generation sets, redundant UPSs and multiple protection circuitries to ensure the supply of the most critical component of a functional data center.
All this helped Progression to become a prominent player in the cloud computing arena. We are currently hosting on our cloud more than 70 enterprises, running their CRM/ERP non-stop, and successfully ensuring e-mail delivery to more than 2,000 users. E-mail, which remains a challenge for many organizations, has so much to do with the cloud. Today our customers are used to e-mail archiving, and have the ability to recover mail lost due to desktop or server crashes; this mail earlier seemed completely out of reach in the owned infrastructure.
Meanwhile, Progression continues to build on its core strength of systems integration. We are leveraging our cloud building experiences to build private clouds for large enterprises. This indicates that both the public cloud and private cloud will continue to co-exist, and that there are markets for both. The large enterprise will move some of its applications to the public cloud and retain some core IT on the in-house private cloud. The SMB can draw considerable functional and economic benefits from the public cloud.
This is not all. There may be other channel partners who wish to take the plunge, and Progression can initiate them into it. The willing partners need not make the large investments which a cloud demands. To build their business or test the waters, they can use white-labeling of their cloud and build on the experience we have gained in the most talked about IT phenomenon of today—cloud computing.
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Mishra says the private cloud emerges stronger than the public cloud because it grants enterprises control over their IT even while providing reduced complexity, increased flexibility, and all the benefits associated with cloud computing.
Arora disagrees. “Although private clouds have their place in enterprise IT, they can never provide the cost benefits, economies of scale and ROI associated with public clouds.” According to Cooper, building a private cloud will always be difficult to justify for most organizations, and will make sense only for some very large entities.
Since both public and private clouds have their merits and demerits, both are expected to co-exist and eventually lead to a hybrid model. Comments Mudiam, “The decision to adopt private or public cloud services is largely dependent on two main factors—the workload and the financial model. Customers looking to leverage the cloud for complex workloads which need high levels of security and compliance are moving toward the private cloud model. For certain workloads such as collaboration they look to leverage a public cloud which provides them an Opex model.”
Partner role
Cloud computing presents a new model of IT where on-premise deployment of software and hardware is minimal, and so is the sale of hardware to customers. So where does the bread and butter of partners come from in this scenario? Do they need to fear cloud computing?
Most vendors say no. According to them, the cloud actually represents an opportunity for partners to move up the value chain. “All channel entities have a role to play in the cloud,” explains Arora. “Regular resellers and VARs can move up the value chain by offering consulting services related to the cloud, including migration and advisory services. ISVs also have an opportunity because with the cloud they have the option of going digital and taking their applications to a larger geographical spread due to the online presence that the cloud entails.”
Lakshmi Narayan Rao, Country Manager, Jamcracker India, believes that the concerns of channel companies stem from the changes in the revenue model that cloud computing brings. “Channel partners are used to an upfront revenue model where they sell or deploy products or solutions and get paid upfront. With cloud computing there won’t be upfront revenue but recurring revenue. Eventually it works in their favor, but since it’s a new model for partners they are a bit apprehensive.”
Adds IBM’s Mudiam, “The channel is far from dead in the SaaS and cloud computing marketplace. It is just being forced to think and behave differently. There are lots of modifications which VARs and SIs can make to today’s basic SaaS solutions, as well as reconfigurations they can make to basic cloud computing services.” According to Mudiam, channel partners have a role to play in both private and public clouds. In the private cloud, channel partners can play the role of a cloud builder or a component reseller. While in the public cloud they could be the cloud operator, aggregator or a marketplace.
“Channel partners have a key role to play in Microsoft’s cloud strategy,” informs Arora. “We already have close to 500 partners selling BPOS in India. Moreover, our cloud platform, Azure, is already host to almost 4,000 applications built by ISVs.”
So how should partners go about leveraging the opportunities provided by cloud computing? Should they sell branded services or create their own white-labeled services to sell? According to Suresh Ramani, CEO, TechGyan, regardless of whether partners sell branded or white-label services, it is imperative for them to build a cloud services portfolio. “The cloud is here to stay, and partners would do well to adjust to the new reality sooner rather than later. Branded and white-label cloud services will go hand-in-hand, and so will cloud services and on-premise deployment of solutions.”
With the increasing standardization of cloud-related technologies, and improvements in security and intercloud operability, cloud computing is making its case stronger than ever.
Cloud computing will co-exist with the on-premise model of IT, and players in the IT value chain should find ways of benefiting from it rather than wondering whether to take the plunge or not. |