Cloud: The ascent continues
Indian corporates especially in the SMB segment have been reluctant adopters of technology primarily on cost consideration. The adoption of cloud in its various forms seems to have reversed that trend.
As our last edition of this publication had highlighted, cloud adoption in India would reach significant levels over the next 2-3 years, driven by increasing uptake across a broad base of large enterprises, SMB, as well as, individual (non-corporate) technology users. There has been a surge in adoption of the cloud as most of the SMB are using productivity software services from large vendors like Amazon, Google and Microsoft. These companies have also become early adopters of public cloud model as they are more cost conscious and less sensitive towards data security issues. The SMB adoption at this stage is primarily driven by Software as a Service.7 The segments where we foresee continued adoption of the cloud by the larger corporations could be in CRM, Finance & Accounting and Recruitment processes because of the non-real-time nature of such applications. Other high adoption segments could be Business Intelligence and Collaboration.
The large enterprises, though consuming a substantially high volume of services from the cloud vendors, would remain less inclined to embrace public cloud. Their preferred mode has been a Hybrid Model of adoption which we perceive is a long-term trend and not merely a measure to mitigate the network cost of adopting cloud or the associated risk that arises out of infrastructure related issues. Such a model provides flexibility in application and infrastructure deployment and optimal deployment of internal and external resources.8 The other large consumer of cloud could be the Government to Consumer (G2C) services, which would see a steady growth in the coming years. As such G2C services move more towards an Open data model, cloud adoption especially Infrastructure as a Service (IaaS) would witness significant uptake. This may eventually tilt the balance towards Public Cloud as multiple agencies would be required to access the data. But before such a large scale migration to the public cloud model happens among large enterprises and government, the vendors need to ensure that issues of data security, compensation for data loss, etc. are addressed. Also, improvement in reliability, availability and pricing of bandwidth will play a pivotal role in accelerated cloud adoption.
While Platform as a Service (PaaS) is at a nascent stage in India, adoption of the same could make a sea change in the overall technology landscape in the country. The adoption of PaaS has been very rapid among the more savvy technology start-ups and their number has proliferated owing to the minimal set up cost. In India, the impact of PaaS would be critically dependent on the worldwide adoption of PaaS as a technology. PaaS adoption would change the way bespoke Application Development happens and directly affect the way large IT services companies function. We predict some short time cannibalisation of revenue of Indian IT services providers due to the advent of various cloud models.9 We predict that the IT Services companies would start taking a deeper look at their business model in the coming two to three years to ascertain how they can adapt to the new environment.
(8) Gartner: Hype Cycle for Cloud Computing, 2012
(9) Gartner : Predicts 2013: Indian IT Industry Set to Embrace Uncertainty to Secure the Future