“Cloud enables SMEs to compete in the global market”

Where are the chances in cloud computing for Indian startups and SMEs? And what barriers do they face? We at YourStory.in talked to Shree Parthasarathy, Senior Director of Enterprise Risk Services at Deloitte Touche Tohmatsu India Pvt. Ltd., about opportunities and risks in the cloud space.What do Indian clients want in terms of cloud computing?

I would place Indian clients into two different categories, one category consists of the large enterprises, and the other category consists of the SME segment. The large enterprises are more interested in keeping an eye on cloud adoption and the hybrid-cloud-environment; they are currently in testing mode with private clouds. On the other hand, in the SME-segment, the adoption-rate has been significantly higher since the risk-to-reward-ratio is much higher for them. And, also the entry barriers have changed; technology which was previously not available to them is now available on the cloud. But even for them there are challenges like actual costs and SLAs. Yet I still believe that more and more of the SME segment will get into the cloud.

Who are the big cloud computing players in India?

All of the large enterprises are playing significant roles; e.g. Microsoft and IBM. You can segment providers into three categories: those who provide software, those who provide infrastructure services, and those who I would call solution providers and consulting organizations. But there has not been a very detailed market segmentation in terms of who has a better offering or who has a better market share; it is still too early to tell.

How do Indian startups benefit from the cloud?

A lot of SMEs who previously did not have the ability to scale due to their lack of IT-infrastructure now have the ability to do so because of the cloud. But the number of businesses that actually end up scaling will depend on the grade of innovation. Many Indian startups, like travel and education portals, are already moving to provide services in the cloud.

Should startups focus more on infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS,) or software-as-a-service (SaaS)?

I believe that they should focus on a combination of infrastructure-as-a service and software-as-a-service. They should concentrate on IaaS to enable their business processes to have better outreach, and on SaaS to support the software-platform, that way it is available on the cloud.

How can Indian companies, especially startups, differentiate from the big players in terms of USP and competitive advantage by utilizing cloud?

One advantage for the start-ups and the SMEs is that they now have the opportunity to compete in the same market as the big players. For that, they need to have their business model in place, be able to think big, and be able to scale to that size. They are not going to be successful just by utilizing the cloud; it's more about how they are able to scale their business model, scale their operations, and expand to a larger segment. If an organization in the SME-segment is doing very well, they will not only be competing inIndia, but in a global market as well.

Security and redundancy of data are always important topics when it comes to cloud computing. Are there any barriers which Indian companies face while moving on to the cloud?The barriers that Indian companies face are also same as global companies. Once companies are properly established, their appetite for taking risk is significantly lower because it affects their existing market base. So the software and infrastructure providers are taking care of those barriers. They are especially looking at things related to contracts. Today, cloud contracts are still very complex; most of the risk is being pushed to the client, whereas it should actually be shared more equally. And when you take a look at the current model of cloud computing, people are looking at the consequences of data-sharing and what will happen to the particular space? Who owns the data? Where is it going to reside? Whereas, if you take the SMEs who previously did not have access to infrastructure, they do not have that much resistance. Without the cloud they wouldn't be able to enter the market. Now that they are able to take the opportunity, they will take it, even though there is a certain risk in terms of security.

Google is now planning to move some of their servers to Finland because the cooler weather will decrease cooling costs. Is the hot Indian climate a disadvantage compared to cooler northern countries?

I don't think so. Even if the infrastructure is positioned inFinland, they still need people to operate it. From that perspective, it doesn't matter if the cloud is located inFinland,India, orChina; you need people to enable it. The last mile is still going to be people; cloud computing reduces the number of people required, but as new businesses enter the cloud, more people are needed to operate the infrastructure.

And what about the threat of energy shortage?

Yes, there are infrastructure considerations that need to be taken into account. But I think a significant number of large enterprises have been operating for a number of years inIndiaand they have not really faced many challenges concerning infrastructure. With the adoption of nuclear energy and other approaches in the near future, I think the situation will ease. But I also totally agree with you, the industry has to watch the energy-situation very closely, because if the infrastructure costs rise, then the overhead costs obviously rise as well.

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Well, if you are Cloud Enthusiast, then do register now to attend Cloud Conclave 2011 with Dr. Werner Vogels, CTO, Amazon, 19th November, IIM Bangalore.