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Cautious and Cloudy

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Publication: The Economic Times Mumbai; Date:2012 Jan 05; Section:Technology; Page Number: 4

Cautious and Cloudy
CIOs at India Inc are not rushing their investments in cloud computing on security worries, erratic broadband availability and lack of cloud-ready applications, says Rahul Sachitanand
Concerns over data security and privacy and an immature ecosystem are likely to stunt the growth of cloud computing in India. Despite the obvious benefits of lower capital expenditure and quicker rollout of new products and services, chief information officers (CIOs) are hesitant to make full-scale investments in the new technology. For now, they are rolling out pilot projects or waiting for the technology to stabilise, before making this radical shift. Unlike traditional information technology, cloud computing relies on storing, managing and retrieving data hosted on the internet, rather than on a local server. As the amount of data generated grows exponentially — a McKinsey estimate believes the amount of data will grow 44-fold between 2009 and 2020 — companies may find it more viable to store this data virtually in a distant server, rather than buy more servers and storage systems to keep it in-house. As broadband services expanded, more companies across sectors started exploring this possibility. Over the past 12 to 18 months, India’s largest two-wheeler maker, Hero MotoCorp, has added 40 dealers to its sales and distribution network as it expands its reach across the country. Hero’s CIO Vijay Sethi leant on a new cloudbased software to hasten this process -- from weeks to a matter of days -- since the rapid expansion would have been impossible with its old technology. “Time reduction from four months to four days is much more advantageous than Rs 1 lakh saved in vendor negotiations,” he says. Based on the success of this project, Hero wants to extend its ‘cloud’ presence into six or seven other functional areas, he pointed out. Despite this major investment, Hero’s Sethi and his peers across India Inc remain cautious about the rollout of cloud computing wherein applications related to supply chain and human resources are hosted on the internet. In theory, this would have resulted in lower capital expenditure because companies would have needed to buy fewer servers and other hardware to store and access their data.

However, concerns over security, insufficient development of cloudready applications, lack of case studies measuring returns from cloud computing investments and erratic broadband availability have forced CIOs to adopt a slow and steady route to cloud computing. Despite the service network implementation at Hero, Sethi doesn’t think cloud computing will see widespread implementation across India Inc. “There has been a lot of talk about this,” he says. “But few companies have taken concrete steps to adopt this technology.” HDFC Bank, India’s second-largest private bank, is taking baby-steps to implement cloud computing. Anand Sankararaman, senior vice-president of IT, HDFC Bank, says a few pilot projects have been rolled out internally to gauge how ready the bank is for cloud computing. However, it neither has a private (data hosted exclusively for the bank) or public (data hosted securely with other firms) cloud set-up yet. “In financial services, there are several concerns over data security and privacy, which aren’t fully answered yet,” he says. According to experts, security and access to data is the biggest stumbling block to a wider cloud computing implementation across India Inc. Sid Deshpande, senior research analyst with technology consultancy Gartner, says basic tools like email, data back-up and video conferencing are the first tools to be moved to the cloud. “There are few cases yet of critical data related to customers or supply chain being cloud based,” says Deshpande.

Executives at storage and security giant Symantec are closely watching the evolution of cloud computing to keep their products and services upto-date and according to one of their internal surveys, there’s a lot to worry. According to the firm’s State Of The Cloud Survey, there is a stark mismatch between expectations from cloud computing and the end results.


efficiency and security. desktop and server virtualisation. According to Amrita Gangotra.” he says.” says Praveen Bhadada. 85% of those interviewed expected cloud technology to improve their IT agility. companies are worried about how long they will spend (and how much money they will invest) in integrating older systems with those built around cloud computing. This means that there will be fewer peaks and troughs of server and storage usage and projects can be rolled out quicker — a key competitive advantage in the extremely competitive mobile services market. Before this opportunity can be tapped. Rather than invest heavily in a complete set-up. “This is not because of the service provider but because we can’t live with the slow speed of broadband. who have limited budgets but need to have a fullfledged technology set-up. which are linked to the business intelligence software. Security paranoia and technology complexity too play a key role in cloud computing.asp?SkinFolder=pastissues2 1/25/2012 .” says Gangotra. VP. may have to invest in IT to keep pace with a flood of orders from mega retailer Wal-Mart. but rather from small companies. Under a third of 150 CIOs interviewed by Zinnov. a small-sized readymade textiles maker in Tirupur in Tamil Nadu. Information Management Group. less than 10% of them connected. Globally. bandwidth costs shoot up and return on investment calculations go flying out of the window. But not everyone is willing to take such a leap of faith. explosive rate of data growth and a changing security threat landscape are the key drivers in this transition. “Most applications are not standalone today…enterprise resource planning software is integrated with data management tools. Others also think that cloud computing has got off to a slow start in India.” says Vijay “There are no financial services companies on the cloud. “We will have a common pool of technology resources using cloud computing.” THE SLOW SHIFT There’s no denying that cloud computing is an area of future technology investment for India Inc. director. but only 57% said that it actually did. Results also fell short in areas of disaster recovery. which can happen only on an online order fulfillment system. as several issues surrounding cloud computing are sorted out. a tight-fisted India Inc will need to be convinced cloud computing is worth their time—and money. http://epaper. India’s largest mobile services firm Airtel has been one of the most aggressive adopters of cloud computing. Gartner estimates that while $74 billion was spent on public cloud services in 2010. this may be a latent opportunity waiting to be tapped. Changes in the approach to IT are also likely to influence a CIO’s decision on cloud computing.” argues Sankararaman of HDFC. “Nearly 75% of the CIOs we spoke to agreed that cloud computing would be an important part of their strategy. When there are hundreds or thousands of users trying to access this data. such a company may prefer to host most of its data online and use pay-per-use software to keep costs down. may not come from large enterprises such as HDFC. have full-scale implementations in place and just over a fifth have pilot projects underway. Airtel or Hero. Bharti Airtel. “CIOs are concerned about access to data and if their IT infrastructure and applications are cloud ready. Gangotra says that the firm will have a common pool of infrastructure on demand for application developers. director-IT. Symantec. For example. few CIOs across India Inc are willing to be pioneers in investing aggressively in cloud computing. “While security and data privacy are the top concerns. Gangotra says that Airtel has even completed at least five proof of concept to manage new cloud-centric applications with its vendors.” asks Sethi. this was a measly 3% of enterprise technology spending. India and South Asia. Zinnov. The hesitancy is because there are few reports which have measured returns from these cloud computing investments—and as the economy sours—people would prefer to restrict their expenditure on technology.timesofindia. The explosion of mobile devices. Sethi is hesitant to place the firm’s mission-critical applications on the cloud because he is unsure of its availability at all times. The uptick in cloud computing then. With over 8 million small and business units in India. Several CIOs suggested that this would go up to 10-12% of spending overall. How do you decide which goes on the cloud first?” Consequently. a management consultancy based out of Bangalore. “What happens if a provider goes bankrupt. rather than a dedicated pool to each team. Gartner says the move towards cloud computing is still in its infancy. the growing trend of bringing your own device to work. says Symantec’s Mhaskar.Cautious and Cloudy Page 2 of 3 According to results from this survey. “The biggest issue is one of perception. the firm began switching to cloud technology around two years ago primarily to reduce costs and carbon footprint globally.

timesofindia.asp?SkinFolder=pastissues2 1/25/2012 .Cautious and Cloudy Page 3 of 3 We will have a common pool of technology resources using cloud computing. Bharti Airtel rather than a dedicated pool to each team AMRITA GANGOTRA Director-IT.