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Case Study for Strategic Management
Cloud computing has the potential to be the next major driver of business innovation, as it promises to enable new business models and servicesacross almost all industries, especially telecommunications, healthcare and government. As well as it opens new customer segment to cloud provider. Cloud has the potential to become the next major driver of business innovation by enabling entirely new business models across a wide range of industries. The cloud computing market will include offerings sold as a service such as business processes, software, platform, and infrastructure. And many of these cloud services will be consumed through a pay-per-usage pricing model. The cloud market is appealing to new entrants not only because of its size and growth, but also due to the business potential it brings to a company. Cloud providers benefit by accessing new customers and markets, improving their deployment times, potentially lower their costs and achieving new revenue streams. We have analyze cloud service provider strategies by evaluating their business models for cloud computing services/offerings, strategies operations and target customers.
WHAT IS CLOUD COMPUTING
³Cloud computing i Int net ed computing, whereby shared resources, software, and information are provided to computers and other devices on demand. Cloud computing describes a new supplement, consumption, and delivery model for IT services based on the Internet The concept behind cloud computing is very simple: it lets you run your business computer applications over the Internet, without having to buy, install or manage your own servers. You can run your company¶s IT operations with nothing more than a browser and an Internet connection. Applications, operating systems, servers and network switches all are available from within the ³cloud´. The benefits of adapting Cloud Computing for any business are great. Here are some of them.
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Quick turnaround or deployment time to be up and running Increased availability of high-performance applications to small/mediumsi ed businesses ± Applications like ERP, CRM or ecommerce applications which were out of reach for Small and Medium businesses are now available at a fraction of a cost. Reduced implementation and maintenance costs since you pay as you go ! Increased Storage on demand / Flexible and scalable infrastructures ³Greening´ of the data center / Reduced Energy costs Highly Automated - No longer do IT personnel need to worry about keeping software up to date. Greater Mobility to your Workforce - Employees can access information wherever they are, whenever they want. Allows Businesses to Focus on their core competency Optimum Performance - The cloud adjusts to your company¶s performance needs, dynamically assigning capacity whenever and wherever you need them, and automatically adjusting to spikes in your business. Security ± For many companies, the level of security and availability, disaster recovery and back-up provided by a software-as-a-service provider far exceeds that which they can provide themselves.
Today for organizations ² big and small ² it is the easiest means to save on costs, as well as leverage on advantages such as security, reliability and scalability. For example, when broadcasting major Star India opted to implement private cloud architecture, availability of resources on the fly and low-cost were the motives behind the move. Cloud computing services, as we know, is a general term for any model that involves delivering hosted services over the Internet. These services are divided into Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Softwareas-a-Service (SaaS) that are made available over the Internet Cloud computing is a better way to run our business. Instead of running our apps ourself, they run on a shared data center. When you use any app that runs in the cloud, you just log in, customi e it, and start using it. That¶s the power of cloud computing. Businesses are running all kinds of apps in the cloud these days, like CRM, HR, accounting, and custom-built apps. Cloud-based apps can be up and running in a few days, which is unheard of with traditional business software. They cost less, because we don¶t need to pay for all the people, products, and facilities to run them. And, it turns out they¶re more scalable, more secure, and more reliable than most apps. Plus, upgrades are taken care of for you, so your apps get security and performance enhancements and new features²automatically. The way we pay for cloud-based apps is also different. Forget about buying servers and software. When your apps run in the cloud, you don¶t buy anything. It¶s all rolled up into a predictable monthly subscription, so you only pay for what you actually use. Finally, cloud apps don¶t eat up our valuable IT resources. This lets we focus on deploying more apps, new projects, and innovation. . The bottom line: Cloud computing is a simple idea, but it can have a huge impact on our business. _____________________________________________ ___
Significance of cloud computing for I vendors
1. Cloud has strong value proposition for existing business users of IT. 2. Cloud enables providers to access entirely new markets 3. Cloud is aligned with broader technology trends and demand 4. Cloud technology is real. Many analysts and IT industry experts are bullish about cloud computing, and are forecasting robust, double-digit annual growth. The market potential for cloud computing is forecasted to be $66B by 2012 for software, platform and I nfrastructure as a service; adding business process as a service and cloud support services could push the total cloud market to well over $100B.
Element consider to form winning strategy for cloud market
To win in the cloud market requires an innovative business strategy and business model. The strategies reflect a rethinking of market fundamentals and truly envision new models to better serve customers. We will see a wide range of cloud business models emerge over the next few years, and most of these will likely fail. Of the ones that survive, the profitability of the business models will vary greatly. A few winning business models will maintain healthy profit margins while others will find themselves relegated to much smaller, commodity-based profit margins
There are three key components that define cloud business models:
CUSTOMER FUNCTION: Cloud Delivered Services- what a company sell i.e. their product CUSTOMER GROUP: Target Markets- to whom it would be sell i.e. their customers TECHNOLOGY: Operations- how to create and deliver what one sell And to successfully implementation of business model a good strategy would be require. Strategy of all cloud vendors would be to create long-term value. ________________________________________ CUSTOMER FUNCTION: Cloud Delivered Service The first component of a cloud provider strategy is to clearly outline the service that will be offered. Most cloud enabled solutions will have four layers in their ³solution stack´: Content Process and applications Integration and middleware Infrastructure and devices Cloud provider mainly tries to outline competitive advantage for each layer. These layers divide the cloud market into following sub market:Business-Process as a Service (BPaaS). Deliver an entire business process as a service via the Internet. Examples include payroll, printing and e commerce from providers.
Software as a Service (SaaS). Deliver a standardi ed application running on a cloud infrastructure, with multi tenancy, accessible from various client devices through a thin client interface such as a Web browser (e.g., webbased email). Target customer would be END USER
Platform as a Service (PaaS). Build and deploy new internally developed applications onto cloud infrastructure, exposing services needed to build an effective application including billing and sign-on services used by APPLICATION DEVELOPER Infrastructure as a Service (IaaS). Obtain processing, storage networks, and other fundamental computing resources as a service where the consumer is able to deploy and run elements of the stack, such as operating systems, on the infrastructure service. Mainly for NETWORK ARCHITECTS
Since A single company does not have to be the owner or operator of all four solution layers. Hence, a key part of developing a cloud strategy is to define which component(s) you will provide and which components will be provided by a business partner that¶s why partnership-based business models normally seen in cloud market. In addition to direct cloud services, there is a wide range of support cloud services and components typically offered by outside providers, such as consulting firms, but also delivered by cloud service providers themselves. These services include training and consulting For example, SalesForce.com offers training and consulting to complement its SaaS and PaaS offerings. _______________________________ CUSTOMER FUNCTION-Target market There are many potential target markets for cloud adoption Most current cloud providers narrow down their respective markets to some combination of the following segments: Industry or Functional Verticals among Large Enterprises While currently focused more on internal cloud enablement some large enterprises will migrate toward adopting shared cloud verticals that reduce cost or risk in areas that are important to the business, but are not key sources of differentiation, such as back office functions or regulatory compliance. For example, pharmaceutical companies could join forces via an industry vertical cloud focused on regulatory compliance to drive cost savings and efficiency.
SMBs Many workloads offer the least pain and most significant gain for the SMB segment. Cloud providers are targeting smaller customers who can benefit from cloud¶s compelling economies of scale, and who are less hindered by large, existing IT capabilities. Financial services companies have strong relationships with their customers, and could use this delivery model for business services Emerging Markets With limited resources, customers in developing markets will respond to the lower up-front investment costs and ability to scale service consumption in times of growth. For example, automotive manufacturers could use cloud to reach dealerships in distant markets. Other Cloud Providers Cloud services serve as building blocks, where a provider sells one cloud service to another cloud provider to construct a larger service offering. IaaS providers often align with SaaS providers to jointly deliver a more comprehensive cloud services. Such as Red Hat sell their platform to Microsoft.
Consumers Mobile devices, online email and other consumer services benefit from numerous new applications made available through cloud delivery models. The another choice for cloud provider that whether establish their market for a public cloud or provide a private cloud. Well demand is rising for public cloud services around HR benefits procurement, ecommerce, data warehousing and archiving. ___________________ TECHNOLOGY-Operation The operations component of a cloud business model includes the development of key elements needed to deliver business services via the cloud. This includes business operations and financial reporting designed to be more agile by more quickly engaging customers, tailoring services to fit customer needs pricing for smaller units of a service, and establishing a viable financial model. The operating model of the business strategy defines the sourcing model, partnership strategy, and deployment plan for the development of these capabilities. Many providers are pursuing strategic partnerships to round out their capabilities and achieve the operational requirements associated with rapid service delivery. Alliances and partnerships are often keys to success in the cloud ecosystem.
Service provider strategies focus towards address pricing models, go-to-market approaches, business intent and value propositions, in addition to defining services and customers. Current cloud providers are capitali ing on first-mover advantage. They are delivering services, learning from their mistakes, and capturing market share along the way. Some of their success has been at the expense of traditional players who have not ventured into the cloud marketplace. One of the defining aspects of cloud computing is pay-per-use pricing models. However, variations are possible within this basic tenet of cloud. For example, some providers priced base on their brand and reputation rather than purely based on hourly usage rates. The challenge is determining how to measure this value and how to capture that value through pricing. Some cloud providers are offering cloud-based services directly to customers. Others are acting as enablers and integrators by providing their products and services as building blocks for other cloud service providers to then sell to their own customers. Another consideration for go to market strategy is targeting the right decision maker for the particular type of service delivered. Providers have tailor their offerings and value proposition based on the target buyer. Cloud providers are deploy new services to their customers in days . Well main focus is to differentiate their product. Let us consider cloud offering of few vendors to understand how different cloud vendor differentiate their product and targeted to whom, and what are their strategies to sustain in market for long run and their competition.
Type of Cloud: Public Cloud Type of Service:IaaS Key Offerings:EC2 , S3, Simple DB and Map Reduce
Specializes in IaaS. It offers through Amazon Web Services (AWS): Amazon Elastic Compute Cloud(EC2), Amazon SimpleDB, Amazon CloudFront, Amazon SQS. It claims to have 82 billion objects stored in Amzon S3 (Simple Storage Service) As on date they are the only provider to offer everything .
Amzaon is the undisputed winner, without any much competition till now. We may call it an early-bird advantage.
Type of Cloud: Private Cloud,Public Type of Service: SaaS,PaaS and IaaS Key Offering: Online Service, Windows Azure Platform and Windows Server Hyper-V,Office Window apps. Specializes in PaaS. It offers Azure, a Windows-as-a-service platform consisting of the operating system and developer services that can be used to build and enhance Web-hosted applications. Azure is available for VS 2008 via Web Platform Installer. Visual Studio 2010 Beta 2 has all the features we need to code, debug, and deploy our cloud service. Microsoft strategy has the right portfolio and articulates the right story to all the entities in the ecosystem. Microsoft has always dominated is the operating system. It started on the desktop, moved to the server, and now it is moving into the cloud Microsoft made a major leap with the release of Office Web Apps, a cloud-based version of its Office software. Web Apps lets users to upload documents from their computer to Microsoft¶s cloud-based Docs.com, and allows accessibility from any machine or device. Here the documents will also be stored in remote server instead of being stored only in personal computers, laptops or company server. Except for the security factor of sharing important files on the web, it will prove to be a good improvement.
__________________________________________________________________ Microsoft charge price for the components of its Azure cloud computing platform, which is consumption-based computing costs are slightly lower than Amazon's costs, but, Amazon's Linux-based service undercuts Microsoft's Windows pricing. However, Amazon's Linux-based offering is $0.10 per computing hour, and it also charges slightly less for storage than Microsoft. There are many analyses going on around the web about how these pricing strategies will play out over time.
Type of Cloud: Public Cloud Type of Service: Saas and PaaS Key Offerings: Google Apps and Google App Engine Specializes in PaaS & SaaS. As SaaS it offers Google Apps: a web-based communication, collaboration & security apps which includes, Gmail, Google Calendar, Google Talk, Google Docs & Google Sites. 15 Sep 2009, Google announced that it will provide GovCloud, which will host Google Apps in a separate data environment with enhanced encryption for meeting state and government security standards. As PaaS it offers Google App Engine: a platform for developing and hosting web applications in Google-managed data centers. Currently, the supported programming languages are Python and Java (by extension other JVM languages are also supported). You build your application using Google¶s PaaS and Google handles deploying code to a cluster, monitoring, failover, and launching application instances as necessary. Good news, Google App Engine is free, but only up to a certain level of used resources. Google¶s strategy is to put its presence in as many clouds as possible. Hence the company¶s launch of products such as Living Stories project in the news media, promotion of Google Apps in the enterprise market and recently the launch of Google Groups, a product that is integrated with the existing Google Apps such as Google Docs, Google Calendar, Gmail, Google Sites and Google Video. As part of its cloud strategy Google wants to use Google Groups to make the product more attractive to the enterprise sector since one of the product¶s main features is project collaboration among employees located in diverse sites. This report also looks at Google Trends and Insights and how they are tied to Google¶s
strategy in building an established presence on the Internet cloud. It also analyzes Google¶s future online strategy and demonstrates its relation to the cloud.
______________________________________________ _____________________ Microsoft and Google have been in a very public debate over which cloud-based program is the better of the two. Most people agree that the latest versions of both Google Docs and Microsoft Office 2010 are both very good, very solid pieces of work. But what makes Microsoft a little better is its ease of use. Microsoft has taken its popular ribbon interface and extended it to all of Office 2010¶s programs. So the users who upgrade will feel familiar with the new programs. Microsoft says the ribbon interface helps to find options quickly and reduces clutter on the screen, which saves users time. The fact that Word is world¶s most widely used editing software adds to the ³little better´ factor however Microsoft¶s attempt to step into the cloud might be small and a little late. ___________________________________________________________________
While all the competition is giving you either a specific suite of applications (Google Apps, Salesforce.com) or component blocks (Amazon EC2), Microsoft Azure is at the heart a platform.
Types of Cloud: Private Cloud Type of Service: SaaS and PaaS Key Offering: Lotus Live and IBM Web Sphere Cloud Burst Appliance The Big Blue has announced Blue Cloud computing platform way back in the year 2007. IBMSmart Business Development and Test on the IBM Cloud is designed to augment and enhance software development and delivery capabilities, particularly in large enterprises. On 16 Nov 2009, IBM announced the world¶s largest private cloud computing environment.The cloud will launch initially with more than a petabyte of data, the equivalent of more than 300 billion ATM transactions. Strategy :- Having a strong partnership model.
Type of Cloud: Public Cloud Type of Service: SaaS and PaaS Key offering: Salesforce.com CRM and Force.com
Leader in SaaS. Offers Salesforce CRM (Sales Cloud 2, Service Cloud 2) & Force.com Platform (Custom Cloud 2, Development Platform).Targeting SME market, it has niche and unique offering.
Type of Cloud: Private Cloud Type of Service: IaaS Key Offerings: VCloud
It offers vCloud: Run, secure and manage applications in the private cloud or have them federated on-demand to partner-hosted public clouds. vCloud is giving a tough competition to more established Amazon¶s AWS. It was recently in the news for partnership with Cisco & EMC, to offer equipment called Vblocksand support a new joint venture called Acadia that will help business customers and service providers build out clouds based on the Vblock gear packages Well,having positioned it as a strong Virtualization platform vendor , they become the natural choice of Private Cloud.
Offers Cloud Ware: architecture to provide an open framework to allow the development of a cloud computing environment that¶s open enough to work on any web/enterprise application. Lack of cloud computing standards has lead to a vendor-lock, where every cloud vendor has proprietary cloud. What if we want to share our application among different vendors/clouds? Currently we can¶t. Cloud Ware is a big step towards bridging the clouds, and creating standards which will lead to open environment for clouds. Hope, soon consumers will be able to move around with their application and data, that will span multiple clouds.
Specializes in SaaS. It offers Suit Cloud Platform: a comprehensive offering of on-demand products, development tools and services designed to help customers and software developers take advantage of the significant benefits of cloud computing. Also a leading provider of web-based Business Software Suite for CRM, ERP tools and Accounting.
Above companies are out of the best player in the world.
Cloud offering by Indian Vendor
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Base Location: Mumbai, India Cloud Offering: PROUD Cloud Type: IaaS
It is an IT product development and innovation company. With an investment of INR 175-crore, this is considered as India¶s one of the most ambitious R&D efforts in IT. The company is expecting 2,000 - 3,000 clients of Proud in next 2 years.
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Base Location: Bangaluru, India Cloud Offering: Wolf PaaS Cloud Type: PaaS
Founded in 2006, it provides affordable cloud service with 99.97% Service Level Assurance. Wolf is a browser based On Demand Platform-as-a-Service (PaaS) for rapidly designing and delivering database driven multi-tenant Software-as-aService (SaaS) applications. One can get started without writing any piece of code whatsoever. Coding only comes in when you need custom templates or specific integration Business Rule actions.
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Base Location: Chennai, India Cloud Offering: OrangeScape Cloud Cloud Type: PaaS
The experience of building business applications of varying complexity across industries has made OrangeScape the most comprehensive PaaS (Platform as a Service) offering in the market. You can transform your idea into a SaaS application and can showcase them to your investors, partners and potential customers. It has an impressive list of customers viz. Ford, Pfizer, Geojit, Sify etc.
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Base Location: India Cloud Offering: ITaaS Cloud Type: IaaS+SaaS
ITaaS is a Nano in software. ITaaS framework is a one-stop shop for total end-toend IT and hardware solutions. It includes hardware, network, bandwidth & business software. Currently ITaaS is available for 5 sectors: Manufacturing, Retail, Healthcare, Education and Professional Services.
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Base Location: Mumbai, India Cloud Offering: Cyn.in Cloud Type: IaaS on Demand SaaS
Cyn.in on demand is a cloud hosted service and is the quickest way to get your own cyn.in server, without the hassles of having to set it up. With a Cyn.in ondemand system, you get a dedicated virtual server running a Cyn.in appliance that is maintained & updated by Cynapse and hosted by Amazon, ensuring an infrastructure-free and worry-free Cyn.in experience.
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Base Location: India Cloud Offering: Wipro w-SaaS Cloud Type: SaaS
Wipro has built w-SaaS, a platform for rapid SaaS enablement and deployment on cloud, using some of the commonly accepted trends in software engineering and open standards. Wipro chose Oracle (Oracle Database, Oracle WebLogic Application Server and Oracle VM) as the deployment platform for w-SaaS enabled applications. The software vendor can deploy the same application onpremise or on the cloud using w-SaaS and Oracle.
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Base Location: Mumbai, India Cloud Offering:Cloudnet, Cloudserve, PrivateCloud Type: IaaS
Netmagic looks like a dedicated cloud provider in Indian market with a potential to become a big player in near future.
16.Reliance Data Center (a division of Reliance Communications)
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Base Location: India Cloud Offering: Reliance Cloud Computing Services Cloud Type: IaaS+SaaS+PaaS
A hosted infrastructure service based on the Microsoft platform for Enterprises and SMBs - geared to deliver India¶s largest cloud infrastructure.
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Base Location: Bangalore, India. Cloud Offering: Cloud based Solution for Auto Sector. Cloud Type: SaaS
Infosys¶ Cloud Computing Consulting and Service offerings enable organizations to adopt the Cloud Computing platform selectively and effectively. But brand Infosys, the most recognized IT brand from India has to put significant efforts to catch up with other cloud providers.
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Base Location: Mumbai, India. Cloud Offering: DeskAway Cloud Type: SaaS
A Web company delivering software as a service (SaaS) over the Internet to the global audience.DeskAway is the flagship product of Synage, based on a monthly or yearly subscription model, requiring zero-installation, and powered by a cuttingedge user interface, It¶s the future of project & team collaboration software. Though the companies listed here have a long way to go before they can be compared with the best in the world yet they have the potential to grow big with the growing Indian economy.
Cloud computing offers a distinctly new level of scalability and a new degree of business value made possible by the maturation of technologies and standards. Scalability results in a host of benefits that will make cloud computing a permanent shift in the how products and services are delivered. We think the recipe for success of cloud computing will require exploring any kind of cloud business model coupled with the right partnership strategy, because strategic alliance are particularly important for creating more robust cloud services, as alliance aggregate different providers¶ unique strength.
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