Small is Big in the Cloud
B Raghavendran ,Head, Partner Organization, Cisco India and SAARC
The evolution of cloud computing is one among the major advances in the history of computing. By enabling to deploy, operate and consume technology with greater agility and improved economics, cloud computing is compelling many organizations to explore a deployment.
A 2010 Gartner survey reveals that the percentage of CIOs expected to have their IT running in the cloud will increase from the present 3% to 43% over the next four years. Deloitte predicts that by 2020, 15% of on-premise spending will be replaced by clouds. The worldwide revenue from public IT cloud services is forecast to reach $55.5 billion in 2014, according to IDC.
While the cloud revolution is fast making IT costs evaporate, another transformation is taking place in the Indian Small and Medium Enterprise (SME) sector. As Indian SMEs grow and enter international markets to become part of a globally integrated supply chain, their quality and processing requirements have increased, and they are turning to IT to find answers.
IT adoption among SMEs is growing and according to IDC the take up of personal computers has grown by 25% in the SME segment over the last five years; this is expected to double by 2015. Hosted services, VoIP and collaboration are gaining traction because they enable affordable access to new technologies and present a predictable monthly cost.
Technologies like cloud computing provide SMEs access to applications and services that they otherwise find unaffordable. Due to its flexibility and pay-as-you-go cost structure which is simple, scalable, affordable, convenient and customizable, cloud computing is commercially viable for many SMEs. According to IDC, cloud computing market in India is expected to grow at a CAGR of 40% by 2014. Driven by cost and performance the technology will be a hot pitch for SMEs.
Partnering in the Cloud
From a technology perspective, small businesses seek strategies that meet their business objectives while also simplifying their existing technology environment and save costs. Partners become a critical conduit of information and support here because SMEs rely on partners for both the initial installation and ongoing maintenance thereafter. This translates into a recurring revenue model for partners, besides becoming a smart IT strategy for SMEs.
With so much hype around cloud, SMEs are turning to their partners for advice, guidance and training on cloud services to understand how it fits into their IT strategy. On their part, partners need to emphasize the business impact of a cloud solution because they are important buying factors for purchasing technology.
Discussing the necessary security evaluations a small business should take before jumping into the cloud like security of end devices, the connection to the cloud, and cloud services will help SMEs understand about confidentiality, integrity, and availability of data in the cloud. Highlighting the predictability of monthly costs (critical for SMEs), along with the benefits of pay-as-you-use which hosted cloud services makes possible, adds to the benefit.
Hosted service is not a one-time sale, it is a contract that brings in a pre-defined monthly revenue. Partners, after the initial installation, can work with SMEs to analyze the business requirements, bandwidth availability, and find new ways to bundle services such as web conferencing, collaboration and security. SMEs based in far-off locations with limited access to modern technology benefit from cloud computing which enables them to get connected and convert CAPEX into OPEX. Partners become trusted advisors to these businesses, offering expertise, training and maintenance services.
With the Indian Ministry of Micro, Small and Medium Enterprises (MSME) providing substantial subsidies for cloud computing to SMEs, partners can better position their services to small businesses and enable them make a sound business decision regarding implementation and upkeep of cloud solutions.
As they adopt technologies like cloud computing, customers seek partners with competency in architecting, building and selling cloud-based solutions. Organizations that can provide the expertise, service, and convenience for customers through a robust and capable ecosystem of partners stand to benefit the most.
With no likely shortage of opportunities in the cloud market, partners can primarily build cloud infrastructures (Builders), provide cloud services (Providers) and resell cloud services (Services Resellers). Majority of the partners will develop a core competency in one or more of the above and build ancillary capabilities around them.
Partners that specialize in cloud building will create hardware and software infrastructure for private, public or hybrid clouds, depending on the requirement of the businesses. Cloud Providers will serve multiple SME customers through services like Software as a s service (SaaS), Infrastructure as a service (IaaS), or platform as a services (PaaS) around existing cloud models. Cloud Resellers will market cloud services as agents of an exisiting cloud provider, earning referral fees or managing customer relationships.
Partners can also embrace multiple business models and go-to-market strategies for the cloud. Partners with system integration capabilities have the added opportunity of evolving to a more sophisticated/hybrid role that will combine all these models into a single offering.
By creating compelling cloud services offerings, and driving innovation in partner programs, vendor organizations can help partners leverage their existing investments to build cloud business practices, validate capabilities necessary for cloud offerings and monetize professional and annuity services. They can also provide guidance on the infrastructure architecture to set up a cloud environment and on new pricing and possible go-to-market models.
To help cloud partners better market themselves to customers, vendors must offer intellectual property and best practices that increase partner expertise. In addition to providing branding assistance, vendors must validate partners' competencies and fill in the gaps where needed. For partners to make the most of cloud computing, vendors must align their sales policies to minimize channel conflict with their sales force.
As the cloud computing market for SMEs proliferates, vendors and partners, backed by government incentives must work together to develop customized solutions that address questions on security, viability and costs through need-based delivery. When executed smartly, the result could be simple - get on the cloud, and save many millions!