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SMEs, Channel and Cloud

For some, the “cloud” is just the latest technological craze, but for others it is the future of computing, and it has already has taken a centre stage in the technology world. What seems certain is that cloud computing has the potential to bring about irreversible changes in the way computers are used around the world.

“The interest is high with a number of large and small players looking at a slew of cloud-based services, from full-blown applications to storage services to spam filtering. Acceptance is growing rapidly and we believe that in the next 2-3 years, a majority of the large players would be using some form of cloud-based service. The early movers will be from the IT/BPO and financial services and the key services on the cloud will be primarily in the mailing services, contact centre applications, storage services, utility computing, etc.,” says Vikas Bansal, Director, Carrier Sales (India) for Cable & Wireless Worldwide. Cable & Wireless (C& W) company is into a host of services under our cloud computing (CC) portfolio, including managed mail services, managed video conferencing, managed storage services, web IP-CCTV, virtual contact centre, etc.

“Most of the big organizations today run large IT departments having multi-million dollar budgets. We know that businesses want to utilize these budgets to strengthen their services and products, not fund IT departments and infrastructure. Cloud computing offers an ideal solution which allows organizations to focus on their core competency. Once this becomes mainstream, this can fundamentally alter the business models of large organizations,” adds Vikas.

Today, the market potential for SMEs is unbelievably high. In fact, small- and medium-sized businesses (SMBs) is a segment that worldwide spends an estimated US$234 billion (about Rs.10.53 lakh crore) per year on IT products. As per the estimate by VARIndia, the number of SMEs in India is more than 6 million, contributing 42 per cent of India’s total exports. These SMEs can be better served through a subscription-based and installation-free business model.

Cloud coming to the forefront of attention

Recently, Instamedia Network, the web's leading content network and creator of Software as a Service (SaaS) based content platform, Instapress announced that it has secured $4 million in Series A funding from Times Internet Limited, a subsidiary of The Times of India Group. The proceeds of the strategic investment will help grow the company's network of writers and accelerate its technology platform development. “The Times Group will be a great long-term, strategic partner. They understand this space very well and bring a lot of experience and expertise to the table,” says Ankit Maheshwari, CEO & Co-Founder, Instamedia network.

Today's small businesses are increasingly using technology for business advantage and competitiveness. Cloud computing is catching on in popularity among the SMEs.

Cloud Services for SMEs

Going by the recent trends, it seems that Cloud services are no longer the preserve of large organizations as SMEs are looking to this model to lower costs.

As a matter of fact, those who don't have manpower, equipment or experience to build out their IT offerings are prime customers for the cloud services.

An increasing number of small- to medium-sized enterprises (SMEs) in India are getting to grips with cloud computing, thanks to its ability to cut costs and reduce the need for capital equipment - both hardware and software.

The reason for growing adoption among the SMEs is not far to seek. The cloud services model with its contract-guaranteed levels of performance has the potential of offering a much more permanent solution to the cost-sensitive SME market.

“Everyone says the cloud is more relevant to SMEs, with our strong R & D presence in Pune. Our research shows that the biggest cloud adopters today are enterprises. We have a three-pronged cloud strategy for the enterprise,” says Shantanu Ghosh, Vice-President - India Products Operations, Symantec.

“Firstly, we want to ensure that our products are both on-premise and cloud. For instance, in the latest releases of our DLP and SMEs, Channel and Cloud

Today, time is ripe for channel partners willing to become cloud service providers. In the past, they had to make significant investments in software, hardware, training and personnel. With the advent of cloud computing, it has become somewhat easy for the channel partners to scale up their businesses without increasing their investment.

Cloud coming to the forefront of attention

Today's small businesses are increasingly using technology for business advantage and competitiveness. Cloud computing is catching on in popularity among the SMEs.

Cloud Services for SMEs

Going by the recent trends, it seems that Cloud services are no longer the preserve of large organizations as SMEs are looking to this model to lower costs.

As a matter of fact, those who don’t have manpower, equipment or experience to build out their IT offerings are prime customers for the cloud services.

“Firstly, we want to ensure that our products are both on-premise and cloud. For instance, in the latest releases of our DLP and endpoint products, we added the ability to scan in the cloud environment. Secondly, we want to provide hosted cloud services. So, our security software will be provided as a service. We acquired a company called Message Labs to take this forward. Through Message Labs, we offer various Security services as well as backup services. Last but not the least, we want to help people build clouds. We also want to provide cloud-based storage. We already have 52 Petabyte of consumer data on the cloud,” said Shantanu Ghosh, Vice-President - India Products Operations, Symantec.

“I, for one, truly believe that cloud opens up tremendous opportunities for small players. Yes, it does close out the commodity play for small players as economies of scale is needed for IaaS sort of cloud offerings. However, on the services front the diversity for the SMEs really makes it unviable for large players like TCS or HP to address,” says Suresh Sambandam, Founder & CEO, OrangeScape.

On EMC's cloud strategy, Manoj Chugh, President, EMC India & SAARC and Director - Global Accounts, EMC APAC & Japan, said, “EMC is leveraging its global Virtual Computing Environment (VCE) coalition initiative formed jointly between EMC, Cisco and VMware which represents an unprecedented level of collaboration in development, services and partner enablement that 'de-risks' the infrastructure virtualization journey of customers to private cloud implementation. A number of companies have come out with cloud-based services like HCL partnered with EMC and got key building blocks of cloud infrastructure by the name O'Zone.”

“Today, we see that not only is there a place for partners, the emerging Cloud opportunity may actually provide more partner opportunities than the traditional IT industry ever had. Given the roughly 5 million-plus small and medium businesses in India that may not have purchased any business software because of their size, Cloud will provide an opportunity for them to automate their business.

Channel partners will need to align with new Cloud vendors in order to develop a symbiotic relationship of expertise of business processes and application functionality,” says Lakshmi Narayan Rao, Global Field Marketing Director, Jamcracker Inc.

Everybody understands that Cloud offers a great emerging opportunity. While the IT industry is abuzz with Analyst Projections about market opportunities and vendors of all sizes launching new Cloud services practically every day, the foremost questions in the minds of Channel partners today are:

What is in it for me?
How does the business model look like? What is the RoI?
What do I need to do to become Cloud ready?

“The Cloud presents a very attractive opportunity for hardware and software resellers alike. The market opportunity is estimated to be over a billion dollars by 2014 with the potential of scaling up even higher. Analysts have waxed eloquent on Cloud as a disruptive model that makes economic sense to the customers. Given that customers are looking at enhanced functionality at ever-reducing costs, Cloud is poised to be the software delivery model of choice for customers," says Lux.

Opportunities for Channel Partners

To cloud or not to cloud. That is the question that rankles the minds of the channel partners. There has been a lot of talk and theories about cloud services. So far, the cloud has remained a cloud. But will it rain? With soothsayers forecasting cloud services to swing in full force by 2012-2015, confusion remains as the industry watchers can't see the light through it. Doubts are aplenty from the channel vendors. What will our role be? Will it be used for hardware consolidation and applied software consolidation or it will remain services? From the customer's perspective, the entire cloud service model sounds terribly complicated. How dependable will it be? Will it be a one way stream or can there be a rollback? What will the response time be? So on and so forth.

In such a scenario, the future of cloud services depends on the understanding and maturity of the customers and channel partners. The willingness of the customer to adapt to the business values that cloud services bring will be the indicator for the success of cloud services. Essentials need to be considered like how easy it will be for the System Integrators and cloud service providers to manage or deploy business applications using cloud service. The other issue, in our business scenario, will be to garner acceptance from the channel. How assured will they feel about the cloud service. To make cloud services a success in the Indian channel, there must be a clear understanding of the roles that each one plays. “We have to create a transparent value chain where the channel is never kept away from the customer base. Plus, awareness programmes need to be created to assure channel about cloud services,” says Girish Krishnamurthy, MD, Kaseya India.

“It is time now to acknowledge that the future is in cloud services. Cloud services and the channel can make a win-win partnership. To make it rain is in our hands together,” adds Krishnamurthy.

Today, time is ripe for channel partners willing to become cloud service providers. In the past, they had to make significant investments in software, hardware, training and personnel. However, with the emergence of third-party vendors who are responsible for the delivery of help desk and management/monitoring services, it has become somewhat easy for the channel partners to scale up their businesses without increasing their investment.

According to Roa of Jamcracker, the "pay-as-you-go-model” enables small businesses to pay less upfront compared to “traditional licence sale”. As a result, there is a natural bias and built-in appeal for smaller businesses to consider and quickly deploy Cloud. He adds, “VARs need to evolve and transform themselves to becoming Cloud Service Providers. While there is a large opportunity, it could only be a mirage for those VARs who are not ready to move with the market trend. The SMB IT Automation trend is really large and would be a significant part of the Cloud market in India. This provides VARs a large playingfield with significant opportunities.”

Though offering cloud services may be easy today, channel partners need to ensure that they are providing the right cloud services.

“Personal Computing will grow leading to more PC sales, increased Basic Networking and Wireless equipment, etc. However, SMEs have been hardly buying Business Software like ERP, CRM, etc. mainly due to affordability reasons. Cloud / SaaS opens up the possibility for VARs to sell business software to SMEs,” says Suresh Sambandam.

“The Channel has to reinvent itself. The long-awaited move to provide true value-added services rather than just push boxes becomes more inevitable now. In fact, if business software adoption increases the need for basic IT infrastructure within SMEs will increase and thereby enable VARs to sell more H/W and Networking in a much more value-added model than the current one. Hence, I see Cloud / SaaS as a great opportunity for channel - that can reinvent itself,” says Suresh Sambandam.

Finally....

Some vendors have gained from rapid changes in technology and the economy, As enterprises looked at reducing their overall IT spend in a declining economy, open source has become an attractive proposition. To reduce the piracy level, the cloud model is affordable and the pay-per-user model will definitely reduce upfront investments in IT by the SMEs and enterprises. Whether to put the data, applications and infrastructure on the cloud, one can’t rely 100% on the cloud but choice depends on the nature of the business. Yes, there could be a choice between on-premise and run online as a service. Whether it is SaaS, PaaS or IaaS, we need to figure it out about the Security challenges in the cloud to identify vulnerabilities in the cloud providers. The objective is to crack the market with their indigenously built Platform-as-a-Services (PaaS) platforms. With these new platforms of PaaS, SMEs can create their own customized SaaS applications.

Most of us must be using Google mail which is again on the cloud. This cloud-based e-mail application is highly appreciated due to the higher level of uptime it offers, and improved spam checking capabilities and the advantage of it is to access it anywhere, anytime, through any device.

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