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Cloud Uptake: Reshaping the business landscape

May 28, 2015
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Traditionally, the business process management (BPM), information technology (IT) and IT-enabled services (ITeS) sectors have been early adopters of technology, as it enables organisations to deliver cost-effective services to clients across geographies and time zones. With a fast evolving technology landscape, the BPM and IT-ITeS industry is now leading the adoption of new technologies such as cloud computing, which is changing and reshaping the business landscape for players in this space.

According to the National Association of Software and Services Companies, the Indian cloud computing market is expected to reach $16 billion by 2020. Cloud computing is expected to have a significant impact on the IT-BPM service industry in terms of types of services offered, delivery mechanisms and business models. Cloud as a model helps BPM and IT-ITeS companies address challenges regarding underutilisation of IT infrastructure, compatibility of different platforms and environments, and scaling up and down of infrastructure. As per the findings of a report by global consultancy firm Zinnov, private cloud adoption is increasing among organisations, since it ensures better security and access to information and leads to significant enhancement in efficiency and cost savings as compared to traditional IT environments. Further, Zinnov states that private cloud deployments could lead to potential savings of 18-20 per cent in IT investments. The savings could even be as high as 50 per cent, depending on the level of IT modernisation within an organisation over a period of time. The research firm has identified six key areas where the BPM and IT-ITeS industry can realise significant cost savings through the adoption of private cloud. These areas are:

  • Telecom and networking: The increase in the cost of data services is offset by the reduction in the requirement for networking hardware as a result of consolidation.
  • Facilities and fabric: Reduction in data centre size and power consumption is due to the consolidation of hardware.
  • Hardware: Reduction in server and storage costs following consolidation.
  • Software: Lower software cost with better multi-tenant applications replacing existing enterprise applications.
  • Internal labour: Significant savings in labour costs as the management of data centres is consolidated and automated. The maintenance cost for data centres is also lower.
  • External IT services: Reduction in IT services due to right-sizing of data centre facilities and configurations.

At present, chief information officers see immense potential in cloud computing and are increasingly evaluating business cases for making significant investments in cloud-enabled applications and infrastructure services (IaaS, private/hybrid cloud and virtualisation) in terms of cloud adoption. Factors such as shorter product development cycles, the coexistence of multiple platforms and the focus on non-linear business models are leading to a greater focus on the use of efficient and scalable infrastructure. Another important advantage offered by cloud is that it enables organisations to build virtual and open business processes, thereby paving the way for various stakeholders, including customers, business partners and suppliers, to connect as well as conduct business seamlessly.

Since cloud as a platform offers a pay-per-use business model, customers of BPM and IT-ITeS companies at large are evaluating cloud offerings. With the growing demand for cloud-based services, companies such as Wipro, Infosys, Tata Consultancy Services and HCL Technologies are making significant investments in cloud infrastructure and developing talent pools skilled in cloud-led technologies. According to research firm TechNavio, cloud computing is gaining ground in the business world with the technology being adopted as a service delivery platform for BPMs. Companies are opting for desktop and server virtualisation. Desktop virtualisation enables IT administrators to have an overview of the complete IT system of the office, therefore lending more efficiency to their work, as they no longer have to individually update or monitor the workstations of each employee. Further, desktop virtualisation helps BPM and IT-ITeS companies reduce their hardware and software costs by allowing the management to provide a few virtual machine (VM) images, or templates for VMs, which are used by all the employees. With lower operating costs, companies are better placed to pass on the cost savings to their clients. Similarly, ser-ver virtualisation allows organisations to run multiple operating systems and multiple applications on the same physical server, resulting in lower hardware costs. Moreover, server virtualisation offers integrated availability and fault tolerance protection for all the virtualised applications. Therefore, in case of a node or server failure, all its VMs are automatically restarted or continued on another machine, with no downtime or data loss.

While both the public and private cloud markets are expanding at a fast pace, there are concerns regarding cloud adoption. The challenges in this regard relate to security, vendor lock-in, location of data centre, and restrictive auditing and governance policies. However, the industry is of the view that the benefits offered by cloud far outweigh the disadvantages and as a result, cloud computing is set to gain ground across industries. Given its status as an early adopter of technology, the BPM and IT-ITeS industry, in particular, is well placed to drive cloud adoption, as it offers virtualisation, scalability and sharing of IT infrastructure resources, leading to significant advantages in the areas of process, technology and people.

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