Cloud computing is a much bandied about term and yet a much misunderstood word.

But every company, large or small, wants to be part of the cloud that has been defined by the National Institute of Standards and Technology (NIST) as a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.

Part of the confusion around the term arises from such technical jargon while the rest stems from the complexity of the technology. Cloud computing essentially allows a user with just a screen, keyboard and Internet connection to work from anywhere without needing to worry about software upgrades and the like.

We’ve heard all this before, of course. Given that the application services provider and application infrastructure provider technology models were similar in nature and went through a hype cycle before fading away from public memory, the scepticism around cloud computing and security concerns over this evolving technology do not appear to be going away in a hurry.

Despite this, cloud computing holds a lot of promise, according to research firms. A Microsoft-commissioned study, conducted by IDC, predicts that cloud computing will generate over two million jobs in India by 2015. And a study by research firm IDC for EMC India Pvt. Ltd concluded that cloud computing in India would be a $4.5 billion market by 2015.

In focus: (from left) Leslie D’Monte, technology editor, Mint; Ajit Mavinkurve, chief information officer, TML Distribution; Akshay Amar Garkel, manager, Deloitte Touche Tohmatsu India;Vijay S. Mahajan, vice-president, centre of excellence and infra projects, corporate IT, Mahindra and Mahindra; Suresh Ramani, chief executive officer, Techgyan; Alok Shende, founder and director, Ascentius Consulting, and Srikanth Karnakota, director, server and cloud business, Microsoft India, at the debate on cloud computing in Mumbai on 24 May. Abhijit Bhatlekar/Mint

However, for cloud computing to evolve into a successful model, security concerns would have to be addressed even as consumers of this technology work towards understanding the return on investment (RoI) as they convert their capital expenditure (capex) models to an operating expenditure (opex) models with the help of cloud computing.

Besides, the needs of a mobile workforce that believes in a BYOD (bring your own device) trend have to be addressed, since mobile devices introduce an additional security dimension.

These were some broad areas debated by participants at a panel discussion on Cloud Computing: Issues, Opportunites and Challenges, in Mumbai on 24 May.

Participants in the round table were Vijay S. Mahajan, vice-president, centre of excellence and infra projects, corporate IT at Mahindra and Mahindra Ltd; Ajit Mavinkurve, chief information officer, TML Distribution Co. Ltd, a subsidiary of Tata Motors Ltd; Alok Shende, founder and director of Ascentius Consulting; Suresh Ramani, chief executive of Techgyan Pvt. Ltd; Akshay Amar Garkel, manager, Deloitte Touche Tohmatsu India Pvt. Ltd; and Srikanth Karnakota, director, server and cloud business, Microsoft India Pvt. Ltd. The debate was moderated by Leslie D’Monte, technology editor of Mint.

Public, private or hybrid?

Public cloud is where applications will be outsourced in the long run, said Mahajan. “Only a small section like mail, Web services, etc., are moving into the cloud," he said. He belongs to a large enterprise that deals with hundreds of users and where data security is a concern.

“RoI is not an issue for moving to the cloud, but security remains a concern. These concerns can be both IT (information technology) related and legal. The need of the hour is to address legal issues arising out of the cloud. Corporates are worried about critical data moving to cloud, they would like to keep it within the four walls," asserted Mahajan.

Mavinkurve of TML Distribution took a similar stance. He said in-house infrastructure is used where data security is critical, such as research?and?development, enterprise resources planning (ERP), etc., but public cloud is used for areas such as emails. “For manufacturing, there is hardly any fluctuation in computing requirements unlike that which happens in the IT industry that can adopt a hybrid model," he said.

When Ramani, who typically services small- and medium-sized enterprises (SMEs) as a systems integrator, was asked if his clients shared similar concerns, his answer was: “SMEs, which have fewer than 1,000 users, don’t make huge investments in data centres. But whatever investment they are making is substantial considering their size. Their primary concerns deal with aspects such as disaster recovery. It needs to be explained that the most important thing for these companies is not cost but uptime—a system that never goes down. Vendors like IBM and Microsoft have a bigger stake and would ensure data is protected. If data is lost through vendors’ data centres, their whole business model collapses as their business depends on them," said Ramani.

Mahajan, however, pointed out that currently only peripheral applications are being put on the cloud. Mavinkurve concurred that applications related to logistics and transportation are candidates for the cloud rather than core ERP solutions.

Shende’s view was different. He said peripheral applications combined with virtual office enterprises are taking a jump these days. He cited the example of India Infoline Ltd, which put 21,000 users on the cloud. “If they (users) had not gone on the cloud, the company would have had to make an enormous investment in infrastructure to meet the demand. India Infoline has adopted a subscription-based model, which resulted in the resources deployed being reduced by 80%," said Shende.

RoI in the cloud

From a vendor point of view, Karnakota of Microsoft said the factors based on which companies are moving to the cloud are agility, focus and costs, “though users tend to be more biased towards agility and costs".

“We (India) have around 400 million SMEs. Their IT spending is slower than that of Sri Lanka and Bangladesh. For these companies, IT is the medium to leapfrog. As far as security is concerned, 90% of the data loss happens within data warehouses of the firms. To?encourage?more companies to move to cloud, there has to be a choice made available to them between public, private or hybrid," he said.

As SMEs deal with a large proportion of collaboration by using subscription-based cloud services, it becomes simple for them as it do not involve capex but only opex (thus reducing costs), Ramani said.

Karnakota cited the example of the All India Council for Technical Education (AICTE) as the largest cloud worldwide. (Microsoft announced in April it would provide free services to AICTE through its Live@edu communication and collaboration software reaching over seven million students and half a million teachers.) Companies need to move beyond just virtualization (a technology that enables fewer servers to balance peak and off-peak data loads, thus reducing costs and energy consumption), said Karnakota. “Cloud not only eliminates the hidden level of cost, but also management capability gained lowers the significance of the cost," he added.

Shende pointed out that large enterprises mainly depend on server utilization. When it comes to making investments in the cloud, however, he added that RoI was not relevant as RoE (return on effort).

“Many new technologies are disruptive. They introduce new ways of doing things that were otherwise not possible. While RoI is an appropriate measure to capture the financial returns for technology investments, it often doesn’t capture that which is new to the world paradigm," he said. “Solutions like cloud computing deliver outcomes that are much lower on the efforts, as compared with erstwhile solutions and their return on efforts that are significantly higher than the return on investments."

Shende added that RoI, for instance, involves calculating costs of IT systems and cash flows. “In the case of AICTE, it would have been virtually impossible to put students in platforms. One also can’t put customer satisfaction into RoI calculation," he said.

Shende added that among various sectors, the banking industry is into server utilization while manufacturing firms have greater growth and hence focus on agility. The IT and IT-enabled services (ITeS) sectors spend a lot on IT, and hence are into server virtualization. “IT companies also have multiple customers, and hence, can make huge productivity gains from the cloud," said Shende.

Security and other concerns

While there’s excitement over the benefits of the cloud, Mahajan cautioned that the industry needs to address the issue of data sovereignty. “RBI (Reserve Bank of India) mandates all the banks and their branches to keep data within geographic boundaries. Hence, there is a gap for pure public solutions," he said.

Garkel of Deloitte agreed that the main concern today was from a regulatory perspective as it (the cloud) had not come under the purview of RBI. For example, regulatory perspectives regarding audits are yet to be introduced in the area of cloud computing. Currently only non-core activities are in the cloud. “There has to be more clarity on how the regulatory landscape evolves," said Garkel.

All the other panellists agreed that security concerns would have to be addressed as the cloud computing model evolves.

Later, addressing a question from the audience that raised concerns over rupee billings, Ramani agreed: “Currently the India billing structure is pretty convoluted and it needs to be worked out." Garkel corroborated that “convoluted billing indeed remains a major issue, and the regulatory landscape might have to come into picture".

To another question over concerns in the logistics industry, Shende said the problems arose since companies that have a large number of offices require coordination among them. “This is enabled by cloud through virtualization. Global geopolitical presence of data centres also helps in data recovery as it is replicated in data centres across geographies," he said.

Pointing out the benefits of a cloud computing model, Ramani pointed out that when Nariman Point (in south Mumbai) was cordoned off after 26/11, those companies not using cloud technologies suffered due to lack of collaboration, the inability to access emails, etc.

Conclusion

According to a recent survey released earlier this year by India’s largest IT services provider, Tata Consultancy Services Ltd, the heaviest users of cloud applications are the companies that manufacture the technology hardware that enables cloud computing (computers, electronics, telecom equipment), while healthcare service providers are the lightest of users (in terms of average number of cloud apps per business function). The report added that the most aggressive adopters of cloud applications are companies in the Asia-Pacific and Latin America.

Nevertheless, cloud computing is already changing how IT delivers economic value to countries, cities, industries and businesses. IDC estimates that in 2011 alone, IT cloud services helped businesses around the world generate more than $600 billion in revenue and 1.5 million new jobs.

All the panellists hoped that more businesses would adopt cloud computing as security and other concerns are ironed out.

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