How Much In Demand?

Any slowdown puts pressure on capex spend. So, anything that allows IT
managers to defer part of a new investment for some time, without deferring the
benefits accrued from that investment, is something that they would embrace with
open arms. In short, something like the on-demand model is a godsend in the time
of a slowdown. Right?

Surprise of surprises. Not a single CIO from among the 35 who took part in
our on-line survey on the on-demand model think so. Yet, with the exception of a
very small minority, most give a thumbs up to the model. In other words, most
CIOs believe that the on-demand model has come to stay; it is not just a
quick-fix for the cash flow issue during the recession.

However, if that is music to the ears of vendors selling the model hard, the
survey also suggests that their work is not yet over. More than half the users
who believe that on-demand has come to stay, say that it is useful but a little
futuristic. Says Shiva Shankar, VP & head, IT infrastructure & security
operations, Reliance Communications, It would take a bit of time to settle
where we are dreaming this technology to take us. In the next few years it will
take us to new heights but I feel the complete shaping of this trend will happen
in the next 4-5 years. Agrees Rajendra Sawant, CIO, Adventity Global Services,
It will definitely mature in next few years and will be used very widely across
spectrum of applications.

In a panel discussion organized by Dataquest, in association with Tata
Communications in Delhi and Mumbai, recently, many CIOs had expressed similar
opinion. They had argued that while technologically the model has some
challenges, what needs to be seen is how the business model unfolds itself.

Says Upal Chakraborty, CIO, DLF, It should take off in a big way for SMEs.
For large organizations, the value for price model is yet to emerge. Yet, an
almost equal (well, slightly less) number of users are unequivocal about the
utility of the model, agreeing with the statement: it is one of the best
innovations in enterprise IT that has come to stay.

As this model matures, this concept is here to stay. And more and more
enterprise would opt for the same, says Dhiren Savla, CIO, Kuoni Travel Group.
And there is the odd discerning voice too: I hope it works, says Arun Gupta,
Group CIO, K Raheja Group.

On being asked what they most strongly identify on-demand with, not
surprisingly, Software as a Service (SaaS) came on top, followed only by cloud
computing. Interestingly, utility computing, that once was a catch phrase in the
US, and many believe the phrase if not the idea of on-demand originated from
there, is not very hot for Indian IT users. Partly because in the US market too,
the phrase has lost a lot of its popularity.

Some of the other findings that the survey brought out was: about
three-fourth of the users said they are either using the on-demand model at
present or are planning to use it in near future. And not surprisingly, the
early movers CRM/contact centers are still the top area where the model is used.

The Issues that Remain

While the survey finds that the outlook towards the on-demand model by
Indian CIOs is fairly positive, many of them point out certain issues that need
to be resolved. A large majority (61% of respondents) feels that while it is a
good model, it is not for every application. While about one-fifth of
respondents said they are fully satisfied with their experience so far, an equal
number of them said that they had issues with delivery.

Among some of the issues raised are of scalability and security, and how the
transition will happen from the current model.

Service providers need to scale for making it economically more viable,
says RD Malav, VP, IT, Jindal Poly Films. Agress Sanjay Mittal, VP, IT, VIP
Industries, Scalability by service providers to match the on-demand needs of
enterprises remains a challenge.

What is your take on the on-demand model in IT

What do you most strongly associate on-demand with ?

What has been your engagement with the on-demand model ?

For which applications are you using it/planning to use it ?

What has been your experience with the model ?

Security, predictably, is the other big issue with the users. The on-demand
service model will grow as SaaS and cloud computing but security issues will
probably keep many away from it,says Rajiv Nandwani, VP, IT and managed
services, Birlasoft.

Security, uptime and SLA will be the important aspects of the deliverables.
Once these are assured the demand will go up, says J Ramesh, CIO, MIRC
Electronics

Says Aniruddha Paul, VP and head, IT change delivery, ING Vysya Bank,
Looking to transform inhouse data centers into private clouds? The biggest
challenge is in managing licensing issues, followed by testing of legacy
applications to see how well they fit into a virtualized environment.

The summary: the message from the CIO community is positive but the vendor
community would need to work hard to work on both improving their offerings and
convincing the users about the positive changes.

Convinced, But Wait till Next Cycle

Take it as half-filled or half-empty--good news or bad news. The good news
is that, most users in India see on-demand as a strategic step in enterprise IT,
not a tactical answer to cash-flow problem.

But the bad news--if it it--is that since they see it as a long-term
investment, they take it like any major strategic IT investment. And that means:
it must wait till the next phase of investment, till they get the returns from
their current investments.

Says Venkat Iyer, CIO, Pfizer India, companies which do not have too many
legacies and new start-ups can take advantage of on-demand solutions right away.
Companies which are migrating their apps to new solutions can also do the same.

In the Dataquest-Tata Communications panel discussions on the on-demand
CRM/contact center, many CIOs and CTOs, especially from the BPO industry, voiced
the same opinion. Many of them said they are fully convinced about the model but
since they have already made huge investments, they cannot just simply throw
them away. A too familar issue.

Many companies are taking a middle path. While they continue to run their
core systems on the legacy platforms, they are going for on-demand for new
applications. The key, here, is a smooth integration with the existing cors
system. That may well be the challenge for the supplier community, in the near
run. Otherwise, no matter how lucrative is the RoI on a standalone basis, the
take-off will not be in direct proportion to the interest levels.

Shyamanuja Das

shyamanujad@cybermedia.co.in