Has Cloud Computing delivered on its promise?

With its promises of agility and cost effective IT to deliver transformational business impact, cloud computing has brought a revolution in the way IT has been consumed traditionally. It has driven mindset changes, redefined strategies, and rewritten organizational success mantras. In fact, cloud has now become the key ingredient to thrive in this digital world and is regarded as a critical enabler in driving business innovations.

But, when we look back from where it all started and think of how far we have come, the question that emerges is whether cloud has really delivered on all of its promises. Why the enterprise cloud journey despite having started, hasn’t really picked up speed and still remains a slow and steady one?

It is well-evident that cloud computing no longer remains a buzzword, and is now even part of strategic boardroom discussions. Organizations are realizing the immense potential of cloud. According to 2015 EY IT Trends and Investments survey, 57% respondents agreed that they are reaping benefits of investments made in cloud-based technologies. The flexibility to scale up and down as per fast changing business needs is one of the major drivers for the growing interest in cloud. Much to the relief of the IT department, it has freed IT from the routine firefighting role and has empowered it to enable real-time decision making and contribute to larger business goals.

SEIZING OPPORTUNITIES, SLOWLY AND STEADILY

In India, there are enough striking examples of cloud-related business transitions. Recalls Milan Sheth, Partner and Technology Leader, Ernst & Young, “One of the largest integrated healthcare delivery providers, Fortis, migrated the company’s entire IT onto a public cloud.

Considering that interest in public cloud (25% according to Enterprise IT Investments Trends survey 2014) is less in India, this serves as one of the most apt examples of the challenges involved and benefits to be derived from using a public cloud.”

Akhilesh Tuteja, Partner and Head of IT Advisory, KPMG in India, shares yet another example of successful cloud adoption, “Seasonal websites like IPL are fully dependent on cloud-based platforms during the peak time for quality interface, forming a great example of cloud adoption.”

Cloud is increasingly being seen as the support vehicle for the adoption of emerging technologies like big data and mobility. “Next set of use cases will combine cloud with other technologies to deliver business transformational benefits,” says Sheth.

Cloud-based analytics presents another big opportunity area. “Adoption of cloud services, from Salesforce, Workday, Google Analytics, etc, has been massive. The cloud analytics market is still nascent in India; however I do think that the overall adoption of disruptive technologies in India is improving rapidly,” opines Deepak Ghodke, Country Manager, India, Tableau Software.

At some point, enterprises need to start their cloud journey, so they need to start attacking it in bits and pieces, moving to a hybrid IT department in the future- Biswajeet Mahapatra, Research Director, Gartner

Although adoption has been picking up gradually, many are still taking their own time to jump on the bandwagon. According to a recent cloud adoption survey by Gartner, around 53% of the organizations in India are using cloud services today, with another 43% indicating plans to begin using cloud services in the next 12 months. While some may start with an enterprise-wide strategy, many are taking small, cautious steps forward.

“Our observation has been that the cloud implementations among Indian enterprises are small-scale and most of the enterprises are still in the early stages (virtualization and migration of utility applications),” says Sheth.

WHERE IS THE COST ADVANTAGE?

The cost proposition has often been considered the most attractive selling point for cloud solutions. Though in reality, the cost advantage seems to be lacking when we look at unique business requirements of different organizations.

Talking about his company’s cloud journey so far, Ashok Cherian, CIO, JK Cement says, “We have consumed cloud services right from Platform-as-a- Service (PaaS) model to Software-as-a-Service (SaaS) model. However, we have done this for mostly non-core and limited sized needs.” The cost comparison between transitioning to a cloud model versus staying on-premise plays an important role. “When we evaluated larger scale semi-core cloud adoption possibilities, while there were no feasibility challenges, the overall TCO became a concern,” adds Cherian.

Many enterprise CIOs seem to have a similar view that shifting core workloads on cloud may not be a cost-effective decision in the short run. Girish Rao, Head-IT and Business Analytics, Marico, also agrees, “Cost for enterprise grade production environment on cloud is not competitive as compared to on-premise.” The company’s cloud adoption has been mixed so far, as email, unified communication, and test and development workloads have been moved to the cloud, while most part of the production workloads is retained on-premise.

In this scenario, we are seeing hybrid cloud models becoming a popular way of adoption. Marico too currently has more of a hybrid cloud strategy and believes that it is going to be like that for the next three to four years, until the public cloud market matures.

The decision organizations are taking right now is not whether to move on the cloud, but which workloads to move to the cloud. “As cloud adoption in India continues to accelerate, the enterprises are transforming into a mix of owned applications and cloud-based services, with core apps and data usually running on-premises in private datacenters and other apps running in the public cloud,” says Paul Coates, Vice President, APAC and Japan, Riverbed Technology.

Although cloud service providers argue that cloud adoption brings considerable cost savings to enterprises and they are attempting to bring solutions at competitive prices, in most cases the cloud advantage hasn’t really translated into cost savings. “The cloud service providers are here to do business and unless they get higher and higher utilization, they would not be able to bring the costs down,” emphasizes Cherian.

A ROAD OF BUMPS AND POTHOLES

Security continues to be a major concern for enterprises taking the cloud path. The lack of a strong regulatory environment has kept the confidence levels low among enterprise IT decision makers. “There should be some regulatory mechanism in the ecosystem to protect the interest of cloud service users,” says TG Dhandapani, Group CIO, TVS Motor. Data protection, network protection, lack of control, etc, are issues that are very often bogging down CIOs and IT heads.

“While security, portability, and contractual traps have been key concerns for a long time in the cloud arena, we have seen positive developments in these fronts but still more work needs to be done by the cloud providers in these areas,” adds Cherian.

There is an ambiguity around the commercial model for cloud. Organizations are skeptical to adopt cloud-based models fully and there is a lack of visibility on a pay-peruse model

--Akhilesh Tuteja, Partner and Head of IT Advisory, KPMG in India

Another cause of concern is lack of maturity in the cloud service provider landscape. CIOs opine that choices are limited and there isn’t much differentiation. “There are not many choices at present. Most service providers are in the same league in terms of maturity. There is hardly any differentiation,” explains Rao.

Also, what most enterprises need today are not disparate cloud solutions, but integrated offerings. This is especially true for organizations that lack the skills, resources or managerial capabilities to put different cloud solutions together to get a single, unified view of their business. Dhandapani elaborates, “Nobody is providing comprehensive cloud services. There is no one umbrella where you can fit the entire IT services.” For large organizations assessing cloud models, the burden of legacy systems is a major cause of worry. The transition is hence slow and starts with small bits and pieces.

REALITY CHECK

There are numerous cases of organizations reaping significant benefits from cloud usually in the form of faster delivery of services, increased IT productivity, and overall business agility. But those companies that get into cloud with the primary objective of cost saving will more likely face setbacks, at least in the short run. Hence, on the cost front, it would be right to say that cloud is yet to deliver, still there is a brighter side to the whole picture. Biswajeet Mahapatra, Research Director, Gartner, puts it perfectly, “If the delivery and the promise were realistic and clear—cloud has delivered. However, in majority of cases cloud adoption has happened with a promise of cost reduction—in which case the cloud has not delivered.” He adds that in cases where the promise was to move redundant and non-critical applications and infrastructure out of the door, and to relieve the in-house IT team of the regular hardware and software upgrade, patching, licensing haggling, etc, it has surely delivered.

It is better to move commoditized services on cloud and focus on core activities internally

—Girish Rao, Head-IT and Business Analytics, Marico

“On the agility and elasticity aspect also it has delivered to some extent,” states Mahapatra. Cherian shares his view, “The cost proposition is relevant only to companies which have achieved good IT procurement efficiencies and have internal knowledge to manage the governance of the system through cost-effective methodologies like ‘Sourced Remote Support/Management Model’. Otherwise we may end up with higher TCO vis-a-vis cloud options.”  He adds that when it comes to the agility factor, certainly cloud offers a near ready to consume model while the build option will take time. So the business needs and the business impact needs to be understood clearly.

Enterprise cloud journey can be tricky, as it will have a lot to explore, discover, and learn on the way. Yet the path will be smooth if organizations prepare for the way ahead, be realistic about expectations, consider their unique business needs, and make the move accordingly. Rushing their way on to the cloud without assessing their capabilities and business needs will not help in reaping the desired benefits and can even result in nightmares. Cloud is the ultimate way ahead, and it is not so much about how fast or how slow you get on to it, it’s more about starting right. For now, it is a journey that continues. As Rao aptly puts it, “Cloud is an inevitable choice that we have to make, we have begun the journey, we will eventually evolve.”