India’s cloud adoption rises, but basic challenges remain entrenched

Indian organizations' adoption of cloud computing is rising each year but the market's maturity is developing much more slowly

Indian organizations' adoption of cloud computing is rising each year but the market's maturity is developing much more slowly, industry executives and analysts said.

Be it large cloud network providers such as Amazon and Microsoft or local hosting providers such as NetMagic and CtrlS, demand for cloud services is on the rise. Even the Indian government – probably the biggest buyer of technology services in the country in the coming years – is adopting the cloud model in various ways.

That said, basic obstacles such as the lack of internet connectivity and reliable power supply are hindering the pace of cloud adoption in the country.

“The number one challenge is internet connectivity – in quality, reach and reliability – to all branch offices/establishments,” said Aiyappan Pillai, an independent ICT industry consultant and former vice-president of business transformation at India’s Tata Communications.

On the top challenge, Virender Aggarwal, CEO of Ramco Systems, a cloud-based ERP provider is in agreement with Pillai: “I think it’s a matter of bandwidth. The more internet bandwidth that is available readily across the country, the more cloud-ready the country will be.”

“So it’s a question of availability of bandwidth at a reasonable price. The country has no choice but to catch up because, in today’s generation and age, internet is a basic need.”

Another hindrance is the lack of availability of a steady power supply, which is a critical factor in setting up large datacenters. Power is the single biggest factor in determining where to set up a datacenter. If that isn’t stable, datacenters can’t be run on back-up power.

The location of datacenters in India will gain increasing significance as laws around data security and privacy fall into place, said Laxman Badiga, an independent industry consultant and former CIO of Wipro. Currently, none of the big clouds, such as those of Amazon or Microsoft are present in India.

Ramco’s Aggarwal added: “You need to have stable power supply, you need to have cheap power supply, and you need to have efficient cooling mechanism. None of these is available in India at the moment, so I think the government will have to do a lot in ensuring reliable power.”

Cloud readiness

India recorded one of the biggest declines in index ranking, falling four positions to 13th, in the Asia Cloud Computing Association’s Cloud Readiness Index 2014 report, which ranked the cloud-readiness of 14 Asian countries.

The association – whose members include Microsoft, NetApp, EMC, The Internet Society, AT&T and Cisco – ranked the countries on 10 parameters using publicly available data. The parameters are privacy, international connectivity, data sovereignty, broadband quality, government regulatory environment and usage, power grid and green policy, IP protection, business sophistication, data center risk and freedom of information.

"India’s performance across many of the parameters remains nascent at best, with international connectivity and datacenter risk needing the most improvement - it ranked bottom of the region on both parameters,” the association said in the index report.

“The Indian market is not that mature a market as, say, the US,” said Shriranga Mulay, senior vice-president for IT engineering at Netmagic, an NTT Communications company.

Equinix in the US, for instance, focuses specifically on co-location; Rackspace on managed services; and Amazon is the largest cloud provider. “There are very specific players doing very specific things,” Mulay said.

There are also big differences in the way companies consume IT infrastructure, he said. In India, CIOs expect a great deal of flexibility with their limited budgets.

Indian organizations also face the problem of low volumes, which means many of the more sophisticated services won’t be available to them. In developed markets, an organization having 3,000 or 5,000 servers is common, because the enterprises are of that size and that’s the market size that they cater to, Mulay said.

But there are very few such enterprises in India, and the disparity will remain that way for some time.

Overall growth

“The overall cloud market continues to grow. Purely from a consumption perspective, cloud computing has grown in the Indian market,” said Praveen Bhadada, a senior director with Zinnov, a technology strategy advisory in India.

In Indian rupee terms, the market has been growing at 45% to 50% every year and in US dollar terms it may have grown 35% to 40% annually, Bhadada said.

“That clearly tells us, irrespective of what challenges exist in the market, one way or the other, adoption has increased,” he said. In the last three to four years, companies have moved beyond the concerns of security risk and are now asking what more can be done on the cloud, and in the coming three years, boosted by the move towards hybrid clouds, adoption will accelerate in India, he said.

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