Private Cloud Landscape in India

An EMC-Zinnov White PaperPrivate CloudLandscape in India

Private Cloud Landscape in IndiaC ONTENTSContents1. Executive Summary ............................................................................................................... 22. Introduction .......................................................................................................................... 33. Cloud Landscape in India ....................................................................................................... 54. Challenges of Private Cloud Adoption...................................................................................205. Key Recommendations .......................................................................................................2116. Sources...............................................................................................................................244 1 |P a g e

Private Cloud Landscape in India1. EXECUTIVE SUMMARY  IT-BPO spend in India has continued to grow over the last 5 years and has become the world’s fastest growing IT-BPO market in FY2011 (growth rates of 21%). The large US$29 billion market is heavily dominated by hardware & IT services accounting for more than 75% of the market value  While IT budgets across verticals continue to increase, Cloud computing is expected to reshape the Indian IT market by generating new opportunities for the IT vendors and driving changes in traditional IT offerings. The rapidly growing enterprises, vast base of SMBs and government adoption are driving the growth of this sector  Majority of CIOs perceive cloud computing as the way forward and have already started adopting/ evaluating cloud computing in the IT environments. CIOs are increasingly looking to invest in applications & infrastructure services (IaaS, Private/ Hybrid Cloud & Virtualization) in terms of cloud adoption  The total cloud market in India currently stands at a US$ 400 million and is expected to reach a market value of US$ 4.5 billion in the next 5 years. This would result in the increase of cloud contribution from the current 1.4% to 8.2% of the total IT-BPO spend in India by 2015  While both public and private cloud adoption is rapidly growing in the Indian market, challenges around security, vendor lock-in, location of data center, and concerns around governance and auditing are restraining the growth of public cloud. More matured enterprises are also increasingly looking to adopt hybrid cloud models  Private cloud market is fast growing in India and has already reached a market value of US$ 312 million in 2010. It is further expected to grow at a rapid pace of over 60% over the next five years to reach US$ 3.5 billion in market value by 2015  IT-ITeS, Telecom, BFSI, Manufacturing and Government are the early adopters of cloud computing (both private and public in India). Other verticals such as healthcare, retail and education are also emerging in the adoption of cloud technologies  Realizing the huge market potential , several companies are competing aggressively to grab a share in the lucrative cloud computing market. More than 2/3rd of the global cloud services companies already have a direct presence in India for its services for Indian enterprises  The fast growth of this segment is also expected to positively influence the employment market in India. Private cloud market in India currently generates more than 10,000 jobs (direct + indirect) and is expected to add another 100,000 jobs in the next 5 years  The evolution of key drivers has nurtured the first phase of growth for private cloud market in India. Current market dynamics indicate strong momentum, supporting a positive outlook. Targeted actions by key stakeholders across key themes will help accelerate the next phase of growth, and enable the annual revenue aggregate of this segment to reach US$ 3.5 billion by 2015 2 |P a g e

Private Cloud Landscape in India2. I NTRODUCTIONCloud Computing, as agreed upon by most of the technology companies and CIOs, is a transformational phase of IT.The concept of computing as a utility, which would transform the IT industry and would also impact the way computingservices are delivered and consumed, is a reality now. The Cloud offers the potential to make software more attractiveas a service and is redefining the way IT hardware is designed and procured. Cloud has enabled companies to eliminatelarge capital investments in hardware to deploy their service or resources to operate it.The concept of Cloud computing is not only restricted to enterprises and businesses, applications & platforms such asFacebook, Twitter, LinkedIn, Zynga, Groupon etc. have enabled millions of consumers to connect, share and leveragetechnology to enhance their life experiences. These platforms are different shapes of the Cloud and relatedtechnologies which enables rapid scalability and reach.The U.S. National Institute of Standards and Technology (NIST), a federal technology agency that works with industry todevelop and apply technology, measurements, and standards defines service and delivery models of cloud computing:Service Models • Infrastructure as a Service - The capability provided to the consumer is to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to run arbitrary software • Platform as a Service - The capability provided to the consumer is to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the provider • Software as a Service - The capability provided to the consumer is to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interfaceDelivery Models • Public Cloud : The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services • Private Cloud : The cloud infrastructure is operated solely for an organization. It may be managed by the organization or a third party and may exist on premise or off premise • Hybrid Cloud : The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability • Community Cloud : The cloud infrastructure is shared by several organizations, supporting a specific community 3 |P a g e

Private Cloud Landscape in IndiaGlobal Market DynamicsWhile in the backdrop of global economic meltdown the IT investments have taken a hit globally, cloud computing hasgained wide interest across all segments of enterprises, small & medium businesses (SMBs) as well as consumers. Themost attractive feature of this new technology is the prospect of converting large, upfront capital investments in ITinfrastructure into subscription or annuity based payments. IT is increasingly being looked at as strategic investmentrather than just a cost item in the profit and loss account. There is a huge pressure on IT companies to demonstratebetter value, efficiency and innovation in products & services .As a result, the worldwide cloud revenues are proj ected to grow rapidly over the next 5 years. Private cloud revenuescurrently account for 83% of the overall cloud revenues and its share is further expected to increase going forward.While software-as-a-service (SaaS) will continue to contribute to the overall revenue; its share is expected to decline,largely due to an increased focus on purchase of infrastructure and infrastructure related services. The key driver forthe fast growth of cloud infrastructure is the increased focus from businesses on reducing the huge costs associatedwith IT infrastructure.Exhibit 1: Worldwide IT Cloud RevenuesWhile developed economies such as US, UK, and Japan have been at the forefront of technology innovations, theadvent of newer technologies in the form of cloud computing (with the rise of telecommunications and the internet)have formed a level playing field in emerging markets such as India & China. This leveling has helped in creatinginnovators and early adopters of cloud computing from these markets. 4 |P a g e

Private Cloud Landscape in India3. C LOUD L ANDSCAPE IN I NDIAIndia, a nation with a population of more than one billion, has been rapidly growing its GDP at an average rate of morethan 8% over the last 7 years. India’s strong GDP growth has attracted heavy foreign investments in the country by FIIs(Foreign Institutional Investors). As per SEBI (Securities and Exchange Board of India) estimates , the total FIIinvestment in India in the year 2009-10 rose to US$ 30 billion from a divestment of US$ 9.9 billion in the previous year(the year of the global economic downturn). This is a testimony to the fact that the Foreign Institutional Investors havepoured inflows heavily to bet on the Indian growth story. As a result, the Indian stock market has bounced back veryearly from the economic slowdown.While the economic growth is showing signs of fast recovery, efforts are being made by both the government and thelarge enterprises to bridge the gap between technology generation and adoption by the targeted endusers/consumers. The technology infrastructure is being expanded by relevant stakeholders to cater to the needs ofthe ever growing market demands. As a result, there is an increased spending on technology which further encouragesintroduction of newer technologies, ultimately leading to the IT investment growth of the country.The teledensity in India as per TRAI (Telecom Regulatory Authority of India) has already reached 62.51% (including bothwired and wireless connectivity, as on October, 2010) and the total active internet consumers has crossed the 80million mark with an annual growth rate of about 40%. With the advent of newer technologies like 3G, WiMax,Broadband Wireless Access (BWA) etc., the penetration is further likely to propel. The introduction of newertechnologies is augmented by the rapid infrastructure overhaul viz. the government’s commitment to lay a 500,000 kmOptical Fiber Cable (OFC) network to reach every single corner in the country.Exhibit 2: Total Domestic IT-BPO Market in India The Indian IT domestic market will continue to be dominated by hardware and IT services accounting for more than 75% of the total revenues. Aggressive government focus continued IT investments by matured verticals along with Greenfield initiatives by emerging verticals are fueling the growth of IT adoption in India in FY2011. Not only has the overall understanding of business improved, services are now more closely delivered. Domestic IT industry will continue its growth unabated in FY2012 with enterprises focusing on flexibility and OPEX models 5 |P a g e

Private Cloud Landscape in IndiaEmergence of disruptive and innovative technologies such as virtualization, cloud computing, service orientedarchitecture (SOA), enterprise mobility and 3G have resulted in new use cases for IT adoption. Moreover, these newertechnologies are affordable, scalable, & reliable and allow users to achieve higher business value.As a result the total Domestic IT-BPO market in India is expected to grow at 21 percent in FY2011, making it the fastestgrowing markets in the world. Total domestic IT-BPO is expected to reach US$ 29 billion in FY2011 from a total marketsize of US$ 24 billion in FY2010. Manufacturing, BFSI, Telecom, and Energy along with Government continue to accountfor the majority of IT investmetns in India. In mature verticals like Telecom, IT budgets have remained the highest in2010 as percentage of revenues.IT budgets are continuing to increase for Indian enterprises across verticals. Increase in IT budgets reflects positiveattitude of decision makers towards IT adoption and a change in mindset from it being a cost item to a businessenabler. Indian enterprises are starting to show signs of recovery with respect to their IT spending.Exhibit 3: Potential Areas of IT Investments by Indian EnterprisesCloud computing is expected to reshape the Indian IT market by generating new opportunities for the IT vendors anddriving changes in traditional IT offerings. Companies are gaining more experience with cloud and they are realizing theimportant value it can bring to their business. Customers today are more established and knowledgeable buyers ofcloud solutions. Enterprises and SMEs are transitioning into clouds to increase business a gility and reduce cost.  The uptake has been led by the aspiring Indian enterprises’ increasingly competing in the global markets and planning their IT strategies with enhanced focus. Number of Indian enterprises featuring in the FORBES 2000 list has already increased from 33 to 56 over the last 5 years 6 |P a g e

Private Cloud Landscape in India  India is home to the second largest SMB base in the world with ~35 million companies. Their current focus includes standardization of processes and aligning IT to the business for operational efficiency and global best practices  Central and state governments have also been aggressive with their IT investments in massive e-governance projects. Government is committed to invest US$ 7.45 billion over the next 5 years to provide better citizen services. Technology & cloud services will form the backbone for last mile reach and efficient delivery of these services  The huge “Native to IT” population with less than 25 years of age, exposed to IT in home, schools and colleges is currently leading the evolution of IT consumerization in India. As these users join the workforce, they would increasingly demand IT solutions and services towards enhanced efficiencyExhibit 4: Hardware Spending in India and Datacenter MarketWhile IT hardware spending is expected to increase by 20 per cent in FY2011, demand for IT modernization in verticalssuch as BFSI & Telecom, interoperability & converged networks anddata digitization in large enterprises, Public Sector Units and SMBsalong with rising spend in Government projects will drive the growth  Manufacturing and IT/ITES contribute tofor cloud ready infrastructure in India. almost 80 percent of the revenues of third party datacentersCompanies are increasingly showing interest in realizing full • The fast growth of captive datacenters ispotential of cloud adoption by undergoing rapid business driven by the manufacturing and BFSItransformation, automation & digitization. Mature enterprises with industrieswell-established IT infrastructure are focusing on optimization usingthe concepts of virtualization and green computing. Continuedinvestments in State Data Centers (SDCs) and implementation of data intensive projects like UIDAI (Aadhaar) by thegovernment are further growing the market. 7 |P a g e

Private Cloud Landscape in IndiaExhibit 5: Association with the Word CloudAs a result, Cloud Computing is no longer considered just a concept by most CIOs. Majority of CIOs perceive cloudcomputing as the way forward and have already started adopting/ evaluating cl oud computing in the IT environments.From a sample of 100 CIOs interviewed across verticals, 54% have already evaluated cloud computing and another 36%are planning to do so in the near future. Awareness of cloud as a technology and accompanying business models isincreasing among the large enterprises in India. CIOs associate Software-as-a-Service (SaaS) and Infrastructure (IaaS,Private Cloud & Virtualization) most commonly with the word cloud and have shown inclination towards the sameExhibit 6: Cloud Computing Service Interest in the Near Future 8 |P a g e

Private Cloud Landscape in IndiaWhile public cloud extends the business benefits to its users, there are certain key challenges with respect to its rapidadoption. These challenges are restraining the growth of public cloud to only basic non-core applications such as email,collaboration tools and CRM etc. CIOs are still contemplating the use of private cloud over public cloud to ensure thatthey derive the maximum business benefits from this emerging and fast growing technology. Below are some of thekey challenges associated with the usage of public cloud offerings:  Security: Potential security issues due to multitenant nature of public clouds. There are security and privacy concerns with sharing same physical hardware with unknown parties that need to addressed  Vendor Lock In: Cloud computing services offered by different vendors are not governed by any standards as of today. Depending on the vendor, the applications have to undergo changes to adapt to the service  Location of Data Center: Public cloud data center being located in an area prone to flooding or other natural disasters increases the risk for the company. Ex. Aditya Birla is moving to private cloud and prefer datacenter to be located in India for security concerns and once they reach maturity level with vendor support the Documents on security, SLA etc then they may take call irrespective of data center located globally  Corporate Governance and Auditing: Performing governance and auditing activities with the corporate data abstracted in the public cloud poses challenges, that are yet to be addressedExhibit 7: Preference of Datacenter by Indian Enterprises Most of Indian CIO’s would prefer to have the data centers located in India and run by MNC service providersLarge and mid-sized enterprises are increasingly indicating that they plan to implement private clouds due to issuesrelated to data security and performance (latency) with the public cloud. A significant number of CIO’s are now willingto leverage Cloud services & the trend will only increase in 2015. Large enterprises, instead of using 3 rd partydatacenters, are willing to use their own datacenter to provide hosted services to employees & customers, in what iscalled a private cloud. For them, private clouds work better because they are more reliable, with network uptime underthe company’s control, and are more secure, because the security systems are managed by the company. 9 |P a g e

Private Cloud Landscape in IndiaExhibit 8: CIOs Willingness to Use Cloud ServicesCloud as a model addresses key pain points of traditional IT such as underutilized IT infrastructure, application &infrastructure silos, compatibility of various platforms and environments, as well as inflexibility by making IT moreefficient and agile. Private cloud is becoming an ultimate deployment model for many enterprises to ensure bettersecurity and access to information and offers a significant enhancement in efficiency and cost savings as opposed totraditional IT environments.Exhibit 9: Private Cloud ROI Potentially can go up to 50% 10 | P a g e

Private Cloud Landscape in IndiaPrivate cloud deployments could result in a potential savings of 18-20% on the IT investments on an average. This couldeven be higher (up to 50%) depending on the level of IT modernization that happens in the organization over a periodof time. Cost savings are realized across the following key areas.  Telecom & networking: The increase in data services cost is offset by reduction in networking hardware due to consolidation  Facilities & fabric: Datacenter size and power consumption is reduced as the hardware is consolidated  Hardware: Reduction in x86 server and storage costs as a result of consolidation  Software: Reduction in software cost as better multi -tenant applications replace enterprise applications  Internal labor: Steep reduction in internal labor cost as the management of datacenter is consolidated and automated. Lesser maintenance of datacenter required  External IT services: Reduction in IT services due to right-sizing datacenter and configurationsSome of the large enterprises have even matured on their journey to the private cloud that they are nowcontemplating the use of a hybrid cloud (i.e. a combination of public & private cloud) where they can choose whatresources they want to manage in-house and allow others to be managed externally. Large companies are putting onlynon-critical applications such as CRM (customer relationship management), lead management and human resourceinto public clouds. Ex. Axis Bank’s has put non-critical lead management data into the IaaS, but not core bankingExhibit 10: Cloud Market in IndiaAs a result, the private cloud market in India accounts for 78 per cent of the total cloud spend largely driven byinfrastructure, infrastructure services and software applications running in a private cloud scenario . Basis the fastadoption that is evident in the Indian market, private cloud market is expected to grow a rapid pace of over 60% overthe next five years to present a cumulative market opportunity of more than US$ 8.8 billion for the players across thestack. 11 | P a g e

Private Cloud Landscape in IndiaThe growth would largely be driven by the increased maturity of Indian enterprises towards cloud computing and CEO/CIO mandate for an enterprise wide cloud strategy. The combined cloud services market (including public & private) atthe same time would increase to US$ 4.5 billion from the current US$ 0.40 billion accounting for more than 3% of theglobal market from the current 0.3%.Exhibit 11: Private Cloud Market Forecast in IndiaSimilar to global market dynamics, the share of private cloud in India is a high percentage of the overall cloud spending.Below are some of the key trends in the way IT investments would move going forward:Applications: Will move from single tenant, monolithic applications to multi -tenant applications, with elated onlineexperience and running on next generation systemsServers will move from dedicated servers and clusters to virtualized dedicated servers. Sever virtualization andconsolidation to become mainline. Reduced space requirements, power and cooling costsStorage will move from DAS/SAN to virtualized storage. Focus will be more concentrated on optimized storageApplication Development & Deployment (Information & Data Services) will move from data islands to dataintegration based on SoA frameworks and master data management. Movement of application servers, databases, andmiddleware to virtualized platformsInfrastructure Software will move from dedicated software to common pooling for the datacenter environments 12 | P a g e

Private Cloud Landscape in IndiaExhibit 12: Cloud Spending Contribution in Total IT Investments Year 2010 2011E 2012E 2013E 2014E 2015ETotal IT Spend (US$ Bn) 28.8 33.5 39.0 44.4 49.8 54.7Total Public Cloud Spend 0.1 0.1 0.2 0.4 0.6 0.9(US$ Bn)Total Private Cloud Spend 0.3 0.5 0.9 1.5 2.3 3.6(US$ Bn)Total Cloud Spend (US$ Bn) 0.4 0.7 1.1 1.9 2.9 4.5Cloud Spend as %age of 1.4% 2.0% 2.9% 4.2% 5.8% 8.2%Total IT SpendThe overall environment of cloud adoption in India is fast evolving and is expected to account for a significant share inthe total IT spend of the small, medium and large enterprises. According to most of the CIOs, out of the total IT budgetsfor a year, 70% is utilized for maintenance and upgrade of existing/ legacy infrastructure and about 30% investmentsare towards new purchases of hardware, software & associated services. It is estimated that about 26% of these newinvestments would be focused on cloud related purchases by 2015. While on one hand companies will look for cloudenablement of their existing IT infrastructure, they will continue to invest in new infrastructure architecture on cloudtechnologies.Exhibit 13: Vertical Wise Spending on Cloud Services (Both Private/ Public) in IndiaMany of the key verticals including IT-ITeS, BFSI, Telecom, Manufacturing and Government already spend a significantpercentage of their IT investments into cloud related areas. Manufacturing industry and Government is now openingup to standardization of business processes and IT systems with the help of cloud infrastructure. Other verticals such asenergy, healthcare, retail and education among others also present a sizable opportunity in the India market. While theCloud could benefit all sectors in one way or the other, the impact will be fairly emphatic in certain sectors. Flexibility,interoperability and scalability are some the benefits of Cloud services that would be commonly experienced in anyindustry sector. 13 | P a g e

Private Cloud Landscape in IndiaExhibit 14: Drivers for Cloud Infrastructure Adoption in IndiaBanking, Financial Services and Insurance:  Enterprises in the fast growing BFSI sector are exploring cloud storage and compute power to handle massive amounts of real Tata Communications has cloud time core/ non-core banking data and minimize outages services known as InstaCompute and  Cost sensitivity of mid-market BFSI enterprises and need for InstaOffice. These offerings target the migration to mobile/ internet platforms to attract new Infrastructure as a Service (IaaS) and customers is forcing them to look at cloud infrastructure Software as a Service (SaaS) verticals.  With the availability of solutions tailored to the needs of InstaCompute cloud computing security and regulatory compliance in the BFSI industry, the services will be provided out of tier 3 adoption in the public sector banks will also increase in the data centers in Hyderabad and future Singapore  Examples of adoption (Both Public & Private Cloud): Yes Bank, Mahindra Finance, India Infoline, ICICI Bank, Axis BankTelecommunications:  Telecom companies are witnessing rapid growth in the subscriber base and with 3G/ BWA roll out, the need for data services, data maintenance and data storage would increase multi -fold and would continue to leverage cloud benefits to support growth  Enterprise telecom firms are focusing on optimizing their operations to improve efficiency and increase their margins. Managed services, for e.g. is heavily being explored by major telecom providers in India  Examples of adoption: BSNL, Airtel, Aircel, Tata Telecommunications, Reliance Communication etc. 14 | P a g e

Private Cloud Landscape in IndiaExhibit 15: Examples of Private Cloud Adoption in IndiaIT/ITeS:  Shrinking development cycles, need to support multiple platforms and focus on non-linear business models is mandating increased use of efficient and scalable infrastructure  The customers for IT-ITeS companies are fast evaluating cloud offerings and look for partner competencies in this space. This is forcing IT-ITeS companies to invest in talent pool creation, test labs with cloud infrastructure, etc. which in turn is resulting in the fast growth of cloud adoption in this sector  The IT-ITeS companies are also leveraging their services expertise to coin new infrastructure services offerings on cloud and partnering with global ISVs and platform providers for comprehensive offerings  Examples of adoption: Wipro, Infosys, TCS, HCL, Patni, Vembu Technologies etc. 15 | P a g e

Private Cloud Landscape in IndiaManufacturing:  Enterprise manufacturing firms already have significant investments in IT infrastructure. While their requirements for computing systems are likely to remain high, many firms are now aggressively focusing on streamlining and efficient IT. Virtualization and cloud enablement of existing infrastructure is expected in this sector  Upfront infrastructure investment is a big challenge for the vast base of SMB manufacturers and hence are considering cloud infrastructure to enhance competitiveness  Need for improved collaboration between employees, customers, supply chain spread across geographical boundaries is forcing fast adoption of cloud technologies  Examples of adoption: L&T, Bajaj Electricals, Aditya Birla Group, Dabur etc.Government:  Riding high on citizen services as part of the national e-governance program, Indian government is looking to set up various data centers across the country  Right to education, financial inclusion, right to information etc. will be forcing the government to invest into IT infrastructure that will support the efficient delivery of these services  Government is also aiming to standardize common processes and ensure adherence to standards across the municipal, state and central government & affiliated bodies, and hence eliminating long and complex procurement cycles  It is also planning to invest in National Cloud Computing Platform (NCCP) to reduce project implementation timelines and resource wastage 16 | P a g e

Private Cloud Landscape in India  Examples of adoption: SDCs, J&K, Haryana and Orissa Government, National Cloud Computing Platform (NCCP) etc.Healthcare:  The number of hospitals adopting e-health records and other digitized clinical systems is increasing rapidly in India  Storage systems like 3-D medical imaging and health information exchanges are looking to provide more efficient ways to share data  The provision of telemedicine to reach to even the most rural areas in India and medical tourism is further fueling the growth of IT infrastructure in India  Examples of adoption: Max Healthcare, Fortis Healthcare, Sankara Nethralaya etc.Education:  Right to education (RTE) and other initiatives by government to promote education through ICT is a key enabler of growth in this segment  The student teacher ratio in India is abysmally low and most of the students do not receive quality education due to lack of personalized attention. Institutions are increasingly looking at IT as an enabler to address this challenge  Upgrading networking and basic IT infrastructure and implementing IT security solutions rank highest on the agenda of most IT decision-makers in Indian education institutes  Various tier 1 and tier 1 colleges have shown interest in creating libraries, research and test labs on cloud for on demand availability and scalability. Universities having multiple learning centers across the country can network with each other and share same storage space using cloud solutions  Examples of adoption: IIT-Delhi, IIIT Hyderabad etc.Retail:  The number of retail units is growing at a rapid pace in India and hence greater computation and storage is required. Enterprise retail firms are likely to invest in web serving, stora ge and systems/ system management to support their growing operations  Cloud readiness is increasing in the typically an unorganized retail sector (95%) as enterprises move on to SaaS for business applications such as ERP and CRM. Mid-market retail firms are looking for cost optimization while increasing IT adoption  Examples of adoption: Shoppers Stop, Oxford Book Store etc. 17 | P a g e

Private Cloud Landscape in IndiaExhibit 16: Vertical Maturity for Private Cloud Adoption in 2010 & 2015Realizing this huge opportunity, several companies are competing aggressively to grab the largest share of the lucrativecloud computing market. More than 2/3 rd of the global cloud services companies already have a direct presence inIndia for its services for Indian enterprises. The next five years would witness more companies focusing on Indianmarket and service portfolio extension of the existing companies in the India market. Many large cloud infrastructurecompanies have laid out service offerings across the stack of private cloud computing for the India marketSeveral MNCs, Indian IT services players such as Infosys, TCS, Wipro, HCL, Tech Mahindra etc. as well as start-ups havestrengthened their focus on the India market. The supply side is slowly gearing up towards providing best- in-classservices for the potentially vast customer base in the India market. Though large technology players have emerged asleaders in cloud computing, several other companies are trying to carve their niche. Telecom companies such as Airtel,Tata, BSNL and Sify also entered into the cloud marketExhibit 17: Cloud Infrastructure Services Offered by Top Players in India 18 | P a g e

Private Cloud Landscape in IndiaSome of the biggest IT players like EMC, Dell, HP, IBM, NetApp and VMware are competing for larger share in the cloudcomputing market. Companies such as VMware, Cisco & EMC have partnered together (the VCE company) to create aone-stop shop for all cloud related needs of enterprise.Exhibit 18: Employment Generated Due to Private Cloud Market Growth in India 19 | P a g e

Private Cloud Landscape in India4. C HALLENGES OF PRIVATE C LOUD ADOPTIONWhile there are lots of benefits in the adoption of the private Cloud, there are some challenges also that needattention from the stakeholders of cloud ecosystem in India. Since cloud computing is at a nascent stage, there is anissue of lack of awareness, which affects the overall adoption of cloud computing in India. Issues regarding security,even though it is mostly a matter of perception, continue to surface. Also the connectivity issues and proximity of clouddatacenters in India geography continues to put challenges on performance. Many organizations in regulated verticalssuch as healthcare, BFSI and government agencies have to adhere to laws and policies and define their IT strategyaccordingly. Lack of benchmarking, best practices and clear ROI models are also inhibiting the growth of private cloudadoption in India. The internal IT teams are still not completely familiar with the entire benefits and use case of cloudcomputing and hence are resistant towards a full blown adoption of the same.Exhibit 19: Key Challenges for Private Cloud Adoption in India 20 | P a g e

Private Cloud Landscape in India5. KEY RECOMMENDATIONSThe evolution of key drivers has nurtured the first phase of growth for private cloud market in India. Current marketdynamics indicate strong momentum, supporting a positive outlook. Targeted actions by key stakeholders across keythemes will help accelerate the next phase of growth, and enable the annual revenue aggregate of this segment toreach US$ 8.4 billion by 2015.As cloud services industry is a subset of the technology industry, it will indeed benefit from most actions that aid thegrowth of the overall industry. The actions outlined below have been developed after considering the unique attributesof and challenges faced by the ecosystem constituents of cloud services and are more specifically focused on enablingthe growth of this segment.Demand Side: Companies looking to adopt cloud technologies in their IT environments should clearly need to alignthemselves to the IT transformations and consider multiple factors before adoption  Align to IT Transformations: Being an IT leader is tough, specifically in the current times when IT is transforming dynamically. 2/3rd of the CIOs do not think of their roles as strategic and currently lack support and direction from businesses. Aligning oneself towards IT transformations and willingness to evaluate benefits and move along the lines of these rapid transformations will be critical towards the growth of cloud adoption in general  Identify Specific Areas of Cloud Investments: While cloud offers strategic benefits, not all IT might be required to be migrated to cloud models to derive maximized benefits. The IT decision makers should identify specific areas for cloud investments based on the strategic needs and current/ ongoing challenges of the IT & business  Learn about Vendor Offerings in the Market: The market is currently flooded by service providers offering multitude of cloud services. A clear understanding of the offerings is much required before making any purchase decision towards the same. Understanding of best-in-class offerings and partnering with those vendors to realize maximized benefits is imperative  Cloud Computing is more than Just Cost Savings: Most of the CIO organizations in the Indian enterprises today continues to view IT as investment rather than business enabler and hence focus on returns even before investing into IT. While cost savings is the core fundamentals of cloud computing, not all cloud investments necessarily result in direct cost savings and could be more intangible in nature. Cloud computing has to be viewed as an enabler for better efficiency and productivity as opposed to pure cost savings  View Cloud Benefits in Long Term: While there has been a certain degree of aggression towards cloud adoption across verticals, the quantifiable benefits may or may not be realized right at the time of deployment. IT in general and Cloud computing in particular is to be looked at as business enabler and the returns may not be quantifiable in the immediate future. The cloud computing strategy needs to be viewed from a long term perspective rather than a time bound quarter on quarter return on investments  Invest in Building Internal Talent: Due to the nascent phase of this technology, not many companies currently have the skilled talent pool that understand the technology and realize the benefits. Enough investments need to be made in building the competencies internally 21 | P a g e

Private Cloud Landscape in IndiaExhibit 20: Catalysts for Cloud Adoption in IndiaSupply Side: Supply side companies looking to penetrate the Indian market should also understand the need ofdifferentiated and focused approach towards the market  Develop a Comprehensive Cloud Strategy for Long Term: There is a definite gap between the needs of the IT organization and awareness about solution availability in the market place. Bridging this gap with a comprehensive cloud strategy and service offerings will help in the short term. Evangelizing the CIOs towards cloud benefits and eliminating perception around challenges will be key to nurturing this market in India  Develop Robust ROI Models: As highlighted above, Indian enterprises continue to view IT as investment as opposed to business enabler and hence look for ROI. While the maturity of Indian enterprise and CIOs is increasing on a continuous basis, addressing the challenge of lack of clear ROI frameworks for cloud adoption might result in an immediate uptake of cloud solutions in the Indian market. A clear framework that defines the ROI sequentially will thrust confidence among the users  Hand Hold Potential Customer, esp. during the Test Phase: While Indian CIOs are willing to experiment and pilot test cloud in their IT environments , their current awareness as well as willingness to completely move to cloud solutions is only slowly improving. There is a critical need to hand hold them through the whole process and address their queries and concerns and provide a seamless experience. High touch customer engagement would help address the challenges of the users  Consortium Based Approach: The IT decision makers in India are aggressively demanding for best of breed solutions and are critical about the offerings, quality, durability, and reliability and pricing of available solutions. A consortium based approach with participation from best in class market players (such as that of VCE) is likely to boost up the confidence in the users and will also showcase commitment towards cloud 22 | P a g e

Private Cloud Landscape in India models  Ecosystem Support: Last but not the least, enabling the ecosystem of cloud market (including service providers, data center providers, system integrators, application providers etc.) would be important to further strengthen the customer confidence in cloud and its potential. End to end support throughout the course of adoption, continuous innovation in delivery and business models, addressing specific needs and helping CIOs transform to the journey of cloud will be much required to realize the huge market opportunity that India has to offerThe next wave of transformation in the IT industry is cloud computing. This is a perfect storm. The only difference isthis storm is destructive only to companies who not willing to change. It is a huge opportunity for others. It is clear thatlike any transformational initiative, adoption of cloud also faces internal resistance to change as it fundamentally altersthe makeup of the IT organization. The key is that the cloud related challenges will eventually get resolved throughbetter technology, transparency, cost, regulations and changes in mind set of the customer.Having realized the immense opportunities, it will be imperative for the companies to come together and enablecollaborative innovation to address Indian market needs. Key focus should now be on developing the ecosystem. Itshould include transformation of IT decision markers, developing the talent for cloud development, connecting start upISVs with large System integrators, enabling the startups on the cloud market places and finally influencing governmentpolicies to influence cloud adoption.In cloud we believe.. 23 | P a g e

Private Cloud Landscape in India6. SOURCES 1. Akamai (www.akamai.com) 2. Aptech (http://www.aptech-worldwide.com) 3. Asia cloud forum (http://www.asiacloudforum.com) 4. Asia pacific future gov (http://www.futuregov.asia) 5. Bitpipe (http://www.bitpipe.com/) 6. Biz2tech.in (http://biztech2.in.com) 7. Business Software Alliance (www.bsa.org) 8. Business Standard (www.business-standard.com) 9. Business Wire (http://www.businesswireindia.com) 10. Businessworld (http://businessworld.in/) 11. Channel world (http://www.channelworld.in) 12. CIO Association of India 13. CIO Research Center (http://cioresearchcenter.com) 14. CIOL (http://www.ciol.com) 15. Cisco (www.cisco.com) 16. Cloud tweaks (http://www.cloudtweaks.com) 17. Crn.in (http://www.crn.in) 18. CXO today (http://www.cxotoday.com) 19. Deccan Herald (http://www.deccanherald.com) 20. Dell Company website (www.dell.co.in) 21. Digitizor (http://digitizor.com) 22. DQweek (http://dqweek.ciol.com) 23. E- government online (http://www.egovonline.net) 24. Economic Times (http://economictimes.indiatimes.com) 25. EMC (www.emc.com) 26. Express computer online (http://www.expresscomputeronline.com) 27. Financial Express (http://www.financialexpress.com) 28. Grameen Foundation (http://www.grameenfoundation.org) 29. Hindu Business (http://www.thehindubusinessline.in) 30. Ibef (http://www.ibef.org) 31. IBM (http://www.ibm.com) 32. Ibn Live (http://ibnlive.in.com) 33. IDC India (http://www.idcindia.com) 34. Information Week (http://www.informationweek.in) 35. Insurance tech (http://www.insurancetech.com) 36. ITpro (http://www.itpro.in) 37. Itvarnews (http://www.itvarnews.net) 38. Live mint (www.livemint.com) 39. Microsoft (http://www.microsoft.com) 40. Netapp (www.netapp.com) 41. Physorg (http://www.physorg.com) 42. Rediff Business (http://business.rediff.com) 24 | P a g e

Private Cloud Landscape in India43. Reuters (http://in.reuters.com/)44. Salesforce (http://www.salesforce.com)45. Search CIO (http://searchcio.techtarget.in)46. Techno Pulse (http://www.techno-pulse.com)47. Technology review (http://www.technologyreview.in)48. The CTO forum (http://www.thectoforum.com)49. The Economist (http://www.economist.com/)50. The New York Times (http://www.nytimes.com/)51. The next web (http://thenextweb.com)52. The Telegraph (www.telegraph.co.uk)53. Times of India (http://timesofindia.indiatimes.com)54. Vcbytes (http://www.vcbytes.com)55. Vmware (www.vmware.com)56. World Bank (www.worldbank.org) 25 | P a g e

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