SMEs take to cloud services

Shivani Shinde / Mumbai August 03, 2011, 0:21 IST

Three years ago, when digital media entertainment firm Hungama decided to expand its operations, Chief Information Officer Manan Chhatrapati felt cloud computing was the best option. This, even at a time when there were hardly any vendors in India offering these services. We were in the process of launching new products and services, for which we had to make investment in hardware and software. When we started evaluating the cost for setting up the systems, we chanced upon cloud computing. However, the problem then was the lack of players in India, says Chhatrapati, who chose Amazon as a services provider. Hungama has seen much progress since then. Its IT system is based on a rented model and the company has saved 40-50 per cent of the costs it would have incurred had it purchased servers (Hungama uses around 150-180 servers from Amazon). Cloud computing is a technology model that allows on-demand network access to a shared pool of computing resources like servers, network, storage and applications. This means an organisation need not invest in buying, maintaining, and hosting its own IT infrastructure. Companies can avail of third-party services for all IT requirements and pay according to their use of the infrastructure. Other than global players like Amazon, Google, IBM, HP, Cisco and Oracle, Indian players like TCS and Netcore offer these services. Chhatrapati says with cloud computing, he does not have to worry about technology turning obsolete, since the service provider will take care of all the IT needs. Our company is a media company that requires huge storage. Any new movie release means we would want to have that in our database. This also means the data we have, be it movie clips, songs or games, needs to be transcoded (digital to digital data conversion). We also have to make this data compliant with several gadgets. So, the demand for computing changes and we have the flexibility to do so, he says, adding, Cloud computing is our computing way for us as we scale our business. We are evaluating some Indian players, too. We have done some proof-of-concepts. If we like the services, we will use them in the future. According to a study by Zinnov Management Consulting, the cloud computing market in India is estimated at around $400 million and is expected reach $4.5 billion by 2015. It added 75 per cent of the total market would be driven by private clouds. Private cloud deployment would help companies reduce their operational cost by around 50 per cent. The study also says IT expenditure on cloud technology is expected to grow from 1.4 per cent in 2010 to 8.2 per cent by 2015. Hungama is just one among several hundreds of small and medium enterprises (SMEs) that are adopting cloud computing. As in other parts of the globe, in India too, the adoption of cloud is the most among the SME segment. Indian firms like Oxford Bookstore, Reilto Enterprises, Ryan International, Kaya, Manav Rachana, Four Fountain, Karrox and United Biscuits have adopted cloud computing. Take the case of Vaidya Nathan, founder and chief executive of Classle Knowledge, a cloud-based social learning platform. Being an IT professional, I knew what cloud computing meant. But more importantly, as a business establishment, I was looking at the simplicity and transparency of cloud-based services. Moreover, as a start-up, what mattered for us was whether or not we could have immediate capex, says Nathan.

Classle, which uses Amazon Web Services, is currently focusing on rural India, where students struggle with resource limitations. It has tie-ups with 43 colleges, including IIT-Madras, and has over 40,000 students accessing its network. Nathan explains cloud computing helps the company, as its IT requirements are different. On an average, we get hits from 100,000 students across India and abroad. We also conduct events, especially when requirements hit the roof. But since we use cloud computing, I just increase my requirement for that period, rather than invest it upfront, he says. When Classle started using cloud computing, Nathan invested around Rs 800 a month. As the usage increased, his company now pays around Rs 60,000 a month. Cloud computing is fuelled by the belief that it would allow a large number of SMEs to adopt the same enterprise class software and technology solutions which were earlier the exclusive preserve of large enterprises. This, in turn, is expected to allow the market for software solutions to open up, as large and upfront capital investments in IT infrastructure can be converted into smaller, manageable and pay-peruse annuity payments, says Kamal Vohra, lead analyst, India Software and IT Services Research, CyberMedia Research.

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