Where lies the Silver lining?

Date:   Saturday , August 01, 2009

When Eric Schimdt, CEO of Google used the phrase ‘cloud computing’ in a search engine conference in 2006, he caused many eyebrows rise. Though his peers and rivals in the industry viewed it with skepticism, they were sure they could not ignore it too. He explained ‘an emergent new model’, which his company had embraced, “It starts with the premise that the data services and architecture should be on servers. We call it cloud computing – they should be in a ‘cloud’ somewhere. And that if you have the right kind of browser or the right kind of access, it doesn’t matter whether you have a PC or a Mac or a mobile phone or a BlackBerry or whatever new devices still to be developed – you can get access to the cloud”.

So what is cloud computing all about? In simple terms it is something we use everyday in our lives. Most of us use Web based email services like Gmail, Yahoomail, or Hotmail or watch a video online or share snaps using photo-hosting services like picasa or flickr or read news online or watch TV shows on the Internet without realizing that we are actually using ‘cloud computing’ services. Most players provide these services for free for individual users; for enterprise users, it’s generally a paid subscription-based model — Google Apps is a good example.

Though it has still a long way to go when it comes to devices other than a PC or a Laptop which Schimdt envisaged, the advocates of cloud computing strongly vouch that cloud computing is poised to succeed where so many other attempts to deliver on-demand computing to anyone with a network connection have failed, thereby dismissing the claims of skeptics that it is just another online fad and rather believe it to be the biggest revolution since the Internet. In fact IDC expects spending on IT cloud services to grow almost three fold, reaching $42 billion by 2012, and accounting for 9 percent of revenues in five key market segments. It is also expected that the cloud adoption trend will be amplified by the current financial crisis. Alok Singh, CEO of Novatium feels that the technology even has the power to kill the dominancy of the giants of the industry and see the emergence of new IT super powers.

While today Amazon, along with Google and SalesForce leads the cloud space, it is interesting to note that inside the labs of the IT companies across the world the engineers are conspiring to understand and leverage this highly potential technology in a manner which ensures maximum ROI. I.Vijayakumar, CTO of Wipro technologies says, “It is not only a new technology, but it is also leading to the evolution of a new commercial model. It has the potential to bring in a paradigm shift to the software industry, as applications are purchased, licensed, and run over the network instead of a user’s desktop. This shift will put data centers and their administrators at the center of the distributed network, as processing power, electricity, bandwidth, and storage are all managed remotely. It affects not only the business models, but the underlying architecture of how we develop, deploy, run, and deliver applications”.

Firms like Dell and IBM are extremely focused on the impending disruptive change that the growth of the cloud services market will bring about. IBM is betting heavily on becoming one of the few true utility providers of technology. Capgemini is taking a focused position as the prime consultant and service integrator in place to plan, sell, implement, and manage the cloud services developed by other firms like Amazon, Google, and Symantec. Firms like Atos Origin, CSC, and Siemens IT Solutions and Services, all offer some cloud services and have the intent to grow their offerings for enterprise clients. These firms are treating cloud more as a key service add-on to their existing portfolios.

Indian IT companies are also catching up fast on cloud computing and are betting big on it. Wipro, for instance, has already built a ‘private cloud’ for its internal purposes. The software giant is now offering that expertise to existing customers to optimize the computing power of their data centers. Wipro is also building what it calls the ‘enterprise cloud’ — which includes designing private clouds and integrating cloud services, a capability it plans to offer to clients who have already outsourced or plan to outsource their hosting or infrastructure management activities with the company. Infosys has cloud computing- based solutions for the auto sector. And others such as HCL Technologies, Tata Consultancy Services, and even Bharti Airtel (with its network PC) aren’t far behind.

A Smooth Sailing Option
At the first glance, it may seem that the companies’ demand for cloud computing seems rooted in their desire to save money. Because cloud services can be easily rented out on a pay-as-you-go basis, companies can avoid purchasing extra equipment in anticipation of the inevitable, but unpredictable, peaks in demand. This ensures scalability. Apart from low cost, the speed of implementation is much faster. For the CIOs whose budgets have shrunk due to the current slowdown this is the best option. But the technology is not all about just cost effectiveness. For any organization to succeed, it also requires agility and flexibility. Cloud computing is one technology that will help organizations maintain both flexibility and agility. For startups, it can help them bring their initial investment down, apart from lowering operating expenditure and reducing the time-to-go-to-market with minimum resources.

Watch out for the Dark Clouds
About a year back it so happened that about 14 percent of Google’s customers experienced slowdowns and interruptions - caused by an accidental redirection of Web traffic through Asia - while using its search, mail, and other services. In a similar outage, Ma.gnolia, a social bookmarking service lost half a terabyte of data, including the backup files, and was forced to shutdown, when a database in the cloud became corrupted. Last year, when Amazon’s cryptographic authentication system became overwhelmed, its simple storage service (S3) went offline for about 2 hours, evoking panic and concern for a large number of companies that rely on it. Such hiccups, though they do not make it to the headlines, have undeniably cast doubts on the reliability of cloud services.

Another area of concern is that of security. Since data will be stored outside the premises, the access to this data by unauthorized agents is a cause of concern for organizations looking to adopt cloud-based solutions. With data being stored remotely, the organizations have no control over the security of data since it is the cloud vendor who enforces the security and compliance measures. But Jamal Mazhar, CEO of Kaavo argues that the data is safer in the cloud than in the internal data centers. To prove his point he cites a study by the University of Berkeley, which says that there are no fundamental obstacles to making a cloud computing environment as secure as the vast majority of in-house IT environments, and that many of the obstacles can be overcome immediately with well understood technologies such as encrypted storage, Virtual Local Area Networks, and network middle boxes. His company provides AES 256 bit encryption for storing the data on EC2 persisted disk volume so that even the data that is generated in the clouds can be stored in an encrypted format. Having said that, he also stresses that organizations should scrutinize the vendors appropriately to redress the concern.

However the biggest issue is the lack of standards, which leads to interoperability issues. Right now, if a company starts using the cloud services of one provider, it is effectively dependent on that provider. Customers are apprehensive since there is no standard format or API that can be vendor neutral and ensure interoperability. These concerns of reliability, interoperability, and security can be mitigated by bringing in information security best practices. Though research is being done in this area, we are yet to define the processes.

The India Scene
“The technology still is in a very nascent stage,” opines Deepak Visweswaraya, Director, EMC Corporation. “But enterprises are seriously looking at it even in emerging economies like India.” But it is true that they are treading cautiously. India offers a $1 billion market for the technology. While organizations across the country, such as Shoppers Stop, Bharti, Ashok Leyland, Asian Paints, Infosys, Maruti, and Tata Elxsi are tuning in to cloud computing services, certain concerns prevent them from buying the full basket of services that the cloud has to offer.

Amazon, the pioneer of cloud computing, still lingers in the market with a very meager client base. Though many corporate firms have evolved with cloud computing, like Microsoft and IBM, yet there is no significant shift towards its total adoption.

One of the major bottlenecks for the adoption of cloud-based technology is the low bandwidth speed. Providing an entire desktop experience to a client via the cloud, in a country like India, would require a high bandwidth, which can bring such an experience from the cloud. Power availability is another issue that could hinder vendors from offering cloud services from within India. Many parts of the country, which are key business centers, face regular power shortages during certain months of the year. Areas around these towns or cities are plagued by power outages and load shedding to compensate for the higher power demand in locations having a concentration of industries and other commercial infrastructure.

However Visweswaraya feels that Indian enterprises, irrespective of their size and category, can benefit from cloud computing. “Especially the technology can benefit a large number of small and medium businesses in verticals like manufacturing, retail, and financial services," he adds.

For the Indian IT players this opens a huge market opportunity. Apart from companies like Patni, CSC, Wipro, mid sized players like Keane, Unisys, Netmagic, and Novatium have launched cloud computing based services.
Vijayakumar says, “Often enterprises face a difficulty in choosing whether to go for public clouds or to build their own private cloud networks. This brings in a huge opportunity in consulting for the service players. After consultation, if the client opts for private cloud, the players can bring in their expertise in designing a private cloud and later in integrating and managing the cloud based services. He adds that in no time software development can also move to the cloud, adding to the opportunities.

While cloud computing can be an answer to the dilemma of having to maintain world-class IT infrastructure while needing to significantly reduce IT budgets, it should also be done after thorough investigation and with caution. “Enterprises should investigate which cloud services are available and the strength and viability of the provider of that service. A survey should be done to determine what parts of legacy technology are cloud-ready,” says Vivek Mehra, Vice President, Global Architecture and Development, Keane Inc. Testing the cloud environment by moving one or a few services in the infrastructure to the cloud will prove to be healthy to the enterprises.

Singh, however, warns the players that for the technology to succeed it should have a holistic approach, should be outcome driven, and simplistic, with a simple service level agreement.

As for the future of the technology, all agree that sky is the limit. It may not be surprising, if the technology eventually impacts the small computing devices used in the common household articles, our car or our washing machine for that matter.