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November 2012

SOURCE CLOUD Guide to the impact of cloud computing on global sourcing of services

EXPERTS COMMENTS INTERVIEWS CLOUD DEBATE


The gateway to the Global sourcing of IT and BPO services

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DIRECTORY OF SERVICES

EDITORIAL TEAM Ed Nair Editor, ed@cybermedia.co.in Smriti Sharma smritis@cybermedia.co.in Smita Vasudevan smitav@cybermedia.co.in Sourabh Chandra Pushp Sourabhc@cybermedia.co.in

NEWSLETTER

SALES & MARKETING

A regular digest of key industry happenings.

DIGITAL MAGAZINE The fortnightly digital magazine features research reports, articles and experts’ views. Available on www.globalservicesmedia.com

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WEBINARS

COVER DESIGN

Global services’ web-based seminars aim to impart useful information related to outsourcing indus-try in the form of presentations and discussions by industry specialists.

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PRADEEP GUPTA, Chairman & MD

RESEARCH We deliver indepth analysis and research reports on sourcing subjects.

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MICROSITES Online resource center designed to provide focused content on special subjects to the out-sourcing community.

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EDITOR’S NOTE

The CLOUD Turns into RAIN The hype wagon of cloud is hurtling along with deafening noise. The services industry is not untouched by this cacophony. But the hype is fast turning into reality and the noise is turning into music. There is data to prove that it is time to look at cloud as the inflexion point in technology and technology services. According to a report by services advisory group, ISG, the percentage of contracts with cloud in scope rose from 9 percent in 2010 to 20 percent in 2011 and 27 percent in 2012 till date. The percentage of purely cloudrelated contracts rose from 109 to 223 (growth of 120 percent) over the past one year. The report further states that half of the outsourcing service providers studied claimed that one-fourth of their pipeline of opportunities now included cloud-based services. The service providers also expect

Ed Nair, Editor

ed@cybermedia.co.in

cloud services to grow faster than traditional IT outsourcing, especially in the US market. Cloud changes the current paradigm of service delivery; it is therefore called a ‘disruptive’ force. In IT outsourcing, the disruption is felt in the way infrastructure services are delivered. In the BPO industry, the disruption is felt in the way applications are delivered using software that is accessed on the cloud. In cloud lingo, the former is called as infrastructure-asa-service (IaaS) and the latter is called software-as-a-service (SaaS). A more refined method for offering services on the cloud is called as platform-as-aservice (PaaS), closely linked to platform-based BPO. The above data clearly shows the extent of adoption and interest in embracing these new ways of service delivery. The overall impact of cloud is more far-reaching than the immediate one of how services are delivered. The implications range from how services are scoped and priced, how contracts are drawn up and administered, how compliance is handled, and many more. This compendium of articles on cloud covers various aspects of cloud that services professionals need to understand. Trust that the collection helps you advance your thinking about cloud for the present and serves as a resource to guide you in your efforts to adopt cloud in the future.

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ADVERTORIAL

BUSINESS PROCESS AS A SERVICE:

A VIABLE ALTERNATIVE

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hose who doubted the role of the cloud in business process management need only look to how rapidly Sales (CRM) and HR have benefitted from cloud-based technology, connecting and expanding global operations in a quick, secure, and cost effective manner. Now, thanks to a variety of groundbreaking Business Process as a Service (BPaaS) solutions, CFOs can unlock the benefits of the cloud for the Finance function as well. BPaaS offers unique opportunities for businesses of all sizes to obtain mature solutions without heavy upfront investment. BPaaS solutions for Finance and Order-To-Cash processes provide industry-leading practices delivered through the cloud. Small businesses attain the same software, technology, and service support for a fraction of the cost of enterprise solutions. Large enterprises can standardize global operations or advance into new markets rapidly, efficiently, and with easy integration of IT policies for compliance, etc. Using BPaaS, one manufacturer acquired three facilities in an emerging market and brought F&A operations online across locations in just three months. While speedier time to market makes the cloud worth a second look, its true value, especially for functions like Finance, rests not so much in access to its underlying software or technologies as in the process support that raises operations to best in class. BPaaS offers instant access to trained personnel across a wide range of specialties, who uses proven processes to drive better service. Genpact has been using process to drive performance for 15 years, in thousands of engagements at top companies in diverse industries. With the largest F&A operation in the world and the largest pool of Lean Six Sigma-trained resources, the company applies this accumulated knowledge to

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BPaaS solutions crafted for both specialized niches and end-to-end F&A process improvement. In one case, it helped an engineering major slash costs by 30% and drive service levels up by 50% through standardized F&A processes. Forward-looking CXOs should view the cloud as a viable option when weighing IT capital expenditures. There are clear advantages to attaining more efficient and effective business operations. As Genpact is demonstrating, BPaaS solutions provide the process advantage that drives true excellence.

Please contact us at Aditya.mony@genpact.com or kalyan.raman@genpact.com www.Genpact.com/home/solutions/BPaaS

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Contents Europe Cloud Computing: Way to Cut Government Annual Deficit

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Security is Becoming Less of a Barrier Drew Hofler senior manager, Financial Solutions, Ariba, Inc.

Cloud Opportunity and Biggest Challenge for The Mid Market M.S Rangaraj Chief Innovation Officer, Microland Vaibhav Tiwari Chief Marketing Officer, Microland

Essentials For Implementing Cloud in The Mid Market All That You Wanted to Know About Cloud Adoption

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Case Study: Cybage

Case Study: Datamatics

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Cloud Services: A Double-Edged Sword? Stanton Jones Analyst, Emerging Technology, ISG

18 Cloud Computing Act of 2012: Efforts to Legislate Cloud

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38 A Walk in the Cloud: Staying the course Kothandaraman Karunagaran VP, Infrastructure Services, CSC

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Outsourcing Will Assume a More DeďŹ ned Role in the Cloud Era Bhaskar Ghosh Global Lead, Application Outsourcing, Accenture Jack Sepple Global Cloud Computing Lead, Accenture

45 Byod in the age of Cloud Services and IT Consumerization

Cloud presents both opportunities and challenges for outsourcing

James R. Slaby Research Director, Sourcing Security & Risk Strategies, HfS Research

48 Proactive Players Will BeneďŹ t From Cloud Computing

Rajesh Rajan associate director, PwC India

67 Cloud Computing Will Drive Outsourcing Because it Enables Big Data and IT Test Beds William A Tanenbaum, partner, Kaye Scholer LLP

Anupam Govil Partner, Avasant and President, Avasense

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Cloud and outsourcing, an alliance for a newer evolution Yugal Joshi Senior Analyst, Everest Group

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Linkedin users respond on What is Cloud computing

Cloud will drive up the value of outsourcing Sundararaman Viswanathan Manager Consulting, Zinnov

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2012 China

Sourcing Summit

kicks off in Hangzhou

are two renowned outsourcing summits in the world-the Gartner Outsourcing & Strategic Partnerships Summit and NASSCOM's annual conference - and China aims to make it a Big Three with its own China Sourcing Summit.

Sourcing Summit 2012 was held on September 26 in Hangzhou. Mr. Wang Chao, Vice Minister of Commerce, Mr. Gong Zheng, Executive Vice-Governor of Zhejiang Province, and Mr. Shao Zhanwei, Deputy Secretary and Mayor of Hangzhou attended and addressed the opening ceremony.

The China Sourcing Summit is expected to become a major platform for Asian outsourcing. It is sponsored by China's Ministries of Commerce, Education, Science and Technology, and Industr y and Information Technology, and it is organized by the China Investment and Finance Committee. The summit was first held in Chengdu, Sichuan province, in 2008, and the Fourth China Sourcing Summit was held at the Dragon Hotel in Hangzhou on September 26-28, 2012. It is the third time for Hangzhou to host this summit. Titled "Business Innovation for the Global M a r ke t, " t h e s u m m i t f e a t u r e s s e m i n a r s, conferences, lectures, one-to-one consultations and other commercial activities.

Vice Minister Wang Chao said that China ’s service outsourcing industry is a talent-intensive modern high-end industry. To vigorously develop China’s outsourcing is helpful for speeding up the transformation of economic development mode and advancing the course of development of modern service industry with Chinese characteristics, and is conducive to the transformation and upgrading of foreign trade and improvement of the capability of independent innovation as well as the building of an innovative country. Vice Minister Wang Chao pointed out that the Central Government has formulated, promulgated and implemented a series of industrial promotion.

Buyers from Europe, America, Japan and Southeast Asia had conversations with executives of large Chinese IT enterprises; they discussed cooperation with domestic service suppliers and representatives from outsourcing demonstration cities and industrial parks.


Demonstration City of Chinasourcing-Hangzhou

for around 45 percent of the total staff. From 2007 to 2011, the total offshore contracts valued at US$4.85 billion, with an annual growth rate of 95 percent. Around 847,000 employees have received training in outsourcing. To date, the city's colleges and universities offer 247 majors relevant to outsourcing, such as computers and software, integrated circuits, cartoons and animation.

Hangzhou advantages Hangzhou, which has been establishing its outsourcing industry since 2006, has given full play to its strengths. Further, the scenic city pursues a core strategy that "good environment makes ever ything better," meaning the city has always been using its good environment to lure talented professionals who can boost the economy and thus, build a better city.

has attracted a large number of outsourcing enterprises to settle in Hangzhou, such as State Street Corp, Insigma, Cisco, WebEx, Strategy Systems Solution, Nokia and Simens. In 2011, 24 enterprises have signed offshore service outsourcing contracts valued over US$10 million each, accounting for 77.23 percent of all offshore contracts in the city.

Now Hangzhou has been named as a "demonstration city of outsourcing" by the central government. The electronic information industry has been a pillar industry in Hangzhou. Hangzhou's finance industry is getting stronger, having attracted more than 200 financial organizations that account for more than 60 percent of the total in Zhejiang Province. Its number of financial institutions makes Hangzhou No. 5 in ranking among all Chinese cities. In 2011, the city's total outsourcing contracts amounted to US$3.28 billion, of which US$2.55 billion represented offshore contracts. Also, the number of people involved in the outsourcing industry reached 223,432. In some of the city's large software enterprises, employees in the research and development sector account

Source: Beijing Great-Idea Business Resources Co., Ltd. Contact Salida Liu: Tel-8610 59002094/2041/2739/2037/2034 ext:612 Fax-8610 59002719 Email: salida-liu@great-idea.com.cn Website: www.great-idea.com.cn


SOURCE CLOUD

EUROPE CLOUD COMPUTING:

WAY TO CUT GOVERNMENT ANNUAL DEFICIT By Sourabh Chandra Pushp

EU estimates, the adoption of cloud computing technologies would help European nations boost their collective GDP by 600B Euros (about $774B), from 2015 to 2020

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GOVERNMENT CLOUD

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he cloud computing is expected to generate substantial direct and indirect impacts on economic and employment growth. USA and UK, both are foraying into cloud services in order to reduce their annual budget deficit and to reduce the IT spending. Let us delve further to look how EU government is expecting a huge monetary benefit by implementing cloud. EU estimates, the adoption of cloud computing technologies would help European nations boost their collective GDP by 600B Euros (about $774B), from 2015 to 2020. According to a new IDC study on behalf of the EU, policy actions aimed at removing barriers to adoption of cloud services would have a strong impact on adoption in the EU, increasing the value of spending on public cloud services from ¼35.2B to ¼77.7B by 2020. “The migration to a new IT paradigm enabling greater innovation and productivity - the roll out of cloud computing - will generate substantial direct and indirect impacts on economic and employment growth in the EU,” said Gabriella Cattaneo, associate vice president, European Government Consulting IDC EMEA. According to the model developed by IDC, if the EU adopts a ‘no intervention’ policy towards cloud adoption, cloud could generate up to ¼88B of contribution to the EU GDP in 2020. However, if the EU follows a proactive a “policy-driven” scenario towards cloud, it would generate up to ¼250B GDP in 2020, corresponding to an increase of ¼162B over the ‘no intervention’ scenario. “We estimate that the cumulative impact for the period 2015-2020 will be ¼940B in the “policy-driven” scenario, compared to ¼357B in the “no intervention” one,” said Giuliana Folco, research vice president, European Industry Solutions. The European Commission, framed a strategy to boost Cloud deployment among it’s member nations. This would not only boost the cloud deployment, but it will also aim to address serious concerns such as interoperability and collaboration among stakeholders in the public and private sectors across EU.

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EU Cloud Computing Forecast According to the model developed by IDC, if the EU adopts a ‘no intervention’ policy towards cloud adoption, cloud could generate up to ¼88 billion of contribution to the EU GDP in 2020. However, if the EU follows a proactive a “policy-driven” scenario towards cloud, it would generate up to ¼250 billion GDP in 2020, corresponding to an increase of ¼162 billion over the ‘no intervention’ scenario. Source: European Commission- IDC

IT WAS FOUND THAT 80 PER CENT OF ORGANISATIONS ADOPTING CLOUD COMPUTING ACHIEVE COST SAVINGS OF AT LEAST 10 TO 20 PERCENT AND THAT 80 PERCENT OF BUSINESSES ALREADY USING THE CLOUD REPORTED 1020 PERCENT LOWER IT COSTS, WHILE 20 PERCENT OF THEM REPORTED SAVINGS RISING TO 30 PERCENT OR ABOVE. The Commission aims at facilitating faster adoption of cloud throughout all sectors of the economy which can cut ICT costs, and when combined with new digital business practices1, can boost productivity, growth and jobs. The EU Cloud

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Barriers to Cloud Computing in Europe According to IDC’s survey report, the main barriers to wider adoption or increased intensity of usage of cloud computing can be summarized as follows: Uncertainty about legal jurisdiction and location of one’s data in the cloud Worry about the level of security guaranteed in the cloud, and difficulty to assess the trustworthiness of suppliers Uncertainty about the business case of fully adopting the cloud model: what is the cost-benefits balance? Fear of lock-in with proprietary systems, preventing portability between different vendors, as well as insufficient transparency and control, for example of software changes and guarantees about data access Insufficient local support, in local language, slow internet connections, loss of tax incentives on capital spending.

strategy represents a political commitment of the Commission and serves as a call on all stakeholders to participate in the implementation of predefined actions, which could mean an additional EUR 45 billion of direct spend on Cloud Computing in the EU in 2020 as well as an overall cumulative impact on GDP of EUR 957B, and 3.8M jobs, by 2020. It was found that 80 per cent of organisations adopting cloud computing achieve cost savings of at least 10 to 20 percent and that

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80 percent of businesses already using the cloud reported 10-20 percent lower IT costs, while 20 percent of them reported savings rising to 30 percent or above. Estimating market growth, several independent research forecasts a healthy growth for cloud services in Europe. For example, public cloud services accounted for just 1.6 percent of EU IT spending in the business segment in the year 2011, amounting to some ¼4.6B in total in 2011. IDC forecasts that this will grow to ¼10.9B, or 3.6 percent of EU IT spending in the business segment, a compound annual growth rate of 35 percent. On the question of how could cloud computing affect the EU-ICT sector, EU believes if all the barriers to cloud computing were removed, more than 98 percent of EU companies would start or strengthen cloud usage. Not only this the cloud would attract new users: 96 percent of those EU businesses that are not using the cloud but are currently thinking about it would actually start investing. Also, an increase in the demand for IT skills not only for the fundamental areas such as data centre management but also, for example, in digital marketing, app design, social networking and financial health. But research firms such as Gartner and IDC, has a different view. Gartner asserts cloud computing adoption in Europe to lag by at least two years when compared to the U.S. and diverse data privacy regulations will act as a main inhibitor for cloud

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GOVERNMENT CLOUD

Actions to Overcome Barriers to Cloud Computing in Europe

The key policy actions which would create a “cloud proactive” environment in the EU are the following (European Commission- IDC Study) Harmonizing data protection and privacy protection regulation across the EU, so that cloud service providers and users are sure that the same regulations are respected, no matter where the data is Clarifying data jurisdiction regulation and providing EU-wide guidelines about which laws apply to data stored in the EU MS Promoting common standards and interoperability of cloud systems, so that portability of data and processes between cloud vendors is possible and lock-in in proprietary systems is prevented Establishing clear and harmonized principles around cloud service providers’ accountability and liability for security breaches, no matter which country they are from Developing EU-wide certification of cloud service vendors on their security and data protection arrangements and compliance with main regulations, to build trust in the offerings; this is specifically requested by the public sector, where ensuring compliance is a priority. Finally, large and small companies alike pointed out that insufficient and patchy high-speed broadband coverage remains a serious obstacle to full cloud adoption in the EU.

in Europe over the next few years. IDC determines few prominent barriers and key actions to overcome those barriers to the cloud. In another view, USA is also expecting to cut it’s annual budget deficit by implementing cloud. With the federal government’s cloud-first policy, government agencies claim the monetary benefits of cloud for cutting annual budget upto $12 B. As per Federal IT consortium estimates, agencies are now already saving about $5.5 B (annually) because of their cloud implementations. But, the bigger part of the story comes ahead- several independent research shows, the savings will rise to $12 B as cloud penetrates further. The US Office of Management and Budget set out its Cloud First policy in December 2010, with backing from President Barack Obama. MeriTalk Cloud Computing Exchange (CCX), study estimates a savings of at least 7 percent off their IT budgets for the next fiscal year which would be about $5.5 B in annual Federal savings when calculated on the base of 2013 IT budget of $78.9 B, the study concludes. The study, reveals that Federal agencies are saving approximately $5.5 B with cloud implementations today. This

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number is expected to reach $12 B in annual savings. It’s further expected that the federal agencies and departments could have cut between $2 and $3 B by Cloud enabled state programs and $25-$32 B by Cloud IT investments over the past two-three years. It’s also reported than more than one-tenth of their annual IT budgets, 11 percent, is now spent on cloud resources and this totals at least $8.7 B, based on the 2013 federal IT budget of $78.9 billion. Federal agencies could easily save approximately $16.6 B annually if all their agencies move atleast three applications to the cloud. Today, the agencies spend 70 percent of their IT budget maintaining their legacy IT-applications, which are learned to have outdated. Spending $8.7 B on Cloud today, predicts Federal IT budget fall to $78 B by 2016. Even if these savings numbers are said to be too optimistic is definitely a significant endorsement of cloud computing by the world’s leading governments. Beyond the examples above of UK and US cloud computing projects, a range of different governments are looking to cloud computing.

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ESSENTIALS FOR IMPLEMENTING CLOUD IN THE

MID MARKET By Smita Vasudevan

While there are lots of considerations to get into the cloud, these are some basics that every mid market enterprise should know before they take the plunge.

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CLOUD FOR MID MARKET

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ery often research studies have established strong reasons indicating the transformation that cloud-based technologies can bring for the mid market. So, there is no doubt anymore on whether cloud is the way for mid market enterprises or not. But they are also at the highest risk if the migration is not implemented carefully. An enterprise’s decision to move to the cloud should not be just an impulsive response to the hype. If implemented the right way, cloud can do a lot in enhancing not just IT operations but the overall productivity of an SMB. So before making that leap discover what’s the right way and then take the plunge.

Decide What You Need the Cloud For? Cloud is not an all-in-one solution. It works as an enabler if put to use along with other core business processes. So understanding the key requirements of your business is very important. In what areas can efficiency be improved by cloud adoption. Backup and storage, website or something more complex? Its usually advisable to move a few simple processes first, get used to the process and then start migrating more complex processes. If your on site infrastructure is inefficient, moving to the cloud can be rewarding and likely to bring considerable cost savings. But if it does not need to be revamped then just let it be. “As a practice, large enterprises usually do not put everything into the cloud . They do it in parts, while mid market enterprises usually tend to move all their applications into the public cloud. This can have its advantages and risks as well. They need to be more aware of what they are getting into,” says, Kothandaraman Karunagaran, Vice President, Global Infrastructure and Enterprises Services at CSC, India.

Educate All Those Involved In the Migration The IT staff that is involved in the transition needs to have a clear understanding of cloud in terms

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Mid market enterprises usually tend to move all their applications into the public cloud. This can have its advantages and risks as well. They need to be more aware of what they are getting into KOTHANDARAMAN KARUNAGARAN, Vice President, Global Infrastructure and Enterprises Services, CSC, India

of what is to be done. If you are moving to public cloud, remember your data is no longer going to be inhouse and will be high in visibility. Certifications, training and well defined data policies will help in peaceful integration and mitigating risks. To a large extent, the benefits derived from cloud depends on a lot on the implementation and this calls for an IT staff that is well aware and capable to regularly manage and monitor things on the cloud. In case, an inhouse IT team looks incapable of handling the transition, outsourcing cloud management could be another option.

Assess Your Cloud Readiness & Then Choose A Service Provider This involves doing an internal assessment to see how prepared your organization is to take the leap. Some key questions need to be answered here. What processes will you move to the cloud? What service model is beneficial? What changes are required in the internal structure? What is the level of security that you are looking for? The internal business environment itself has to

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be realigned in a way that it supports the cloud transition. Karunagaran adds, “Enterprises should look for a service providers after they list down their objectives for cloud adoption.” There can also be situations where a service provider offers help in the transition. That is helping organizations assess their cloud readiness and identify the right strategies. For companies that have less awareness on cloud practices, finding a service provider that offers end-to-end support could be beneficial. Michael Custers, VP global alliances and strategic marketing, NorthgateArinso, points out a general attitude of SMBs while looking for service providers. According to him, SMBs are asking for measurable business outcomes as part of an outsourcing arrangement, above and beyond service level agreement. “The concept of gain shares is rapidly gaining ground. Enterprises are expecting their service providers to be more than a ‘transaction box’, and are looking at them as trusted partners, who can advise them on how to be more efficient, more agile and more cost effective,” says Custers. The size of the cloud service provider is not what matters. What is more important is the reliability and reputation of the service provider in offering cloud services. Also since every enterprise has different security needs, the vendor should be capable of offering cloud security based on specific needs and constraints. Investigating case studies for similar enterprises and looking for reliable references might also help. Clear cut objec-

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Enterprises are expecting their service providers to be more than a ‘transaction box’, and are looking at them as trusted partners, who can advise them on how to be more efficient, more agile and more cost effective MICHAEL CUSTERS VP global alliances and strategic marketing, NorthgateArinso

tives, thorough research on cloud services and a cautious approach in choosing a cloud vendor are essential for a smooth transition. While they see inherent advantages in moving to the cloud, SMBs are naturally cautious about adopting the technology. They are concerned about information security and risking downtime once they move their data and applications to the cloud. How can SMBs move their critical applications and sensitive data to the cloud with an approach that addresses all their concerns? The following recommendations will help a SMB achieve a seamless adoption of the cloud: Choose a cloud specialist: In an

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CLOUD FOR MID MARKET

Source: Mckinsey Report, Winning in the SMB Cloud

increasingly crowded cloud market it is not the size of the service provider that matters. A thorough research on the service provider’s reputation and how long they have been offering cloud services are good indicators of their reliability. Understand security needs: Every organization’s security needs and expectations are different so it’s important to understand how the vendor can meet those needs. The Symantec Internet Threat Report Volume 16 (ISTR XVI) identified 286 million new threats last year. This means that the threats are more specific, sophisticated and continuously evolving. Such a dynamic threat landscape requires SMBs to check their vendor’s references and investigate case studies with similar organizations. Learning the fundamentals of data back-up: It is important to know how the cloud provider backs up data and accordingly have a contingency plan to move data to another provider whenever necessary. They need to be aware of the retention policy followed by the provider is periodically tested for DR purposes. Draft clear and precise Service Level Agree-

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ments: Industry certifications cannot always guarantee good service. The Service Level Agreements (SLAs) must be drafted with the contractual language precisely enunciating how the data is stored, secured and accessed with clear financial penalties for underperformance. Care must also be taken to specify how many people are allowed access to the data post the verification of their identities. Evaluating customer service: With minimal IT services and support at their disposal, SMBs would need to evaluate whether the provider’s customer service divisions are staffed with cloud specialists, who are available 24x7 to meet any doubts and queries that may arise in day-to-day operations. Conduct trials: it is easy to deploy free trials, as most vendors offer this to prospective customers to boost their confidence in its usage. Starting with small trials, SMBs must feel confident about retrieving their data conveniently in times of disasters. Once they are satisfied, the trials can be expanded to include confidential data and other critical systems. Set your expectations realistically: Despite all the hype, cloud computing remains a new and maturing market. It is important to set realistic expectations and then track results to gradually improve results. While cloud computing will definitely drive business growth and lower costs, the related security concerns are a barrier to its adoption. Moving to the cloud is not as worrisome as it may seem provided a SMB user follows a criteria while choosing a cloud service provider. Adoption needs to be a seamless process and the user needs to be confident while making the decision to avail or implement any cloud service.

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ALL THAT YOU WANTED TO KNOW ABOUT

CLOUD ADOPTION By Smriti Sharma

Copious researches have highlighted that buyers of cloud pay 30-40 percent more than their requirements, due to inefficient management.

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uccess of cloud adoption, much like any other service, is a repercussion of impeccable planning, cost effective implementation efficient management, and employing people with the correct skill set. ‘One size fits all’ is definitely not for cloud. The various stages encapsulate meticulously studying the business case, then zeroing upon the application and finally choosing cloud platforms to achieve the target benefits. Expert advice is highly prescribed. Solely pining out the appropriate platform is not sufficient. For making cloud adoption a success it is imperative to comprehend de facto that implementation architectures (both for applications and deployment) could make or break the cost effectiveness of cloud.

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Copious researches have highlighted that buyers of cloud pay 30-40 percent more than their requirements, due to inefficient management. In order to extract full value from cloud adoption, what is needed is an evaluation of investing in various tools and training the staff, or even outsourcing it to a managed service provider. One of the leaders in this segment, Accenture believes that the combination of BPO services and cloud computing has the potential to yield greater scalability, agility and cost savings for clients—as well as reduced time to bring services online and greater transparency and cost control. For example, Accenture is working with a global financial services company, providing software-as-a-service to deliver Procure to Pay services through the Ariba

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CLOUD ADOPTION

Optimizing application architectures and cloud deployment architectures for performance is often neglected or at best done using a DIY approach, which leads to the issues later. MILIND KHIRWADKAR associate vice president, cloud solutions, Symphony Teleca Corp

Network.(The Ariba Network is a collaborative commerce system that delivers the capability for the client’s suppliers to deliver invoices electronically, eliminating the need for paper and eliminating manual processing time and errors.) e-Invoicing is coupled with automated invoice workflow and matching and the end-to-end process is more robust and delivers improved controls, reduced cycle time, and tighter working capital management. Additionally, Accenture built and piloted the Accenture BPO Navigator—a central portal that provides real time visibility into a client’s business performance, including operational and contractual metrics and analytics that is delivered in their private cloud. Dr Gavin Michael, chief technology officer for BPO, Accenture, explained, “This tool

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provides clients with both a snapshot and detailed view of their business performance and the dashboard shows metric thresholds, trends and compares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions.” Companies can adopt one of two approaches to Cloud technologies - reactive or pro-active. Explaining this further, Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp. articulated, “The reactive approach entails looking at the Cloud to solve cost and agility issues when these start affecting an organization. Under this approach, a serious consideration of Cloud technologies is recommended if 60-70 percent of IT budgets are locked in maintenance, there is a

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backlog of development projects and IT budgets are exceeding 1-3percent of revenue.” He added “Similarly, an ISV with a flat license revenue growth or facing threats from SaaS competition would do well to look at cloud platforms (PaaS or IaaS). However, the proactive approach suggests using SaaS/Cloud as a disruption or a game changer, and anytime is a right time to introduce cloud based innovative solutions. There are number of industry examples where cloud has been successfully used to collaborate with customers/suppliers, tap new markets and provide new services. In fact, the true power of cloud lies in the latter approach.” Services that should be the first ones to move to cloud depends on the state of maturity of an enterprise in terms of cloud adoption. Dhiman Basu Ray, director & global practice head, cloud and application transformation business, Happiest Minds Technologies states, “In case it is early days and still not really convinced about the advantages/benefits and probably doing some proof of concepts, then non-core functions like HR, Payroll might be the ones to be moved first. In the process one gets to figure out the actual challenges, benefits and the readiness factors as well.” “If the state of maturity is higher in terms of Cloud adoption, one should look at a private cloud implementation for core Applications first before moving on to the core Applications on a public or a hybrid model. Private Cloud shields quite a few popular apprehensions about Cloud and this way it just gives enough confidence for all the stakeholders who are supporting the Cloud journey, he added.” A typical well planned Cloud adoption should not run into issues but some of the key temporary challenges as highlighted by Ray can be in the following areas: Process decommissioning and gap in transition of the Applications/Assets Data mismatch post transition Training and knowledge adequacy in the new system especially in the operations

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Cash flow optimization is one of the key business benefits cloud provides. This is generally prefixed by a transformation cost, over a period of 1-2 years, the operations optimization is so impactful that a break-even is achieved very soon and then customers soon start getting the benefits of cloud. DHIMAN BASU RAY director & global practice head, cloud and application transformation business, Happiest Minds Technologies

Social backlash as a result of IT role consolida-

tion Increased latency in case of real time transac-

tions especially for public Cloud implementations

Watch Out For Performance and availability are the top cited issues apart from security, but fortunately both are addressable. Explaining this further, Khirwadkar enunciated, “Optimizing application architectures and cloud deployment architectures for performance is often neglected or at best done using a DIY approach, which leads to the issues later. Similarly building the most cost effective redundancy and failover mechanisms in cloud deployments can in effect provide availability beyond the uptime guarantees as promised by the providers. This is a lesser known fact which deters many customers from

GlobalServices


CLOUD ADOPTION

migrating mission critical applications to cloud though it need not be so.” One relatively unknown issue which surfaces, Khirwadkar further explained, is change in development processes post migration, especially for software vendors. The release cycles become shorter so agility becomes a de facto engineering process. Non-functional requirements become stringent and hence performance, scalability, availability and security testing practices have to be strengthened. Professional services and support, hitherto performed by partners, become ISVs responsibility and need investments to build these capabilities. Considering all these aspects many companies entrust the transitions to external providers till such time they don’t become equipped to handle these in house.

The Two C’s Cloud and Cost Every Cloud adoption is generally substantiated by a very elaborate business case. There is no denying that cash flow optimization is one of the key business benefits cloud provides. Ray pointed although this is generally prefixed by a transformation cost, but over a period of 1-2 years (depending on the complexity of portfolio), the operations optimization is so impactful that a break-even is achieved very soon and then customers soon start getting the benefits of Cloud.

We see the next generation of BPO evolving in the marketplace where cloud computing will become pervasive in our offerings and will allow our clients to realize increased flexibility, stronger industry and analytical capabilities and greater economies of scale through standardization of the process and the technology. DR GAVIN MICHAEL chief technology officer for BPO, Accenture

The business case is specifically blue printed so as to accurately determine the roadmap which makes commercial sense. The non-commercial intangible benefits like process optimization, simplified provisioning leads to efficiency and indirect cost reduction right from day one. Though there are research reports claiming up to 80% reduction in the TCO. Symphony Teleca has seen up to 40 percent savings being achieved rather consistently in their cloud engagements. Khirwadkar mentioned that the new business value generated through cloud innovations by and large outweigh the cost savings. The ROI and TCO calculators have yet to evolve to capture this accurately.

Two Interesting Cloud Strategies Accenture Accenture sees the next generation of BPO evolving in the marketplace where cloud computing

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THOUGH THERE ARE RESEARCH REPORTS CLAIMING UP TO 80% REDUCTION IN THE TCO. SYMPHONY TELECA HAS SEEN UP TO 40 PERCENT SAVINGS BEING ACHIEVED RATHER CONSISTENTLY IN THEIR CLOUD ENGAGEMENTS. THE NEW BUSINESS VALUE GENERATED THROUGH CLOUD INNOVATIONS BY AND LARGE OUTWEIGH THE COST SAVINGS. THE ROI AND TCO CALCULATORS HAVE YET TO EVOLVE TO CAPTURE THIS ACCURATELY will become pervasive in their offerings and will allow their clients to realize increased flexibility, stronger industry and analytical capabilities and greater economies of scale through standardization of the process and the technology. Their aim is to provide their clients with all of this, delivering business processes as a service – an on-demand, standardized service that provides global support, data protection and the quality delivery for which Accenture BPO is renowned. In this next generation, their clients will also benefit from pay-per-usage and a business outcomebased fee structure, along with the ability to scale up and down services as their businesses demand it.

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Symphony Symphony Teleca’s Cloud Strategy helps clients realize the business value from cloud through a combination of tools, best practices and business models. With no interest in providing our own cloud services, Symphony Teleca provides impartial cloud planning and offers to manage the cloud life cycle till the client realizes expected business outcomes. Our cloud maturity model helps us in devising an optimal cloud strategy for our clients without over engineering and associated costs. Another important aspect of our strategy is to cross leverage other offerings like mobility and analytics as these converge well with cloud to provide end-to-end solutions.

The Cloud Rx Milind Khirwadkar, associate vice president, Cloud Solutions, Symphony Teleca Corp. We recommend buyers to have a clear cloud strategy and roadmap in place on priority. This can be followed by a proof-of-concept to test the assumptions and subsequently action the strategy as necessitated by the business case. This is a long cycle and starting late could hurt. Similarly cloud service providers need to continuously work on top inhibitors to cloud adoption. Our top most asks are more transparent SLAs and addressing the vendor lock-in issue by adopting Open virtualization formats as soon as possible. Dr Gavin Michael, chief technology officer for BPO, Accenture The cloud is simplifying some aspects of IT, while making others more complex. While some kinds of services are advertised as being as easy as turning on the lights, customers often need more than just raw power. Therefore, the various levels of service needed in the new cloud environment will inevitably result in a kind of shakeout within the outsourcing industry itself, resulting in a range of providers offering alternative value propositions at a variety of price points. Given the challenges companies face with cloud services such as security, data integrity and service

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CLOUD ADOPTION

availability, the important integration role played by some outsourcing providers isn’t going away anytime soon. The ability to advise companies on the proper design of their business models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, will likely usher in a totally new era of outsourcing. The introduction of the cloud model means that IT departments now have to manage an even more complex, hybrid environment consisting of externally provided cloud services along with their own internal systems and legacy applications. From a business process perspective, integration points between different functions and processes need to be carefully managed, since a utility cloud provider most likely will not have a clear grasp of client’s overall business goals. Dhiman Basu Ray, director & global practice head, cloud and application transformation business, Happiest Minds Technologies

be the single point of contact responsible for aggregation, integration and customisation. Cloud is otherwise a very componentized offering Engage in business outcome based model either based on price or efficiency Choose the right set of products forming the Cloud stack, arrive at separate benchmarks for Application and infrastructure Avoid any stickiness in this respect Although cloud ensures, on-demand scaling, a proper sizing is suggested so that the TCO follows the predicted business case Most of the providers have consumption based pricing buckets Adopt SaaS services for non-core functions or functions where data can be easily exported or imported and is only key element in the process, workflows are pretty standardized Ensure you achieve a shared services model once you have adopted cloud

Recommendations for Service Providers Provide an end to end integrated services right

Recommendations for Cloud Buyers Look out for a Cloud Services Broker who can

GlobalServices

from Consulting to Operations Bring assets and accelerators at every stage of Cloud adoption Position your offerings with specific industry flavour so the benefits are much more tangible Transformation should be the main theme; Cloud is an agent which helps catalyze the same Integrated Delivery capabilities for Enterprise Mobility, Analytics and Social on Cloud Offer Integrated pricing to customers.

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CLOUD COMPUTING ACT OF 2012:

EFFORTS TO LEGISLATE CLOUD By Sourabh Chandra Pushp

Amy Klobuchar, a Democrat Senator from Minnesota has introduced a new bill, the “Cloud Computing Act of 2012” (S.3569), that purports to “improve the enforcement of criminal and civil law with respect to cloud computing.” 24

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CLOUD COMPUTING ACT

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et ready for a bill to improve the enforcement of criminal and civil law with respect to cloud computing, and for other purposes. The proposed bill’s provisions attempt to give “cloud computing services” extra protections under the CFAA (Computer Fraud and Abuse Act), a law passed by the United States Congress in 1986, intended to address and resolve federal computer-related offenses. The bill proposes each unauthorized access of a cloud computing account to count as a separate CFAA offense and it specifies a formula for computing losses in CFAA violations involving cloud computing services, setting a minimum floor of $500. It states- This Bill is intended to improve the enforcement of criminal and civil law with respect to cloud computing, and for other purposes. And, be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. Three major “sections” form the proposed “Cloud Computing Act of 2012” are SEC 1. SHORT TITLE SEC. 2. UNLAWFUL ACCESS TO CLOUD COMPUTING SERVICES SEC. 3. PRESUMED LOSSES Not only this proposed Act is emphasized on defining the Cloud, presumed losses and their values. It is also equally focused on creating international fora to advance international interoperability with law and policies of United States. As per the proposed Act, The Secretary of State shall work with other international fora, such as the Organization for Economic Cooperation and Development, to advance the aims of ensuring interoperability between the provisions of this Act, the amendments made by this Act, and other laws and policies of the United States and foreign countries, including in consultations between the United States and the European Union. Now have a look at some of the sections and clauses of the proposed act. SEC. 1, describes the name and purpose of

GlobalServices

THE BILL PROPOSES EACH UNAUTHORIZED ACCESS OF A CLOUD COMPUTING ACCOUNT TO COUNT AS A SEPARATE CFAA OFFENSE AND IT SPECIFIES A FORMULA FOR COMPUTING LOSSES IN CFAA VIOLATIONS INVOLVING CLOUD COMPUTING SERVICES, SETTING A MINIMUM FLOOR OF $500. the said act. It reads- This Act may be cited as the `”Cloud Computing Act of 2012.” Whereas SEC. 2, frames all the possible unlawful access to cloud computing services. This section is the most vital amongst all. It states and defines the unlawful access to Cloud. It states Sec. 1030 of title 18, United States Code, is amended by adding at the end the following about the purpose of a Cloud offense and describing Cloud account and service in accordance to the unlawful access to Cloud Computing services. (k) For purposes of an offense described in paragraph (2)(C), (4), or (5) of subsection (a) or an attempt or conspiracy to commit such an offense, if the protected computer is part of a cloud computing service, each instance of unauthorized access of a cloud computing account, access in excess of authorization of a cloud computing account, or attempt or conspiracy to access a cloud computing account without authorization or in excess of authorization shall constitute a separate offense. (13) the term `cloud computing account’

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means information stored on a cloud computing service that requires a password or similar information to access and is attributable to an individual, which may include allowing a customer of the cloud computing service to have multiple accounts; and (14) the term `cloud computing service’ means a service that enables convenient, on-demand network access to a shared pool of configurable computing resources (including networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or interaction by the provider of the service. Section 3 defines the presumed loss and their value. It reads- Section 1030 of title 18, United States Code, as amended by section 2(a), is amended by adding at the end the following: (l) If an offense under this section involves a protected computer that is part of a cloud computing service, the value of the loss of the use of the protected computer for purposes of subsection (a)(4), the value of the information obtained for

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The proposed Cloud Computing Act 2012 is emphasized on defining the Cloud, presumed losses and their values. AMY KLOBUCHAR Democrat Senator, Minnesota

purposes of subsection (c)(2)(B)(iii), and the value of the aggregated loss for purposes of subsection (c)(4)(A)(i)(I) shall be the greater of-(1) the value of the loss of use, information, or aggregated loss to 1 or more persons; or (2) the product obtained by multiplying the number of cloud computing accounts accessed by $500. SEC. 5. Annual study and report on international cooperation regarding data privacy, retention, and security and sec. 6. Annual federal information technology and cloud computing procurement forecast. It also provisions that the Administrator shall make each 3-year forecast submitted under subsection (b) available to the public via an Internet website. Eric Goldman, Santa Clara University School of Law, in Forbes article states how the proposed act is nothing more that a way closer to make things more complex. Eric says, the definition of “Cloud Computing Service” is incoherent which sounds more like a vendor’s sales pitch than a basis for criminal prosecution. Now the question remains, will this act be a way towards moderating technology services around the world. A new way of regulatory exceptionalism, creating rules for subsets of the Internet ecosystem- effort to legislate the Internet.

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SOURCE CLOUD

Drew Hoer, senior manager, Financial Solutions, Ariba, Inc. 28

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Q&A

SECURITY IS BECOMING LESS OF

A BARRIER By Smriti Sharma

Global Services interacts with Drew Hofler, senior manager, Financial Solutions, Ariba, Inc. to understand the relationship between cloud and BFSI.

GS: What has been clouds role in helping business leaders of commerce/BFSI? DH: The benefit of a cloud-based approach to finance lies in the fact that it provides leaders with visibility into data and processes outside of their business silo and across their supply chain and partner landscape. With such visibility, they can transform finance from a transactional activity into a collaborative one. At various places in the business process (Buyer, Supplier, 3rd party provider, partner, etc.), they can both access and act upon relevant data across the entire process and work together to drive solutions and outcomes that are beneficial to all parties. GS: With convergence of Cloud with Big Data, what are the possibilities that could reshape the whole commerce/BFSI business? DH: One of the primary benefits of collaborative commerce through the cloud is that it enables visibility across business processes and the ability to act on that visibility. Layering in the potential benefits and intelligent insight of Big Data will only amplify this. For example, we’ve begun to bring some of this into play on the Ariba Network through partnerships with people like Dun & Brad-

GlobalServices

street, where integration of their financial database with our collaborative commerce applications enables buyers and suppliers to access meaningful intelligence on their trading partners and make more informed business decisions as a result. Another example where this is beginning to make a difference is with Ariba Receivables Financing, where buyers, suppliers and finance providers can connect through the Ariba Network to execute on financing of supplier receivables. Through the network, buyers have visibility into relevant trading relationship history regarding the receivables they are seeking to finance, which allows them to lower their risk profile and thus their pricing so they can be more competitive in their offers. This is also a great benefit to the suppliers looking for receivables financing in that they find their costs to be greatly lowered due to the speed and efficiency of transacting through a network. GS: What are the three most important reasons that propels finance/commerce corporate towards cloud? DH: 1) Visibility across business processes, 2) The enablement of real–time collaboration with business partners, and

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3) Win-Win outcomes that result from trading partners having greater visibility. Cloudbased business networks are changing the finance game. It used to be that once a document or piece of data exited your physical walls, you had no real visibility into its status or ability to act on it until the receiving party responded. Within cloud-based business networks, all trading partners have visibility into the relevant documents or information at many (or any) points along the process or supply chain and can collaborate or take action based on that data/ intelligence. This is absolutely huge in the area of banking & finance as the thing finance providers wish for more than anything is visibility into financing trigger points along the physical & financial supply chain and the “Big Data” underlying the risk of those financing points. GS: What hurdles do you think hinders the cloud adoption? DH: Security is always a concern, particularly in the area of finance and banking. But it is becoming less of a barrier. Investments in behindthe-firewall application infrastructure is also a hindrance. Many companies have spent a lot on ERP and other traditional enterprise software and don’t want to invest in additional technology or the resources needed to integrate and manage them. Cloud-based applications and business networks all but eliminate this as an issue, as they require no special software or hardware to run – all that’s needed is an Internet connection. And in the case of Ariba, companies using ERP systems can quickly connect to the Ariba Network and extend the value of their investments through standard adapters. Beyond that, a key barrier is choosing which cloud. To collaborate with business partners, you all need to be in the same cloud. This is why many companies choose Ariba. Because with more than 730,000 companies participating, chances are, many of their partners are already there.

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ONE OF THE PRIMARY BENEFITS OF COLLABORATIVE COMMERCE THROUGH THE CLOUD IS THAT IT ENABLES VISIBILITY ACROSS BUSINESS PROCESSES AND THE ABILITY TO ACT ON THAT VISIBILITY. LAYERING IN THE POTENTIAL BENEFITS AND INTELLIGENT INSIGHT OF BIG DATA WILL ONLY AMPLIFY THIS. GS: How is the buyers response? What are their expectations and how has market molded itself to meet those expectations? DH: Buyer response has been excellent. Our business has always been about connecting buyers and their trading partners via the Ariba Network, so I think our customers see it as a legacy of Ariba and a normal way of doing business. Essentially, they expect to be able to extend their internal ERP investments to their suppliers via the Ariba Network, and they expect to be able to easily discover, connect and collaborate with them. A large part of this has to do with ease of use, ease of connection and functionality to handle important business processes, and a lot of it has to do with the network effect that enables buyers to easily connect with trading partners in the cloud because, again, they are already there (and if they are not, the cloud should offer many ways for suppliers to easily connect). And I think the overall market is in the process of molding to these expectations.

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Q&A

CLOUD OPPORTUNITY AND BIGGEST CHALLENGE FOR

THE MID MARKET By Smita Vasudevan

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Global Services interacts with two key people at Microland, M.S Rangaraj, Chief Innovation Officer and Vaibhav Tiwari, Chief Marketing Officer, Microland, on the transformation in the cloud market, the opportunity and the biggest challenge.

GS: What is the change that you see in the global cloud market from a mid market perspective? Ans: Mid market cloud is in the very initial stages. The trigger for cloud adoption is mostly based on technology rush. Enterprises are moving to new technologies to prepare themselves for the change. Also we see that there is a change in the CIO mindset. As a trend, CIOs are now able to visualize their IT organization through services. Numerous organizations are attempting cloud usage in different areas, like moving their websites to public cloud. Multi national organizations too are using cloud in their different centers. GS: How big is the opportunity currently? Ans: The opportunity is quite huge. Around 3040% percent of the cloud market is mid market. There is lot more potential to explore as enterprises are becoming aware of it and considering different alternatives. Conversations are moving from why to what and how. GS: Is there is a direct impact of cloud on business Productivity Ans: There is no one answer for this. The success depends on defining what is the business need. While its difficult to see a direct impact of how cloud, it does offer the building blocks to better productivity. Cloud is more like a new set of toys available. But the basic principle remains the same.

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AROUND 30-40% PERCENT OF THE CLOUD MARKET IS MID MARKET. THERE IS LOT MORE POTENTIAL TO EXPLORE AS ENTERPRISES ARE BECOMING AWARE OF IT AND CONSIDERING DIFFERENT ALTERNATIVES

GS: What is the biggest challenge in cloud? Ans: Enterprises are still not that aware of what is available and how to go ahead. So there is need for hand holding. Enterprises need to told and informed about things and then it should be left on them to decide when they want to make the move. Security concerns are always likely to be there. This depends on the industry and also on the type of workload being transferred. Service providers are working hard on ensuring security. Four essentials for success Good governance strategies The way you operationalize the process Compliance Architecture Most preferred cloud services Messaging and collaboration Inhouse SAP implementation to cloud SAP Desktop Virtualization Leading Markets US and Europe are leading adoption. India showing good traction but not as much. Major Benefits Cost savings ability and flexibility that was never there before.

GlobalServices


SEGMENT ANALYSIS

HRO

CASE STUDIES THAT DEFINE GLOBAL SOURCING

CASE STUDY: CYBAGE

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CASE STUDY: DATAMATICS

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CASE STUDY

CYBAGE CASE STUDY DESCRIPTION OF THE CUSTOMER’S BUSINESS

T

he customer is a leading global online research provider. With headquarters in Germany, it has presence across major geographies. It specializes in consumer and product research solutions across industry verticals including pharmaceuticals, retail, media, and public policy. Cybage implemented this solution for the customer’s US subsidiary. This solution focused on measuring and increasing the efficiency of digital ad campaigns.

At a glance CUSTOMER: A leading Market Research Organization SERVICE PROVIDER: Cybage Software INDUSTRY: Consumer Research and Advertising SERVICE PROVIDED: Technology consulting, Cloud Consulting, Product Engineering, Remote Infrastructure Management SOLUTION: Digital Market Intelligence based on Hybrid Cloud BigData/Hadoop solution for Online Ad Campaign performance measurement and analysis

Situation analysis The customer used a home-grown solution. It had evolved to a complex, high-volume system. It performed well functionally. When the customer witnessed exponential growth, this solution hit its technology breakpoints and scalability. Data management, administration, and feature addition became cost prohibitive. The customer witnessed an escalating demand for customized decision support analysis on local data sets captured by the survey system and cross-channel data sets including data acquired by marketing and sales initiatives of customers. This solution had a global demand. Across geographies, the requirements for privacy and data retention were varied. Regional rollouts were a challenge. A solution designed for the world rather than the US alone was needed. The earlier constraints resulted in a loss of business agility and opportunities. The need was of a web scale technology based solution for global rollouts. This had to be a rich and highly customizable decision support system supporting growth for upcoming five years.

Solution Cybage was a technology consultant responsible for solution conceptualization, implementation, global rollout, migration, and sustained engineering. The project had complexities typical to big data systems, high-volume transactional systems, high compute systems, and real-time analytics systems having cross-cutting high performance, high availability, and regulatory requirements.

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Cybage designed a distributed computing solution in a Hybrid Cloud setting using Amazon AWS on Cloud and an Oracle and JEE on premises. Apache Hadoop was used for massive parallel processing; Cassandra for webscale storage; Various data capturing, curating, and analytics tools and building blocks for strategic and exploratory analysis and reporting; Custom global administration and control toolset for seamless auto-scaling and platform administration to support an auto-scaling, multi-data center deployed, and variedly configured global distributed system.

Benefits, impact, and outcome The solution enabled building block level extensibility to support seamless solution extension as business evolves. Its self-healing and highly distributed architecture provides extremely high fault tolerance, availability, and scalability. The massively parallel processing compute infrastructure enabled extreme data processing rates. The big data class architecture and visualization, and data management tooling enabled to meet evolving analytics and real-time reporting needs. Dynamic capacity provisioning capability and verified loads up to forty times the envisioned peak capacity present a significant game changing advantage. Cybage delivered this product in under eight months of Go-to-Market window, and helped the customer surge ahead in the competition.

GlobalServices


CASE STUDY

DATAMATICS CASE STUDY Client Business A leading US based manufacturer of high quality sealing products for global automobile manufacturers. The company designs, manufactures, & delivers innovative automotive sealing products, weather strips, moldings, belt strips & other rubber seals.

Business or technical problem/ situational analysis With Global Business Operations, the manufacturer has plants in multiple locations across the world catering to global customer base. The existing account receivables system was spread across multiple locations and run over three different ERP systems. There was a growing need to optimize the process for better cash management and greater customer satisfaction Need for consolidation of business processes across multiple geographies into a streamlined, standardized and optimized processes Use of three different ERP systems leading to limited visibility across the organization. Volumes of unapplied cash pending for more than 180 days Need to improve processing speed, quality of processing and thereby customer satisfaction Need for greater accountability for transaction across different business units Better Spike Management: Recruitment, training & management of temporary workforce hired to cope with peak volume increases

Brief on the solution Datamatics employed their consulting expertise to understand the existing business processes,

GlobalServices

accounts receivables operations and technology environment. The analysis culminated into a Proof of Concept: A Cloud based, Customer-centric, automated e-Receivables Cash Management solution that provides a single platform for both, customer & Accounting team. Datamatics’ ERM Solution integrates seamlessly with a range of legacy ERP systems. Since ERM is Cloud based, infrastructure and maintenance costs are significantly lower. The solution helps automate event-driven workflow process, providing enhanced support for Help-desk queries or concerns Datamatics’ Platform based outsourcing services facilitate quicker scale-up during peak volumes Unique paper-to-electronic solution provides better visibility to stakeholder across the organization. ERM provides Intelligent exception handling with complete audit trail features

Summary of Benefits Database integration helped achieve accurate & synchronized data across locations, enabling high performance & scalability Reduction in manual efforts & cycle time Consolidated report generation helped the measurement and analysis process Cost reduction by 20% Higher productivity; the team was cross trained for optimum utilization during peak Volumes Turn around time (TAT) reduced by more than 50%.

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coming soon... To know more write to arvindr@cybermedia.co.in


SEGMENT ANALYSIS

HRO

EXPERT SPEAKS

• ISG • CSC • ISG • CSC 37

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SOURCE CLOUD

CLOUD SERVICES:

A DOUBLE-EDGED SWORD? By Stanton Jones, Analyst, Emerging Technology, ISG

The “on-demand” and “as-aservice” aspects of cloud delivery represent a dramatic departure from traditional IT, which focuses on buying hardware and building software

E

nhanced flexibility and agility... On-demand computing and pay-as-you go consumption... Rapid provisioning of resources to respond to peaks and valleys in demand for IT resources... These benefits are widely seen as the Holy Grail of cloud computing. But are businesses and IT departments really ready to relinquish their traditional approach to overseeing IT? The fact is, cloud services represent a management dilemma – for enterprises in general and for the IT function in particular. The “democratization of IT” via cloud can undermine centralized control over spend, security and compliance. Effective cloud initiatives must therefore be integrated into the organization’s existing service delivery model, and governed like any other delivery method. The “on-demand” and “as-a-service” aspects

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of cloud delivery represent a dramatic departure from traditional IT, which focuses on buying hardware and building software. Cloud delivery dramatically speeds up the delivery cycle – to a point that most traditional service providers are not yet ready to embrace. Perhaps a bigger concern is decreased certainty and predictability around who’s ultimately in control of the environment and who’s accountable for results. Traditionally, accountability stopped with the CIO. Cloud changes the game by democratizing technology throughout the organization, leaving accountability gaps around key areas like demand management, information security and cost oversight. In a traditional service delivery environment, moreover, a customer pays essentially a flat monthly rate for infrastructure and software, making budgeting and planning relatively straightforward. In a self-provisioned, on-demand cloud delivery model, meanwhile, variations in usage raise the specter of dramatic spikes and valleys in monthly spend.

rein in renegade business units that pursue ad hoc cloud initiatives. And that task becomes more onerous if the CIO lacks a credible, flexible, on-demand IT platform to offer internal customers. Ultimately, the CIO typically remains accountable for the cloud delivery model, but if he can’t deliver the business will find a solution elsewhere. Governance oversight is therefore essential if a CIO is to address the cloud’s flexibility/control paradox. But as in traditional environments, getting governance right is easier said than done. The goal, specifically, is to strike a balance between the benefits of selfservice delivery and the imperatives of corporate oversight. Going too far in one direction poses unacceptable risks, while going too far in the other negates the benefits offered by the cloud in the first place. In a cloud environment, governance mechanisms address the myriad challenges around the fundamental operational and architecture changes cloud delivery models bring to the enterprise. Specific areas where governance plays a role include demand management, capacity and utilization planning and analysis, and service level and chargeback management. Demand Management: Many large organizations have sophisticated IT service delivery frameworks, processes and tools to ensure the right IT projects are selected, funded and implemented. These business-driven frameworks are commonly based on the “funnel” premise, whereby a set of projects goes into the funnel for the IT organization to work on. The size of the funnel depends on the size and maturity of the IT organization. Cloud technology changes this model by widening

EFFECTIVE CLOUD INITIATIVES MUST THEREFORE BE INTEGRATED INTO THE ORGANIZATION’S EXISTING SERVICE DELIVERY MODEL, AND GOVERNED LIKE ANY OTHER DELIVERY METHOD.

Who’s in Charge? The decentralization that accompanies cloud delivery complicates oversight and raises some thorny questions: Who is matching capacity with demand? Who is ensuring we’re not paying more than we planned to pay? Are we in compliance? The challenge is exacerbated by how cloud technology is currently being deployed in many enterprises. Ideally, a cloud strategy is a partnership between the CIO, COO, business unit leaders and other senior executive stakeholders. In reality, business heads who perceive the CIO as not moving fast enough often circumvent the IT department to work directly with providers across the entire cloud stack. As a result, many CIOs are now challenged to

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SOURCE CLOUD

EXPERT

IDEALLY, A CLOUD STRATEGY IS A PARTNERSHIP BETWEEN THE CIO, COO, BUSINESS UNIT LEADERS AND OTHER SENIOR EXECUTIVE STAKEHOLDERS. IN REALITY, BUSINESS HEADS WHO PERCEIVE THE CIO AS NOT MOVING FAST ENOUGH OFTEN CIRCUMVENT THE IT DEPARTMENT TO WORK DIRECTLY WITH PROVIDERS ACROSS THE ENTIRE CLOUD STACK.

the funnel, giving business units and individual analysts more power to move projects forward. Demand will always be unlimited, but supply will, conversely, always have constraints. As such, ensuring a demand management framework is still in place – even with the new service delivery model – is crucial. Capacity Planning: Tightly linked with demand management, capacity planning is typically performed by IT, and is designed to ensure that “IT capacity” is adequate to meet business demand. When a funnel is in place, capacity is easier to predict and secure. However, when the funnel widens or becomes more flexible, predictability becomes far more elusive. Public cloud solves this problem by ensuring excess capacity is always available. However, many large organizations currently favor private and virtual private clouds, which don’t have the scale of the public cloud model. The dynamism and “on-demand” nature of capacity in private and virtual private delivery is therefore limited. Ultimately, the business needs to understand that, even with cloud, capacity is not infinite. Utilization Analysis: Once demand and capacity plans are developed, day-to-day operations must remain consistent and aligned. While this requires tools that provide visibility into cloud utilization, many of today’s cloud platforms and services offer only a very basic level of visibility. Organizations are therefore finding they need to invest in smaller third-party tools or build bespoke applications to gain the required insight into their environments. Service Level Management: Today’s cloud service levels tend to reflect the platforms they support: simple and standardized. The price of this

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standardization is that service levels cannot be easily negotiated or changed. Nonetheless, effective monitoring and management of service levels in a cloud environment is just as critical as in a traditional managed services agreement. Invoice and Chargeback/Showback Management: In a cloud environment, costs are very closely linked with business decisions: Use more service, pay higher fees to the cloud vendor; use less service, pay lower fees. Awareness of the consequences of business decisions is therefore critical in this new delivery model, and effective organizations use cloud invoices and associated chargebacks to establish linkages between business decisions and cost outcomes. While the processes involved may seem straightforward, scaling invoice and chargeback management across an enterprise can be a daunting task. Simple questions like, “Is my invoice accurate?” can be exceptionally difficult to answer without effective governance mechanisms and tools in place to ensure visibility. Effective management of the cloud paradox enables businesses to be smarter about their use of cloud as a new service delivery model, and ensures companies get the expected value from their investment. In many respects, integrating cloud into the service delivery mix is only the first step. The true challenge lies in effectively balancing the “democratization” of IT services via cloud with the need for corporate governance over this new service delivery model. Stanton Jones is Analyst of Emerging Technology at ISG.

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SOURCE CLOUD

A WALK IN THE CLOUD:

STAYING THE COURSE By Kothandaraman Karunagaran, Vice President, Infrastructure Services, CSC

Cloud Service Providers are in for a bonanza in the country, but are they aware of the risks involved?

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hese are exciting times for the Indian IT outsourcing ecosystem. Consumerisation of IT is witnessing unchartered territory. Picture some of these examples. Online shoppers have developed loyalties for online retail stores far from being circumspect of them. Cloud campuses are a reality and enriching education outreach. Offices of district collectors are using web based software which allows the general public to file and monitor grievances through Internet or SMS thereby providing a fillip to e-governance. Mobile workforces located in remote mining sites are exchanging real time information with city headquarters. Even buying a life insurance online does not merit a second thought. These are all examples of what Cloud computing has been able to achieve. It is transforming the IT infrastructure of today’s enterprise, helping companies reduce

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EXPERT

operating costs, expand customer relationships, support a mobile workforce and respond to changing business conditions. Cloud Service Providers are in for a bonanza in the country therefore, but are they aware of the risks involved? The research firm IDC has estimated a whopping 70 percent growth for the Indian cloud computing market this year. Moreover, the Indian cloud market is likely to maintain a 50 percent growth in the coming three years, says the firm in its ‘India Cloud Market Overview, 2011-2016’ report. This is way above global adoption standards as the same firm in its “IT Cloud decision economics” report,

WHILE BARACK OBAMA’S MUCH TOUTED ‘CLOUD FIRST’ STRATEGY IS PRIMARILY AIMED AT REIGNING IN FEDERAL IT SPENDING OVER A PERIOD OF TIME, BEING A FUNDAMENTALLY DIFFERENT ECONOMY, CLOUD COMPUTING IS SET TO ENHANCE IT SPENDING MANIFOLD IN THE INDIAN MARKET. estimates a CAGR of 27.6% for the industry for the 2010-2015 time period. What all the above facts prove without doubt, is that the ‘cloud’ has clearly crossed the inflexion point in India and has moved from ‘testing the waters’ stage to operational adoption as far as Indian enterprises are concerned. So while Barack Obama’s much touted ‘Cloud first’ strategy is primarily aimed at reigning in federal IT spending over a period of time, being a fundamentally different economy, cloud computing is set to enhance IT spending manifold in the Indian market. Easy accessibility and little or no capital expenditure leading to a much broader customer base being the primary driver. It is but natural however, that these ‘new’ IT customers will demand services of the highest possible consistency and availability as in many cases the success of the business will depend on it. Compelling business incentives generally bring about a ‘jump onto the bandwagon’ approach to innovations of such stature. However, just as cloud adopters need to be alive to the concerns around management control, risk mitigation and organi-

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zational agility, cloud service providers would also do well to remember that even the pioneers and biggest names in the business have experienced embarrassing ‘cloud outages’. In the past two years alone, around eight high profile outages have adversely affected public opinion of cloud computing. Indian service providers should be looking to invest to create new service offerings in all the areas of cloud, infrastructure, people, partners and data warehouses to support their cloud services and also building on its strengths. Otherwise gains made, by the justified hype around cloud technologies resulting in such phenomenal growth of the business, can stagnate quite quickly. What’s on the mind of CIOs as they evaluate cloud technologies? Another recent IDC study, titled “U.S. Buyer Requirements of Cloud Services,” identified some top concerns and questions. Security, reliability, reporting and compliance requirements are on top of that ladder. Transparency is also high up in the pecking order. Breach of security has been an ever present concern among CIOs and even the most sensitive of networks have been known to be breached, even after deploying the highest standards of security measures. What is more in control of service providers though is the reliability factor. And it is here that a ‘no compromise’ approach needs to be adopted. To give an insight into the kind of economic hardships that can result out of ‘cloud outages’, according to a recent report released by the International Working Group on Cloud Computing Resiliency (IWGCR), approximately 568 hours of downtime at 13 well-known cloud services since 2007 have thus far had an impact of more than $71.7 million dollars. And by the groups self-admission this is an under-estimated figure as many outages are not published in the press, leaving a lot of room for missed outages. It therefore becomes more important that the service providers are reliable, especially when systems are mission critical. To

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plan with the thought that mission critical systems will never migrate to the cloud is a folly. It would suffice to point out, that new economy businesses like online retailing, social networks and others, which were essentially Small and Medium Enterprises (SMEs) to begin with, and relied solely on the features inherent to cloud technologies, to be the backbone of their growth journey, are also the prime drivers of the cloud movement. What can be more mission critical than business growth? Two thirds of the world’s cloud revenues have been driven by ‘new businesses’ over existing service lines. It also becomes imperative therefore, that cloud service providers would also have to have a strong consulting background. Cloud design and architecture apart from domain knowledge of the customer’s business, if flawed at the very onset, can lead to disastrous consequences. It will be safe to say that organizations with a strong footprint and experience in domains like systems integration, where equal importance is given on consulting and implementation, l will be in a better position to take advantage of the newer opportunities arising. Companies that have overcome single-point of failure challenges by embracing redundancies in the IT security architecture will also remain a step ahead. According to the IWGCR, the average unavailability of cloud services is 7.5 hours per year, amounting to an availability rate of 99.9 percent. But cloud service providers should know that it is still extremely far from the expected reliability of mission critical system (99.999 percent). As a comparison, the service average unavailability for electricity in a modern capital city is less than 15 minutes per year. The expectations and responsibilities for cloud providers are huge, and will only grow. Vendors must really know how to run an operation at the level that clouds require. That’s a daunting task, but it’s a requirement. Kothandaraman Karunagaran is vice president, infrastructure services at CSC.

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OUTSOURCING WILL ASSUME A MORE DEFINED ROLE IN THE

CLOUD ERA By Bhaskar Ghosh, Global Lead, Application Outsourcing, Accenture and Jack Sepple, Global Cloud Computing Lead, Accenture

Given the ongoing challenges companies face with cloud services the role of the value-added outsource provider, while it may change, is not about to go away any time soon.

O

ne wide-spread thought about cloud computing, to use the electricity analogy, is that it is as simple as flipping a switch. That perspective, unfortunately, ignores the fact that enterprises require more than just raw power. While the cloud is certainly simplifying some aspects of IT, it is also forcing CIOs to manage a more complex, hybrid environment that includes externally provided cloud services along with their own IT services and older legacy applications. Given the ongoing challenges companies face with cloud services – chiefly security, data integrity, system and service interoperability, and service availability issues – the role of the value-added outsource provider, while it may change, is not about to go away any time soon. In fact, the ability to advise companies on the proper design of their business

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models based on multiple service providers, and to help them harness the potential innovations arising from the interaction of these providers, is likely to usher in a whole new era of outsourcing.

Ramping Up the Need Far from putting outsourcers and integrators out of business, these increased demands are likely to make the services of an integrator even more critical, inevitably creating somewhat of a shakeout within the outsourcing industry. Whereas integration was previously about getting multiple vendors, working across systems and functions, to manage basic services in a common and consistent

WHILE THE FUTURE OF LIFE IN THE CLOUD REMAINS UNCLEAR, IT IS INDISPUTABLE THAT THE RULES OF THE GAME HAVE AND WILL CONTINUE TO CHANGE— AND ORGANIZATIONS WILL LIVE IN A HYBRID OF IT AND LEGACY FOR THE FORESEEABLE FUTURE. way, this is changing in an environment where companies are sourcing business and IT processes on the cloud. The challenge is integrating data across multiple services and then understanding the end-toend business process that is being serviced so that a company can be confident that its employees and customers will be properly served. This requires specialized skills in service integration, as well as processes and tools that will automate and monitor IT to ensure coordination and oversight between outsourcers and internal IT functions. In short, it means not just integrating cloud services, but all the services IT provides the business. As companies increasingly rely on the cloud, the emergence of three classes of outsourcing services and providers is envisioned:

Utility Providers The value proposition for these providers will focus primarily on efficiency and cost. The essential capabilities of a utility cloud service provider will be driven by the needs of a CIO whose overriding concern is having an IT service up and running when

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required. Downtime, after all, translates into lost productivity, missed sales opportunities, and poor customer service.

Business Function Providers These are niche providers with deep expertise in a particular function, such as sales, HR or customer support. The value proposition here will be to make sure a company gets a business function that is properly configured to its needs. As a means to this end, the provider will design applications and services, at scale, that are readily and securely configurable to a client’s specific environment, needs and business goals.

Orchestrators These providers will help companies become “cloud enterprises,” or organizations that are more dexterous and agile because they can adapt their business design on the fly. This outsourcer will be more than a pure consultant, but rather a trusted broker with deep operational experience across all major business processes and technology solutions. Aided by the other categories of outsourcers, they will work with clients to harmonize the pieces while taking a holistic view of IT and business services across the enterprise. While the future of life in the cloud remains unclear, it is indisputable that the rules of the game have and will continue to change—and organizations will live in a hybrid of IT and legacy for the foreseeable future. Companies that intend to be successful in this environment will need to start changing the way they manage their IT and business operations. They will be forced to carefully assess the risks involved with deploying new technologies, and understand at an ever more granular

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THE VALUE PROPOSITION HERE WILL BE TO MAKE SURE A COMPANY GETS A BUSINESS FUNCTION THAT IS PROPERLY CONFIGURED TO ITS NEEDS. AS A MEANS TO THIS END, THE PROVIDER WILL DESIGN APPLICATIONS AND SERVICES, AT SCALE, THAT ARE READILY AND SECURELY CONFIGURABLE TO A CLIENT’S SPECIFIC ENVIRONMENT, NEEDS AND BUSINESS GOALS.

level the capabilities of their outsource providers. Most importantly, they will need to learn what it means to operate in a multi-sourced environment, one where the integration of the different components promises to take on greater importance than it ever did before. Jack Sepple is Accenture’s global cloud computing lead and Bhaskar Ghosh is global lead of Application Outsourcing for Accenture.

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BYOD IN THE AGE OF

CLOUD SERVICES AND IT CONSUMERIZATION By James R. Slaby, Research Director, Sourcing Security & Risk Strategies, HfS Research

Managing the security and risk implications of employee-owned mobile devices

E

xecutive Summary- Enterprise IT and security executives have become acutely aware of the need to accommodate employee access to business applications from personal (as opposed to company-supplied) smartphones and tablets. The so-called Bring Your Own Device (BYOD) trend parallels two related, important and mutually reinforcing IT trends: the advent of cloud computing services and the increasing consumerization of IT. CIOs and CSOs must tread carefully, employing a battery of near-term tactics and considering longer-term strategies to balance the business value of supporting BYODs with the increased security threats and business risk that they entail. The BYOD, Cloud and IT Consumerization Trends Are Mutually Reinforcing Three broad trends in enterprise IT are converging in ways that

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feed off each other to drive business value and at the same time create some interesting challenges for CSOs: The Bring Your Own Device (BYOD) phenomenon, in which mobile computing is done on user-owned mobile devices, especially tablets and smartphones, instead of company-supplied ones, though in many cases, companies will provide some level of cost support for the devices and/or service plans. Increases in employee productivity and morale that accompany the ability to use whatever mobile device they prefer, as well as lowered IT costs for end-user infrastructure and support are among the

CIOs AND CSOs MUST TREAD CAREFULLY, EMPLOYING A BATTERY OF NEARTERM TACTICS AND CONSIDERING LONGER-TERM STRATEGIES TO BALANCE THE BUSINESS VALUE

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benefits that are encouraging enterprises to embrace this trend. These are accompanied by increased risk in the form of reduced visibility, control, and security policy enforcement over these devices compared to company-supplied ones. In many cases, remote management and security tools comparable to those that exist for corporate laptops and secure smartphones like Blackberries do not yet exist for the newer mobile platforms. Cloud computing, which in security and risk terms can be thought of as a novel form of shared services or IT outsourcing. Its benefits include infrastructure virtualization and a utility-like billing model that deliver simple provisioning of services, fast deployment of new applications, and rapid scaling of capacity at an attractive cost. Cloud applications are increasingly being developed to work with browsers and mobile applications on a wide range of devices, including the many consumer devices that mainly comprise BYODs. Likewise, cloud computing’s ability to support consumption elastically is well-suited to the surge in demand that emerging consumerized mobile applications are projected to drive. But cloud computing entail considerable additional risk: see HfS Research reports “Top Security Issues for Cloud Buyers” and “Legal and Contractual Risks in Cloud Services”. IT consumerization, the growing use of new mobile applications and devices to access enterprise applications in both traditional data centers and in cloud environments. The term also embraces the use of social media tools (e.g., LinkedIn, Facebook, Twitter) that originated as consumer applications but are increasingly being turned to business purposes, as well as the advent of new purpose-built mobile applications as a means for enterprises, their partners, and their customers to transact business. Finally, IT consumerization reflects a tendency of younger workers and consumers to prefer doing their jobs and conducting online business on

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Exhibit 1: Sample Mobile Device Security Hierarchy SECURITY LEVEL

ACCESS TO SENSITIVE DATA

SECURITY MEASURES Device PIN protection

Employee does not need access to systems containing sensitive data, proprietary IP, or regulated data (subject to some compliance regime)

Low

Password expiration Strong passwords Remote wipe Secure connection to email (SSL) Wipe after N failed login attempts

Medium

Employee needs access to some systems containing sensitive information on company personnel, finances, plans, customers

Above measures, plus: Two-factor authentication VPN connection to sensitive systems Device-level encryption

High

Employee needs access to systems with highly sensitive personal, financial, legal, or product information, and/or regulated data such as personally-identifiable information

Above measures, plus: More granular, centralized IT control of device via mobile device management: what networks it can access, what apps can be installed on it, etc.

Source: HfS Research, 2012

such devices, their desire to choose their own platforms for such purposes, and their inclination and ability to at least partly provide their own technical support for them. The benefits of IT consumerization include greater productivity for workers, greater engagement with customers, and the lower costs of a self-service support model. But these too come with a security and risk price tag: CSOs will have to learn how to secure a new generation of mobile applications, address a broader spectrum of mobile malware threats, consider new ways to distribute custom mobile apps (e.g., by building a private mobile application store), and address the same issues that afflict BYODs for a larger universe of mobile devices over which it will have even less visibility, control, and security policy influence. These three trends are here to stay: enterprises increasingly recognize the value in flexibility, cost reduction, business differentiation, and employee and customer engagement that they represent. BYOD, cloud computing and consumerized mobile computing are a natural, synergistic fit. But if they haven’t begun to already, CSOs must more effectively formalize security and risk manage-

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ment around these technologies. The immediacy of employee demand for BYOD makes it a good place to start.

Business Benefits Are Offset by Increasing Security Threats and Corporate Risk Exposure As a result of these trends, IT increasingly will serve more applications, both in the cloud and in the data center, to more employees, partners and customers using many new mobile devices, most of which will not be company-supplied and thus substantially controlled by the enterprise. To break that down in more detail, and contemplate some of the accompanying security issues, consider: IT is being asked to support a growing range of employee-owned mobile devices, notably tablets and smartphones running Apple iOS, Google Android OS, Microsoft Windows Phone, and Research in Motion Blackberry OS, plus a few discontinued platforms like Microsoft Windows Mobile, Hewlett-Packard WebOS, and Nokia Symbian. Most enterprises have limited visibility to the types and amount of sensitive and proprietary

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IT INCREASINGLY WILL SERVE MORE APPLICATIONS, BOTH IN THE CLOUD AND IN THE DATA CENTER, TO MORE EMPLOYEES, PARTNERS AND CUSTOMERS USING MANY NEW MOBILE DEVICES

data that is being stored on employee-owned devices, including data that might be subject to regulatory oversight. Most enterprises have a lot of work to do to update existing policies or develop new ones regarding BYODs. For example: who is eligible to use a BYOD for work purposes, what applications can they use, and what devices are supported? How much does the company pay for the device, service plan and mobile apps? What security policies must the employee follow, and what happens if their device is lost or stolen? How do acceptable use policies change for a BYOD? How much support can the BYOD user expect from IT? Employees don’t always treat their own equipment with the same security consciousness that they might a corporate-owned device. For example, many users don’t bother to enable auto-lock, password protection, lost-device location, or remote-wipe capabilities on their smartphones or tablets. As they become more popular and ubiquitous, tablets and smartphones are increasingly becoming the targets of malware developers. Many security tools like endpoint management, anti-malware, and data loss prevention (DLP)

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systems that work well for desktops, laptops and Blackberries do not yet offer a rich set of features for newer mobile platforms. Thanks to their versatility, portability and growing popularity as a business tool, tablets are increasingly subject to loss or theft. Users are more likely to bring these compact, lightweight devices everywhere, providing more opportunities for them to take an unexpected walk. In short, the growing synergy between cloud and mobile computing and the obvious business value of supporting BYODs are offset somewhat by an increase in new security threats and greater corporate risk exposure. Understanding and mitigating that risk will only become a greater challenge as IT consumerization further drives the appeal of cloud computing, and swells the ranks of devices and external users that IT must support. The need to get a firm handle on the security and risk issues around BYOD is thus gaining urgency.

CSOs Have Some Tactical Options for Managing BYOD Risk Today Between their good fit with cloud computing, employee desire to use their own mobile devices, and IT’s impetus to support them, CSOs and corporate risk officers cannot simply ignore BYODs: the risks they bear are real, and these devices are not going away. Neither is it practical to try to ban BYODs outright – senior executives will insist they be allowed to use their new toys, and a company that refuses to let its younger employees use the mobile devices they prefer faces a recruiting disadvantage, to say nothing of missing the opportunity to better understand and develop innovative new mobile applications with the help of a built-in beta-testing group. Rather, security and risk executives must come to grips with BYODs today, using one or more of the following tactics: Implement the same security regime for BYODs as you do for laptops, including anti-malware, encryption, secure virtual private network (VPN) connections, and DLP. As already noted, this works better in environments with a handful of

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IN ESSENCE, THE GOAL OF THIS INTERIM APPROACH TO BYOD MANAGEMENT IS TO ESTABLISH A RISK HIERARCHY OF USERS, APPLICATIONS AND DEVICES. THIS WILL HELP TO DEFINE TIERS OF MOBILE DEVICE ACCESS better established operating systems (e.g., Windows and Blackberry). It gets increasingly difficult to implement and manage as your mobile device environment becomes more heterogeneous. Further, many of the established security and management tools that work so well on laptops and Blackberries are relatively immature for the newer mobile operating systems. Consider investing in MDM tools, but understand their limitations. Many MDM offerings have limited mobile platform support; others are better at inventory, reporting and tracking than they are at security functions. At a minimum, it may be helpful to implement a lightweight version of MDM that provides monitoring and reporting on BYODs only. This will at least enable some modest threat remediation via policy control of users, e.g., notifying them via email when they violate a mobile-device security policy. Consider MDM tools with remote- wipe capabilities, which can do a lot to mitigate the risk of lost or stolen devices. Note that some MDM platforms have more granular capabilities in this regard than others, e.g., the ability to erase only corporate data and access mechanisms, leaving the user’s personal data alone for the

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possibility that the device may be recovered. Force users to take advantage of their mobile device’s native encryption capabilities (common on iOS and Blackberry platforms) or third-party mobile device applications for folder-level or full-disk encryption (more common to Android devices but also available for other platforms). Allow BYOD users access only to specific applications with limited exposure to sensitive or regulated data, e.g., browser-based access to Microsoft Exchange. Allow BYOD access only via desktop virtualization tools (like Citrix XenDesktop), thereby avoiding local storage of potentially sensitive information on the devices. Consider the use of mobile device firewall (examples?) which gives the user control over what services and applications it will allow the device to connect to, and which will be allowed to connect to it. Forbid the use of “hacked” mobile platforms like jailbroken iPhones and “rooted” Android devices, which bypass the not-always-reliable security vetting of Apple’s App Store, Google’s Android Market, and other mobile application distribution channels. In essence, the goal of this interim approach to BYOD management is to establish a risk hierarchy of users, applications and devices. This will help to define tiers of mobile device access: access to regulated data or sensitive corporate intellectual property might be restricted to certain employees using fully-managed mobile devices, while mobile platforms with less control and visibility from IT might be allowed access only to less-sensitive applications, or in ways that limit enterprise exposure to data loss or tampering, like desktop virtualization. Exhibit 1 offers a simple example of a hierarchy of access to sensitive data and corresponding mobile device security measures: This may remind some IT and security veterans of the early days of application access from employee-owned PCs, before remote desktop management, anti-malware, and VPN tools were

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mature. As then, IT will need to get the input of several stakeholders – security, corporate risk, compliance, legal, and HR – in order to better understand and quantify the sensitivity of the data at risk and the business costs of restricting access to some applications by some employees, while noting that the risk of device loss or theft is higher than with laptops. The rapid ascent in the popularity of these mobile platforms for enterprise use has caught many vendors of relevant technology tools like remote device management, IAM, encryption, and DLP a little at-footed, so their functionality and ability to support a range of mobile platforms is still limited. Likewise, many enterprises and service providers have not updated their auditing policies and reporting mechanisms to accommodate BYODs.

Recommendations HfS Recommendations for Buyers Even in native data center environments, the need to support BYODs is urgent and growing. Add the additional complications of managing these devices in cloud computing environments, and it becomes clear that the CIO and CSO need to work now to develop governance, compliance, and technology plans to accommodate them in a way that balances their business value with the increase IT security and corporate risk that they entail. With the pending IT consumerization trend and the attendant reality that the universe of external users, mobile devices and internal applications they must access will soon rapidly expand, it becomes clear that enterprises have two challenges. In the short term, they must take a tactical approach to managing BYODs, using some combina-

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tion of interim tools and policies outlined above. Longer-term, buyers must develop a strategy that assumes the eventual availability of better tools and controls for employee-and consumerowned mobile platforms, such as MDM, mobile device support for network-based authentication mechanisms like 802.1x, federated identity management, and end-to-end encryption. In some respects, cloud computing may make this easier, as cloud service providers have greater ability and incentive to invest in these technologies at scale, and will seek to differentiate themselves by offering them as part of their services.

HfS Recommendations for Cloud Services Providers Understand the urgency of the BYOD issue for your prospects, and explain your capabilities for supporting security for mobile devices including BYODs Consider offering options for varying levels of services access based on device type and ownership Consider how you might modify your monitoring, reporting, and auditability capabilities for buyers to accommodate BYODs.

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SEGMENT ANALYSIS

HRO

EXPERT DEBATE

WILL CLOUD DRIVE OUTSOURCING? • AVASANT • EVEREST • KAYE SCHOLER • PWC • ZINNOV

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Neutral View

Anupam Govil is a Partner with Avasant, a Sourcing Advisory firm and President of Avasense, a Sourcing Governance software company (wholly owned subsidiary of Avasant). At Avasant, Anupam manages the Globalization practice, providing ICT and BPO sector development and investment promotion advice to emerging regions across the world.

PROACTIVE PLAYERS WILL BENEFIT FROM

CLOUD COMPUTING By Anupam Govil, Partner, Avasant and President, Avasense

Recent trends show that transition to a Cloud environment will eventually benefit the outsourcing industry. Both, Buyers and Providers of Outsourcing services will discover tremendous benefits.

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A

s Cloud computing and Cloud based services become more mainstream, there is concern that it will erode the business of Outsourcing service providers who may lose out to Cloud service providers offering computing and applications on a tap. However recent trends show that transition to a Cloud environment will eventually benefit the outsourcing industry, though there could be a transition period when those who do not proactively step up to the changing landscape could fall by the wayside. Both, Buyers and Providers of Outsourcing services will discover tremendous benefits from embracing the Cloud, provided they do it for the right way. Following are some of the leading reasons: More value for the buck, especially for smaller organizations: Traditional outsourcing involved large upfront investments in IT and Staffing resulting in a lengthy cycle to achieve the desired ROI. With Cloud computing, a buyer can realise the cost savings almost immediately as the huge capital expenditure towards server farms, software licensing and resourcing is now converted to operating expenditure with very low upfront investments. The economies of scale that a Cloud service provider is able to achieve is normally passed on as a benefit to the subscribers. Flexibility and Control: Cloud’s utility style payment model allows Buyers to better control and flexibly provision IT and Business services based on real demand. Further, Cloud inherently isolates Business functionality from the underlying technology, allowing Buyers to not be tied down to a single technology for long periods of time. Leveraging the latest technologies and industry best practices: Due to long term contracting in traditional outsourcing, buyers were locked in with service providers and often had to wait for a transition period to procure new technologies or adapt latest best practices. With the Cloud its become more commonplace to have shorter term contracts and outsourc-

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NOW MANY OUTSOURCING SERVICE PROVIDERS ARE GRABBING THE OPPORTUNITY AND INVESTING IN PARTNERSHIPS WITH LEADING CLOUD SERVICE PROVIDERS TO OFFER AN END TO END SERVICE

ing service providers have had to standardise their services as well as adapt them to evolve with advances in technology platforms and best practices. This is a huge benefit for companies that often got stuck in the no-man’s territory between system upgrade cycles and service contract renewals. End to End Service Level ownership: A perpetual challenge with outsourcing of services has been the segmentation of IT and Business process layers, with different entities or groups owning different components, resulting in lack of full ownership of outcomes and service levels. Now many Outsourcing service providers are grabbing the opportunity and investing in partnerships with leading Cloud service providers to offer an end to end service. This is beneficial to the Buyers as they can now rely upon one entity for service delivery and performance as well as know transparently where the breakpoints might lie. Service providers also see this as an opportunity to expand their revenue share with existing customers and have opportunities to cross-sell other services. Have large server farms and have strong hosting capabilities across the world. This allows

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them to fall back seamlessly on any server in case of any untoward incident like a natural disaster or attack by terrorists. Traditional service providers have lesser global hosting capabilities compared to cloud service providers due to their very nature of business. Rising up the value chain: Traditional Outsourcing service providers have tried to transform their business models to become business partners with their clients. However, their biggest impediment is the limited impact their IT implementation has on the business side. With many packaged solutions and end-to-end managed services being offered on the Cloud, these providers are now using their deep domain experience to design and develop solutions that produce sustaining bottom line impact on their client’s business. This is enabling more mature service providers to get closer to their client’s business and transform their relationship into a more partnership based model. Penetration into the SME market: Enthusiastic adoption of Cloud computing by small and medium size enterprises is carving a new market segment for traditional service provid-

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ers, especially for those who have infrastructure hosting capabilities. Transition

to the cloud is providing these companies the wedge to penetrate a market that was hitherto too fragmented or slow to outsource. Evolution of Hybrid Services: The demand for system integrators is expected to rise with the advent of the Cloud. Buyers are now seeking advice and innovative solutions from service providers to z Understand and better deploy hybrid Cloud solutions z Assist them in migrating to the Cloud z Integrating Cloud based applications to ERPs z Developing custom based applications on the Cloud.

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Positive View

Yugal Joshi, Senior Analyst, Everest Group, tracks global sourcing and technology industry focused on various aspects such as next generation delivery models, technology landscape, new growth avenues, and competitive strategies.

CLOUD AND OUTSOURCING, AN ALLIANCE FOR

A NEWER EVOLUTION

The need of the hour is to drill down into each type of global sourcing service and analyze the impact of cloud delivery models. There is a need to differentiate between the type of services delivered.

By Yugal Joshi, Senior Analyst, Everest Group

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I

n most cases, leveraging cloud delivery models, be it in application, infrastructure, or platforms, implies being served end-to-end by an external vendor unlike the typical “do-ityourself” products. Therefore, in a way, the cloud is driving the IT consumption towards an “external vendor” model, which is also a type of outsourcing. Most of the discussions around cloud’s impact on outsourcing services take a monolithic view of the industry. The focus is to take an extreme position, such as “outsourcing is dead”, or perform a very broad analysis based on the evolving role of CIOs, changing demand in enterprise IT, cloud eating into traditional sourcing, etc. This makes for good reading but is not necessarily a thoughtful analysis of the real impact. The need of the hour is to drill down into each type of global sourcing service and analyze the impact of cloud delivery models. To analyze the impact of cloud delivery models on globally-sourced services, one needs to understand both of these in the right context. For IT outsourcing and the impact of cloud, there is a need to differentiate between the type of services delivered such as application development, application implementation, application maintenance, “keep the lights on” infrastructure services, servicelevel driven managed services, and transformational services. Cloud delivery models will have a spectrum and not a binary impact on this market. Different services, providers, business models, and investments will see different opportunities and challenges. One major “non-technology” challenge from cloud models is the shifting of budgets from a typical IT department to businesses. Everest Group and Cloud Connect Enterprise Cloud Adoption Survey indicate an increasing role for business users in deciding IT spending. As outsourcing providers have access generally to IT and procurement departments, they will witness significant challenges to penetrate the business side of a buyer in accessing “business IT” budget. Moreover, enterprise IT shops that have so far not outsourced, may directly lever-

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DIFFERENT SERVICES, PROVIDERS, BUSINESS MODELS, AND INVESTMENTS WILL SEE DIFFERENT OPPORTUNITIES AND CHALLENGES. ONE MAJOR “NONTECHNOLOGY” CHALLENGE FROM CLOUD MODELS IS THE SHIFTING OF BUDGETS age a cloud service, reducing the potential role of an outsourcing provider. To pre-empt this, the provider may need to offer integrated cloud and outsourcing services. The relevance of cloud models should also be seen from newer or existing investments the buyers make in enterprise IT. For transforming the existing investments (e.g., ERP, CRM, other business applications, and infrastructure) to the cloud, it is difficult to believe that typical global sourcing buyers will prefer any other vendor over the enterprise-class providers. For example, if they have to transform ERP platforms to a cloud infrastructure, they would generally prefer a renowned enterprise class ERP and cloud service provider over a pure-play cloud hosting provider. Though various service providers are moving towards a solution-based approach, which leverages IP-driven delivery, the largest share of revenue will continue to come from the billing of people. Whether the cloud delivery model will reduce the demand for people or reduce their billing rates? A people-centric view helps in clearing the clutter around the usual argument on cloud’s impact on IT outsourcing. The impact will change as these mod-

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els evolve. Short-term impact will be very different from the long term. Given that Amazon Web Services has been synonymous with cloud, most of the debate on cloud and outsourcing becomes a datacenter discussion. However, cloud delivery models are much more than infrastructure and will have different impact on different services. Let us consider some typical revenue streams of the outsourcing industry: Packaged implementation engagements, where the providers deploy and customize industry solutions, may get negatively impacted when more buyers consume software-as-a-service (SaaS) vendor-hosted applications. Application implementation engagements (e.g., ERP and CRM) require capacity design, demand forecasting, consulting services, application customization/configuration, on-going maintenance, etc. Once the buyer sources the applications in the SaaS model, it has a limited use for outsourcing providers to deliver many of these

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services, compared to the traditional on-premise engagements. However, the market is also witnessing growth of hosted application service providers that are leveraging cloud principles; yet, do not offer typical multi-tenant SaaS solutions. Newer technologies are allowing outsourcing providers to offer application hosting with smaller footprint and “cloudlike” features. Therefore, these outsourced application providers are gearing up for the impact of SaaS solutions and may not get negatively affected. Providers that offer pure services around on-premise applications may face hurdles with the growth of SaaS-based offerings. Though they have created partnerships with SaaS vendors, the amount of work a buyer can outsource to these service providers in this context is lesser than the traditional on-premise set-up. Traditional datacenter services will face challenges unless they adopt cloud delivery

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models. Buyers are showing preference for these solutions over multi-year, multi-tower, and prone-to-failure infrastructure services. Everest Group Cloud Connect Enterprise Cloud Adoption Survey indicates that over 80% of enterprise buyers have either already deployed or plan to leverage cloud-based infrastructure. Cloud delivery is agile and allows infrastructure services with a lower asset footprint, enables consumption-based pricing, leverages automation and standardization leading to reduced management costs. Given the growing buyers’ preference for these models, providers have a limited choice but to embrace them even at the cost of cannibalizing existing books of business. Therefore, many outsourcing providers, especially those that have a hardware infrastructure legacy, are integrating cloud infrastructure solutions in broader global sourcing engagements. Everest Group’s research on cloud adoption in global sourcing indicates over 50% of the deals have cloud infrastructure transformation in scope. Therefore, the providers with home-grown cloud infrastructure offerings are communicating the benefits of trusting an enterprise-class provider over the usual cloud infrastructure providers. They are also differentiating by adding other services, such as security, data recovery, and service level agreements, over non-enterprise class cloud infrastructure provider. Application development services where the providers offer customization, coding, testing, performance, and other services will have an interesting impact. Various providers are engaging buyers in cloud application migration projects where they analyze the suitability of legacy applications, develop “migrating code”, and port the applications to the cloud. Cloud application development requires special skill sets as the functional requirements are different. Therefore, not only the underlying development platform has to change (typically, platform-as-a-service (PaaS),) but also the developer should understand cloud infrastructure,

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application scalability, virtualization, clustering, subscription billing, and other related aspects. This allows the outsourcing provider to charge a premium for these developers. Most of the application service providers now have a “cloud application development” offering where they develop “cloud-like” applications for their customers. These are not SaaS solutions, but applications generally developed on a PaaS platform or hosted in a cloud infrastructure. If the buyers demand the service providers to develop applications leveraging the public PaaS or IaaS platforms, the amount of work for designing, coding, and testing the application (especially related to platform and infrastructure), which used to be a major portion of the traditional application development, will significantly reduce. This is because the PaaS and Iaas platforms offer various mechanisms to take the burden off the developer’s shoulder in terms of architecture, scaling, security, identity management, data continuity, etc. In addition, we are witnessing many buyers opting for SaaS-based solutions that reduce the demand for custom applications. Everest Group Cloud Connect Enterprise Cloud Adoption survey suggests that ~85% of the buyers are either currently using or planning to deploy SaaS-based solutions in the near future. However, would there be enough SaaS-based solutions available to match various custom application requirements of the buyers? Probably not. Moreover, the short-term integration and management of SaaS-based solutions is creating opportunities for the global sourcing providers. Application and infrastructure management services in a cloud application (SaaS) and infrastructure (IaaS) world will be different from the existing scenario. When the SaaS vendor is hosting and managing the applications, the amount of work left for the outsourcing provider in terms of management services will be reduced. These global service providers will still perform integration of on-premise systems to the cloud as well as offer management services for these systems. They need to en-

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hance their portfolio by offering orchestration, security, identity management, and integration services. If more buyers source infrastructure from external cloud providers, there will be a limited role for pure infrastructure management services. Service providers may monitor the on-premise systems and create dashboards to ensure working of the hybrid environment. However, this demand will be significantly lesser than earlier days where service providers managed the datacenter and other infrastructure assets of the buyers. Moreover, even for an outsourcing provider hosted or on-premise private cloud, the buyer requires fewer people for managing the environment. Therefore, the management service providers need to augment their offerings beyond low-cost labor-focused delivery. In the short term, global service providers may witness an increase in cloud-related work when the customers begin their cloud journeys. Service

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providers are already working with their clients in cloud readiness assessment, application migration, and private cloud deployment engagements. Most of the providers do not charge the buyers for these assessment services to get the downstream work. In the long term, the industry needs to evolve the concept and understanding of global sourcing. Rather than viewing cloud delivery models as a threat to the global sourcing industry, it should be seen from the perspective of Darwinian evolution that the fittest shall survive. The type of services performed, solutions offered, delivery models, client management, and related aspects may change, though this implies an evolution of global sourcing market and not necessarily its demise. Maybe, from builders of infrastructure and applications, the providers will become integrators and creators of sourced cloud services. Providers who continue to operate in denial and prefer the traditional outsourcing may have to fight for their survival. Enterprise IT is too complex an environment for pure-play cloud providers to serve exclusively. There is an inclination to source critical services in a “private/ hybrid” model, where they are delivered for a specific buyer and not necessarily for the public at large. Sourcing providers have a significant role to play in these delivery models. These providers need to evolve their offerings to include cloud services brokerage and managed services, integrated into these delivery models. We must remember that the global sourcing industry came into existence to cater to a market demand. Now, with the demand changing, the industry will transform as well. From the earlier “your-mess-for-less”, “cheap coders”, and “lift-and-shift” days, it is now a valued partner of enterprise IT. Given its evolutionary nature, enterprise IT will embrace cloud delivery models to grow, though in a different avatar.

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Positive View

Sundar is an Engagement Manager with Zinnov and specializes in Shared Service Centers / MNC captive centers. Sundar holds an Engineering degree in Computer Science and Engineering and a certificate in Business Management from the Indian Institute of Management, Calcutta. He has experience working on globalization and India entry strategies (in setting up IT / ITeS centers) of Fortune 500 clients.

CLOUD WILL DRIVE UP THE VALUE OF

OUTSOURCING By Sundararaman Viswanathan, Manager Consulting, Zinnov

As the rate of cloud adoption increases, the eco-system will get more clarity on aspects like “What will get outsourced?”, “How will it get outsourced” and finally “To whom will the work get outsourced to?” Looking at the emerging trends it is evident that impact of Cloud on Outsourcing will be more profound. GlobalServices

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ot long ago, we had to build our own houses. Then came the days when we had to procure the materials and masons and their team would build out the houses for us. Then, the contractors emerged, who would completely manage the construction process and all we had to do was to verify the plan, approve the architecture and of course pay up money. Currently, this is the era of apartments (flats), very few people can afford to build their own houses. For those who want to build their own homes, there are contractors available and they command a premium. Constructing houses in the apartments (flats) model is very different from constructing an individual house. The contractors and masons are having to re-skill / cross skill to be able to survive. The players have gotten re-aligned, the engagement models have also undergone a change – from in-house to managed services to completely outsourced, and new players and services have emerged. For example, most of the independent contractors who used to do end to end construction have now become professional services suppliers, the construction activity has gotten highly segmented and specialized with specialists owning up small pieces of work. This means, that the contracts are no longer end to end with multi-year commitment instead they are small and short. New type of players with service offerings like fully managed security services, housekeeping services, etc., have evolved. Evolution of building and construction industry is the closest real world parallel to cloud computing and its impact on outsourcing. And as one can see, the apartments (flats) have in fact driven up the value of building & construction outsourcing industry by enriching it with new players, bringing in newer, subsidized and convenient services & enabling viability of competitive business models. This has driven up efficiencies across the value chain and has had a direct and positive impact on the cost structures as well. Cloud computing will in fact do the same to technology outsourcing industry segment - i.e.

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QUITE A FEW ENTERPRISES STILL CONSIDER IT AS A NON-CORE ACTIVITY, THE NEED TO INTEGRATE AND SUSTAIN A VARIETY OF EXISTING COMPLEX ENTERPRISE LEGACY SYSTEMS IS NOT GOING AWAY ANY SOONER AND EMERGING TECHNOLOGIES LIKE CLOUD NECESSITATE SPECIALIST TECHNOLOGISTS. Cloud will drive up the value of outsourcing. Quite a few enterprises still consider IT as a non-core activity, the need to integrate and sustain a variety of existing complex enterprise legacy systems is not going away any sooner and emerging technologies like cloud necessitate specialist technologists who can port the existing systems to cloud and design the next generation systems for an enterprise. These trends will ensure that, Outsourcing as a business operating model is here to stay. However, as the rate of cloud adoption increases, the eco-system will get more clarity on aspects like “What will get outsourced?”, “How will it get outsourced” and finally “To whom will the work get outsourced to?” Looking at the emerging trends it is evident that impact of Cloud on Outsourcing will be more profound. Apart from the obvious like, bringing in disruptive pricing models and lean cost structures in outsourcing, some of the key implications of Cloud computing on Outsourcing will be… 1. Introduction of new players into the traditional outsourcing space 2. Increase in end-to-end and non-linear project opportunities for service providers

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3. Creation of consortium model amongst eco-sys-

tem partners

Introduction of new players into the traditional outsourcing space According to Ericsson, Global investment in Cloud services is expected to double to about $130 billion by 2015. Also, Ericsson predicts that in the “networked society” there would be more than 50 billion connected devices. The telecom operators are uniquely placed to leverage this opportunity because; They already have network assets Are used to provisioning on-demand services in a pay as you go model Have extensive experience in managed services Have deep customer connects at both consumer and enterprise level The telecom service providers are working towards providing cloud connectivity solutions, delivering cloud capabilities for service providers in terms of infrastructure services and platform services either through their own or by partnering with a key players and finally enhancing the cloud offerings by leveraging their network assets. The Telecom service providers are heavily

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invested in this space already. In 2011 alone the deals, investments and partnerships forged by telecom companies worldwide was worth over $ 5 Billion. US based Verizon, France Telecom’s Orange Business Services, Australian operator Telstra and India’s Airtel in the recent past have made significant announcements on their cloud services readiness and offerings. The data and voice services have gotten commoditized. Telecom operators are looking to tap into new revenue streams and Cloud is just the right opportunity in terms of relevance and scale. So it should not come as a surprise for traditional players when they bump into telecom service providers in the outsourcing circuit especially for cloud infrastructure services.

Increase in end-to-end and nonlinear project opportunities for service providers Managing multiple service providers in an outsourced scenario is any day a nightmare. Especially in the case of cloud – one could potentially end up with a wide array of service providers if not planned appropriately. There could be at least five service providers (telecom service provider, infra-

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structure service provider, a platform provider, an application services provider and business services provider) for one service line. This situation is a service delivery hazard. To mitigate this, enterprises will outsource more and more of end to end work to service providers. This means service providers will get to live their dream of executing projects “way up in the value chain”… Vendors will get to deliver on large transformation programs right from consulting, through to design, development, migration and provisioning of business services. This presents a golden opportunity for the large service providers to get the customers on to their own platform and cloud infrastructure. This is the “non-linearity” silver bullet that service providers have been longing for. To tap into this opportunity, service providers will invest and build their own platforms, test out the robustness of their platforms and products by dog fooding or through freemium models with select customers and perfect the metering and billing models. To cope with the rapid cloud adoption by Govt’s., SMBs, large enterprises, and end consumers, the service providers will also begin re-skilling their workforce and re-organizing their operations. Tier I Indian service provider, Infosys for instance recently announced the launch of a new division within its company that will focus on platforms and products. Infosys plans to build this separate wing, with a strong product orientation led by some of its brightest engineers. The division will be unique in terms of people policies, compensation and benefits structure and culture. Over the next few years, Infosys expects its platforms and products line of business to ride the cloud wave and contribute to 30% of its overall revenues from the current levels of about 5%.

Creation of consortium model amongst eco-system partners Almost all the players in the outsourcing eco-system have entered into some form of partnership or the

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other with leading cloud companies be it Google, Microsoft, Amazon, Salesforce etc., Just to note, all the top 20 Indian service providers have some form of partnership or the other with the leading cloud companies. At this point in time most of these partnerships are limited in their construct. No one is yet to take a big bet on a particular platform or a partner. However, over the next 5 years, as the industry segment evolves, we will witness a consortium led approach to winning outsourcing deals. That’s simply because, it will not be possible for a single vendor to manage service delivery across all aspects of the cloud. For example an Infrastructure and Platform provider like Amazon will forge partnerships with Tier I service providers, SaaS start-ups and increase investments in building a strong developer community to increase its foot print amongst both enterprise and consumer segments. Companies will develop a complete 360 degree approach for their Go-To-Market and Service Delivery strategy. IT services will be provided in a seamless and commoditized manner via cloud just like utilities (electricity and water). The foundation for such a delivery mechanism will be co-creation, strong governance structure and internal OLAs (Operations Level Agreements) between various players of the eco-system. Together they will provide an integrated SLA structure and a single window / dashboard to the enterprise customer. For the players, the industries and economies across the globe, a mature and healthy outsourcing industry is a necessity. Outsourcing drives innovation, improves operational efficiencies and delivers great bottom line value. Cloud not only an enables the outsourcing business model further but also enriches it. Creation of new market places, players, business models, technology platforms and services are clear indicators of a maturing value chain and based on the evidence across these parameters, we can say with confidence that cloud computing has already had a phenomenal impact on outsourcing.

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Neutral View

Rajesh is an Associate Director with PwC India, with 14 years of experience. He has signiďŹ cant experience in Strategic Enterprise Architecture, Cloud Adoption Strategies, Cloud Architectures, Solution Architectures, IT Business Alignment, IT Strategy & Transformation, Technology Strategy and planning, Enterprise Application Architecture, Technology & Innovation management Service Oriented Architecture, Emerging Technologies Enterprise Mobility Strategy, Social Enterprise Consulting.

CLOUD PRESENTS BOTH OPPORTUNITIES AND

CHALLENGES FOR OUTSOURCING By Rajesh Rajan, associate director, PwC India

Cloud computing provides tremendous opportunities and enormous challenges for IT outsourcing vendors. Success will depend on maintaining the right balance between traditional IT outsourcing services and cloud services. GlobalServices

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s more and more companies are buying into the cloud promise, there is speculation among the traditional IT outsourcing service providers about their business models and customer value proposition being disrupted. Service providers in the IT outsourcing space have, after all, profited handsomely by taking on their customers’ highly complex, one-off collections of IT assets and finding ways to manage them more efficiently than their customers can. But the essence of cloud computing is a move towards highly standardized racks of commodity servers and a software environment that together make for a highly efficient use of resources. So the question being asked is where is the opportunity for IT outsourcing in that? PwC surveyed 489 business executives to find answers find answers to these and questions about the state of data center infrastructure management. Individual interviews with vendors offering traditional IT outsourcing and new cloud-based offerings, including infrastructure-as-a-service (IaaS), complemented the survey. We sought to understand the real state of data center management today, how fast business executives expect to move to cloud infrastructures in the future and who they will turn to—traditional IT outsourcing providers, new cloud-oriented providers or internal staff—to make the shift. The PwC IT Outsourcing and Cloud Computing Survey suggested that many, if not most, functions of the traditional data center—internal or outsourced—will gradually migrate to the cloud. It found growing interest among IT outsourcing customers and non-customers for infrastructure in the cloud, especially for private clouds restricted to a single enterprise. However, the survey indicated that the migration to the cloud could also take a long time. Cloud computing, when done right, has the potential to make rapid improvements to the data center. Infrastructure-as-a-service (IaaS) is indeed a boon for IT outsourcing customers who are thinking of moving workloads to the cloud because it

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PWC IT OUTSOURCING AND CLOUD COMPUTING SURVEY SUGGESTED THAT MANY, IF NOT MOST, FUNCTIONS OF THE TRADITIONAL DATA CENTER—INTERNAL OR OUTSOURCED—WILL GRADUALLY MIGRATE TO THE CLOUD. gives them many of the same characteristics of IT outsourcing at a lower price and with greater flexibility. New cloud-based IT infrastructure providers are taking aim at the enterprise market for IaaS by offering the kind of innovative solutions for which there is growing demand, especially private cloud hosting and consulting. But they face stiff competition from IT outsourcing providers as established IT outsourcing vendors are aiming for the new cloud business and are making major investments in cloud offerings. So the question for IaaS providers need to ask themselves is – over the long haul, can they match the spending, innovation and marketing one can expect from these established IT outsourcing providers, many of whom already offer cloud services? The IT outsourcing providers on the other hand, for the next several years, will face the dual challenge of delivering traditional IT infrastructure services while they meet the growing demand from their own customers to migrate to cloud computing, including infrastructure-as-aservice (IaaS). IT outsourcing providers not ready or able to move with their customers could put the entire relationship at risk, a fact some, perhaps many, of them understand. For the foreseeable future, there is likely to be enough demand

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IF, IT OUTSOURCING VENDORS OVEREMPHASIZE THE CLOUD THEY RISK ALIENATING EXISTING CUSTOMERS WHO PREFER TRADITIONAL INFRASTRUCTURE. THE OVERALL PICTURE THAT EMERGES FROM THE SURVEY REGARDING THE STRATEGIC POSITION OF IT OUTSOURCING VENDORS IN THE CLOUD ARENA SUGGESTS TREMENDOUS OPPORTUNITIES AND ENORMOUS CHALLENGES. to keep everyone busy. But besides deep pockets and trusted brands, another differentiator for IT outsourcing providers will be the vast experience many of them have with consulting services. In the PwC survey only 18 percent of respondents said 51 percent or more of their compute workloads were ready for the cloud today, suggesting a market for consulting services to help determine the when, what, where and how of migration. However, the migration will be gradual, and the cloud will coexist with traditional infrastructure for a long time. Since the IT resource landscape will be a mix of traditional infrastructure, private cloud, and public cloud for several years, customers will need help in deciding which applications to run where and to make sure everything works together. Recognizing the opportunity to help companies migrate to the cloud, some IaaS providers are offering consulting services, not just compute clouds.

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IT outsourcing providers are also gearing up to play that role, specifically aiming to provide three vital cloud services: planning and workload assessment, migrating workloads to the cloud and managing all the moving pieces. Despite such efforts, the PwC survey suggested that in some cases IT outsourcing vendors may lack credibility as cloud experts. Only 48 percent of IT outsourcing customers said IT outsourcing providers were the best source of managed private cloud computing services today; even fewer—38 percent—said they would be in three years. In contrast, 45 percent of IT outsourcing customers said a new breed of private cloud specialist was the best source for services today, a figure that rises to 52 percent in three years. IT outsourcing executives recognize the problem, and are working to increase awareness of their cloud capabilities. Some IT outsourcing providers are trying to educate customers about cloud benefits. If, however, IT outsourcing vendors over-emphasize the cloud they risk alienating existing customers who prefer traditional infrastructure. The overall picture that emerges from the survey regarding the strategic position of IT outsourcing vendors in the cloud arena suggests tremendous opportunities and enormous challenges. “The challenge will be to maintain the right kind of balance between traditional IT outsourcing services and cloud services. IT outsourcing vendors need to evolve and innovate constantly to do so.”, comments Rajesh Rajan, Leader in PwC India’s Emerging Technologies practice. The solution, from PwC’s perspective, is to reconsider performance metrics with the cloud in mind. Established IT outsourcing vendors clearly have a role to play as enterprises move to the cloud. Evidently, there appears to be new, cloud related business available to IT outsourcing providers if they can offer the right menu of services to customers who have previously shied away from them. Their ability to seize the opportunity and to offer credible private cloud services could, in fact, determine their ability to prosper in the future.

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Positive View

William Tanenbaum is a partner in the New York office of the law firm of Kaye Scholer LLP. He chairs the firm’s IP and Technology Transactions Practice Group and the firm’s GreenTech & Sustainability Practice Group. He was named “Lawyer of the Year 2013” in Information Technology Law in New York by Best Lawyers in America.

CLOUD COMPUTING WILL DRIVE OUTSOURCING BECAUSE IT ENABLES

BIG DATA AND IT TEST BEDS By William A Tanenbaum, partner, Kaye Scholer LLP

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Cloud will drive outsourcing because Cloud meets the needs of corporate IT customers who benefit from external IT providers with the technical expertise and financial economies of scale

C

loud Computing will drive IT and business process outsourcing because it provides an IT environment that enables enterprise-level businesses to use Big Data effectively. Cloud Computing also allows companies to create temporary IT test beds to test products and services without having to spend the time and money to modify their core IT infrastructures before determining whether the new product or service is a success. Cloud will drive outsourcing because Cloud meets the needs of corporate IT customers who benefit from external IT providers with the technical expertise and financial economies of scale to implement technological innovations in IT environments faster than companies can do using internal data centers. For these reasons, Cloud Computing will be used when mainstream businesses upgrade their IT ecosystems.

The Three Steps in Big Data

SOME COMPANIES CAN AFFORD THE COST OF THE INFRASTRUCTURE TO DO BIG DATA ON THEIR OWN. BUT FOR MANY COMPANIES, THE ECONOMICALLY RATIONAL COURSE WILL BE TO RELY ON INDUSTRIALSTRENGTH CLOUD PROVIDERS

It is a given that businesses today have access to tremendous amounts of data. The challenge is not just to collect data but to analyze it and make decisions. Making decisions is not the end of the story. The ultimate purpose of making

GlobalServices

decisions is to achieve good business outcomes. Better outcomes can be better customer relations, better supplier management, better product development, and better profits -- it depends on the specific business. Better outcomes can also be analysis of sales data to determine optimal pricing, mining customer data to identify the most important customers, using Social Media to discover new market trends and accurately predicting changes in customer demand, and analyzing risk in financial portfolios and effectively mitigating the risk. Going forward, the biggest mining companies will mine data, not coal. Big Data is often characterized by the “Three V’s,” namely, volume, variety and velocity. The volume of data has increased because of larger amounts of transaction data, of content streaming from Social Media, of location-aware data from mobile computing devices and of information collected from sensors, RFID tags, smart meters and all manner of devices in today’s Internet-of-things. The variety of data has also increased and, most significantly, comes in different formats. Data analytics requires dealing with structured and unstructured data and information generated and stored in disparate ways. Velocity is how quickly data is being generated and how quickly it must be processed. In the “old days” IT departments focused on storing data, putting it in virtual drawers and then organizing it. In the new Big Data paradigm, companies must aggregate data and conduct analytics without moving it. Analyzing data, not storing data, is the goal.

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Cloud and Big Data The IT infrastructure required to support Big Data is complex, and building it is expensive. Updating it is a continuous requirement. The infrastructure will become more robust and the analytics more sophisticated. Some companies can afford the cost of the infrastructure to do Big Data on their own. But for many companies, the economically rational course will be to rely on industrial-strength Cloud providers. Such providers can afford to set up, improve and maintain large networks of data centers and the related infrastructure. This is because the cost of building the infrastructure -- and continuously improving it -- is either simply too expensive to afford or is a disproportionally expensive undertaking to meet the needs of only a single company. It is expensive to build and run the large network of data centers (with advanced servers and highcapacity storage devices) that the largest Cloud providers operate. The computer horse-power that these Cloud providers offer will likely exceed what a company can build for itself or obtain from a

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customized IT outsourcing arrangement. Importantly, the leading Cloud providers are likely to be able to more quickly implement technological improvements and advances in analytics. Moreover, there may be a cost advantage to using the Cloud for Big Data. Cloud-based analytics is provided as a service, and the cost of data scientists and analytics professionals should be baked into the cost of the service and should not be an extra cost as it may be in more traditional IT outsourcing pricing models. Managing large volumes of Big Data will generally be accomplished using distributed computing arrangements. This can be accomplished through a distributed network of Cloud-based services. And it may well be a Cloud of Clouds will emerge to de-silo the data and allow analytics to be run across combinations of datasets initially assembled for speciďŹ c business purposes. Taking advantage of Big Data increases importance of IT services compared to applications. Software-as-a-Service, Platform-as-a-Service and Infrastructure-as-a-Service are often associated with Cloud computing.

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But Cloud computing can also be considered as data-storage-as-a-service, security-as-a-service and analytics as a service. Businesses that plan to use Twitter and social networks as a large data source for social business will investigate Cloud-based service providers that provide social analytics.

Cloud and Big Data Give Rise to New Roles for CIOs The maturation of Cloud-based services will change the nature of a CIO’s job, especially as Cloud providers provide stronger data protection and trusted access to data. Historically, CIOs focused much of their attention on selecting the right software application. This will shift, and CIOs will focus on selecting services rather than applications. The CIO’s corporate role will be to evaluate which providers deliver the right services at the right price for his or her company. The role of the CIO will be to decide which suite of services from which suite of providers provides the best portfolio of services for his or her company’s needs. This will include when and how to switch from one service to another. The ability to manage service integration will become a more important measure of how well a CIO does his or her job.

Will Big Data Services Evolve Faster in the Cloud? As noted, Cloud providers generally provide standardized services, and they compete on price and technical features. It is likely that this competition will increase the time to market of improved services based on improved technology. The fact that customers can more readily switch Cloud providers than they switch outsourcing providers is likely to lead to faster improvements in Cloud services than in the traditional IT outsource offerings. The pressure to retain customers will lead to pressure to improve the capabilities of the services. In light of these factors, it is likely that competition between Cloud providers will lead to increased speed to market of improved services based on improved technology, and that competition will reduce prices.

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Cloud as a Test Bed A company that plans to introduce a new product or service can build its own cloud for that product or service at less expense and more quickly than it can modify its existing IT infrastructure. It can then modify and improve its product or service and the IT services it needs to support it again without having to modify its core IT infrastructure. Similarly, the company could use a provider’s Cloud rather than build its own. It the product or service is successful in the market place, the company can then move the IT into its core infrastructure. It does so when it has determined that it wants to continue the product or service, and therefore it has avoided the cost and disruption of changing its core IT operations “unnecessarily” for a product or service that it did not know would be successful. Thus, the Cloud provides a cost-effective test bed when it is evaluating whether to make new products and services part of its standard offering.

Summary From one perspective, if Big Data is the goal, then Cloud Computing is the answer. Cloud Computing will drive IT and business process outsourcing because it increase customer demand for specialty IP providers who can operate large data centers and who have business incentives, and economic resources, to add improvements on a continuous basis. Large Cloud providers provide the IT infrastructure to allow companies to amass, store and analyze large volumes of different types of data from sources ranging from the company’s internal operations to data obtained from the public domain, from Social Media networks and from private companies that sell information. In addition to serving as the container for Big Data, Cloud computing environments can serve as an IT test bed to allow a company to test or perfect new products and services without having to incur the time cost and risk of modifying its core IT infrastructure before deciding whether or not it will make the new product or service a permanent part of its sales offerings.

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USER GENERATED CONTENT

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LINKEDIN USERS RESPOND ON

WHAT IS CLOUD COMPUTING Cloud Computing is distinct from Cloud Storage in that it actually allows the remote (from the user) execution of applications and access to far greater computing resources than most people could ever have locally, and without any need to actually manage the nuts and bolts of the system. As the earlier posts have said, we are returning to the old architecture of centralized computing, but now the likes of Amazon are opening it to anyone and everyone, by packaging raw access to massive computing resources as a product. It is no longer the privilege of a few people who work for a particular company or attend a particular university. —Mark Lambert

The name “cloud computing” is new, but the philosophy isn’t. It’s essentially Service-Oriented Architecture (SOA), a framework in which computer services are stored and managed locally at the server level but used globally, down to the user. What makes this paradigm such a powerhouse is that, thanks to the Internet, the difference between “local” and “global” can be worldwide. —Tony Lamb

In a nutshell Cloud Computing = Open, Virtual, Flexible, Scalable, Secure and most of all affordable. —Chandra M. Hundigam Venkat

A boundless spacial resources that flexes to the ebbing demand of a consumer audience. —Jerry Durant

Having taken the plunge last week and moved over to Google Apps - using the cloud is to make my business more efficient and to save money. In terms of working flexibility I don’t need to haul a laptop around with me. I can access everything from a tablet.. —David Mitchell

My definition of cloud computing is precise, narrow, and technical; I distinguish between cloud computing and hosting. Cloud computing is when you have dynamic provisioning; if your provisioning is static, it’s hosting. —Nick Chuvakhin

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From a user perspective, cloud computing allows me to run my business from anywhere, with any device, on my terms and my schedule in a more cost-effective manner than desktop-based applications of the past. Cloud computing allows me to not worry about the computer I use (i.e. I use a Mac while most of my clients use PCs) or where I’m working. I am much more productive and in control of how I work. —Dallon Christensen

It is a reversion to previous central architectures utilizing the current technologies to provide users with the tailored experience that PC technology brought combined with the capabilities of central management that the mainframe based systems provided. The user experience remains as individualistic as the distributed personal computer based systems allowed. The centralized architecture provides for fast, efficient, unobtrusive, maintenance along with strong security and data safety capabilities. It goes beyond what mainframes could ever hope to achieve by allowing provisions to quickly utilize new platforms and user devices without requiring major systemic redesign or upgrade cycles. —Wayne Hammerschlag

It’s a whole new way of approaching information storage. We are actually going back to the computer mainframe, where data is stored in a seperate location from the device. —Ivanna Rosendal

It is a method of using information technology resources in a cost-effective and efficient way, sometimes dedicated, sometimes shared and available when required, to pre-defined and agreed service levels. —Mike Bradley

The “cloud” comes from that shape that started appearing in our conceptual diagrams at the dawn of networking. The shape sat between the users’ computers and our grand designs. We focused on the boxes and drums and arrows that captured “the essence” of our creation. The cloud was the network. Stuff other guys specialized in. It is the deconstruction of our applications into components (services), that we offload to the other side of the cloud. Storage, search, mapping, almost anything done in other computers, other locations, reached by the Internet. Outsourced for others to build and worry about. —Doug White

Source: http://www.linkedin.com/answers/international/offshoring-outsourcing/INT_OFO/1055873-15631139 http://www.linkedin.com/groupItem?view=&gid=4364197&type=member&item=172216823&qid=4604d076-ddab-41a5-b6afe043cf0adeba&trk=group_most_recent_rich-mc-rr-ttl&goback=%2Egmr_4364197 For any questions related to above content, please contact Gurdeep (Gary) Bindra at gurdeepb@cybermedia.co.in

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November 2012

GlobalServices



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