I N S I G H T. T C S ' s C l o u d S t r a t e g y i n E u r o p e I D C O P I N I O N. Mette Ahorlu

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1 IDC EMEA, 389 Chiswick High Road, London, W4 4AE, U.K. Tel I N S I G H T T C S ' s C l o u d S t r a t e g y i n E u r o p e Mette Ahorlu I D C O P I N I O N TCS is Europe's 16 th largest service provider, and one of the fastest growing. It offers a broad range of business, application, infrastructure, and engineering services from consulting to managed services including cloud services and cloud professional services. TCS takes two approaches to cloud in Europe: one is to provide cloud-based domain-specific and industry-specific platform services, if possible with BPO provided on top. The other is to provide professional services for cloud, transforming infrastructure and migrating applications. TCS also offers to manage private clouds or host private clouds in partner datacenters. TCS is migrating its platforms in key industries to cloud starting with BaNCS, the platform for financial services, as well as its key horizontal platforms F&A, HR, procurement and business intelligence (BI). The aim is to provide standardized applications, but still allow an element of customization/ configuration; TCS wants to provide BPO on top, but also increase automation of the business processes to turn the SaaS into BPaaS. This is well aligned with where the cloud market is heading. The ultimate success will depend upon the attractiveness of the content and competitor alternatives when the market for this type of solution becomes more mature. TCS is an early mover, which will give it competitive advantage. TCS's professional services focus on transformation of application and infrastructure to private cloud (TCS will also help clients migrate to public cloud, but like others it sees the transformation market as largely private-cloud oriented). Its methodologies for analysis and migration are highly standardized and tool based, using both in-house developed tools and standard software, enabling a "factory approach" that also enables cost efficient virtualization of a larger share of the application estate than competitors undertake (90%+ compared to the standard approximately 70%). Service management based on BMC and Tibco combined with internal tools are positioned as key differentiators. TCS has launched some interesting cloud offerings in India that address the small and medium-sized business (SMB) market. We believe this gives the company valuable experience that could later be relevant in case the company launches similar offerings in Europe and help TCS address a whole new segment that will see large growth and that many large players find it hard to address. While TCS may not have as many customers in Europe as some competitors, it has some very important references. For instance, transforming the infrastructure for Star Alliance (group of airlines) to run shared applications on a private cloud, and creation of a private cloud for NEST, the U.K. public pensions fund. Given the role that references play in the cloud vendor selection processes, these references will be a major help in winning new transformation deals. Filing Information: February 2013, IDC #QL51V, Volume: 1 European Datacenter Life-Cycle Services: Insight

2 I N T H I S I N S I G H T This IDC Insight presents a profile of TCS's cloud strategy and activities in Western Europe. It looks at offerings, strategy, and customer successes, and discusses TCS's differentiation, opportunities and challenges in the West European cloud market. Although TCS's strategy for cloud is global, the offering and market position vary by region, and conclusions in this study are therefore only valid for the European market. S I T U A T I O N O V E R V I E W S t r a t e g y TCS sees cloud as a major force with the potential to change the IT landscape and provide opportunities for companies to innovate themselves with previously unknown speed. Cloud creates the necessary flexibility and implementation speeds for companies to become agile. TCS sees two approaches to cloud among European (and global) companies and wants to play in both areas An "innovation" approach, focusing on creating new applications or adopting the use of software as a service (SaaS) or platform as a service (PaaS). TCS will support this agenda with innovation workshops and industry/domain-specific platforms and applications, potentially offering BPO on top. Where it is possible to automate the business processes, TCS will offer full-scale business process as a service (BPaaS). This approach is built on domain and industry-specific expertise. An "optimization" approach. This focuses on building private clouds and migrating existing applications to either public or private cloud. The approach leads customers to buy professional services to help them migrate to the cloud. TCS is developing its services and tools to address these needs, and it sees its differentiation in its tools supporting the services. Until recently, TCS has not wanted to own cloud infrastructure and its clients have either retained the datacenter in-house or hosted the cloud with TCS partners. This strategy has been in full accordance with the general approach to infrastructure managed services in TCS. However, TCS has refined its strategy and is now investing in building a network of cloud datacenters across the globe. First in Europe is a 3,000 square feet U.K.-based datacenter for private cloud which will also be used for its Managed IaaS. TCS says it has now (end of 2012) provided dedicated private cloud services for 2,000+ OS instances and 500 TB of storage from the European datacenter. TCS plans to use the European cloud datacenter also for BaNCS and other industry-specific solutions. TCS is continuously investing in the development of new tools both for assessment and analysis, for migration and for management of cloud. It has developed its own end-to-end cloud management solution Integrated Command Center (ICC) which is integrated with BMC and Tibco service management solutions. Star Alliance's global check-in solution is based on the ICC platform. 2 #QL51V 2013 IDC

3 C l o u d P o r t f o l i o Professional Services TCS has a wide range of professional services in Europe for supporting clients' evaluation of when, where, and how to use cloud as well as for the practical implementation and migration. TCS sees clients often starting with specific business issues that need addressing and therefore considering cloud, but rapidly moving on to a wider assessment of the application estate to determine which operational model public cloud, private cloud, traditional model is best suited for each application; best meaning a combined technical, security, work process, and economic view. The highly tool-based advisory services play a key role in TCS's portfolio, and the company claims that its tools for analyzing the existing portfolio and operational landscape to identify opportunities for cloud are its key differentiators. TCS' IT IS Infrastructure Transformation service is based on TCS' 3PT (Prepare, Process, Plan and Transform) framework a fact-based, analytics-led and highly automated methodology for defining and executing enterprise IT transformation programs. The Transform phase of 3PT involves end-to-end processes and accelerators that facilitate factory-like execution of the transformation plan. Professional services include: Cloud advisory services Analysis of the current estate, identifying cloud potentials and optimal future model, and defining future architecture Creating business case and roadmap Create cloud strategy for application and infrastructure (compute, storage, network, tools, and service desk), policy and standards Design service management implementation Cloud deployment and migration services Migration from in-house to public cloud SaaS using a factory approach Adaptation of applications for cloud Migrate and deploy in-house applications to cloud (public IaaS or PaaS, or private cloud) using a factory methodology. Datacenter migration and transformation Design of governance, SLA, and metrics, and testing of performance and functionality Cloud environment build and management services Management of public and private cloud components of the combined environment Governance of technology, business and application standards 2013 IDC #QL51V 3

4 Hosted Enterprise System Management Managed IaaS Managed Infrastructure as a Service for BaNCS, SAP, Oracle Apps, Telcoin-a-Box, egov and TCS Platform BPO offerings Virtual Desktop Infrastructure (VDI) Disaster recovery solutions to cloud Domain Specific Offering SaaS and BPaaS For the last decade, TCS has focused on developing intellectual property, reusable service assets, and software in a wide range of industries. The long-term intention is to migrate all of these solutions to cloud. TCS naturally starts where its expertise and experience is strongest, and where the cloud-based demand is seen in today's market or expected to arise very soon. As of end 2012, only the BaNCS and F&A offerings and parts of the HCM offering have been migrated to cloud. TCS offers cloud-based BPO or platforms for BPO in four domains HR, F&A, procurement, and business intelligence. This is based either on standard software (SAP and Oracle) or on proprietary platforms. When migration is completed the solutions will include: Human Resources Payroll, time and attendance, workforce administration, compensation management, performance management, recruitment and staffing, enterprise learning Finance and Accounting Core F&A, F&A for startups, order to cash, procure to pay, record to report Procurement Source to contract, procure to pay, spend management Analytics Customer analytics, data mining and predictive analytics Domain-specific analytics: F&A, human capital, IT, supply chain, retail and CPG TCS's platform for banking, capital markets, and insurance services BaNCS is also in the process of being migrated to cloud. Modules like core banking are already available on cloud today. The total package includes: Banking: Core retail banking, direct banking, global risk management, payment, and several other modules Capital markets: Lending and borrowing, securities processing, securities trading, treasury, wealth management, and other modules 4 #QL51V 2013 IDC

5 Insurance: Property and casualty, workers compensation, life insurance, reinsurance and agent's workbench Some industry-specific software that is not BPO platforms has been adapted to run in a private cloud environment TCS' Telco-in-a-Box Direct Sales for Retail Energy Trading Platform for the utility industry C l o u d C u s t o m e r s i n W e s t e r n E u r o p e In Europe, TCS's cloud professional services targets mainly existing customers, TCS is not pushing transformation to cloud as a standalone sales topic. TCS runs annual innovation workshops (called Lighthouse) with its larger clients, and these workshops tend to have a strong focus on using cloud for innovation. But cloud is positioned merely as an enabler of innovation, not an end in itself. TCS says it has carried out a "substantial number" of specific applications to public cloud, but larger assessment and migration projects are still few. Examples of cloud professional services, and cloud-based domain platform contracts are: A European semiconductor company: TCS delivered design, implementation, and automated operation in AWS cloud. U.K. utility company: assessment and recommendation of future operational landscape of public, private, and hybrid cloud and framework for cloud hosting and assessment for Web sites as well as interim solutions. TMILL (Germany) deploys TCS's HCM cloud solution. Scandinavian Airline Systems: Signed contract summer 2012 for TCS' F&A platform deployed in a hosted private cloud model. U.K. Government Public Pensions Fund: TCS built a high capacity dedicated private cloud infrastructure combining Windows, Linux, and Unix OS. Star Alliance. TCS has built and manages a global dedicated private cloud for the alliance's customer check in solution. P a r t n e r s TCS has a range of partners providing the cloud hosting but TCS will as an independent provider work with any hosting company that the customer chooses: Amazon Web Services, Terramark (Verizon), Savvis, and Tata Communication Services. TCS also has relationships with a range of SaaS and PaaS providers, for which it has developed professional services expertise and migration templates. Microsoft Azure, Google, Salesforce.com, and Jamcracker IDC #QL51V 5

6 Finally it works with key technology providers: VMware, Redhat, Netapp, Cisco, Data Synapse, and JBoss F U T U R E O U T L O O K S t r a t e g i c I n i t i a t i v e s i n I n d i a TCS has two important initiatives in India that may not be immediately relevant for Western European customers but IDC believes in a longer perspective could become so, as TCS intends to target the European SMB market at a later stage. It is unlikely that a direct "export" of the Indian models will take part, but modifications or at least reuse of insights can be expected, and we therefore see these initiatives as important for understanding TCS' future in Europe. ion An "all IT you need" service for small companies. This is a range of bundled software delivered as SaaS enabling small companies to use IT without investing in hardware and software. The package is specifically designed for rural needs and TCS claims it is seen mainly as a "corporate social responsibility" offering. We do, however, believe the aim is to make the services profitable even if not from the outset, but it should as a minimum give TCS experience in assessing and addressing small companies' needs both at an operational level including dealing with a vast number of customers with very small scale operations and in how to reach this market segment a segment that has major potential but that few if any services suppliers have yet to address. BaNCS as a service. TCS's BaNCS platform is offered to small banks or bank branches in rural India in a joint venture called C-Edge with India's State Bank (it is a regulatory requirement in India that services holding bank data can only be offered by banks). For now TCS has no plans to launch similar offerings in other countries, but the initiative will (as in the case of ion) give valuable experience that can potentially be exported. The potential in Western Europe would in the short term be limited, as core banking on a shared platform is not the most likely approach from even small European banks, but it clearly helps to establish TCS as an important innovative player in the space. D i f f e r e n t i a t o r s a n d O p p o r t u n i t i e s TCS's approach to cloud focuses on application and business transformation. TCS's industry-specific and domain-specific platforms are important differentiators. TCS has been providing BPO-platform services for longer than most competitors and with cloud TCS gets the ability to provide these platforms with a flexibility and efficiency that clients will be looking for. The ability to provide BPO services on top of its technology platforms creates growth potential, especially when TCS builds automation of the business processes into the platform (BPaaS) as it intends to do. For years TCS has focused on platform-based BPO, and the focus on automating the business process is likely to attract new attention. 6 #QL51V 2013 IDC

7 The rapidly growing number of industry-specific software packages available for private cloud for now Telco-in-a-box, Direct Sales for Retail and Energy Trading for utility is a key differentiator. TCS is providing a dual model for hosting services: on the one side it is building out own globally interconnected cloud datacenters, on the other hand partnering with AWS, Savvis, Tata Communications Ltd. and Terramark (Verizon). When looking to buy business critical services clients want to be sure the underlying IT services has high quality, and we see the choice of these high profile infrastructure providers as well as hosting with TCS itself as a differentiator. In the professional services space, TCS's range of tools for advisory services and implementation/migration is a differentiator, helping to keep project costs for the client down. According to TCS, its analytics-based "solution accelerator" (e- Transform, e-predict, e-sense suite) stands out particularly. However, having tools for this is not unique to TCS. TCS claims its tools are more efficient than competitors a statement that is difficult to verify, especially in a market where all vendors launch new offerings and tools continuously. Risk mitigation during migration is an important selection criterion for services partners, according to IDC's surveys of European clients. TCS' ISO and CMMI certification will help reassure some customers, but for European customers' experience typically counts above certification. Service management focus. TCS provides its own "control center" for cloud orchestration integrated with standard management software BMC and Tibco that already has substantial market share in Europe. We expect TCS to integrate with more packages, such as Tivoli, in the future to gain share in IBM environments. TCS is highly price competitive, based on a mix of reuse (ability to turn its experiences to assets) and industrialized platforms combined with global service delivery. Specific cloud provider focus, including an end-to-end package of technology and services. Competition is hard in this area, but TCS has a strong position in the European telco segment which will help it position its cloud offering. The TCS model for co-innovation, which also includes technology partners in the process. Bringing the partners into the work with the client not just keeping them in the background is increasingly popular with European clients. The Co- Innovation Network (COIN) and strategic alliances with Cisco, EMC, VMware, Microsoft, Amazon, Yahoo, and Google will be attractive to clients. Vendor-agnostic approach is a differentiator against competitors in the infrastructure space such as IBM and HP. C h a l l e n g e s a n d T h r e a t s TCS is a bit late to the European cloud market and creating mindshare in an already crowded market is not easy. TCS has chosen not to focus on "cloud" as such in its market messaging, but the market's interest in "cloud" as a topic is still very high and not likely to pass in the very short term. This could impact whether TCS is considered for a deal IDC #QL51V 7

8 Cloud is a cross discipline activity, often initialized by the infrastructure side of IT department, and although TCS takes a holistic approach to cloud and combines the transformation of application and infrastructure, its position within infrastructure departments in European enterprises is not strong. We think TCS will need to over-emphasize its capabilities in the infrastructure space to cross this barrier. References play a key role both at the market screening stage and in the final phases of selecting a cloud vendor. TCS has some very strong references that it has now slowly started to use, but it is still behind key competitors in the use of references. We would recommend it should work to get clients to talk about results achieved so it can extend the reference base and work also to make it more visible in contexts that are not just sales oriented, exhibitions, industryspecific forums, conferences, and so on, to increase awareness. Local datacenters are key to winning strategic deals that include mission-critical data, and TCS is behind in this space. However, TCS has recently begun investments to provide cloud infrastructure services from its own datacenters. TCS only promotes hybrid cloud solutions on a limited scale services that include both public and private cloud elements or cloud and non-cloud elements in the same service. "Hybrid" is mainly an infrastructure and management issue, but many of the new cloud applications for customers' front-office operations are implemented in hybrid models. We believe TCS should include hybrid capabilities and seek to create reference customers for this type of capability, which will see increasing demand. TCS says it provides service management for cloud, but it does not focus on integration and service aggregation including management of services from the increasing number of sources public cloud providers, hosted private clouds, onpremises clouds and traditional environments. This complexity presents a big challenge, and clients are starting to look for external competencies for these challenges. Cloud penetration has not yet reached a stage in Europe where this is critical, but we believe TCS should work to position these capabilities. C o n c l u s i o n TCS has chosen a cautious approach to cloud in Europe. Its strategic focus is longterm, providing platforms that will be offered as a service or with integrated automated business processes as a service. This is a strategy for addressing the market (user requirements) as it may well look in 3 5 years time However, the competitive landscape will change and the selection race among service providers to become trusted cloud partners has already begun, and TCS must start investing more to become more visible now. TCS needs to strengthen its visibility as a credible cloud partner and needs to become better at telling the story where it is heard and telling it in a way that resonates with the short-term goals clients have today, which is much more about legacy optimization and legacy transformation, and IDC's end-user surveys continuously find that clients are planning to invest in transformation of existing IT and migration to cloud. 8 #QL51V 2013 IDC

9 We like TCS' business-oriented approach. We like that it doesn't start talking about technology with its clients, but they must be seen as credible to deliver the broad technology transformation that is the foundation for higher level services. Migrating to cloud is a strategic and large undertaking and therefore tends to favor traditional service providers that have long and broadly proven track records. However, there is an appetite for new providers that are leaner and more cost effective, as traditional players are sometimes seen to over-complicate things. TCS has the strategy, capabilities, and references to move fast and become a large player in the European cloud market in the coming years IDC #QL51V 9

10 C o p y r i g h t N o t i c e This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2013 IDC. Reproduction is forbidden unless authorized. All rights reserved. 10 #QL51V 2013 IDC

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