Cloud Strategies for Indian Service Providers
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1 Cloud Strategies for Indian Service Providers Santosh Anoo Principal, Deloitte Consulting Bengaluru 22 nd September 2011
2 Cloud is driving consumerization of IT Paradigm shift Cloud is Consumers Enterprises Blurring the line between consumer and enterprise IT Innovations from the consumer space are finding their way into enterprise space (e.g., social networking, IM) Transforming CapEx to OpEx and enabling payper-use, bringing IT to new segments Bringing non-users like SMBs/ SOHOs into the fold Within enterprises, empowering lines of business Democratizing innovation, enabling players to experiment with new models irrespective of size New businesses such as Netflix, Groupon et al have been built on Cloud platforms Source: Deloitte Analysis, analyst reports, press releases, primary interviews with industry players, SMEs and end clients CIOs
3 IT Price Index and will push the IT envelope to expand to new areas IT Expenditure Vs. IT price index (US) 1 Illustrative example for IT scope expansion: ERP IT Price Index IT Expenditure Index IT Expenditure Index (% of real GDP) Production scheduling (MRP), Inventory management Customized production, budget and cost controls Support processes integration (finance, HR, logistics) E-Commerce extensions, productivity improvements Supplier integration, Customer management Note: Year 2005 value normalized to 100 Traditionally, despite falling costs, IT budgets have remained constant or has expanded Going forward, cloud will further push current costs down, freeing up IT budget to be spent in new areas ERP on Cloud will reduce time to deploy and total cost of ownership freeing up budgets. This could enable ERP/ IT scope to potentially expand to newer areas involving Leveraging unstructured data to drive optimization Integrating with physical layer Automating newer activities and workloads 1. Based on data for information processing equipment and software investments, including computers, peripherals, software and communication equipment Source: U.S. Bureau of Economic Affairs, Deloitte Analysis
4 IaaS PaaS SaaS Cloud IT Services IT players are starting their cloud play from their positions of strength and expanding Illustrative Strong play Emerging play Note 1: Initial player movements are only indicative based on publicly available information and are not representative of player s complete strategy/ scope Note 2: Position of company logos indicates initial origin of cloud play and positions of strength for the respective firm Source: Deloitte Analysis, Primary interviews, Company Websites, Industry press
5 Cloud is also reducing the barrier to entry and enabling non-traditional IT players to enter Enablers for Telco cloud play Large infrastructure and network base Network integration expertise Subscription pricing model Enterprise relationships? Enablers for Market Pivot cloud play Industry knowledge IT maturity Strong partner ecosystem Strong leadership position Traditional IT Industry Enablers for NEP cloud play Network integration expertise Technology R&D partnerships Strong technology understanding Established sales channel? Enablers for Govt. cloud play Strong captive market availability Large infrastructure base Deep pockets While this increases competition, it also drive new opportunities for IT services players to collaborate due to complimentary capabilities Source: Deloitte Analysis, press releases, primary interviews with industry players and SMEs
6 Cloud impact will be net positive on existing service lines while opening up new product opportunities Overall Cloud opportunity is estimated to reach $650-$700B globally and $15-$18B in the domestic market by About 2/3rd of this will be new-business 2020 Cloud services share ($650-$700B) Consulting, and SI services would address a larger market than before from emerging cloud lifecycle management needs Total share $650- $700B Commoditization will drive competition down to Price and QoS; scale will be key PaaS market could be segmented into generic and specialist (functional and process) platforms $40-$45B SaaS will see an explosion of players catering to specific industry, business process and/ or geographic need $230-$245B IS outsourcing may require re-invention (e.g. SLA management, brokering etc for disparate IT environments) $240-$260B $140-$150B IaaS PaaS SaaS IT services for Cloud Source: Deloitte Analysis, analyst reports, primary interviews with industry players, SMEs and end clients CIOs
7 Success however needs a fundamental change in how IT services providers think and execute Traditional think Cloud think Study Develop Enterprises Time to opportunity Service portfolio Target markets Seize Configure/ Productize Enterprises, SMBs & SOHOs In the cloud market, speed is of essence and it is critical to fail quickly and re-invent rather than have long innovation cycles IT services players will have to rearchitect their business model and go-to-market depending on their role in the cloud ecosystem e.g. changing pricing models, building channels and volume play Compete Perspective on ecosystem Co-opt Driving right partnerships will be key as cloud will change the basis of competition from individual companies to ecosystems Linear Growth Non-Linear e.g. Google ecosystem vs. Microsoft ecosystem
8 Thank You
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