Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com V E N D O R P R O F I L E H C L : V e n d o r P r o f i l e S e r i e s f o r C l o u d P r o f e s s i o n a l S e r v i c e O f f e r i n g s Gard Little Rebecca Segal I D C O P I N I O N HCL's journey to the cloud dates back to 2002 when it pioneered remote infrastructure management. This was extended in 2005 into a program named Total IT outsourcing, a unique asset-light integrated infrastructure and applications management offering. Likewise, HCL started with Business Ready Infrastructure as a reference architecture implementation for private cloud in 2007, and moved over 30 customers into a private cloud for infrastructure management and monitoring. HCL has also partnered with independent software vendors (ISVs) by cloud enabling and managing the SaaS-based delivery of their applications. IDC believes: HCL's strategy focuses not only on being a systems, or service, integrator but also on being a cloud service provider with unique offerings related to its engineering services heritage. Cloud infrastructure is rapidly commoditizing, and while HCL wants a role here, it is also leveraging its infrastructure knowledge as quickly as possible into a line of business (LOB) play for higher value added cloud services. HCL's value proposition for cloud is about connecting its competencies in applications and infrastructure to its skills and expertise in engineering services. HCL stresses that it can integrate multiple viewpoints within its clients' organizations; a valuable role for an external service provider. HCL strives to collaborate with customers, offering a humble approach in contrast with vendors whom it says claim to "know it all". This collaborative approach works well in highly complex, technical or emerging areas, where HCL often plays, but it is less effective in more traditional industries where firms often look for industry best practices and advice from their service providers. I N T H I S V E N D O R P R O F I LE This IDC Vendor Profile looks at HCL by describing the company's capabilities with respect to its cloud professional service offerings. IDC examines HCL's overall cloud professional services strategy and marketing messages, major cloud investments and new developments, cloud professional services portfolio, major methods and tools used in cloud engagements, key competitive differentiators, strengths, and challenges. Filing Information: October 2010, IDC #225071, Volume: 1 SOA and Cloud Services: The Professional Services Opportunity: Vendor Profile
M e t h o d o l o g y This document is based primarily on information gathered from HCL via interviews (including written responses to questionnaires), additional IDC primary research, secondary research, and discussions with end-user organizations that have consumed cloud professional services. IDC has used public domain information and HCL company presentations in conjunction with discussions to aid in the analysis published in this document. S I T U A T I O N O V E R V I E W C o m p a n y O v e r v i e w HCL has established a distinct corporate team chartered to, "visualize, build and deliver" cloud services for its customers. The organization took a senior manager, with over 20 years at HCL, out of a line responsibility to head this effort to build new businesses for HCL. The group has business leaders, service architects, product/solution managers, and engagement managers who are responsible for incubating and delivering cloud services to enterprises and ISVs. Apart from its dedicated corporate team, HCL has created a virtual center of excellence where it designated cloud champions from different lines of businesses to come together and help in building services through a collaboration platform. HCL believes that competencies for cloud exist across its lines of businesses including: Engineering Services, Enterprise Transformation Services, Infrastructure Services, and Vertical Solutions teams. The corporate team has identified some initiatives that are led by specific lines of businesses and they are responsible for end-to-end visualization as well as revenues. This has resulted in a high level of dedicated focus on cloud across all lines of business. This also helps in fostering a culture of developing innovative solutions and products that later can become a part of the overall corporate initiative. Com p a n y S t r a t e g y Cloud Professional Services Vision and Strategy HCL's strategy focuses on two types of services: Cloud Competency Services. HCL sees strong growth and momentum in services such as assessment and consulting, migration to public cloud and implementation of private cloud, and cloud operations. It wants to play the role of service integrator, so it can provide niche functional application in various industry domains via the cloud. HCL has a very special focus on building and delivering cloud applications because it believes that this is what will lead to stickiness in the market and will ensure that HCL has a sustainable revenue stream in the long term. 2 #225071 2010 IDC
Business Services. HCL sees Business Services as the most important revenue growth area for itself, and the highest value area for its customers. These services are highly unique and distinct in nature because they will be incubated through a corporate funded initiative and will be multi-dimensional. The uniqueness of these services will come from the fact that they will be applicable to multiple vertical industries, span across multiple geographies, involve multiple technologies and will have replicability and multi-tenancy. HCL strongly believes that these will be game changing applications for the industry and that it has an ability to orchestrate these solutions which are highly complex, but original. For example, integrating an engineering device with cloud based hosting and analytics to deliver energy management services to a consumer. HCL is developing an emerging set of cloud services to be delivered by HCL as a cloud service provider including: Infrastructure-as-a-Service for selected areas such as compute, storage and backup, and for providing IaaS from its datacenters across the globe. Platform-as-a-Service (including Testing-as-a-Service) that will include hosting, infrastructure, an integrated development environment, testing tools and frameworks, and HCL's best practices frameworks and IP for development and testing. Business Process- / Application-as-a-Service HCL will play an integrator role that provides true business applications in the cloud which will largely be vertical applications for specific functional areas. HCL' s Clou d Mar keting M essa ges HCL is changing its go-to-market approach for cloud services because it sees buyer influence shifting from IT organizations towards various lines of business. The first key marketing message is that cloud initiatives must be value proposition-led, because a valid business case makes the cloud journey easier. Second, HCL states that it emphasizes a collaborative approach with customers, in contrast with vendors whom it says claim to "know it all". HCL has a strong belief in its Advise to Execute philosophy where it looks at long term and mature partnerships with its customers. Hence, HCL looks at a cloud journey in an integrated and cohesive fashion whereby the complete life cycle (assessment, implementation and migration, operations) is delivered in an integrated fashion to yield maximum benefits. Major C loud Investment s and New Development s Cloud management is a major area of focus and HCL has been able to drive innovation across LOBs and hence developed intellectual property (IP) around various aspects of cloud management such as infrastructure monitoring & management, SaaS-enablement, private cloud deployment and provisioning, metering and billing, and cloud gateways for public clouds. HCL has recognized the significance of providing domain applications, both horizontal and vertical, in the cloud and is making substantial investment and efforts in 2010 IDC #225071 3
visualizing, building (through its own IP and in collaboration with partners) and offering new sets of cloud services. HCL's role is to play an integrator who provides true business applications in the cloud, largely vertical applications for specific functional areas. HCL is working in different verticals like energy & utilities, pharmaceutical & healthcare, financial services, manufacturing, retail, transport & logistics, and media & publishing. HCL is working on the use cases especially for business users new applications and workloads and also ensuring that its assets (solutions/ip) across vertical domains are available via the cloud. A financial services example of IP, called Invest IT, is available via Amazon Web Services today. Key Cloud Professional Services Offerings HCL has a full suite of services starting from assessment and consulting on applications and environments, to helping customers with a business case for cloud adoption, to implementing private clouds and/or migrating to public clouds, to running operations/ management for the customer. For ISVs HCL has services such as SaaS enablement, and IaaS/PaaS product development. Specifically, HCL's cloud professional services include: Cloud Consulting and Assessment Migration/Deployment to Public Cloud (Amazon Web Services, Azure, Force.com etc.) Implementation of a Private Cloud Data Center Consolidation Infrastructure & Application Virtualization Application Re-Engineering Platform Migration Automation, Self Service through subscription New Application Builds on Cloud Platforms/ Technologies. SaaS enablement Product Multi-tenancy Web Enablement Security & Integration Security management across IaaS/PaaS/SaaS Cloud Management & Operations The size of projects varies and is dependent on the scope and requirements of each client. Typically, consulting and assessment projects are 10 to 12 week activities 4 #225071 2010 IDC
involving team sizes of 8 to 10 professionals (e.g., principal, experts and business analysts). These are fixed price projects where a client is given a set of deliverables (e.g., business case, effort estimation, clear roadmap for cloud adoption). Likewise, the length of system integration projects such as cloud implementation or migration also depend on the choice of technology platform and the volume of application, data and infrastructure required for migration. Typically for consulting, migration, and operations tasks, clients are charged based on the level of effort, whereas they are charged a fixed price for the tools and IP which HCL has built (e.g. MTaaS, Agora, Nimbo). HCL has seen no cannibalization of its professional services revenue in the last year. The professional services revenue for cloud assessments and migration to public cloud is net new. However, revenue that comes from professional services such as virtualization is not considered net new. According to HCL, revenues have only increased and hence it does not see a cannibalization of services. HCL believes cannibalization happens largely on the assets and datacenter hosting revenue. HCL's strategy has been to use an asset-light model, and for datacenter hosting it generally partners with datacenter hosting providers. It believes that over the years, there will be some amount of cannibalization that service providers will see especially with infrastructure management, and application management, but it would be offset by new revenues generated due to inevitable platform migrations, application reengineering projects, and cloud and SaaS enablement projects. Key Methods and Tool s HCL has started initiatives to productize its services by making its standard templates and frameworks available as reusable components or APIs which can be used by its clients. For example, HCL has created the HCL Enterprise Library which has reusable components in its factory enabling the development of necessary integration/apis between on premise applications and applications on Azure, thus helping reduce development effort and cost during migration. HCL identified the lack of a plug and play framework for the adoption of private or hybrid clouds as a major issue and developed Nimbo, a vendor-agnostic framework for seamless cloud adoption and governance, to address this gap. Nimbo not only allows customers to manage their infrastructure but also allows them to create private clouds. At the application platform layer, HCL has developed Cirrus which allows clients to build applications and, if required, extend them to other clouds. Competitive Different iat ion HCL's value proposition for cloud is about connecting its competencies in applications and infrastructure to its skills and expertise in engineering services. HCL stresses that it can integrate multiple viewpoints within its clients' organizations. Likewise, HCL strives to collaborate with customers, offering a humble approach, in contrast to firms that try to know it all. IDC believes this approach works well in highly complex, technical or emerging areas, where HCL often plays, but less so in more traditional industries where firms often look for industry best practices and advice from their service providers. 2010 IDC #225071 5
F U T U R E O U T L O O K HCL s role in the cloud will be both as a professional service provider and as a cloud service provider. IDC believes it will take some time for cloud services revenues to approach the levels of its systems integration and application development business, but that HCL is striving to maximize cloud services revenues because it perceives the disruptive potential of cloud as a positive force. HCL will be developing more cloud applications, most likely in financial services, healthcare, and manufacturing. These will be niche applications with a unique engineering twist. IDC believes HCL will be shifting the target of who it sells to, away from its more traditional IT and engineering clientele to more line of business executives. This will be a challenge not only because the new client targets are often adjacent to its current client set, but also because many service providers have already been targeting, and building relationships with, LOB executives for decades. E S S E N T I A L G U I D A N C E A d v i c e f o r H C L HCL should use the client relationships it has developed through its IT and engineering services to gain access to LOB executives at the same organizations who are targets for HCL's cloud application offerings. HCL should expedite the development of its cloud applications, and related business services, because being first to market is critical, especially for niche applications. HCL should emphasize how its experience in areas such as remote infrastructure management and IaaS make it uniquely qualified to help customers manage the consumption of cloud services. Because cloud is not only a delivery model, but also a customer consumption model, IDC believes customers will increasingly need support with cloud management.. L E A R N M O R E R e l a t e d R e s e a r c h Worldwide and Regional Public IT Cloud Services 2010 2014 Forecast (IDC #223549, June 2010) 6 #225071 2010 IDC
Cathay Pacific Flies High With HCL's Application Portfolio Optimization (APO) Services (IDC # AP221114S, June 2010) Survey: Virtualization Management Maturity A Prerequisite for Cloud (IDC #223671, June 2010) U.S. Cloud Professional Services 2010 2014 Forecast (IDC #223382, May 2010) IDC's Worldwide Services Taxonomy, 2010 (IDC #222046, February 2010) HCL Tech's Enterprise Transformation Services in Asia/Pacific (Excluding Japan) Region (IDC # AP221122S, December 2009) U.S. Professional Services Opportunities Related to Cloud Services (IDC #221260, December 2009 HCL Wins its First Significant U.K. Life and Pensions Deal (IDC # lcuk22097609, November 2009) 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 www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com 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 2010 IDC. Reproduction is forbidden unless authorized. All rights reserved. 2010 IDC #225071 7