Waiting For The Rain

Lakshmanan Narayan is a happy man today. The president of Vembu Technologies, a Chennai-based data backup software development firm, is kicked that he does not need to buy the 100 servers he needs frequently — but only for a week at a time — for testing software. Instead, he has rented servers residing in data centres on the internet, paying an unbelievable 10 cents-$1.2 per hour of CPU usage, depending on the application and the operating system being used. He also stores company data on the internet’s servers. “For storage, we pay a monthly rent,” says Narayan. In the process, he has saved loads of money in capital expenditure — for the servers, software, and people to manage them.

What Narayan has done is basically hook on to networking technology’s latest buzzword — cloud computing. Introduced in 2007, cloud computing allows you to use the data centres of companies such as Amazon, Google and Salesforce, among others, by paying a fee — either on a pay-per-use or subscription basis. All you need is an internet connection and a contract with a cloud service provider, and you can save a whopping 30-40 per cent of operational costs and, at times, with zero capital expenditure.

India is not an early adopter of new enterprise technology, but cloud computing is making its presence felt. Not surprisingly, small and medium enterprises (SMEs) are flying into the cloud in swarms. “With cloud-based infrastructure, we can scale up to the levels of large enterprises cost-effectively,” says Venkat Viswanathan, founder-CEO of Latent View, which analyses customer and financial services data for companies such as ICICI Prudential.

Large companies are also getting in, but instead of using internet data centres of others, large companies use their own data centres to provide hosted services to employees, in what is called a ‘private cloud’. For them, private clouds work better because they are more reliable, with network uptime under the company’s control, and are more secure, because the security systems are managed by the company. Large companies are putting only non-critical applications such as CRM (customer relationship management), lead management and human resource into ‘public clouds’.

This is not an India-specific phenomenon; globally too, SMEs have adopted cloud computing in a bigger way. “In the next three years, we expect cloud computing to grow by 75 per cent,” says Andrew Knott, senior vice-president of Salesforce.com, which has 59,300 ‘cloud’ customers, mostly SMEs.

More For Less
In India, already, instances of SMEs using cloud computing have begun to emerge. “My database of static and billing information, and delivery details, resides on the public cloud,” says Shirish Gariba, chief information officer of Elbee Express, a courier company. An average Elbee employee does not use the sales CRM for more than 45 minutes in a day. To have it running 24x7 on an on-premise server is wastefully expensive. Instead, employees can access the CRM on the cloud whenever needed.

Latent View uses public clouds for CRM and advertising, at just $10 per user on a monthly rental basis. Its email is also on a public cloud. “We would have to shell out Rs 50,000 for a license-based model, but we have reduced costs to Rs 2,000 (for all users for a year) by using cloud computing,” says Viswanathan.

Software developed by small-time companies might work out cheaper than cloud computing, but the quality of software and service cannot be compared. For instance, Indian School Finance Company (ISFC), a non-banking finance company, has been using CRM on the cloud even though “pricing per user is slightly on the higher side compared to locally developed software, but there is good value addition”, says Nimisha Dutta Chavan, associate at ISFC.

Hyderabad-based LifeSpring Hospitals uses CRM to track customers real time. “We have seen conversion rates improve,” says Tricia Morente, head of marketing. For LifeSpring, the biggest benefit has been automation and generation of a database over the Web.