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, VP-Marketing, APAC, 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.

ACE Data, which manages the information lifecycle for large enterprises such as Bharti, Philips and Hero Honda, has its CRM, HR, ERP (enterprise resource planning), project and cash management on the public cloud. “I do not have to make any extra payment apart from what I pay as rental,” says Neeraj Mediratta, CEO of ACE Data. To put ACE’s entire suite of computing needs on a licence model would have cost Rs 40 lakh, but it now pays only Rs 5,610 (annually) for each of its 25 users totalling to Rs 1,40, 250.

Others are planning their moves, too. “The first thing we have to do is to move our email and application to a SaaS (software as a service) model,” says Meheriar Patel, head of IT, HR and administration at Globus Stores.

The Flip Side
However, not everyone is thrilled with cloud computing. “Applications on clouds have to be more user-oriented and unified to work seamlessly,” says NIIT Technologies’ CEO Arvind Thakur. Security is another major concern. Axis Bank’s senior vice-president for IT, Subhakanta Satpathy says that a lot of the bank’s critical data is sent over emails, which cannot be done if the email is over a cloud. Also, it has put non-critical lead management data into the cloud, but not core banking.

There are other bottlenecks, too. “All my applications do not run seamlessly on the cloud platform,” says Arun Gupta, group chief technology officer of Shoppers Stop. Retail, FMCG and healthcare are expected to adopt cloud computing in a big way after banks and financial institutions. Thomas Abraham, managing director of Sage Software, feels conventional computing is still preferable. “This will continue as long as the bandwidth problem does not get sorted,” he says. Still others say over long usage periods, the accumulated rent might be higher than the cost of company infrastructure. But then, cloud computing is like paying EMIs for a house, where the EMIs of several years put together add up to more than the real value of the house.

Every new technology has its share of backers and baiters, and cloud computing is no different. Whether it manages to evolve and become stronger or fizzles out remains to be seen, but for now, cloud computing is making steady inroads into India's SME world.

sunny(dot)sen(at)abp(dot)in