Cloud Rains Business for SMBs

by November 20, 2018 0 comments

In India cloud computing has quickly become a key driving force for businesses, especially SMBs, today. Early concerns over security and data sovereignty have largely been addressed by the big public cloud vendors like Amazon Web Service (AWS), Microsoft Azure, Oracle and Google Cloud Platform, with only the most heavily regulated businesses (and normally these are not SMBs) lagging behind in terms of adoption.

In fact, SMBs have been fairly active in terms of cloud adoption, particularly in terms of the public cloud.  The reasons are not difficult to identify. India has over 50 million SMBs. They contribute over 30% to India’s GDP and employ over 117 million people. However, SMBs face many challenges, including limited access to resources and technology, which greatly limits their productivity and profitability.

Indeed, an asymmetry between SMBs and large enterprises can be as much as 7 to 8 times. Helping SMBs address these challenges can contribute significantly to their growth, which in turn will contribute significantly to India’s socio-economic growth. This is where cloud computing has proved to be a panacea for SMBs.

Numbers Don’t Lie

According to a study on the ‘Socio-Economic Impact of Cloud Adoption by SMBs in India’ conducted by the Thought Arbitrage Research Institute (TARI) in association with Microsoft, reduction in the investment cost (capital expenditure) on technology can lower entry barriers for SMBs for accessing technology, which then creates a positive multiplier effect.

Productivity gains afforded by the cloud are strongly reflected in business metrics, such as improvement in operating expenses and better cash flow from business operations. The gains have been quantified using statistical analysis, some of which are as follows:

  • SMBs show a multiplier effect of 1.5 times in improvement of productivity metrics when they move from low to medium cloud usage.
  • Profitability indicators (reduction in operating expenses) show a multiplier effect of 3x once SMBs move from low to medium cloud usage.
  • 96% of SMBs find a positive impact on their operating expense within two years of high cloud usage (and this remains stable with time, demonstrating that the gains are sustainable).
  • SMBs’ ability to improve products and reduce launch time improves 100% when they move to high cloud usage from medium cloud usage.

Another research conducted by market research firm Longitude Research, along with Oracle and Intel substantiate these statistics.

Some interesting results that emerged from the survey include

  • Nearly 43% of Indian businesses say their cloud strategies are fully implemented and working
  • An emerging group of businesses that have 70% or more of their applications in the Cloud are outperforming their competitors globally.
  • In terms of Cloud strategy implementation in India, 40% of the businesses said that their strategy implementation was progressing.
  • Nearly a fifth (18%), however, said their strategy development for Cloud was in its infancy

SMBs in India were also looking to capitalize on new and innovative technologies, such as open source, multi-platform capabilities and visual tools in the next year.)

It is important to note the steep upward differential in gains when there is medium or high cloud adoption vis-à-vis merely using basic cloud services such as email, file storage, etc. This is significant as most SMBs feel that mere adoption of basic services is sufficient to make an impact. Some of the improvements in productivity and profitability, as brought out in the survey, are as follows:

  • Asset utilization increases only 17% on low cloud adoption, but 52% on moderate and 66% on high
  • Employee productivity increases only 21% on low cloud adoption as compared to 51% on moderate and 81% on high
  • Operating expenses reduces only by 13% on low cloud adoption, but a considerable 47% on moderate and 68% on high
  • Cash flow increases only 13% on low cloud adoption, and 33% on moderate and 53% on high

Analyzing Cloud Vendors

Amazon Web Services (AWS)

AWS ranks highly amongst SMBs on platform configuration options, monitoring and policy features, security and reliability. Its partner ecosystem and general product strategy are also seen as market leading, and its AWS marketplace has a large number of third-party software services.

Another benefit of the AWS cloud, especially for SMBs, is its openness and flexibility. However, one area AWS falls short to some degree is with its hybrid cloud strategy. Unlike Microsoft, AWS has tended to be dismissive of the benefits of on-premise private clouds for SMBs. Many SMBs prefer to keep sensitive data within their own data centres – such as those in the financial sector – using public clouds for other purposes.

At the same time, this clearly has not deterred many SMB customers from using AWS as part of their cloud strategy, regardless of whether they plan to move all systems to the cloud or not.

Another downside to AWS is the scale of its offering. While this is an attraction in many senses, it can be difficult at times for mid-sized organizations to navigate the large numbers of features that are on offer, and some see AWS as being a complex vendor to manage.

Andy Jassy, CEO, Amazon Web Services says India is a very important market for them. “Indian start-ups and enterprises have been using AWS for many years. We are very optimistic on our cloud business in India and we will significantly expand our operations in the coming years.”

Many fast-growing startups such as Airbnb, Spotify and Shazam have built online businesses with Amazon’s data centres and services providing the back-end infrastructure.

Oracle

Oracle works with close to 350,000 SMB customers. Their experience shows that SMBs with a cloud-first strategy is able to drive faster growth and innovation and focus more on their core business as opposed to those without.

“India is one of the fastest growing cloud markets in APAC, and Indian SMBs are more versatile and agile than some of their APAC peers, partly because they are among the early adopters of modern cloud services,” says Sheela Nambiar, Senior Director, Oracle Digital.

With its Digital Hubs, Oracle is empowering Indian SMBs to dream bigger, innovate faster and serve their end customers better with our modern, enterprise-grade cloud solutions. Its industry-first autonomous database solutions, which are completely self-driving, self-securing and self-repairing, promise to help SMBs to lower human error, reduce business risks and reduce operating costs. Many of Oracle’s SMB customers are undertaking a pilot program with the Oracle Autonomous Data Warehouse solution, and many have already started deriving tremendous business benefits

Some of Oracle’s SMB cloud customer successes include:

  • AyusCare, a healthcare informatics company, that was able to scale faster and deliver consistent performance to its end customers (hospitals/diagnostic centres) with Oracle cloud infrastructure.
  • iTriangle is a company engaged in design, development and manufacturing of innovative and next-generation products/applications in Telematics. iTriangle leveraged Oracle’s cloud infrastructure and MySQL cloud solutions to build a stable, scalable, highly available, easy to manage platform – enabling the company to make a significant difference to their customers and their business.

Microsoft

The big pull for Azure is where Microsoft already has a strong footing within an SMB organisation and can easily play a role in helping those companies transition to the cloud. Azure naturally links well with key Microsoft on-premise systems such as Windows Server, System Center and Active Directory.

In addition, while both AWS and Azure have PaaS capabilities, this is a particular strength of Microsoft’s.

One of the downsides, however, has been a series of outages over the years. AWS too is not immune to downtime, though, suffering a major S3 outage of its own in March 2017.As part of its 2017 IaaS global Magic Quadrant, Gartner states that many SMBs have had issues with “technical support, documentation, training and breadth of the ISV partner ecosystem” – but the company has been steadily working on these areas.

Whereas AWS provides users with many options for supporting other platforms, Azure can be somewhat restrictive in comparison. If you want to run anything other than Windows Server then Azure might not be the best solution, but Microsoft has been willing to embrace open source platforms if a little slowly. For example, the company has been busy extending its support for Linux operating systems in 2017.

Says Amit Kumar, general manager, small and mid-market solutions and partners, Microsoft, “Out of 1,50,000 SMB customer base in India, nearly 25%-30% are already on the cloud. Over 3,500 ISVs have joined to operate their businesses on the Microsoft cloud platform in the past three years. Currently, over 40% of Azure’s revenue comes from ISVs and SMbs.”

Microsoft has always had a strong partner-led strategy and currently works with 10,000 partners across India. With digital transformation and spending on cloud increasing, Microsoft expects medium enterprises and tech startups to drive a significant portion of its growth.

Trade bodies like Surat Diamond Association, Mahratta Chamber of Commerce Industries & Agriculture and Indian Industries Association have been proactive in helping SMEs access to the right technology resources that can help them grow.

For Microsoft and its partner companies, these bodies present an easy way to access potential customers, especially in Tier II and III cities. The Federation of Small and Medium Industries along with Microsoft has helped SMBs become more efficient, helping them grow their revenue by 12.5% every year, adds Kumar.

Google

“Google was born in the Cloud,” said Rajan Anandan, vice president of South East Asia and India at Google, during his keynote at the company’s first ever Google Cloud Summit in India.

Google has several consumer products with billions of users, like Search, YouTube and Gmail, and the company has put together extraordinary resources and infrastructure for them. These include computing, big data, storage and networking, along with artificial intelligence and machine learning for SMBs as well. With Google Cloud Platform (GCP), the company is now offering these capabilities to businesses in SMBs sector.

Hike Messenger, India’s homegrown messaging service that rivals WhatsApp, shares over one billion messages every day and has more than 100 million registered users has been a Google customer.

The company is certainly betting big on its machine learning tools, with the company’s internal AI expertise and popular TensorFlow framework as selling points in what is set to become a key battleground. It has also proved itself more than an AWS copycat, launching innovative features in the machine learning space as well as its BigQuery analytics engine, and the Cloud Spanner distributed database.

Infor

Infor develops business cloud software for Enterprise and SMB companies globally. With 17,000 employees and over 68,000 customers in more than 170 countries, Infor software is designed for progress.

Infor has been particularly strong amongst SMBs and has made the Infor Internet of Things (IoT) in a multi-tenant deployment. Infor IoT provides IoT sensor data ingestion, securely and at scale, from anywhere. The IoT sensor data is synchronized with Infor EAM Asset information, bringing deeper context via blending of IoT data and asset transactional data, and delivering better exception detection, workflows, reporting, data analytics and artificial intelligence.

Infor IoT is integrated with Amazon Web Services (AWS) IoT, which enables SMB customers to take advantage of AWS’s scalability, stability, and security. Additionally, IoT analytics are provided via Birst, a next-generation, cloud-based platform for networked business intelligence.

SMBs play a critical role in the country’s fast-paced development. However, in the highly competitive and digitized economy, SMBs need to stay highly agile to sustain the fast-paced growth. To achieve this, SMBs need to focus on their core business competencies and leverage the power of cloud ERP to achieve business management functionality like quality and production, supply chain management, inventory management, and product development.

“Infor is well poised to provide SMBs with business applications that are specialized by industry and built for the cloud with last mile functionality and designed to deliver a truly enterprise-grade experience,” says Ashish Dass, Vice President and Managing Director, South Asian Subcontinent, Infor.

The Favorite Troika

AWS, Microsoft Azure and Google Cloud Platform seem to be the three favourites of Indian SMBs/ They offer largely similar basic capabilities around flexible compute, storage and networking. They all share the common elements of a public cloud: self-service and instant provisioning, autoscaling, plus security, compliance and identity management features.

All three vendors have added machine learning tools and a number of features targeted at cutting-edge technology areas like the Internet of Things (IoT) and serverless computing (Lambda for AWS, Functions with Azure and Google), while customers can tap either cloud to variously build a mobile app or even create a high-performance computing environment depending on their needs.

Naturally, all three vendors are strong in machine learning as they can draw on deep wells of internal expertise.

AWS launched the Amazon Machine Learning service in April 2015 to help developers create machine learning models. Then in 2016, it announced three new machine learning services for image recognition (AWS Recognition), text to speech deep learning models (Polly) and the engine that powers Alexa (Lex).

Google offers a Cloud Machine Learning Engine, which helps machine learning engineers build models based on its open source TensorFlow deep learning library. Google also offers a whole host of off-the-shelf APIs for things like natural language processing, translation and computer vision.

Microsoft’s Azure Machine Learning Studio allows specialist developers to write, test and deploy algorithms, as well as a marketplace for off-the-shelf APIs.

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