Indian CIOs Get On the Hybrid Cloud Hyperdrive

For the first time, the number of Indian CIOs pointing their enterprises towards a hybrid cloud model is equal to those focusing on private cloud. What gives? Arthur Clarke once said, “Trying to predict the future is a discouraging and hazardous occupation.” Yet, that’s exactly what he did when he predicted the iPad in 1968 (he called it the ‘Newspad’). He wasn’t the only one. Isaac Asimov predicted online education, and Douglas Adams predicted e-books. All of them wrote science fiction.

You don’t have to be a Clarke, an Asimov or an Adams to predict where cloud computing is headed in the short term. It isn’t the public cloud or the private cloud—but an amalgamation of both.

Research from CIO India reveals that 42 percent of Indian CIOs are choosing a hybrid cloud strategy, when asked to select a cloud model their organizations are likely to implement in 2014. At the start of 2013, that number was 38 percent. But, here’s what’s more interesting: As far as the hybrid cloud is concerned vis-à-vis the private cloud, we’ve reached a tipping point. For the first time, the number of Indian CIOs planning for hybrid clouds is equal to those planning for private clouds.

Until the middle of 2013, a majority of Indian CIOs (51 percent) were pointing their organizations towards a private cloud strategy—and 35 percent to a hybrid cloud. Today, they are equally divided with 42 percent on both sides.

This sudden spike of interest in hybrid clouds is a recent phenomenon. In the middle of 2013, over half of Indian CIOs said hybrid clouds weren’t even on their technology roadmap. Then six months later, 46 percent say they are either implementing a hybrid cloud or are planning to deploy one within a year.

What gives?

Lined with Silver

Sterlite Technologies is exactly the sort of place you’d expect to see a hybrid cloud. Headquartered in a posh Pune locality, a 10-minute walk from the Osho International Meditation Resort, the Rs 3,300 crore Sterlite Technologies, manufactures telecom and power infrastructure. And it’s very IT savvy.

Four years ago, like many companies in India facing economic headwinds, Sterlite Technologies needed new ways to create a leaner, more efficient version of itself. And the public cloud was going to play a big role.

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“We realized that changing business dynamics required us to adopt a robust cloud strategy to help us reduce capex costs and eliminate the needless manageability of certain IT systems,” says Prasanth Puliakottu, CIO, Sterlite Technologies.

Puliakottu isn’t alone. According to CIO research, 35 percent of Indian CIOs believe that public cloud offerings can help them convert capital expenditure into operating expense. And 44 percent believe it helps lower their total cost of ownership.

Puliakottu and his team started pushing chunks of the company’s operations to public platforms. Today, its e-mail, sales and CRM applications, project management, and videoconferencing rest in the public cloud while its payroll, HRMIS, workflows and approvals operate from its private cloud. The company has integrated its e-mail with its internal ERP to streamline project workflows.

Sterlite Technologies made the move four years ago, at a time when many CIOs were reluctant to dabble in technology platforms they had little control over. Today, however, that’s changed.

“CIOs were very apprehensive about the side effects of the cloud but now the technology has reached a level of commodization, and the mass adoption of the hybrid cloud is likely to happen,” says Rajesh Uppal, executive officer-IT and CIO at Maruti Suzuki.

For the Rs 44,376-crore Maruti Suzuki, its initiation to the cloud started as early as 2005 when it built a private cloud for its dealers, distributors and service stations for a nominal fee. Today, over 30,000 dealers, distributors and service stations, in over 3,000 locations, use its private cloud. The experience of hosting a cloud internally, says Uppal, was a great learning experience for the automobile manufacturer and helped it recognize the pros and cons of managing in-house infrastructure at an early stage.

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In the next phase of its cloud strategy, Maruti Suzuki decided to move about 35 customer-facing applications—including user websites and insurance applications—to a public cloud platform.

Infrastructure costs, security concerns and manageability of resources were the three main drivers that strengthened the auto manufacturer’s decision to adopt a hybrid strategy. “We decided that we wanted to use more of our IT budget for innovation instead of spending it on running legacy infrastructure,” says Uppal.

The move took only three weeks, says Uppal. Today, his team has fewer worries around the manageability and availability of customer facing apps. Before commencing on a hybrid cloud journey, Uppal advises CIOs to compare the performance of their on-premise apps and map them against the benefits of a public cloud. There, he says, they will find a business case for a hybrid cloud.

“In the last eight years, the cloud has reached a level of maturity. It now makes business sense for us to utilize both private and public clouds to manage our internal and external customers,” says Uppal.

At Sterlite Technologies, Puliakottu too, has seen monetary benefits from using a hybrid cloud. “Our hybrid cloud strategy has been quite profitable for us. We have been able to lower our costs by 30 percent,” he says.

And rather than being forced into choosing one technology solution over another, the hybrid cloud, says Puliakottu, allows Sterlite Technologies to acquire the expertise of multiple technology partners.

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According to Puliakottu, managing multiple clouds from multiple vendors and ensuring internal applications could be integrated into a hybrid service was no mean feat. “The most crucial aspect of leveraging a hybrid model is to coordinate between different vendors managing your applications,” says Puliakottu.

Recently, in a first of its kind initiative, Puliakottu organized a meeting between the company’s C-suite and eight of its key IT vendors, who he prefers referring to as partners. The objective was to enhance transparency and increase collaboration between the two groups.

Light as a Cloud

About five kilometers to the north-east of Sterlite Technologies, another Pune-headquartered company has already discovered the first-hand benefits of using a hybrid cloud model. The hybrid cloud has done wonders for Bajaj Finance, a company with Rs 22,461 crore of assets under management. In 2008, the company which successfully ran a captive two-wheeler financing business, decided to expand its portfolio to become among the most diversified non-bank in the country. Today, it provides for 11 product lines across consumer, SME and commercial lines of businesses.  

It’s a transition that would have been less successful without a hybrid cloud strategy.

“Our cloud journey began five years ago when the industry was still evaluating the pros and cons of a cloud strategy. However, our business model required an anytime, anywhere technology solution to on-board the vast number of consumers we were acquiring in our consumer durables business” says Rakesh Bhatt, COO, Bajaj Finance.

“We realized that cloud solutions could help us scale operations quickly and gain business agility,” says Anurag Chottani, CIO, Bajaj Finance.

According to many other Indian CIOs (53 percent) an increase in business agility is the most important benefit of leveraging the public cloud.

Chottani says that by using a cloud-based sales CRM, Bajaj Finance’s approval turnaround time for its consumer  durable business improved from three days to three hours to three minutes resulting in more processing capacity and improved customer experience. “Today, our cloud-based platforms enable us to acquire 2.4 million customers in a year across 4500-plus retail chain outlets across India. This initial success led to the creation of a hybrid cloud strategy, which suited the business model much better,” he says.

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Today, Bajaj Finance leverages  software-as-a-service (SaaS) and platform-as-a-service (PaaS) offerings. “SaaS provides us opportunity to use and deploy off-the-shelf objects related to sales and service CRM framework,” says Chottani. “PaaS is used to build custom applications for complex business products like home loans and business loans,” he says, “Moreover, this strategy matches to the cyclical nature of our consumer business, which allows flexibility in managing our compute infrastructure.”

Apart from using the cloud for business applications, Bajaj Finance also made a huge foray into a cloud-based messaging solution and collaboration tool for the enterprise. “The best part about this is that we face zero downtime and there is no infrastructure management activities,” says Chottani. Chottani says that the main challenge with a cloud strategy is the integration of multiple solutions on the cloud and in-premise. Bajaj Finance has addressed this challenge by implementing middleware, which provides for real-time data exchange between cloud and in-premise solutions.  

For Bajaj Finance, the hybrid cloud has changed the company’s business dynamics radically. Sales CRM enables revenue benefits, service CRM enables high customer retention,and mail and collaboration solutions enable employee productivity. “This is an example of true cloud orchestration, a mix of in-premise, hosted, SaaS and PaaS solutions working in harmony to deliver the desired business process,” says Chottani.

“Today, our hybrid cloud strategy enables the creation of a differentiated and profitable business model with focus on cross-selling, customer experience along with product and process innovation. This strategy delivers huge operating leverage for the company,” says Bhatt.

Simplifying the Datacenter

Another reason, Indian CIOs are turning to the hybrid cloud is to reduce the stress on their datacenters. According to CIO India research, IT leaders say that the growth of server virtualization is one of the top factors increasing datacenter complexity. At some Indian organizations there’s the realization that server virtualization is actually increasing infrastructure costs. Server virtualization, goes the reasoning, packs a lot of applications onto a single machine, making  it a single point of failure. As a result, few CIOs want to risk extending the life of their virtualized servers and having them fail—so they are calling for more frequent hardware refreshes.

Datacenter complexity is also on the rise due to increases in both data volume and in the number of business-critical applications. These factors, say a quarter of Indian CIOs, have led to higher costs.

That’s a terrible thing, especially because inadequate budgets is the third highest factor leading to datacenter complexity. A hybrid cloud strategy, one in which, some applications are pushed to public cloud, promises to alleviate some of that complexity.

A hardware refresh is what triggered a hybrid cloud strategy for Ritu Madbhavi, senior VP-IT at Draft FCB Ulka Advertising. That isn’t unusual. “CIOs have almost always been influenced by technology refresh cycles in order to consider cloud as a viable option,” says Biswajeet Mahapatra, research director at Gartner.

The firm commenced its cloud journey in 2011 when it decided to invest in an external cloud-based storage solution. The company’s existing legacy storage was going out of support and Madbhavi didn’t want to invest in traditional storage and servers for data recovery and backup, and was therefore, looking at the cloud as a possibility. The company had already treaded the path of owning a datacenter and undergoing almost 100 percent server virtualization in the past.

For two months, Madbhavi weighed her options and finally chose a cloud-based storage solution which provided the firm with primary storage, and backup and disaster recovery for an on-premise datacenter. It gave the company the flexibility to conduct DR on the cloud and saved immensely on capex costs.

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As per an Acronis Global Disaster Recovery Index report on BRIC nations, the top three benefits of using the cloud for backup and disaster recovery include lower IT operating costs, additional or flexible storage space, and improved compliance—all of which were  true for the company.

Testing the waters of a hybrid cloud storage has proved to be successful for the company because it freed up capital—but, perhaps more importantly, it gave it the confidence to do more with a hybrid model.

“Our SAN storage costs have reduced by 40 percent,” says Madbhavi. For the company, the hybrid cloud journey has begun and Madbhavi is already in the process of moving the company’s development servers to the cloud. “Going forward, we will be making considerable cloud investments in the near future,” she says.

CIO research indicates that about 40 percent of Indian CIOs will move less critical IT systems to cloud services. That’s because they see the benefits of moving to a hybrid cloud environment. CIOs believe that the best of both worlds can help their IT organizations meet the growing demands of businesses to maximize efficiency, increase business agility, and improve manageability of resources within organizations. CIO research also indicates that Indian IT leaders also realize that hybrid clouds will overcome the hurdles of private cloud by lowering their cost of operations and enabling faster provisioning. This makes a reasonably strong case for the hybrid cloud and indicates a growing acceptance among CIOs to reposition their cloud strategy—from purely private to hybrid.

That said, not everyone believes in the hybrid phenomenon. Some analysts believe that what’s currently being called hybrid cloud models, aren’t really examples of the hybrid cloud.

True hybrid clouds should allow enterprises to lean on their public clouds during stretch periods, and vice-versa, some some analysts. Or what they call cloud bursting.

“Hybrid clouds are still a lot of science fiction,” says Mahapatra. “That’s because IT organizations haven’t yet reached a level of cloud maturity for them to adopt a hybrid model,” he says.

Whatever the definition of hybrid you follow, one thing is for sure: With every passing day, the environment is becoming more conducive for hybrid cloud models to build up. Some of the key ingredients of this environment include the lowering costs of bandwidth and an increase in hybrid cloud success stories.

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“Everyone was waiting for a few success stories to come up,” says Debdas Sen, executive director, PwC India.

Another important factor is the changing perception of the public cloud’s security. “Both in reality and in perception, the insecurities around the public cloud have been taken care of. CIOs have realized that it’s now fairly safe for their businesses and workflow applications to reside somewhere else, in a multi-tenant environment,” says Sen. In fact, according to CIO research, 54 percent of Indian CIOs believe that the risk or working with cloud providers is about the same or lower than the risks of working with traditional outsourcers.

According to Gartner, nearly half of all enterprises will have hybrid cloud deployments by the end of 2017. “The strength of the cloud lies in a hybrid model,” says Mahapatra.

The hybrid cloud is the future. In the words of Douglas Adams, “Let the past hold on to itself and let the present move forward into the future.” Buckle up.   Shubhra Rishi is senior correspondent. Send feedback on this feature to shubhra_rishi@idgindia.com