Business Today

Business in the Cloud

Why traditional companies are adopting cloud applications in a big way
Radhika KTP | Print Edition: October 18, 2020
Business in the Cloud
Illustration by Raj Verma

Federal Bank found a silver lining in the cloud two years ago. This was a period when the financial services industry was undergoing a huge transformation, triggered by a host of fintech companies, right from Google's payment solutions and home-grown Paytm to tens of somewhat smaller start-ups. As use of fintech was becoming an important part of banking, the Kerala-based scheduled private bank wanted to be ahead of the curve by having resilient open banking with help of an API (application protocol interface) on which fintech partners could connect without hassles. An API is a computing interface which defines interactions between multiple software intermediaries.

This was a big change for the traditional bank, which till then had an ad-hoc, on-premise, solution. After looking at a lot of options, it decided to install IBM's API Connect, a hybrid cloud-based solution, to manage its API ecosystem. "On-premise solutions would have taken months for development, testing and deployment. We wanted the solution up and running at the earliest," says Shalini Warrier, COO, Federal Bank. "We were operational with a secure cloud-based solution in less than 10 days. This is an integral part of our digital media ecosystem now." She says the banking sector was hesitant to adopt cloud initially, but for Federal Bank, it has been a preferred choice for the past few years.

Similarly, when the Centre announced the Covid-19 lockdown, Mumbai-based RBL Bank, with over 7.8 million customers, wanted to run daily operations smoothly, for which enabling work from home and uninterrupted back-office support were critical. Allowing employees to use own devices meant security challenges. It adopted Amazon WorkSpaces, which has a secure Desktop-as-a-Service (DaaS) solution. DaaS allowed employees to work from home as smoothly as in a traditional environment.

Banks are not alone. A host of traditional sectors, right from retail and telecom to manufacturing, are turning to cloud applications due to the easy transition to digital that it offers, and that too at a very low cost.

Cloud Connect

In the past, companies in traditional sectors such as banking, financial services and insurance, manufacturing, telecom and automobiles have been reluctant to adopt cloud services. The reasons included regulatory issues around sharing data and operations and concerns over data security, customisation and compliance. However, in the past two years, there has been a shift, with more and more companies adopting cloud-based solutions in their journey towards digitisation. "Rapid deployment, scalability and well-defined architecture are a few things luring traditional companies towards cloud solutions," says Madhusudan Shekar, Head, Solution Architecture, Digital Native Business, Amazon Internet Services.

The lockdown has given a big push to the trend as enterprises focus on deeper customer engagement, self-service technologies and personalised customer experience, all of which require IT applications that are resilient and can reduce risk and costs. Cloud promises all this, and more. "The pandemic will be a catalyst. We have seen rapid adoption of cloud technologies for collaboration and CRM," says K.S Ganesan, Global Technology Leader, Cognizant. "Organisations are looking to shift from capex to consumption-based models more than ever."

A big part of demand is coming from enterprises reorganising themselves. For instance, BFSI players have adopted a mobile-first approach, being implemented over cloud; and the retail sector has embraced e-commerce solutions powered by cloud technologies for business transactions and digital commerce.

The Market

According to a recent EY report, 64 per cent of Indian organisations have invested in cloud technologies in the last two years. Nasscom says cloud adoption is undergoing a new wave of growth in India. Growing at 30 per cent year-on-year, cloud spending in India is estimated to reach $7.2 billion by 2022 from $2.5 billion in 2018. The global cloud spending is projected to reach $345 billion by 2022.

The number of companies moving to public, private or hybrid cloud has been increasing. "We are experiencing revenue growth of 50 per cent from hybrid cloud services. Shortly, this will settle at 30 per cent. Around 70 per cent customers are from the traditional sectors, including BFSI and manufacturing," says Rahul Ambegaoker, Senior Director & Region Head - West, NTT India.

Improved Security

Most concerns around cloud adoption, be it storage as a service, software as a service or infrastructure as a service, relate to data security and compliance. This is changing. With more and more critical applications moving to the public cloud, enterprises are becoming comfortable with the security offered by public cloud providers. "With increase in number of industry compliance certificates, concerns over IT and data security have come down. Today, many enterprises have put it on record that they see cloud implementation as more secure than their data centre implementation," says Narasimha Rao, EVP & Head, Cloud Infrastructure and Security Solutions, Infosys.

Another advantage of cloud vendors is that they work with a plethora of customers. "Thus, the speed with which a security breach is fixed in a cloud environment will be far higher compared with a standalone solution," says Shekar of Amazon. Security solutions have also improved a lot.

Cloud can have a multiplier effect on an organisation's investments. Apart from saving on capital investment, choosing the right cloud can help a company introduce new products or services quickly. "The biggest advantage of moving to cloud is that the customer will no longer have to worry about things such as version updates, having latest security measures or regulatory compliance. The vendors will handle these responsibilities, allowing customers to focus more on what's critical for their business continuity and growth," says Sriram Rajan, VP, Cloud, Oracle India. "Thus, performance, security and cost, along with business continuity, are taken care of better."

Cloud can also enhance customer reach. "Technologies are changing fast. Businesses should adopt and adapt faster. Cloud is the best way to do this with minimal investment," says Tarun Anand, Head, Global IT, Dabur India. Dabur has increased cloud adoption in the past two years right from employee collaboration tools to email and intelligence applications. This ensured business continuity during the lockdown.

Better Compliance

Adopting emerging technologies like artificial intelligence, blockchain, IoT, biometrics, is key for an enterprise to scale and stay competitive. Most of these solutions are tailored to the cloud and work well. This will also shorten the time to market. Cloud is always a means to an end. "The end is more important," says Viswanath Ramaswamy, Vice President, IBM Cloud & Cognitive Software & Services, IBM India/South Asia. AI and chatbots have become a trend and the adoption has accelerated after the pandemic lockdown to interact with the customers. All these are powered by the cloud. Apart from these many mission-critical workloads of enterprise customers are also moving to the cloud."

Commercial vehicle maker Ashok Leyland, for instance, took its existing telematics platform to cloud in 2019. This connected vehicle platform, which supports 1,20,000 vehicles and is adding 7,000 vehicles every month, deals with huge amounts of data. Apart from reducing cost, migrating to AWS Cloud helped it increase data processing speed by 300 per cent. This means it can provide insights to customers faster now.

Increase in network speeds is also encouraging cloud adoption. "Three years back, we didn't have a robust network. Indian network traffic has been seeing 30-40 per cent growth over the past two years. The global average is 7-15 per cent," says Pankaj Kitchlu, Systems Engineering Director (India-Saarc), Juniper Networks.

"All our new-age applications are being deployed in the cloud," says Vishant Vora, Chief Technology Officer, Vodafone Idea. "In the last two years, we have deployed more than 80 distributed cloud locations across the country. Hybrid cloud infrastructure can change the cost and quality of core network delivery, enable new distributed edge computing capabilities and blend network and IT functions better," he says.

Moving the Core

Cloud is not just about moving the data centre but involves an architectural change. It needs a strategical shift, planning and infrastructure changes. Traditional companies have a lot of computing technologies such as VMware workloads, GPU workloads, different kinds of storages, blocks and files. If these are moving to the cloud, all these have to be supported. While innovating, they also have to make sure that the security and existing investments are not compromised. "When an enterprise chooses cloud, it has to check whether all these workloads will be supported in a cloud architecture. When you move a core application to the cloud, its architecture should be cloud-friendly. For example, you could containerise these applications," says Ramaswamy.

While the trend of cloud adoption will continue, the pace of adoption will depend on a lot of factors. "Data privacy issues, compliance and government regulations will be the deciding factors for adoption of cloud technologies. Having a regional data centre and adhering to government regulations will encourage public sector and large enterprises to adopt cloud applications," says Arun Kumar J., Regional Sales Director, Asia Pacific & UK, ManageEngine. The Reserve Bank of India, for example, restricts use of cloud in key areas such as core banking.

Another driving factor will be mindset change. When migration happens, there is a learning curve, and that may cause inertia. "That is changing as customers become more demanding," says Shekar.

Another factor will be skillset management. "Migrating to cloud is not a standalone decision of the IT department. Management, legal department, regulatory authorities, all have stakes in this decision. The users also have to become acquainted with the system. We are conducting frequent training sessions for the same," says Warrier of Federal Bank.

The traditional sector started investments in IT much earlier than the others. But migration to cloud happened at a slow pace. In 2010, when cloud was an emerging technology, industry watchers expected that in the next ten years, most IT investments would move to a utility model. Yet, only 20 per cent workload of the traditional sector has moved to public cloud, while 80 per cent of important operations are still on the premises.

That said, not all IT operations can be moved to the cloud. For instance, applications such as factory control systems have to be on-premise. Thus, hybrid cloud is the best option for the sector. "As technologies mature and new technologies come in, the journey from 20 per cent to 40 per cent will be much faster and could happen in the next few years. The current market buzz is assuring this," says Ramaswamy.

Forming a specific cloud strategy, including what all can be moved to the cloud, is going to be important for the traditional enterprise segment. System integrators need to know their industry compliance requirements and implications of government regulations such as data policies. Well-rounded cloud solution frameworks with specific industry templates, which can significantly reduce complexity, time and cost, will be a game changer for the traditional industries.

(K.T.P. Radhika is a freelance journalist based in Chennai)

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