India is churning out a spate of Cloud start-ups. Mehak Chawla evaluates their dynamics, challenges and offerings
If there is one technology that has changed the way that applications are being created and consumed, it is Cloud computing. Today, everything, right from data center consolidation to application development, is happening from a Cloud perspective. Cloud consumption too, is following some interesting patterns, with both large and mid sized organizations bringing their unique perceptions of the Cloud to the table.
Little wonder then, that a wave of Cloud start-ups is emerging on the horizon to tap into this scattered, yet lucrative opportunity. If we do a historical check, then the surge in the number of start ups, is much like the Internet entrepreneurial wave that gripped the country in the late 1990s (before the first wave of Net entrepreneurs went bust in 2000). A closer comparison can establish the synergies between the Cloud entrepreneurs and the e-commerce entrepreneurs of today. The difference is that, unlike e-commerce, which is treated with a hefty dose of skepticism, Cloud start-ups are being greeted with general acclaim.
Building from the Cloud up
Cloud start-ups are those newcomers that kicked off their business on the Cloud. That’s in stark contrast to larger organizations that have forayed onto the Cloud as the technology evolved. Since starting a business on the Cloud does not require substantial CAPEX, and it can often yield quick results, the technology is proving to be a magnet for young technocrats.
Beyond this, today’s entrepreneurs appreciate the scalability that the public Cloud delivers. Sachin Garg, CEO of MintM, a mobile convergence company that lives in the Cloud, said, “Our reason for being on the Cloud is simple. Enterprises used to handle their backend infrastructure by themselves but the Cloud has changed all that. We were looking for flexibility and scalability and the Cloud was the obvious answer. The biggest advantage of the Cloud is elasticity. With it, you can scale up in seconds. We started on the Cloud from the word go.”
Others corroborated Garg’s views. Prashant Kumar, Founder, PromptCloud, explained his reasons for embracing the Cloud right from the beginning. “The reason we opted for the Cloud is that this technology gives us an edge from both the cost and the scalability perspective. Low maintenance is the other big advantage of the Cloud.”
Other than scalability, the Cloud also comes with considerable technological advantages that are sparking off innovation. Take the instance of PromptCloud, a big data company that provides large-scale data crawl and extraction on a customized basis. “There’s a lot of data scattered around these days on blogs, reviews, catalogs, travel sites, social media, etc. but companies [whose business isn’t technology] have little time to aggregate all these at one place, format them and then try to make some sense of it. In order to save our clients from these hassles, we custom crawl and extract information from the Web and present data in the desired format be it XML or CSV,” explained Kumar.
PromptCloud operates on a Data as a Service (DaaS) model and it uses technologies such as Apache Nutch, Hadoop, Apache Lucene, etc. for large-scale data solutions on the Cloud. The company’s proprietary software employs machine learning techniques to extract meaningful information from the Web in the desired format. “Our crawl engine extracts data from the deepest of Web pages and provides incremental information as the data gets refreshed.”
Kumar elaborated that the Cloud was the only technology that had been created to date that could deal with Big Data and enable data crawl on a massive scale without consuming huge hardware and manpower resources.
Public preferences
There was one common thread that ran through all the start-ups that we talked to. They were all renting resources on the public Cloud. Although the private Cloud is popular with large organizations, start-ups are betting their shops on the public Cloud.
Rahul Sethi, CEO, Business Intelligenze, a cloud analytics company focused on the outsourcing vertical, remarked, “The logic of being a public Cloud start up has to do with TCO. The TCO for perpetual licensing can be as high as 500%. If I would have been offering this solution on a perpetual licensing model, my offerings would have ended up costing a lot more than they do today.”
Resource optimization is another advantage of the public Cloud that brings professional services to the table and helps startups avoid hiring technical staff for managing the IT infrastructure. Sethi commented, “We use only four to five servers as of now and operate with minimal manpower, something that would have been impossible without the public Cloud.”
The public Cloud offers businesses the flexibility to offer subscription-based models to customers. “Our subscription starts at about $10 per person per month and this attractive pricing goes a long way for start-ups,” opined Sethi.
With the Everything-as-a-Service concept catching on in the Indian market, Cloud entrepreneurs are looking to capitalize on the hosted model. Kabir Khanna, CEO, Chalkpad, an education ERP provider on Cloud, said, “We offer our services on a public cloud that we host in a professional data center. The key advantage that we saw with the Cloud is the anytime, anywhere factor.”
Mobile applications are the order of the day and the Cloud can deliver in a mobile environment. That is a large part of what’s prompting application providers to host their setups in the public Cloud. “The biggest trend in the application space is that things have been moving on the Web and mobile. The Cloud is an enabler of both, which is why we were focused on the hosted model right from the very start,” said Khanna.
Potholes on the Cloud superhighway
Although the public cloud comes with defined cost and service delivery advantages, Indian businesses have not, so far, made their peace with the security aspect of the public Cloud. So how are the cloud start-ups, dealing primarily on public Cloud, managing to get customers on board?
Khanna of Chalkpad agreed that convincing customers to put their data outside the country was a challenge that was often faced. “People are wary of data being hosted elsewhere. Therefore, we have to repeatedly assure them of the security of their data. We try telling them that the data in their server room is more vulnerable than the data in a professional data center.”
Although security in the public Cloud is more or less an established thing, the data control mechanisms are not well defined and we are still not quite there with respect to having mature and all-encompassing SLAs. That’s making it tougher for Cloud-based companies to sell their offerings on the public Cloud. Sethi of Business Intelligenze commented, “With the Cloud, acceptability is the problem, not security. The Cloud is still evolving and it would take three to four years to enter the mainstream.”
Intense competition from the giants of IT is perhaps the biggest bug bear for companies looking to make their mark on the Cloud. However, young businesses are stepping up to the wicket by getting into narrow niches or offering vertical-oriented solutions. Targeted marketing is a frequently employed tactic.
Nishchal Khorana, Head – Consulting and ICT Practice, Frost & Sullivan, South Asia & Middle East, explained, “Although competing in the mass market and large enterprise segments is a challenge for start-ups given the limited product maturity, domain knowledge and brand, several players have identified niche areas in service models. The offerings range from standalone business function solutions such as inventory and sales management to larger enterprise applications including business applications and verticalized ERP and CRM products.”
Eventual consolidation
The spurt of startups is good news for the IT industry as well, since it not only brings diversity in terms of the choices that are available to customers but it also adds to the richness of the solution sets that exist. However, experts believed that once Cloud expectations and adoption were rationalized, there could be a spate of M&A activity that would result in significant contraction and consolidation in the market.
Consolidation also seems likely if we consider the fact that most software IT biggies are increasingly looking to verticalize their application offerings and are busy acquiring niche application providers. The same equation could well extend to Cloud in the near term. Moreover, since Cloud startups are going beyond vanilla product offerings, acquisitions could end up bringing innovative products into the canvas of the established IT majors. Then there is the added factor that, despite being startups some ventures have managed to get marquee names on their client lists and having a good clientèle is always half the battle won. Khanna of Chalkpad said that it was already working with universities such as MICA, Indus International University and Chitkara University. Similarly, Sethi of Business Intelligenze disclosed that they were doing work like supplier analytics etc for Capgemini.
The interest of the IT majors in these start-ups is already beginning to bubble over. Microsoft recently announced that it would incubate ten early-stage technology startups in Cloud computing, Internet and mobile using its Accelerator for Windows Azure program. The startups would have access to resources such as the BizSpark program and $60,000 in Azure credit through the same.
Khorana concluded, “The competition is intensifying as larger Indian and global companies are ensuring that they have Cloud offerings in their portfolio. As the landscape evolves, the market will witness consolidation with smaller players selling off ideas or even their businesses to capitalize on the initial success that they have managed to garner.”
Till consolidation kicks in, we can expect to see some innovation and a lot of activity coming from Indian Cloud startups.
