Indian organizations are keenly looking at deploying private clouds in order to meet their service and security expectations, but challenges and questions remain
By Harshal Kallyanpur
It should come as no surprise today when an enterprise talks about adopting cloud computing in one way or the other. And then the conversations move to public, private and hybrid, and one realizes how keenly enterprises are looking to adopt cloud. At the same time, they want to ensure that all their service level and security expectations are met.
Many of these enterprises have already tasted success with public cloud adoptions. They have taken non-critical functions such as CRM, HR and travel and expense management to the cloud, realized benefits and are now looking to extend them to the rest of the IT infrastructure.
However, organizations continue to be skeptical about public clouds as they still associate a certain amount of risk with being totally dependent on remote infrastructure.
Says Rajesh Rajan, Associate Director – Emerging Technologies, Technology Consulting, PwC India, “With India being a price-sensitive country, cloud is being sold on an OPEX model where there is no need to be locked into CAPEX. However how many cloud service providers in India have clearly conveyed to people about privacy compliance and policy?”
“Furthermore, the government does not have cloud policies, nor are there enough guidelines on how to handle cloud related issues. Many specific industries such as banks or the government strongly believe in data sovereignty and would want their data within India.”
On the other hand, enterprises, particularly the large ones, have invested a lot on growing their internal IT systems over the past several years and they cannot just do away with these systems. Leveraging on a cloud like model internally, they would like to maximize the use of their existing infrastructure. And the private cloud model is showing the way ahead.
Virtualized or private?
Over the past few years, most organizations have made considerable investments in their IT infrastructure and have realized that simply adding more physical infrastructure to meet the rising demands just doesn’t cut it. That’s when they discovered virtualization, which provided a cost-effective answer by consolidating hardware and eliminating the need to buy infrastructure each time a requirement came in.
According to Ashwin Waknis, Sr. Solution Strategist, CA Technologies India, almost 60 percent of Indian enterprises have already virtualized. However, he believes that organizations are also realizing that there is no cost-saving in virtualization beyond a certain point. This is because virtualization brings in its own set of infrastructure management and provisioning complexities.
Therefore, for most organizations, the rationale is that private cloud adoption will help them drive down IT costs further. A private cloud would essentially make the infrastructure a lot more process efficient, which would eventually translate into cost-efficiencies.
“While enterprises can gain up to 25 percent cost savings by moving to a private cloud, cost savings alone should not be the reason for adopting private cloud. Enterprises could see up to 37 percent improvement in productivity,” says Pankaj Sabnis, Product Manager, Product Engineering Services, Bluestar Infotech.
For most enterprises, the idea of a private cloud is a flexible IT infrastructure, where resources can be provisioned on-the-fly, much like the public cloud. However, a similar level of flexibility is offered by a virtualized infrastructure and therefore many presume that a virtualized infrastructure is a private cloud.
By definition, a cloud needs to not only provide IT in a flexible manner, but offer it as a service that is monitored, metered and charged to user based on usage. It should allow the user to choose the type and amount of resources, and the duration for which it would be needed.
Vishnu Bhat, Vice President and Head – Cloud Services, Infosys, says, “Enterprises first need to change the perception that virtualization is private cloud. A private cloud needs to have the automation, metering and monitoring mechanism that can measure and monitor transactions.”
Sharing a similar opinion, Ashwin says, “The idea of a private cloud is to have the enterprise manage IT like a business and not a cost center. To deliver IT as a business, you create a bunch of services, create a catalog around it, and meter them such that IT can charge the business unit for using these services.”
Giving his perspective, Vish Mavathur, Vice President & Head of Cloud Services at iGate, says, “A lot of organizations virtualize and stop. They are just consolidating underutilized capacities. The real benefit is when you charge users. The charge-back helps monitor actual consumption.”
Getting it right
For those that have made the decision to embark on the private cloud journey, they are still in the process of getting the idea clearly understood, trying to determine the requirements of a private cloud infrastructure, or trying to put automation, metering and charge-back mechanisms in place. While some have taken a few steps in the right direction, and have gotten close to the premise of having a private cloud infrastructure in place, many are struggling to get the pieces right.
Self-servicing and automated provisioning capabilities is something that every enterprise with a private cloud project is looking to implement first. However, this is where a lot of enterprises run into challenges. Typically any department within an organization wanting additional resources sends out an e-mail request to the IT team. The request goes through a series of approvals, post which the resources are allocated to the department in question.
Automating this process may save little on CAPEX but can make the process a lot more efficient and therefore save a lot more on operational costs and time. IT administrators can be freed from mundane processes and allowed to focus on monitoring the infrastructure to improve its utilization and efficiency. However, the self-servicing layer calls for an additional investment, something for which many IT teams find difficulty in showing the potential ROI to the organization.
Says Waknis, “We have not seen much adoption for the automated provisioning and self-service mechanisms for private cloud, although ticketing is being implemented. Self servicing is something that CIOs have identified as the next logical step; however, a lot of them are still trying to justify its ROI while getting their virtualization and automation pieces perfectly in place.”
Bhat of Infosys has a similar view but says, “People change management is the biggest challenge. Is the organization ready for self service? Are the key stakeholders ready to be a part of self service? If the process of reviewing and approving will take months, the benefits of cloud are not going to be realized.”
Sridhar Reddy, Managing Director, CtrlS Data Centers, shares a similar opinion and says, “Organizations should come up with a new set of processes and annual budgets of different departments should become the basis for cloud requirement approvals. The entire approval process should be built into the private cloud infrastructure as a rule-based engine.”
The self-servicing and automation layers pose an additional problem: if the users are given a free hand in choosing and deploying virtual machines and other IT resources, it could lead to an uncontrolled sprawl of VMs. This could further cause resource congestion at the infrastructure level and could potentially bring down the server infrastructure. Regulating the self-service features would help control this.
Says Mavathur, ”Many stop at automated provisioning. Due to this users can deploy VMs as and when they require, which leads to a VM sprawl, where the IT department does not even know about orphan VMs on the infrastructure. The IT group must create policies around provisioning resources to prevent indiscriminate use of auto-provisioning. They can have a financial cap on the amount of resources allotted to a department. If someone exceeds the limit then the CFO’s office gets alerted.”
“Furthermore, there should be a ‘type’ filter which looks at the demand and if it is a temporary demand it could be met using a standard configuration,” he says.
To do so, the organization needs to have a charge-back mechanism in place, so that it can meter resource usage, and bill different departments based on their requirement, usage and overlays. Having a metering and billing mechanism ensures that the resource usage is kept in check, as every department knows that it is paying for what it uses, and it also helps the organization achieve a better ROI on its IT investments.
While charge-back is definitely a crucial piece in the private cloud puzzle, the very same piece forms a roadblock for some organizations. However, it is not the charge-back mechanism but applications in the enterprise environment which create the challenge.
According to Sabnis, many companies do not have a charge-back mechanism in place today, as implementing the charge-back mechanism can be a challenge. For instance, the same application could be used by three different departments. They may have the same number of users using it, but one department must be using the application a lot more than the other. The organization needs to decide whether it wants to charge them based on number of users, or based on workload.
Purshottam Purswani, CTO, Atos India, says, “At the application level, the enterprise will need to look at existing applications to see if they can be run on a multi-tenant model. If the application is based on heavy licensing, they need to check if it is possible to logically multi-tenant the license. Furthermore, they need to check how it will integrate with other applications, how they can be provisioned, and how the internal customers will be billed.”
Waknis of CA believes that enterprises need to consider the heterogeneity in the existing physical servers, or even in an existing virtual server infrastructure. The end-user applications usually dictate what kind of virtualization platforms the organization should go with.
“There is a proper catalog through which the end user can ask for services. The orchestration and automation at the back-end is helping the user avail these services. The old infrastructure has not totally gone away. The management and automation approach needs to not only cater to the new virtualized infrastructure, but also to the legacy infrastructure and therefore needs to have the ability to handle past, current and future technologies,” he adds.
RoI and hosting
Organizations often end up expecting returns from day one just because they are using a cloud computing approach. What they should remember is that RoI would accrue over a period of time as people within the enterprise get accustomed to the new way of IT delivery. The infrastructure that started out as a private cloud would itself go through hardware refreshes over the period. Therefore, it would be a good idea that organizations looking to adopt private cloud start with an ROI estimation of a few years.
Says Purswani, “The business case of private cloud happens only over a period. While ROI is realized faster with a public cloud service provider, it takes a lot more time to realize it with an on-premise cloud implementation.”
“Enterprises will need to exercise due diligence to determine whether the current infrastructure supports virtualization and scaling and the kind of investment that would be needed to set up a private cloud. In some cases ROI can come as early as two months if the infrastructure is thought out well,” he says.
For most organizations though, the suggested RoI window is about three years. “A common myth is that adopting cloud is cheaper than deploying IT infrastructure the traditional way. An organization needs to look at a three-year implementation cycle as the TCO over three years will give it a better ROI on the implementation. One year is not enough to justify the ROI,” says Mavathur of iGate.
Also, as private cloud infrastructures mature, organizations would realize that these infrastructures come with their own set of management complexities and therefore, just as they outsourced their IT to managed service providers or had it co-located with them, they would need to look at adopting virtual private clouds that are hosted by cloud service providers.
A virtual private cloud not only gives them the benefits of a private cloud, but also frees them from management and hardware refresh issues, as now the service provider takes care of those factors. Having said that, those with large scale legacy IT or data security concerns will continue to run it on-premise, until they are compelled to look at the public cloud for meeting additional requirements, or find that the public cloud infrastructure has reached its desired levels of maturity in terms of data security and regulations.
Sridhar of CtrlS believes that a hosted private cloud can offer certain cost-savings, especially on software solution licensing as that part is handled by the service provider. In case of an in-house private cloud, the enterprise needs to worry about technology changes and redundancies, licensing issues and the costs associated with renewals. With hosted private cloud, these issues are avoided to a great extent.
Harish Reddy, VP & head of India centre, CallidusCloud, “Enterprises are looking at what has gained acceptance in the public cloud and how it can work in the private cloud. Sectors like BFSI have their own data centers and want control. Therefore they would have their private cloud implementations on-premise. Sectors such as Retail are much more open to adopting virtual private cloud.”
Sid Deshpande, Senior Analyst, Gartner India, believes that a private cloud needs to be a continuously evolving system and enterprises should choose technologies accordingly, as they would need to maintain that context and relevance of purchased technology three years down the line.
Desphande is of the view that one should look at it from three perspectives: management, ownership and location.
While enterprises in India are increasingly looking at virtual private clouds, they are currently more inclined towards local private clouds. Quoting a recent Gartner study, Deshpande says that 64 percent of the enterprises in India who have adopted private clouds have a service provider managing the infrastructure on-premise within the company.
Nevertheless, expressing a strong belief in virtual private clouds, Mavathur says, “The future is ‘virtual private clouds’ and we will see a lot of adoption in the next three to five years. There will soon be a time when the cost of providing IT as a service internally cannot be brought down any further. It would make sense to go to a cloud service provider for a hosted private cloud.”
On a growth trajectory
Despite a staggered start, it is quite clear that most organizations believe that when it comes to their core IT infrastructure, private cloud is the way to go. Enterprises today are keenly looking at adopting private cloud so that they can extend the benefits of cloud within their organization without compromising on security and governance.
Though any industry vertical with an appetite for cloud can look at adopting private cloud, enterprises with large IT infrastructure such as banks and telecom companies can be expected to take the lead and they are doing so. However a vertical that hugely stands to benefit from private cloud is the IT/ITeS sector since it is in the business of providing and consuming IT.
Furthermore, government organizations can be expected to adopt cloud as they would want a scalable infrastructure that can provide them the privacy and security for their sensitive data. The industry too believes that the next few years will see private clouds being adopted in a big way. According to Sridhar of CtrlS, almost all banks are running some sort of private cloud project and many of them are also looking at running their ATM services out of a hosted private cloud.
Purswani of Atos talks about an IT service provider that has created a digital campus running on a private cloud. An employee from the company in his free time can request IT resources to run innovative projects and resources can be allocated to him within a day. Turnaround time for these employees with these projects has reduced by 50 percent and IT is saying a huge cost savings on test and development environments.
He also gives the example of Siemens, which is looking at a private cloud approach for its healthcare products. The healthcare industry has hospitals looking at hosting their hospital information systems on a private cloud, as it gives them scalability along with security and confidentiality for their data. Furthermore, manufacturing organizations are looking at running PLM on private clouds for similar reasons of performance and data confidentiality. According to Purswani, companies like Renault, Volkswagen and others are looking at setting up supplier hubs on private clouds to help keep track of stock.
Another use is Sony TV network in India which, with the help of Atos, created a private cloud for hosting HD quality videos of its popular TV show Big Boss. The private cloud, according to Purswani, helped ensured there were no leaks of the videos.
Giving his perspective on the growth of private clouds in the country, Sabnis of Bluestar says, “70 percent of Indian enterprises are either using or evaluating public cloud. 53 percent are either using or evaluating private clouds.”
Bhat of Infosys shares a similar opinion and says, “We believe in the next five to seven years, 70% of enterprise workloads will be cloud-based and enterprises will be using a combination of public and private clouds.”
Deshpande of Gartner adds, “A lot of enterprises thought of private cloud from a cost perspective when the use cases were fewer and the awareness was low. However, while the discussion started with cost optimization, today it is moving to processes, skill sets and adding business value.”
Needless to say, conversations on cloud are going to get a lot more exciting in the next couple of years.
It should come as no surprise today when an enterprise talks about adopting cloud computing in one way or the other. And then the conversations move to public, private and hybrid, and one realizes how keenly enterprises are looking to adopt cloud. At the same time, they want to ensure that all their service level and security expectations are met.
Many of these enterprises have already tasted success with public cloud adoptions. They have taken non-critical functions such as CRM, HR and travel and expense management to the cloud, realized benefits and are now looking to extend them to the rest of the IT infrastructure.
However, organizations continue to be skeptical about public clouds as they still associate a certain amount of risk with being totally dependent on remote infrastructure.
Says Rajesh Rajan, Associate Director – Emerging Technologies, Technology Consulting, PwC India, “With India being a price-sensitive country, cloud is being sold on an OPEX model where there is no need to be locked into CAPEX. However how many cloud service providers in India have clearly conveyed to people about privacy compliance and policy?”
“Furthermore, the government does not have cloud policies, nor are there enough guidelines on how to handle cloud related issues. Many specific industries such as banks or the government strongly believe in data sovereignty and would want their data within India.”
On the other hand, enterprises, particularly the large ones, have invested a lot on growing their internal IT systems over the past several years and they cannot just do away with these systems. Leveraging on a cloud like model internally, they would like to maximize the use of their existing infrastructure. And the private cloud model is showing the way ahead.
