5 things Cloud has changed for Indian IT

The pace of change and disruption in the technology industry has always been faster than other industries. It is very easy for companies to fail – Compaq, Novell, Nortel, and Nokia were all great companies which got disrupted and collapsed in a fairly short duration. The fast pace of evolution means that the threshold for failure has gone down and capital/ scale can no longer defend an untenable business model.  In order to ride this wave of change and not be disrupted, current Indian IT-BPM players have evaluated what “CLOUD†means to their business and prepared for this disruption. The implications of cloud is felt across the value chain, though to varying degrees. While there is no one-size fits all solution and players have developed strategy specific to their market place and internal assessment, an overarching requirement for competing in the cloud world has been a change of mental models for the Indian players. How to “thinkâ€? Succeeding in the cloud market place needs a fundamental change in how companies think about approaching their clients and markets. As demonstrated by the likes of Salesforce and Amazon, new mindset and business models are needed which is not easy given the legacy current IT-BPM players have built over the last couple of decades.  In the traditional model, companies needed to focus on “getting it right†the first time, develop large integrated solutions to meet end-to-end client needs, build everything to order and forge partnerships and relationships targeted towards enterprise clients. This effectively meant linear growth models for most players.  In the cloud world, speed is of essence and it is critical to “fail quickly†and re-invent rather than have long innovation cycles. Players especially in the SaaS space think like mobile application developers of today – speed to build network effects. Solutions have been modularized and “designed to fail†so that failure of a component does not bring down the entire application. Players have also put thought on value chains and ecosystems in the cloud stack to figure out where they would like to play and who do they partner with. This will be especially important because of the new breed of players (e.g. telcos, market pivots, startups etc) have entered the services space and also to expand customer base beyond the traditional client base. What to “doâ€? IT-BPM players have re-architected their go-to-market along various dimensions in light of the cloud threat. While strategies have been customized for each player scenario, key areas of focus has been delivery models, talent and capabilities, partnerships and investments.

  1. Cloud enablement has led to significant delivery model changes for IT-BPM players

IT-BPM players have traditionally focused on build, operate and maintain contracts which significantly locked-in clients. This also included a certain onsite/offshore mix of dedicated resources (and infrastructure) to engage the client and manage costs. This delivery model has significantly changed in a cloud era with services being provided over the internet.

  1. New talent and capabilities have been inculcated

The service capabilities required in a cloud era are different from the traditional development and implementation focused talent pools that IT-BPM players had built over the years. While technology capabilities was relatively easy to build, players needed to put efforts on building architecture/ design capabilities and cloud development skills (“Design to fail†approach). These broader changes to skills and market positioning was more difficult to inculcate. Players also integrated existing enterprise understanding with cloud delivery and go-to-market models to retain their value proposition and develop value chain specific capabilities.

  1. Partnership and alliances baked into standard go-to-market strategy

While IT-BPM players have traditionally looked at partnerships primarily in the technology space, cloud will change the basis of competition from individual companies to ecosystems (e.g. Google ecosystem vs. Microsoft ecosystem). This coupled with the reduction of barriers that cloud is driving has resulted in a multitude of new players (Telcos, market pivots, startups, SMEs) and new customer segments (SMBs, BU buyers). These changes have required players to ingrain alliances and partnerships into their go-to-market strategies.

  1. Key investment areas identified and strategic bets taken

Based on the extent of cloud impact on business growth plans, players have devised their cloud strategy and identified areas of investments. Players have established dedicated Centers of Expertise/ R&D labs to focus on cloud product development, realigned current solutions and devising new go-to-market models.

  1. External standards and security considerations have been managed

Growing consideration of data security and privacy have compelled Governments and industry organizations worldwide to establish policy and regulatory guidelines for storage and transfer of secure data and personally identifiable information classes. Additional standards and certifications have been defined by these authorities to ensure minimal regulatory adherence of cloud solutions. Due to their evolving nature, Indian players have constantly monitored these developments, evaluated the impacts on an on-going basis and incorporated them into their solutions.

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