cloud computing -strategic case study
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Strategic turn to monetize
cloud computingCase Study for Strategic Management
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ABSTRACT
Cloud computing has the potential to be the next major driver of business
innovation, as it promises to enable new business models and services across almost
all industries, especially telecommunications, healthcare and government. As well
as it opens new customer segment to cloud provider. Cloud has the potential to
become the next major driver of business innovation by enabling entirely new
business models across a wide range of industries. The cloud computing market will
include offerings sold as a service such as business processes, software, platform,
and infrastructure. And many of these cloud services will be consumed through a
pay-per-usage pricing model. The cloud market is appealing to new entrants notonly because of its size and growth, but also due to the business potential it brings
to a company. Cloud providers benefit by accessing new customers and markets,
improving their deployment times, potentially lower their costs and achieving new
revenue streams.
We have analyze cloud service provider strategies by evaluating their business
models for cloud computing services/offerings, strategies operations and target
customers.
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WHAT IS CLOUDCOMPUTING
Cloud computing i Int net ed computing, whereby shared
resources, software, and information are provided to computers and
other devices on demand.
Cloud computing describes a new supplement, consumption, and delivery
model for IT services based on the Internet
The concept behind cloud computing is very simple: itlets you run your business
computer applications over the Internet, without having to buy, install or manage
your own servers. You can run your companys IT operations with nothing more
than a browser and an Internet connection. Applications, operating systems, servers
and network switches all are available from within the cloud.
The benefits of adapting Cloud Computing for any business are great. Here
are some of them.
y Quickturnaround or deploymenttime to be up and runningy Increased availability of high-performance applications to small/medium-
si ed businesses Applications like ERP, CRM or ecommerce applications
which were out of reach for Small and Medium businesses are now
available at a fraction of a cost.
yReduced implementation and maintenance costs since you pay as you go !
y Increased Storage on demand / Flexible and scalable infrastructuresy Greening ofthe data center/ Reduced Energy costsy Highly Automated - No longer do IT personnel need to worry about
keeping software up to date.
y GreaterMobility to your Workforce - Employees can access informationwhereverthey are, wheneverthey want.
y Allows Businesses to Focus on their core competencyy Optimum Performance - The cloud adjusts to your companys performance
needs, dynamically assigning capacity whenever and wherever you need
them, and automatically adjusting to spikes in your business.
y Security For many companies, the level of security and availability,disaster recovery and back-up provided by a software-as-a-service provider
far exceeds that which they can provide themselves.
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Element consider to form winning strategyfor cloud market
To win in the cloud market requires an innovative business strategy and business
model. The strategies reflect a rethinking of market fundamentals and truly envisionnew models to better serve customers.
We will see a wide range of cloud business models emerge overthe next few years,
and most ofthese will likely fail. Ofthe ones that survive, the profitability ofthe
business models will vary greatly. A few winning business models will maintain
healthy profit margins while others will find themselves relegated to much smaller,
commodity-based profit margins
There are three key components that define cloud business models:
CUSTOMER FUNCTION: Cloud Delivered Services- what a company sell i.e.
their product
CUSTOMER GROUP: Target Markets- to whom it would be sell i.e. their
customers
TECHNOLOGY:Operations- how to create and deliver what one sell
And to successfully implementation of business model a good strategy would be
require. Strategy of all cloud vendors would be to create long-term value.
________________________________________CUSTOMER FUNCTION: Cloud Delivered Service
The first component of a cloud provider strategy is to clearly outline the service that
will be offered. Most cloud enabled solutions will have four layers in their
solution stack:
Content
Process and applications
Integration and middleware
Infrastructure and devices
Cloud provider mainly tries to outline competitive advantage for each layer. These
layers divide the cloud marketinto following sub market:-
Business-Process as a Service (BPaaS). Deliver an entire business process
as a service via the Internet. Examples include payroll, printing and e-
commerce from providers.
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Software as a Service (SaaS). Deliver a standardi ed application running ona cloud infrastructure, with multi tenancy, accessible from various client
devices through a thin client interface such as a Web browser (e.g., web-
based email). Target customer would be ENDUSER
Platform as a Service (PaaS). Build and deploy new internally developed
applications onto cloud infrastructure, exposing services needed to build an
effective application including billing and sign-on services used by
APPLICATION DEVELOPER
Infrastructure as a Service (IaaS). Obtain processing, storage networks, and
other fundamental computing resources as a service where the consumer is
able to deploy and run elements ofthe stack, such as operating systems, on
the infrastructure service. Mainly for NETWORK ARCHITECTS
Since A single company does not have to be the owner or operator of all four
solution layers. Hence, a key part of developing a cloud strategy is to define
which component(s) you will provide and which components will be provided
by a business partner thats why partnership-based business models normally
seen in cloud market.
In addition to direct cloud services, there is a wide range of support cloud services
and components typically offered by outside providers, such as consulting firms,
but also delivered by cloud service providers themselves. These services includetraining and consulting For example, SalesForce.com offers training and consulting
to complementits SaaS and PaaS offerings.
_______________________________
CUSTOMER FUNCTION-Target market
There are many potential target markets for cloud adoption Most current cloud
providers narrow down their respective markets to some combination of the
following segments:
Industry or Functional Verticals among Large Enterprises
While currently focused more on internal cloud enablement some large enterprises
will migrate toward adopting shared cloud verticals that reduce cost or riskin areas
that are importantto the business, but are not key sources of differentiation, such as
back office functions or regulatory compliance. For example, pharmaceutical
companies could join forces via an industry vertical cloud focused on regulatory
compliance to drive cost savings and efficiency.
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SMBs
Many workloads offer the least pain and most significant gain for the SMB
segment. Cloud providers are targeting smaller customers who can benefit from
clouds compelling economies of scale, and who are less hindered by large, existing
IT capabilities. Financial services companies have strong relationships with their
customers, and could use this delivery model for business services
Emerging Markets
With limited resources, customers in developing markets will respond to the lower
up-front investment costs and ability to scale service consumption in times of
growth. For example, automotive manufacturers could use cloud to reach
dealerships in distant markets.
Other Cloud Providers
Cloud services serve as building blocks, where a provider sells one cloud service to
another cloud providerto construct a larger service offering. IaaS providers often
align with SaaS providers to jointly deliver a more comprehensive cloud services.
Such as Red Hat sell their platform to Microsoft.
Consumers
Mobile devices, online email and other consumer services benefit from numerous
new applications made available through cloud delivery models.
The another choice for cloud provider that whether establish their market for a
public cloud or provide a private cloud.
Well demand is rising for public cloud services around HR benefits procurement, e-
commerce, data warehousing and archiving.
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TECHNOLOGY-Operation
The operations component of a cloud business modelincludes the development of
key elements needed to deliver business services via the cloud. This includes
business operations and financial reporting designed to be more agile by more
quickly engaging customers, tailoring services to fit customer needs pricing for
smaller units of a service, and establishing a viable financial model.
The operating model of the business strategy defines the sourcing model,
partnership strategy, and deployment plan forthe development ofthese capabilities.
Many providers are pursuing strategic partnerships to round out their capabilities
and achieve the operational requirements associated with rapid service delivery.
Alliances and partnerships are often keys to success in the cloud ecosystem.
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STRATEGY
Service provider strategies focus towards address pricing models, go-to-market
approaches, business intent and value propositions, in addition to defining servicesand customers.
Current cloud providers are capitali ing on first-mover advantage. They are
delivering services, learning from their mistakes, and capturing market share along
the way. Some oftheir success has been at the expense of traditional players who
have not ventured into the cloud marketplace.
One of the defining aspects of cloud computing is pay-per-use pricing models.
However, variations are possible within this basic tenet of cloud. For example,
some providers priced base on their brand and reputation ratherthan purely basedon hourly usage rates.
The challenge is determining how to measure this value and how to capture that
value through pricing.
Some cloud providers are offering cloud-based services directly to customers.
Others are acting as enablers and integrators by providing their products and
services as building blocks for other cloud service providers to then sellto their own
customers.
Another consideration for go to market strategy is targeting the right decision
maker for the particular type of service delivered. Providers have tailor their
offerings and value proposition based on the target buyer. Cloud providers are
deploy new services to their customers in days .
Well main focus is to differentiate their product.
Let us consider cloud offering of few vendors to understand how different cloud
vendor differentiate their product and targeted to whom, and what are their
strategies to sustain in market forlong run and their competition.
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1.Amazon
Type ofCloud: Public Cloud
Type of Service:IaaS
Key Offerings:EC2 , S3, Simple DB and Map Reduce
Specializes in IaaS. It offers through Amazon Web Services (AWS): AmazonElastic
Compute Cloud(EC2), AmazonSimpleDB, AmazonCloudFront, AmazonSQS. It claims to
have 82 billion objectsstoredin AmzonS3 (SimpleStorageService)
As ondate theyare the onlyprovider to offereverything .
Amzaon is the undisputed winner, without any much competition till now. We maycallit an early-bird advantage.
2.Microsoft
Type of Cloud: Private Cloud,Public
Type of Service: SaaS,PaaS and IaaS
Key Offering: Online Service, Windows Azure Platform and Windows Server
Hyper-V,Office Window apps.
Specializes in PaaS. It offers Azure, a Windows-as-a-service platform consisting
of the operating system and developer services that can be used to build and
enhance Web-hosted applications. Azure is available for VS 2008 viaWeb
Platform Installer. Visual Studio 2010 Beta 2 has all the features we need to
code, debug, and deploy our cloud service.
Microsoft strategy has the right portfolio and articulates the right story to allthe
entities in the ecosystem. Microsoft has always dominated is the operatingsystem. It started on the desktop, moved to the server, and now it is moving
into the cloud
Microsoft made a majorleap with the release ofOffice Web Apps, a cloud-based
version ofits Office software. Web Apps lets users to upload documents from their
computerto Microsofts cloud-based Docs.com, and allows accessibility from anymachine or device. Here the documents will also be stored in remote serverinstead
of being stored only in personal computers, laptops or company server. Except for
the security factor of sharing important files on the web, it will prove to be a good
improvement.
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Microsoft charge price for the components of its Azure cloud computing platform,which is consumption-based computing costs are slightly lower than Amazon's
costs, but, Amazon's Linux-based service undercuts Microsoft's Windows pricing.
However, Amazon's Linux-based offering is $0.10 per computing hour, and it also
charges slightly less for storage than Microsoft. There are many analyses going on
around the web about how these pricing strategies will play out over time.
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3.Google
Type of Cloud:Public CloudType of Service: Saas and PaaS
Key Offerings: Google Apps and Google App Engine
Specializes in PaaS & SaaS. As SaaSit offers Google Apps: a web-basedcommunication, collaboration & security apps which includes, Gmail, Google
Calendar, Google Talk, Google Docs & Google Sites. 15 Sep 2009, Googleannounced that it will provide GovCloud, which will host Google Apps in aseparate data environment with enhanced encryption for meeting state andgovernment security standards.
As PaaS it offers Google App Engine: a platform for developing and hosting webapplications in Google-managed data centers. Currently, the supportedprogramming languages are Python andJava (by extension otherJVM languagesare also supported).
You build your application using Googles PaaS and Google handles deploying
code to a cluster, monitoring, failover, and launching application instances asnecessary. Good news, Google App Engine is free, but only up to a certain level ofused resources.
Googles strategy is to put its presence in as many clouds as possible. Hence thecompanys launch of products such as Living Stories project in the news media,
promotion of Google Apps in the enterprise market and recently the launch ofGoogle Groups, a productthatis integrated with the existing Google Apps such asGoogle Docs, Google Calendar, Gmail, Google Sites and Google Video.
As part of its cloud strategy Google wants to use Google Groups to make theproduct more attractive to the enterprise sector since one of the products mainfeatures is project collaboration among employees located in diverse sites. Thisreport also looks at Google Trends and Insights and how they are tied to Googles
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strategy in building an established presence on the Internet cloud. It also analyzesGoogles future online strategy and demonstrates its relation to the cloud.
______________________________________________ _____________________
Microsoft and Google have been in a very public debate over which cloud-basedprogram is the better of the two. Most people agree that the latest versions of both
Google Docs and Microsoft Office 2010 are both very good, very solid pieces ofwork.But what makes Microsoft a little better is its ease of use. Microsoft has taken its
popular ribbon interface and extended it to all of Office 2010s programs. So the
users who upgrade will feel familiar with the new programs. Microsoft says the
ribbon interface helps to find options quickly and reduces clutter on the screen,
which saves users time. The fact that Word is worlds most widely used editing
software adds to the little better factor however Microsofts attempt to step into
the cloud might be small and a little late.
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While all the competition is giving you either a specific suite of applications (Google
Apps, Salesforce.com) or component blocks (Amazon EC2), Microsoft Azure is at the
heart a platform.
4.IBM
Types of Cloud:Private CloudType of Service: SaaS and PaaSKey Offering:Lotus Live and IBM Web Sphere Cloud Burst Appliance
The Big Blue has announced Blue Cloud computing platform way backin the year
2007. IBMSmart Business Development and Test on the IBMCloud is designed
to augment and enhance software development and delivery capabilities,
particularly in large enterprises. On 16 Nov 2009, IBM announced the worlds
largest private cloud computing environment.The cloud will launch initially with
more than a petabyte of data, the equivalent of more than 300 billion ATM
transactions.
Strategy :- Having a strong partnership model.
5.Salesforce.com
Type of Cloud:Public Cloud
Type of Service: SaaS and PaaS
Key offering: Salesforce.com CRM and Force.com
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Leader in SaaS. Offers SalesforceCRM (Sales Cloud 2, Service Cloud 2)& Force.comPlatform (Custom Cloud 2, DevelopmentPlatform).Targeting SME
market, it has niche and unique offering.
6.VMware
Type of Cloud:Private Cloud
Type of Service: IaaS
Key Offerings: VCloud
It offers vCloud: Run, secure and manage applications in the private cloud or havethem federated on-demand to partner-hosted public clouds. vCloudis giving atough competition to more established Amazons AWS.
It was recently in the news forpartnership with Cisco & EMC, to offer equipment
called Vblocksand support a new joint venture called Acadia that will help
business customers and service providers build out clouds based on the Vblock
gear packages
Well,having positioned it as a strong Virtualization platform vendor , they become
the natural choice ofPrivate Cloud.
7.Tera
Offers Cloud Ware: architecture to provide an open framework to allow thedevelopment of a cloud computing environmentthats open enough to work on anyweb/enterprise application. Lack of cloud computing standards has lead toa vendor-lock, where every cloud vendor has proprietary cloud. Whatif we wanttoshare our application among different vendors/clouds? Currently we cant.
Cloud Wareis a big step towards bridging the clouds, and creating standardswhich will lead to open environment for clouds. Hope, soon consumers will beable to move around with their application and data, that will span multiple clouds.
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8. NetSuite
Specializes in SaaS. It offers Suit CloudPlatform: a comprehensive offering ofon-demand products, development tools and services designed to help customersand software developers take advantage of the significant benefits of cloudcomputing. Also a leading provider of web-based Business Software Suite forCRM, ERPtools and Accounting.
Above companies are out of the best player in the world.
Cloud offering by Indian Vendor
9.Zenith InfoTech
y Base Location: Mumbai, Indiay Cloud Offering: PROUDy Cloud Type: IaaS
It is an IT product development and innovation company. With an investment ofINR 175-crore, this is considered as Indias one ofthe most ambitious R&D effortsin IT. The company is expecting 2,000 - 3,000 clients ofProud in next 2 years.
10.Wolf Frameworks
y Base Location: Bangaluru, Indiay Cloud Offering: WolfPaaSy Cloud Type: PaaS
Founded in 2006, it provides affordable cloud service with 99.97% Service LevelAssurance. Wolf is a browser based On Demand Platform-as-a-Service (PaaS) forrapidly designing and delivering database driven multi-tenant Software-as-a-
Service (SaaS) applications. One can get started without writing any piece of codewhatsoever. Coding only comes in when you need custom templates or specificintegration Business Rule actions.
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11.OrangeScape
y Base Location: Chennai, Indiay Cloud Offering: OrangeScape Cloudy Cloud Type: PaaS
The experience of building business applications of varying complexity acrossindustries has made OrangeScape the most comprehensive PaaS (Platform as aService) offering in the market. You can transform your idea into a SaaSapplication and can showcase them to your investors, partners and potentialcustomers. It has an impressive list of customers viz. Ford, Pfizer, Geojit, Sify etc.
12.TCS
y Base Location: Indiay
Cloud Offering: ITaaSy Cloud Type: IaaS+SaaS
ITaaS is a Nanoin software. ITaaS frameworkis a one-stop shop for total end-to-end IT and hardware solutions. It includes hardware, network, bandwidth &business software. Currently ITaaS is available for 5 sectors: Manufacturing,Retail, Healthcare, Education and Professional Services.
13.Cynapse India
y Base Location: Mumbai, Indiay Cloud Offering: Cyn.iny Cloud Type: IaaS on Demand SaaS
Cyn.in on demand is a cloud hosted service and is the quickest way to get yourown cyn.in server, without the hassles of having to set it up. With a Cyn.in on-demand system, you get a dedicated virtual server running a Cyn.in appliance thatis maintained & updated by Cynapse and hosted by Amazon, ensuring aninfrastructure-free and worry-free Cyn.in experience.
14.Wipro Technologies
y Base Location: Indiay Cloud Offering: Wipro w-SaaSy Cloud Type: SaaS
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Wipro has built w-SaaS, a platform for rapid SaaS enablement and deployment oncloud, using some of the commonly accepted trends in software engineering and
open standards. Wipro chose Oracle (Oracle Database, Oracle WebLogicApplication Server and Oracle VM) as the deployment platform for w-SaaS
enabled applications. The software vendor can deploy the same application on-premise or on the cloud using w-SaaS and Oracle.
15.Netmagic Solutions
y Base Location: Mumbai, Indiay Cloud Offering:Cloudnet, Cloudserve, PrivateCloudy Type: IaaS
Netmagic looks like a dedicated cloud providerin Indian market with a potentialtobecome a big playerin near future.
16.Reliance Data Center (a division of Reliance Communications)
y Base Location: Indiay Cloud Offering: Reliance Cloud Computing Services y Cloud Type: IaaS+SaaS+PaaS
A hosted infrastructure service based on theMicrosoft platform for Enterprisesand SMBs - geared to deliverIndias largest cloud infrastructure.
17.Infosys Technologies
y Base Location: Bangalore, India.y Cloud Offering: Cloud based Solution for Auto Sector.y Cloud Type: SaaS
Infosys Cloud Computing Consulting and Service offerings enable organizationsto adopt the Cloud Computing platform selectively and effectively. But brandInfosys, the most recognized IT brand from India has to put significant efforts tocatch up with other cloud providers.
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.Synage
y Base Location: Mumbai, India.y Cloud Offering: DeskAwayy Cloud Type: SaaS
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A Web company delivering software as a service (SaaS) over the Internet to theglobal audience.DeskAwayis the flagship product of Synage, based on a monthly
or yearly subscription model, requiring zero-installation, and powered by a cutting-edge userinterface, Its the future of project & team collaboration software.
Though the companies listed here have a long way to go before they can be
compared with the best in the world yet they have the potential to grow big with
the growing Indian economy.
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CONCLUS ON
Cloud computing offers a distinctly new level of scalability and a new degree of
business value made possible by the maturation of technologies and standards.Scalability results in a host of benefits that will make cloud computing a permanent
shift in the how products and services are delivered.
We think the recipe for success of cloud computing will require exploring any kind
of cloud business model coupled with the right partnership strategy, because
strategic alliance are particularly important for creating more robust cloud services,
as alliance aggregate different providers unique strength.