cloud opportunities in india – a cios perspective

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Cloud Opportunities in India – A CIOs Perspective Media Briefing 25th November, 2010

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Survey Demographics: Distribution by Vertical, Revenues, Staff using IT & Size of Internal IT team

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Distribution by Staff using IT

Note: Source: Zinnov’s Survey of 100 CIO 2010

Internal IT Team Size

Sample Size: 100

Distribution by Revenue

IT/ ITeS 21% BFSI 14% Telecommunications 11% Pharmaceuticals & Chemicals 7% Media & Entertainment 5%

Textile 5% Healthcare 4% Automobiles & Auto Components 4% Electrical Machinery 4%

Cement 3% Utilities 2% Steel 2% Food Industry 2% Tourism & Hospitality 2% Others 14%

Distribution by Vertical

More than 10000 (6%)

2500-10000 (8%)

750-2500 (18%)

250-750 (22%)

100-250 (12%)

Less than100 (26%)

Not Disclosed (8%)

Less than 10 (34%)

10-30 (32%)

30-50 (15%)

50-100 (7%)

100-250 (6%)

250-500 (3%)

More than 500 (3%)

200-500 Crore (16%)

500-2500 Crore (20%)

50-200 Crore (21%)

<50 Crore (15%)

Not Disclosed (13%) More than 10000 Crore

(5%)

2500-10000 Crore (10%)

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IT-BPO 1.9%

Government 2%

Auto 2.1%

Telecom 4.2%

BFSI 12%

Energy 26.7%

Manufacturing 44.5%

Others 5.7%

Vertical-wise Spend Of IT Services In 2010

Domestic IT spend in India has been growing at a significant pace and is dominated by BFSI, Telecom, Government, Manufacturing & Energy verticals

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Software

9.5

9.4

2.4

2.9

Hardware IT services BPO

FY2009 FY2010

Domestic IT-BPO Spend (Bn) 2009-2010

Vertical-wise Spend Of Software In 2010

Vertical-wise Spend Of Hardware In 2010

Note: Public Sector Enterprises are spread across verticals other than Government Source: NASSCOM Strategic Review 2010

Healthcare/ Pharma

1% Auto 1.4% Telecom

6.4%

BFSI 12.8%

Government 15.4%

Energy 18.4%

Manufacturing 39.1% Others

5.7%

Healthcare/ Pharma

1.4%

IT-BPO 1.6%

Auto 2.1%

BFSI 8.8%

Telecom 9.7%

Energy 12.3%

Others 12.9%

Manufacturing

24.7%

Government 26.2%

9.2

8.4

2.0 2.7

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…and it is expected to grow going forward for majority of firms 4

Will remain nearly the

same (34%)

Decrease less than 10%

(4%)

0-10% increase (49%)

10-20% increase

(4%)

20-40% increase

(2%)

More than 40% increase

(2%)

Cant' Say (5%)

Change in IT Budget From 2010 To 2011

• Indian enterprises are starting to show signs of steep recovery with respect to their IT spending

• Around 60% of the CIOs believe that their IT budget will be growing next year

• While companies continue to invest on

IT, OPEX models are increasingly being favored

Note: Source: Zinnov CIO Survey 2010

Sample Size: 100

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The findings highlighted that Cost of solution and brand of the technology provider are key parameters for evaluation during the decision making process

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56%

42%

29% 26%

21%

12%

Key Parameters for IT Decision Making

Cost Brand of IT Vendor/ Best of Breed

Solutions

Time to implementation

Flexibility & Scalability Existing relationship with the IT vendor

Support Infrastructure

Sample Size: 100

• While Indian enterprises are cost conscious with respect to their IT purchase decisions, they would prefer to go along with the “Best in Breed” solutions – Price value focus of large enterprises in India


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Better agility , flexibility and cost visibility offered by cloud solutions are synchronous with the top priorities of a CIO

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75%

51%

38% 34% 33%

14% 13%

Current IT Goals of Enterprises

Aligning IT with Business Goals/ Driving Business

Innovation

Cost Control/ Expense

Management

Developing New go-to-market Strategies & Technologies

Improving IT Operations and

System Performance

Cultivating IT/ Business

Partnerships/ Negotiating with IT

Vendors

Redesigning Business Processes

Implementing New Systems &

Architecture

Sample Size: 100


Agility/ Flexibility

OPEX models Reach and customer

enablement

Efficiency enhancement

Best of breed

…Can Cloud be the

Answer?

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A significant number of CIOs are now willing to leverage Cloud services and have already started evaluating it…

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38%

29%

10%

7%

4%

39%

Willingness to Use Cloud Services (2011)

Software as a Service (SaaS)

Infrastructure as a Service (IaaS)

Business Process Private Cloud Platform as a Service (PaaS)

Can't Say

• While cloud as trend is gaining attraction, many CIOs are currently in a wait and watch situation

• Some of the CIOs have already started running pilots for some of the non-core applications

• However for some of the core applications, CIOs are currently considering to adopt private cloud scenarios

Sample Size: 100


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…and the trend is only going to increase by 2015 8

58%

37%

19%

9% 9%

21%

Willingness to Use Cloud Services (2015)

Software as a Service (SaaS)

Infrastructure as a Service (IaaS)

Business Process Private Cloud Platform as a Service (PaaS)

Can't Say

• More and more CIOs would be investing in cloud technologies through 2015

• SaaS adoption would continue to grow at a rapid pace in India over the next 5 years; Business process as a service to grow rapidly as well in the SMB segment

• CIOs might take a cautious approach towards private cloud adoption; 3rd party datacenters may become a preferred option

Sample Size: 100


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Data security continues to be one of the key concerns with respect to adoption of Cloud technology among Indian CIOs

9

60%

23% 20%

13% 10%

8% 7% 6% 6% 4%

9%

Current Perception About Using Cloud Technology

Data Security or

Privacy

Integration with legacy

systems

SLA, Reliability &

business continuity

Loss of control on

IT

Lack of Maturity of

cloud service

providers

Lack of standards

Lack of trained

manpower

Legal/ regulatory constraints

Lack of Features &

functionality

None Can’t Say

• Data security and privacy still continue to be the key challenge towards cloud adoption in India

• Complexity of integration of cloud based systems with legacy investments is also a major cause of concern

Sample Size: 100


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Most of Indian CIOs would prefer to have the data centers located in India and run by MNC service providers

10

MNC with datacenter in India

50%

My own datacenter 28%

Domestic company with datacenter in

India 8%

MNC with datacenter outside India

7%

Can't Say 7%

Preference of Cloud Provider


Sample Size: 100

Zinnov Confidential

The Cloud Computing market (including private cloud) in India holds a multi Billion Dollar potential

FY 2010 FY 2015

Domestic IT Market in India (Billion) FY’10 to FY’15

• CIOs will look towards cloud computing to reduce the ever increasing IT budgets

• Verticals such as BFSI, education, healthcare, retail will increasingly rely upon cloud computing for better reach

• Governments’ continued focus on e-governance will drive significant adoption of cloud pan India

• ISVs and IT services/ BPO companies in India will look at cloud computing for non-linear and rapid growth

Key Drivers for the Indian Cloud Computing Market

Note: Source: NASSCOM Strategic Review, 2009-10 & 2010-11; Zinnov Analysis

Total Cloud Market is less

than 0.5% of total Domestic IT

Spending

Total Cloud Spend will increase to around 5% of the total Domestic IT Spending with the following distributions:

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Zinnov Confidential

Other government projects also hold huge potential for Cloud technologies

• Around 300,000 bookings are done on IRCTC everyday • The traffic on the site fluctuates with the time of the day, highest being in the morning hours

IRCTC

• The government has committed itself to provide banking services by using information and communication technology to 73000 rural habitation in the country having population of over 2000 by March 2012

• Much stress is being given to the use of over 500 million mobile phone connections present in India to extend financial inclusion across rural and remote regions

Financial Inclusion

• Increasing awareness regarding Right to Information in the public is compelling the government to digitize its databases and make more and more information available to the public domain

Right To Information

The government will require huge processing power capabilities for projects of such large magnitude and

fluctuating demands. This in turn will favor the adoption of cloud for cost effectiveness and faster implementation

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Zinnov Confidential

Cloud Computing is here to stay!!!!

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cloud opportunities in india – a cios perspective

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