Cloud Computing

How SMEs can leverage the cloud for operational and financial streamlining

Let’s take a look at how cash-strapped small- and medium-sized Indian businesses can benefit by adopting cloud computing

In India, for a small-scale textile or leather footwear manufacturer a typical day would go like this: Get to the office-cum-factory early by 8.30 a.m. to avoid the peak traffic, settle down with a cup of sweetened tea and start turning the pages of a voluminous ledger where the accounts clerk would have made several entries for the bales of cotton yarn or leather hides brought in from various suppliers. The quantity used the previous day and the amount to be shifted from their respective warehouses would painstakingly be noted down manually. Next, would come the checking of all the bits of paper scribbled with his distributors’ requests coming in from various parts of India for the finished saris/cotton materials or ladies/men’s footwear. Sometimes the entries would have been entered wrong and at times the bits of the paper with distributor’s requests for material would be lost or flown away in the hustle bustle of the shop floor activities.

Eventually, the amount of work would accumulate so much that the owner would realize that it is impossible to expand or innovate. All his time was being spent poring over papers and bills rather than searching for new distributors or working on newer designs and products needed to grow his business. And growth was critical since competition was coming in from all sides.

Now comes the turning point. Since some of his peers have been trying their hand at IT automation, he too begins to think that this could be the path to success. He would consult IT services providers whom he knows through word of mouth and almost all them suggest cloud computing, a cheaper and an innovative way of adopting technology.

But the question hovering on his mind at this point of time is this: What is “cloud computing” all about? And why was it being touted as the next big thing in the area of automation?

The cloud concept has been compared with the rollout of grid-based electricity over a century ago, where businesses and consumers no longer needed to produce their own power, but could simply plug into a huge network. Similarly, cloud computing sees users plugging into services and solutions as and when needed and pay as per their usage of the services – on a monthly basis or whatever agreement they come up with their cloud service provider.

Today, cloud computing has become a widely adopted term for entrusting a company’s data, software and infrastructure management to a third party. The company’s information resides in a far-off data center and can be accessed through the Internet. This method helps companies avoid the complexities of managing many large computers and servers while still benefiting from what technology can offer. In addition to entering and tracking customer orders and requests, cloud technology also helps store documents, perform accounting, and run all the software that would be needed for this kind of automation.

Cloud computing challenges 

Undoubtedly, cloud computing is changing the way businesses function and has significant cost savings attached to it. But there are several challenges en route.

One major concern for a cloud computing adopter is the security issue — that nagging fear that their data could be compromised at some point of time. 

Another issue is the power shutdown at the data center where his data resides. What if he needs to access it and there is some sort of an outage at the data center where it resides? No doubt there could be a power shutdown even if he had his own servers but that would be an outage that he would need to manage on his own. However, when he outsources it to a third party he expects infallible results with 99.9 percent uptime.

Yet another hurdle in cloud adoption is the low awareness. Though cloud-based service providers are offering services on a pay-per-use model, (like a pre-paid mobile SIM card) industry sources suggest that the cloud awareness levels are lower amongst smaller companies and relatively higher in metros.  One has to realize  that  cloud services are not very different from data being hosted in a third party data centre except that it now extends to your server, storage, application which is also available on a shared and rental model.

If the cloud service provider can ensure that it has a robust security compliance program in place which includes physical access controls and an impeccable track record, these fears are allayed.

According to industry reports, quality of solutions and post-sales service are the major drivers to accelerate cloud adoption among SMEs in India. The total number of channel partners catering to SMEs in India has increased by nearly 10 percent-15 percent from the previous year, while the number of cloud channel partners increased by approximately 25-30 percent. This translates to a significant shift in the number of providers offering cloud-based services solutions. 

Interestingly, a number of small co-operative banks which are using cloud services for hosting core banking solutions are setting an example for the SME segment showing that cloud is the way forward for growth and success.  These co-operative banks which were using manual methods have now leapfrogged to the cloud and are able to offer  smarter and efficient services such as Internet banking, online money transfer and ATM services, mobile banking, etc., to their customers. By operating on a centralized network twice as fast and at half the cost compared to an on-premise licensed software model, they are able to prove to their SME customers that the cloud technology has actually helped the bank to reduce its burden of upfront capital expenditure and move to a pay-as–you-use model. 

The textile/leather manufacturer now realizes that if he were to move his business onto cloud, life would become much easier and his business development could drastically take off.  Instead of spending hours poring over pages with manual entries, partnering with a cloud service provider would help ease the burden at a substantially lower cost with no investment whatsoever in infrastructure. With right planning, strategy, and partner in place, the he can keep his eye on the larger goal. The logistical parts of the process will fall in place with the right guidance and planning.

The author is Executive, Offerings Management & Development, Global Technology Services, IBM, India/South Asia

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