Strategic turn to monetize

cloud computing
Case Study for Strategic Management
 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 not
only 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.
 WHAT IS CLOUD COMPUTING

“Cloud computing is Internet-based 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: it lets you run your business
computer applications over the Internet, without having to buy, install or manage
your own servers. You can run your company’s 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.

 Quick turnaround or deployment time to be up and running

 Increased availability of high-performance applications to small/medium-
sized 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.
 Reduced implementation and maintenance costs since you pay as you go !
 Increased Storage on demand / Flexible and scalable infrastructures
 “Greening” of the data center / Reduced Energy costs
 Highly Automated - No longer do IT personnel need to worry about
keeping software up to date.
 Greater Mobility to your Workforce - Employees can access information
wherever they are, whenever they want.
 Allows Businesses to Focus on their core competency
 Optimum Performance - The cloud adjusts to your company’s performance
needs, dynamically assigning capacity whenever and wherever you need
them, and automatically adjusting to spikes in your business.
 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.
Today for organizations — big and small — it is the easiest means to save on
costs, as well as leverage on advantages such as security, reliability and
scalability. For example, when broadcasting major Star India opted to
implement private cloud architecture, availability of resources on the fly and
low-cost were the motives behind the move.

Cloud computing services, as we know, is a general term for any model that
involves delivering hosted services over the Internet. These services are divided
into Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-
as-a-Service (SaaS) that are made available over the Internet
Cloud computing is a better way to run our business. Instead of running our apps
ourself, they run on a shared data center. When you use any app that runs in the
cloud, you just log in, customize it, and start using it. That’s the power of cloud
computing.

Businesses are running all kinds of apps in the cloud these days, like CRM, HR,
accounting, and custom-built apps. Cloud-based apps can be up and running in a
few days, which is unheard of with traditional business software. They cost less,
because we don’t need to pay for all the people, products, and facilities to run
them. And, it turns out they’re more scalable, more secure, and more reliable than
most apps. Plus, upgrades are taken care of for you, so your apps get security and
performance enhancements and new features—automatically.

The way we pay for cloud-based apps is also different. Forget about buying servers
and software. When your apps run in the cloud, you don’t buy anything. It’s all
rolled up into a predictable monthly subscription, so you only pay for what you
actually use.

Finally, cloud apps don’t eat up our valuable IT resources. This lets we focus
.
on deploying more apps, new projects, and innovation.

The bottom line: Cloud computing is a simple idea, but it can have a huge impact
on our business.
________________________________________________
Significance of cloud computing for IT vendors

1. Cloud has strong value proposition for existing business users of IT.
2. Cloud enables providers to access entirely new markets
3. Cloud is aligned with broader technology trends and demand
4. Cloud technology is real.

Many analysts and IT industry experts are bullish about cloud computing, and are
forecasting robust, double-digit annual growth. The market potential for cloud
computing is forecasted to be $66B by 2012 for software, platform and I
nfrastructure as a service; adding business process as a service and cloud support
services could push the total cloud market to well over $100B.
______________________________________________________________
Element consider to form winning strategy for 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 envision
new models to better serve customers.

We will see a wide range of cloud business models emerge over the next few years,
and most of these will likely fail. Of the ones that survive, the profitability of the
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 market into 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.
 Software as a Service (SaaS). Deliver a standardized application running on
a 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 END USER

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 of the 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 that’s 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 include
training and consulting For example, SalesForce.com offers training and consulting
to complement its 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 risk in areas
that are important to 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.

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
cloud’s 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 provider to 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.
___________________
TECHNOLOGY-Operation
The operations component of a cloud business model includes 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 for the development of these 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.
__________
STRATEGY
Service provider strategies focus towards address pricing models, go-to-market
approaches, business intent and value propositions, in addition to defining services
and customers.

Current cloud providers are capitalizing on first-mover advantage. They are

delivering services, learning from their mistakes, and capturing market share along
the way. Some of their 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 rather than purely based
on 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 sell to 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 for long run and their competition.

1.Amazon
Type of Cloud: 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): Amazon Elastic

Compute Cloud(EC2), Amazon SimpleDB, Amazon CloudFront, Amazon SQS. It claims to
have 82 billion objects stored in Amzon S3 (Simple Storage Service)
As on date they are the only provider to offer everything .

Amzaon is the undisputed winner, without any much competition till now. We may
call it 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 via Web
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 all the
entities in the ecosystem. Microsoft has always dominated is the operating
system. It started on the desktop, moved to the server, and now it is moving
into the cloud

Microsoft made a major leap with the release of Office Web Apps, a cloud-based
version of its Office software. Web Apps lets users to upload documents from their
computer to Microsoft’s cloud-based Docs.com, and allows accessibility from any
machine or device. Here the documents will also be stored in remote server instead
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.
__________________________________________________________________

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.
___________________________________________________________________

3.Google

Type of Cloud: Public Cloud

Type of Service: Saas and PaaS
Key Offerings: Google Apps and Google App Engine

Specializes in PaaS & SaaS. As SaaS it offers Google Apps: a web-based

communication, collaboration & security apps which includes, Gmail, Google
Calendar, Google Talk, Google Docs & Google Sites. 15 Sep 2009, Google
announced that it will provide GovCloud, which will host Google Apps in a
separate data environment with enhanced encryption for meeting state and
government security standards.

As PaaS it offers Google App Engine: a platform for developing and hosting web
applications in Google-managed data centers. Currently, the supported
programming languages are Python and Java (by extension other JVM languages
are also supported).

You build your application using Google’s PaaS and Google handles deploying
code to a cluster, monitoring, failover, and launching application instances as
necessary. Good news, Google App Engine is free, but only up to a certain level of
used resources.

Google’s strategy is to put its presence in as many clouds as possible. Hence the
company’s launch of products such as Living Stories project in the news media,
promotion of Google Apps in the enterprise market and recently the launch of
Google Groups, a product that is integrated with the existing Google Apps such as
Google Docs, Google Calendar, Gmail, Google Sites and Google Video.

As part of its cloud strategy Google wants to use Google Groups to make the
product more attractive to the enterprise sector since one of the product’s main
features is project collaboration among employees located in diverse sites. This
report also looks at Google Trends and Insights and how they are tied to Google’s
strategy in building an established presence on the Internet cloud. It also analyzes
Google’s future online strategy and demonstrates its relation to the cloud. 
___________________________________________________________________
Microsoft and Google have been in a  very public debate over which cloud-based
program 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 of
work.
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 2010’s 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 world’s most widely used editing
software adds to the “little better” factor however Microsoft’s attempt to step into
the cloud might be small and a little late.
___________________________________________________________________

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 Cloud

Type of Service: SaaS and PaaS
Key Offering: Lotus Live and IBM Web Sphere Cloud Burst Appliance

The Big Blue has announced Blue Cloud computing platform way back in the year

2007. IBMSmart Business Development and Test on the IBM Cloud is designed
to augment and enhance software development and delivery capabilities,
particularly in large enterprises.  On 16 Nov 2009, IBM announced the world’s
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
Leader in SaaS. Offers Salesforce CRM (Sales Cloud 2, Service Cloud 2)
& Force.com Platform (Custom Cloud 2, Development Platform).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 have
them federated on-demand to partner-hosted public clouds. vCloud is giving a
tough competition to more established Amazon’s AWS.

It was recently in the news for partnership 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 of Private Cloud.

7.Tera

Offers Cloud Ware: architecture to provide an open framework to allow the

development of a cloud computing environment that’s open enough to work on any
web/enterprise application. Lack of cloud computing standards has lead to
a vendor-lock, where every cloud vendor has proprietary cloud. What if we want to
share our application among different vendors/clouds? Currently we can’t. 

 Cloud Ware is a big step towards bridging the clouds, and creating standards

which will lead to open environment for clouds. Hope, soon consumers will be
able to move around with their application and data, that will span multiple clouds.
8. NetSuite 

Specializes in SaaS. It offers Suit Cloud Platform: a comprehensive offering of

on-demand products, development tools and services designed to help customers
and software developers take advantage of the significant benefits of cloud
computing. Also a leading provider of web-based  Business Software Suite for
CRM, ERP tools and Accounting.

Above companies are out of the best player in the world.

Cloud offering by Indian Vendor

9.Zenith InfoTech

 Base Location: Mumbai, India

 Cloud Offering: PROUD
 Cloud Type: IaaS

It is an IT product development and innovation company. With an investment of

INR 175-crore, this is considered as India’s one of the most ambitious R&D efforts
in IT. The company is expecting 2,000 - 3,000 clients of Proud in next 2 years.

10.Wolf Frameworks

 Base Location: Bangaluru, India

 Cloud Offering: Wolf PaaS
 Cloud Type: PaaS

Founded in 2006, it provides affordable cloud service with 99.97% Service Level
Assurance. Wolf is a browser based On Demand Platform-as-a-Service (PaaS) for
rapidly designing and delivering database driven multi-tenant Software-as-a-
Service (SaaS) applications. One can get started without writing any piece of code
whatsoever. Coding only comes in when you need custom templates or specific
integration Business Rule actions.

11.OrangeScape
  Base Location: Chennai, India
 Cloud Offering: OrangeScape Cloud
 Cloud Type: PaaS

The experience of building business applications of varying complexity across

industries has made OrangeScape the most comprehensive PaaS (Platform as a
Service) offering in the market. You can transform your idea into a SaaS
application and can showcase them to your investors, partners and potential
customers. It has an impressive list of customers viz. Ford, Pfizer, Geojit, Sify etc.

12.TCS

 Base Location: India

 Cloud Offering: ITaaS
 Cloud Type: IaaS+SaaS

ITaaS is a Nano in software. ITaaS framework is 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

 Base Location: Mumbai, India

 Cloud Offering: Cyn.in
 Cloud Type: IaaS on Demand SaaS

Cyn.in on demand is a cloud hosted service and is the quickest way to get your
own 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 that
is maintained & updated by Cynapse and hosted by Amazon, ensuring an
infrastructure-free and worry-free Cyn.in experience.

14.Wipro Technologies

 Base Location: India

 Cloud Offering: Wipro w-SaaS
 Cloud Type: SaaS

Wipro has built w-SaaS, a platform for rapid SaaS enablement and deployment on
cloud, using some of the commonly accepted trends in software engineering and
open standards. Wipro chose Oracle (Oracle Database, Oracle WebLogic
Application 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

 Base Location: Mumbai, India

 Cloud Offering:Cloudnet, Cloudserve, PrivateCloud
 Type: IaaS

Netmagic looks like a dedicated cloud provider in Indian market with a potential to
become a big player in near future.

16.Reliance Data Center (a division of Reliance Communications)

 Base Location: India

 Cloud Offering: Reliance Cloud Computing Services
 Cloud Type: IaaS+SaaS+PaaS

A hosted infrastructure service based on the Microsoft platform for Enterprises

and SMBs - geared to deliver India’s largest cloud infrastructure.

17.Infosys Technologies

 Base Location: Bangalore, India.

 Cloud Offering: Cloud based Solution for Auto Sector.
 Cloud Type: SaaS 

Infosys’ Cloud Computing Consulting and Service offerings enable organizations

to adopt the Cloud Computing platform selectively and effectively. But brand
Infosys, the most recognized IT brand from India has to put significant efforts to
catch up with other cloud providers.

18.Synage

 Base Location: Mumbai, India.

 Cloud Offering: DeskAway
 Cloud Type: SaaS
A Web company delivering software as a service (SaaS) over the Internet to the
global audience.DeskAway is the flagship product of Synage, based on a monthly
or yearly subscription model, requiring zero-installation, and powered by a cutting-
edge user interface, It’s 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.
 CONCLUSION

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.