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India becoming the new battlefield for data center providers


After the entry of Microsoft and IBM in the public cloud data center market, and with more to follow, the CIO will have to be a connoisseur in weighing cloud options by Abhishek Raval

Sept 28, 2015 – Microsoft launched three cloud data centers (DC) in India.

Oct 13, 2015 – IBM Softlayer launches a cloud DC in Chennai

Feb 21, 2016 – DigitalOcean, world’s second largest cloud computing provider announces plans to set-up a DC in Bengaluru in 2016

March 7, 2016 – Oracle announced cloud machine- a service, which allows companies to bring the public cloud in their own DCs (on-premise); Oracle has also announced that it plans to set up its own data centerin India later this year

Amazon has also announced plans to launch public cloud DCs in India

As one can see from the above announcements, the action in the public cloud DC is happening thick and fast. It’s a perfect storm for the DC Industry. The government has taken up the task of Digital India. The work of laying out fibre optic cables as a part of the National Optical Fibre Network (NOFN) is running at a brisk pace; the Indian startup community has shown its vibrancy and the government has announced a dedicated programme for startups in the form of ‘Startup India, Stand up India’; the focus towards data localisation has also been growing – and especially after the entry of IBM, Microsoft and the plans announced by other foreign public cloud DC providers to set shops in India, there are more options available to the CIO.

The Indian colocation providers are evolving and maturing towards providing cloud services. “Most of the Indian colocation providers are not traditional providers of cloud. They are aspiring to become cloud service providers but they are flexible – offering colocation, rackspace and cloud-based services,” observes Santhosh Rao, Principal Research Analyst, Gartner.

That said, some industry observers believe that the Indian providers are not true cloud providers. “The Indian cloud providers are still developing in terms of self service & multiple platform options that can be offered to customers,” points out Daykin Creado, CTO, ItzCash

In this scenario, when it’s going to be foreign public cloud data center providers versus Indian cloud enabled managed hosting providers, CIOs should weigh the the pros and cons of both the Indian and foreign providers. However, Vikas Gupta, Head IT, Essar Group, quips, “It’s not about Indian or a foreign provider. What matters is how they deliver their services.”

Public cloud data center services: Indian vs foreign providers
The foreign public cloud DC providers have a network of DCs globally. It allows them to scale with the wherewithal required for typical large scale volumes for selected business verticals. “These companies are able to cater to such large volumes easily compared to others. For example, when contracts are signed during provisioning of data center space across the Asia Pacific region, they have a network of data centers, which allows them to scale better,” says Sanchit Vir Gogia, Chief Analyst, Greyhound Research.

This adds as a huge advantage compared to the Indian providers who are primarily local. “While Indian providers do a decent job in catering to mid ticket clients, they face a problem to serve the companies having a global presence, which requires them to tie up with other global providers who will further provide services,” points out Gogia. They have to depend on other providers which can create unnecessary service level dependencies.

“The foreign providers are mature and focused on being self-service. The consumer can log on to the website and select a payment option. In a couple of clicks he is ready to go. That’s how the cloud is supposed to be –simple to use, easy to provision, with on demand scale up, scale down and billing. This works very well for small to medium enterprises, startups etc who may not have any experience in running their own infrastructure or with unpredictable workloads. At one level it’s very good because they have brought in a level of standardisation to the cloud and done away with the need to have specialized in-house skills to setup infrastructure for network, storage, compute, application servers, databases etc and they have the APIs to help automate provisioning, deployment and scale out. This is all done in a public and mostly transparent pricing manner,” says Creado.

The investments made in the kind of IT infrastructure hosted by foreign providers is very robust and hence the infrastructure on board the DCs is purpose built for cloud. “I know of a foreign provider whose entire IT infrastructure has been manufactured by a particular vendor. It’s massive. These are not just boxes deployed in the conventional sense. But their entire rack is like one server. The infrastructure that sits underneath the cloud solution doesn’t have common servers. They are custom designed and engineered to host the cloud solution and provide robust performance,” says Anup Purohit, CIO, Yes Bank.

Thus the foreign providers are able to deliver better performance, uptime and availability, security. It also results in those machines being equipped to take more load and offer better features. Few Indian providers have bought the regular size blade servers or just boxes as if it’s for individual customers. The strategy is to keep adding the boxes and host a cloud on it.

From an applications perspective, the Indian providers face a major threat, however on the infrastructure front, there will be hardly any impact. “The foreign companies, since they also have a large portfolio of applications, which are standardised globally, they might be able to deliver it to the Indian companies at a reasonable price than Indian providers,” says Mani Kant Singh, Chief-IT & CISO, Orbis Financial Corporation. Hence there is a possibility that Indian providers start buying licenses from foreign providers to stay in the competition.

Indian managed cloud hosting providers: Where do they have the edge?
The advantage with Indian providers is they understand the Indian market better. The foreign providers will take some time to understand the Indian mindset, buying mentality and how budgets are allocated. “Whereas the Indian public cloud providers have already stabilised themselves within the Indian ecosystem – the buying mindset, customisations required for the Indian corporates, the Indian bandwidth availability vs the capability. I don’t see much competition for the next 24 months,” says Mani Kant Singh.

The cloud offerings by large foreign public cloud service providers such as AWS and Microsoft Azure are highly elastic and agile and they provide resources via a rich and highly evolved self-service catalogue. “They are also in a better position to support complex deployments such as Big data and IoT when compared to India service providers. However, customers need to manage and maintain the deployment themselves or use the services of a managed service provider partner of these cloud providers. This creates some additional level of dependency” says Rao.

As against this, Indian providers are more flexible in their contracts and support clients with their specific environment requirements, including legacy environments but are not as agile and elastic as AWS and Microsoft Azure” claims Rao.

The communication aspect is important. “Indian CIOs can have face to face conversations with the local vendors. That’s not possible with players like Google. However in case if a company is an existing large consumer of the likes of Oracle or Microsoft, then a face to face meeting is possible,”

The Indian CIOs want to meet in person. “They want to have a few meetings to build a comfort level. We are yet to have that trust factor in India,” says Piyush Somani, CEO, ESDS. The Indian providers do a fantastic job of handholding the company in its infancy. “I know of a company, which later came out with an IPO – when it launched operations – it required a lot more dedicated support, wherein the IT team was looking for a closed loop working with its providers. That’s where an Indian provider scored above a MNC public cloud provider,” says Gogia.

The Indian providers are a lot more flexible compared to their foreign peers, who provide structured offerings. “They have a prepaid infrastructure services model which is more than a compute based pricing model. They have a different business model than a managed services flexible model of the Indian providers. This is a huge difference,” says Gogia.

Anup Purohit, CIO, Yes bank does not see much difference between the technology, infrastructure provided by the foreign public cloud data center vis-a-vis Indian providers. “I have visited the data center sites of both the foreign and Indian providers,” he says.

At times, Indian players are slightly better because they are flexible in meeting specific requirements from the clients. “The foreign providers at times, are stringent and inflexible to meet the needs. In the cloud offerings, the foreign public cloud data center providers are slightly better. This is from a bank’s perspective.”

Yet the foreign providers may not live up to the expectations for every business application. It depends what the company decides to host on the public cloud. “I was evaluating moving the email on the public cloud and was studying a particular vendor. The study findings led me to go against the move,” says Purohit.

As far as licensing is concerned, the foreign providers offer a very complex model, which might land up the CIO in a tangle. “You need to be aware of licensing requirements when deploying software in the cloud. Given the plethora of already complex licensing metrics that differ from one enterprise vendor to the next, be it sockets versus cores, hard partitions versus virtual machines, x86 versus Sparc versus Power etc that exist in the on premise model, moving to the cloud further complicates this. One needs to be cognizant of the underlying infrastructure in the cloud where you are deploying your licenses to ensure that you are compliant with all licensing requirements be it for the application server, database etc. Also Disaster Recovery & its associated licensing requirements need to be carefully considered,” points out Creado.

Cloud adoption: Overall scenario
So, how should CIOs strategise their cloud adoption? “So, for me, the entry of a foreign cloud data center provider would be impactful only when I require a cloud based solution which would be based on a business objective,” states Creado.

There are certain inflection points to look out for when considering a cloud based solution. “These could be triggers like a hardware refresh, technology obsolescence or augmentation of capacity,”
The other kind of inflection point is when launching a new product or a new service – how confident is the business on how much capacity is required – “do I want to buy three years Capex upfront or do I want to put the infrastructure on the cloud and see how the business scales? Depending on volume and how the business scales, it may be cost effective to invest the Capex rather than Opex in the long run – this is also sometimes a factor of what the CFO wants to do,”

“All factors such as local presence, regulations, Managed Services contract considerations, Security, SLA’s, Latency for sensitive apps like telephony, online gaming etc do come into the consideration list for CIOs to make their decision regarding public cloud adoption,” says Sourabh Chatterjee, Senior VP, Head – Technology, Online Sales and Digital Marketing, Bajaj Allianz General Insurance

CIOs want to move to the cloud on their own terms. They are looking for choice between adopting a private, public or hybrid cloud model. “They are also seeking to leverage their existing IT assets while they make a smooth move to the public cloud. They are seeking options that offer hyper-scale, are compliant to in-country and global regulations, and offer enterprise-grade security and privacy,” says Srikanth Karnakota, Director – Server and Cloud Business, Microsoft India.

The Indian CIOs are not blindly putting everything on the public cloud. The journey of the Indian CIO to the public cloud has been very picky because of a number of reasons.

A number of them have a lot of legacy systems already. Change management is very difficult. There are latency issues because at times the data centers are in the USA etc. “More importantly there are many applications which are running on a single tenant model and to move them on a public cloud is very complex,” says Gogia.

However the move towards the cloud has already started. “CIOs, to begin with are moving Infrastructure, DR, email to the public cloud. These are non mission critical applications and relatively easier to manage and less complex. No change management required. It’s a more definitive use case,” states Gogia. However, sometimes having to move ERP on a public cloud is complex. At times, organisations require response times of milliseconds. The public cloud cannot provide that response time.

The use case is more complex in the applications space. More non complex applications like CRM, UC are now being moved to cloud. The CIOs are taking a more careful journey to the public cloud.
To ensure compliance, security to work in a public cloud environment is very difficult than in a traditional environment. “To adopt public cloud also requires a lot of preparedness from inside the company. The IT decision makers should make sure that the applications will work fine in the public cloud with equal amount of availability as was before. They also have to look at the cost impact,” says Gogia.

Some companies are successfully undergoing that change and some are struggling to cope with the public cloud. Managing security in a single tenant application is easy but one has to be a few notches higher to manage security after the same application is ported to a public cloud, which is where companies are struggling. They will have to make changes internally to structures that change. It takes time for these practices to settle down in the organization.

There is a consensus in the CIO community about the applicability of the cloud, the economies of scale it offers. However, like every technology, the cloud will take its own time to become mainstream. As more and more cloud standards get accepted, they can play a role in accelerating the adoption of cloud in the enterprise.

ab[email protected]

If you have an interesting article / experience / case study to share, please get in touch with us at [email protected]

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