Indian outsourcer to offer cloud computing services

Cloud computing can save money, says Patni

Outsourcer Patni plans to use cloud computing as an extra tool to retain customers on tight budgets.

The IT services firm sees the technology as a strategic differentiator to weather the recession and is trying to educate clients on how the hosted model can be used to generate savings.

According to global chief technology officer Satish Joshi, Patni’s smaller clients tend to go for cloud-based solutions more often, but even that customer segment is proceeding with caution.

“We see things developing in the sense of how technology is being developed and moved out of enterprises and into third-party locations among mid-to-small organisations, but we haven’t seen that happening to the same extent in the larger segment of our clients,” said Joshi.

“Smaller clients would rather buy the computing plus storage-on-demand service from a cloud provider and try to just get rid of the datacentre expense, but the larger businesses are still dipping their toes in the cloud.”

However, Joshi added that there is anecdotal evidence of a fast uptake of cloud in applications such as email and content management in larger clients.

“Customers are more inclined to move their peripheral systems that are not critical to their market differentiation to the cloud. You can’t imagine an enterprise without a reliable email service, yet it is not really part of their core processes,” he said.

Citing the experience of one of Patni’s clients, Joshi said that fears in relation to cloud computing include intellectual property being exposed to the public in case of outage and assurances that firms would save money under the hosted model.

“We needed a lot of proof of concept and spent at least a quarter [to come up with a business case]. The pricing mechanisms our partner was using were so complex that it took a long time for us to figure them out and build the financial models to demonstrate to them that it was actually viable,” he said.

“Besides, those who run datacentres often don’t really realise how much it costs them to run their facilities, as cost – depreciation, power bills, air conditioning - is often spread across so many departments and it becomes quite difficult to put it all together and maybe for larger organisations this is a much bigger challenge.”

Generally, businesses are often hesitant about the cost of change, even in applications such as word processing and email, said Joshi, who admits that the cost of changing and retraining can sometimes be so high that it makes the whole process pointless.

“We follow a fairly structured process to assess what technology is being used by the business and what can be moved. In some cases you can use the same technology – Microsoft Office, for example – but just virtualise it. Your savings will be limited but still better than zero,” said Joshi.

“But if you want a bigger bang out of this then you need to analyse the cost and the impact of things such as email archiving and, if using Google Apps, not being able to open docs in Office 2007,” he said.

“It becomes a very detailed discovery process to be able to evaluate the minor details and put a number on it. So we are asking all the right questions and then building a cost model once we get the answers.”

Joshi said security concerns around the cloud, as well as stability, are also points to be considered.

“Security is a much more harder challenge to overcome. The only assurance you can give clients is how strong the operating processes and storage mechanisms at the computing storage provider are – but however strong a case you can build, it is really hard to demonstrate they are safe,” he said.

“One the stability point, our clients are going for internal cloud solutions rather than Google Apps. My view is that if businesses can’t afford to have the service provider give no guarantees on uptime, then Google Apps is maybe not the answer.”

Joshi’s advice to CIOs planning to define a cloud computing strategy is to following a “bottom to top” approach and experiment with the technology in areas that are simpler to understand and quantify and where immediate savings can be generated.
He believes that “virtualising in some way”, whether is it is through shared shared services or cloud computing, will be an instrumental tool for busineses wanting to cut down on costs.

“However, it is really important that an integration framework is put into place, to guarantee that you are not spending more than you are trying to save,” he said.