Emerging markets seem to have the clear advantage when it comes to adopting new technologies. Without the burden of older systems already in place, and with less developed infrastructures, countries in emerging economies are showing widespread acceptance of mobile solutions and cloud computing – more so than countries in mature markets. This process is called “leapfrogging”. But, as is often the case, when you take a closer look at the trend, it becomes apparent that it doesn’t apply to all emerging markets equally.
India slow to adopt the cloud
A recent survey conducted by the Business Software Alliance (BSA) showed that while countries in the Asia Pacific and Latin American regions – like Thailand, Malaysia, and Argentina – use cloud services more extensively than the U.S. or Germany, other emerging markets have “more work to do to integrate into the global cloud market.” In addition to China and Brazil, India fell into this category. Gartner, the IT research company, also described the current state of cloud adoption in India as “slow” at its Infrastructure, Operations and Data Center Summit in 2012.
But the business world shouldn’t be too quick to count India out of the cloud game. Gartner predicts that by 2013-2014, the cloud will start seeing “healthy adoption” in the country. And according to a recent study from Zinnov Management Consultancy, based in Bangalore, India, investment in the cloud will soon make up more than 20% of total IT spending in India.
Read on the next page: 4,900 SAP customers in India: 3,800 are SMBsThis growth is expected to occur in the public cloud, in particular, which comprised 20-22% of the country’s overall cloud market in 2011. “Public cloud market is expected to grow at 55% in the near future and will become a default choice for new IT investments, especially in the SMB segment,” says Praveen Bhadada, director market expansion at Zinnov Management Consultancy.
4,900 SAP customers in India: 3,800 are SMBs
That is the general consensus, according to several researchers and experts in the market: large enterprises will be interested in adopting a private cloud, while small and mid-sized businesses (SMBs) will be more active in the public cloud. With around 400 million SMBs in India, making up around 20% of the country’s GDP, there is a tremendous growth opportunity here. SAP, which claims over 47% of the Indian ERP market, will likely be a major player in the cloud business, especially in the small business space. Over 3,800 of their 4,900 customers in India are SMBs.
In an interview published on smeworld.org, Priyadarschi Mohapatra, head of emerging business, SAP India, shared his opinion on the level of IT adoption among Indian SMEs: “With the evolution of SMEs, there is a growing need for adoption of newer technologies […] The IT trends gaining popularity among SMEs include cloud computing and mobility solutions.” He went on to say that the implementation of new technologies is a necessity today, rather than just a means of doing business in a “slightly more efficient” way, as it was often regarded in the past.
Read on the next page: Are Indian companies missing the point of cloud computing?In SAP’s portfolio of cloud solutions, there are two SMB-specific options: Business ByDesign and Business One OnDemand. These are both end-to-end ERP applications that cover a range of essential business processes: sales, accounting, analytics etc.
Are Indian companies missing the point of cloud computing?
According to one industry professional, however, many SMBs have a different motivation for using the cloud: disaster recovery and back-up. At a recent debate held in Mumbai, top executives from local and global technology companies discussed the topic, “Has cloud computing come of age?” It was during this event that Suresh Ramani, CEO of Techgyan, said that SMBs are primarily concerned with aspects such as disaster recovery: “The most important thing for these companies is not cost but uptime.”
But large enterprises also seem hesitant to embrace the full potential of cloud computing. “Only peripheral applications are being put on the cloud. Logistics and transportation applications, for example, and not core ERP applications,” said Vijay S. Mahajan, VP centre of excellence and infra projects, corporate IT at Mahindra and Mahindra, during the debate.
Read on the next page: Investement is extended to the cloudPerhaps that’s the reason SAP maintains that its cloud offerings are to complement, not completely replace, its on-premise solutions. Neeraj Athalye, head of cloud business, SAP India, explained the idea in an InformationWeek article: “Some of our large enterprise customers have chosen our supply chain solution on-premise, but are also looking for a cloud-based reverse auction platform or a cloud sales force automation. So the investment in on-premise is extended to the cloud or mobile platforms.”
Finally, if there’s one finding that makes it clear that Indian companies haven’t fully bought in to the cloud (yet), it is this one, released in a study by Tata Consultancy, India’s largest IT services provider: “The heaviest users of cloud applications are the companies that manufacture the technology hardware that enables cloud computing.”