Five reasons why enterprises do not like cloud

BANGALORE, INDIA: The furore over the cloud computing technology is precipitating as the industry is realizing what it is and what it can offer.

However, enterprises are still at large when it comes to take the bait. Cloud vendors claim a lot of benefits that a cloud can offer to enterprises, however there are many reasons for the latter not to be there. So what is it with them that they refuse to avail the benefits that it promises. Let us look at the reasons.

Cloud: Not a place for my business critical apps

Large businesses deal a lot with critical data and it does not make sense to them to put it on a public platform like cloud, which are today more and more becoming the target of cyber attacks.

Prasanjit Mukherjee, GM, Information Technology, Reliance ADA, says: “We are not looking at cloud for our business critical data applications since we have a huge database of billing and consumer information data, for which security is of highest priority. Moreover, ours is a government body regulated business, which does not allow us to move to a cloud owing to reasons such as security and localization.”

Tamal Chakravorty, CIO Ericsson India, also feels the same. “Our interest in cloud is very small. Unless it is ready to host important applications and critical applications and can guarantee performance, reliability etc., it is not useful for me.”

Now, coming to the second reason, do not be surprised if we say even the pay-per-use model or access information on the move, two of the main features for which cloud stand for, also fail to impress the enterprises.

Pay-per-use and access data anywhere/from anything concepts do not work

“Why should my enterprise invest a lot of money to host the information of 10,000 guys on cloud?  What is the benefit? Why would I pay-per-user and buy few GBs of data per user? I can very well develop an in-house infrastructure to do that,” notes Chakravorty.

Anna Gong, VP, Virtualization, Service Automation & Cloud, APAC, CA Technologies, adds that pay per use and consumption-based utilization models are still rare.

“Subscription models are more common, however, they tend to be more expensive for enterprises versus SMBs, when an ROI model is created and analyzed,” Anna adds.

Angira Agrawal, head & associate vice president, NEC Cloud business in India, notes that in large enterprises, because of usage patterns across different departments, it often makes sense to structure the capacity (and therefore the commercials) with some fixed thresholds, with the variable / periodic needs being on a pay per use.

“Choice of the most appropriate payment model is a commercial decision, based on economics.  Usage, variability of the usage, and the pricing available for different usage scenarios determine the one that is the most effective. Our experience has been that enterprises prefer a blend of fixed monthly fees, with the ability to pay per use for data storage beyond specific thresholds,” Agarwal adds.

Chakravorty, on the other hand, says he would be happy if he could host some of his business critical applications such as CRM on cloud or if his R&D team could develop application that can sit in a cloud or if he could build a new office without bothering about building network.

However, what stops him from doing so is, “If I look at my people, they are either on mails, or working on excel sheets and word documents, all 365 days. If these three applications are put in cloud then they will be  happy to go to cloud and work from wherever they are. However, that does not happen today. Until the connect anywhere from any device to access data concepts does not work, it is of no use to me.”

{#PageBreak#}

The third reason we would like to highlight is not something new, it is the very much discussed security and data privacy concerns.

Security and data privacy are compromised?

Security is said to be the main reason preventing enterprises from looking into cloud. Ever since the term cloud came, we have been hearing about the security concerns and concerns about data privacy in and around it.

Now, whether these are mere 'perceptions or psychological human belief that having our arms around our data ensures it is more secure,  says Agarwal, whose view is also backed by cloud service providers. Or, are they something in real and need to be pondered upon is the issue today.

Anna agrees that data protection, identity breach and compliance issues indeed prevent enterprises from adopting cloud.

And Mukherjee is not planning to look at cloud for even storage or data back-up because he is more at home and all his major business applications, which are on SAP servers, sit in a very secured zone in Mumbai, with a DR site in Bangalore.

S Sriram, CEO, iValue InfoSolutions, avers: “With multiple organizations sharing the same hardware through virtualization, cloud service provider needs to clearly articulate how they ensure data privacy between organizations and with the service provider.”

Now, coming to the fourth reason, one that is most serious, is who has to take the responsibility of the data that is sitting on a cloud, is it the service provider or the consumer. Such things are still debated and will take some more time to arrive at a consensus.

Whereabouts of data and SLAs not defined well

It also matters for enterprises where their data resides. Now, if it is on cloud, even the service provider cannot tell you in which data centre, residing in which part of the world, is your data being hosted on. Yes a lot can be specified in the SLAs, but even SLAs fall short when it comes to diffusing the uncertainties.

“Some government entities might insist that their data remains within the boundary of the country to ensure minimal risk during litigation process with service provider. We have still not evolved to an extent where we can compare service provider offerings, SLA, price and take a call on cloud front,” notes Sriram.

Anna notes that lack of maturity of infrastructure could cause uncertainties in Service Levels Agreements (SLA).

“SLAs cannot be reliable when your infrastructure and apps are outsourced and you have less to zero control over service levels. Moreover, financial models have not caught up with the market. Public cloud providers are perceived to provide the most flexible cost models, however, when it comes down to it, customers are still locked in two-three years’ worth of contracts and they do not even own the licences,” Anna adds.

Moreover, most Indian companies we know of in India have taken an IT and ROI based approach to cloud. The problem with that is that virtualization is mostly enough to consolidate infrastructure and a cloud (Automated Self Service Infrastructure) is not required, notes Aditya Yadav, ATS/R&D Head, SunGard India.

{#PageBreak#}

Now, coming to the fifth and last reason we will see how the very buzz about the technology is hampering its traction. Also, by being new, how large companies are hesitating to be the first to experiment it and so are ready to give it a 'wait n watch'.

The Cloud buzz and I do not want to be the first mindset

“There are a few factors affecting public cloud deployment in enterprises in India. At first, the perception of cloud computing has been over hyped, thus confusing the market. Some enterprises face hard time figuring out where and how they should start. Although they all know they need to begin with some form of cloud(s) to become a more efficient and agile organization but not enough market awareness is being conducted on the differences and benefits of various clouds,” Anna adds.

“Secondly, infrastructure and connectivity reliance is critical. With India moving into more advanced  broadband and mobile technologies, like 3G and 4G, we will see considerable advancement in broadband connectivity and reliance. Another thing is that not many want to be the first to try out cloud. They would like to see how does this shape up,” she quips.

Prasenjith Mukherjee adds to it that in their kind of business none of the organization across the country has tried anything on the cloud front.

“Moreover our business is localised to a particular geographical area, where connectivity becomes an issue only to an extent, but moving to cloud and spending money does not look viable business as of now,” he opines.

Sriram is of the opinion that since benefits of cloud are tangible to business, this initiative will be driven more by CEO/CFO moving forward.

“Even mobile phone adoption took a while before gaining traction. Being a paradigm change in the way we think, consume, own, account etc. It would take some time for the ecosystem to evolve before we see a rapid adoption phase, sooner than later,” Sriram adds.

Agarwal likes to differ from the whole talk and says that public cloud for enterprise storage is now on the active consideration list, and overall usage is certainly on the rise. And, if some enterprises are still evaluating, but not able to take a firm decision on public cloud storage it is 'primarily owing to the unique needs in their business, around private cloud solutions that they may already be considering, misconceptions around security of data stored in the cloud, and legacy investments that may already have been done.

Yes, the last point about legacy investments is very valid. Similarly, there are also other issue with regards to cloud-to-cloud migration, and cloud exit.

"Companies with dedicated hardware need to find some use for the left over hardware. The most early adopters of cloud in the West have taken an Organizational Agility based reasoning to adopt cloud, such adopters are not very concerned upfront about standardization, legal, privacy, compliance & regulatory and they work with them as and when they need to be addressed. The former category of ROI based approaches to cloud are more concerned with the issues mentioned earlier and are late adopters of Cloud,adds Yadav.

So, these were the challenges that cloud service providers will have to look into if they are serious about large enterprise as their prospective market.