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Utility-based
computing: Future of Indian IT?
Focusing on
the implementation of utility-based computing, MOHAN BABU writes that the
lack of basic infrastructure and low rate of IT utilisation (outside the core
software industry), may be a big advantage in India, for starting with a clean
slate
In my column
recently, I had talked about the various predictions and trends shaping up in
the tech world. In the column, we also looked at some of the recent predictions
made by Gartner. Of all the recent trends, perhaps the most notable, and the one
receiving most focus, is the shift towards utility-based computing.
Interestingly, the IT giants including Microsoft and IBM, are also betting their
future strategies on this paradigm.
Before we get
into further details, we will first try to answer the question: what is
utility-based computing? Last year, Bill Gates set a new agenda for Microsoft
around “trustworthy computing”. He defined it as: “Computing that is as
available, reliable and secure as electricity, water services and telephony.”
He went on to
draw an analogy between utility companies and how they provide ubiquitous
services to individuals and companies. He was evangelising a similar ubiquitous
service for software systems too and it does sound attractive. As defined by a
recent Computerworld article: “Utility-based computing is an attractive concept,
both from an operational and a financial standpoint. Com-panies pay only for the
CPU, storage, servers or other equipment and services they need; costs are
fairly predictable; and IT organisations can ramp up quickly with new
applications without having to build out additional infrastructure, buy
equipment or add personnel to maintain those systems.” In a sense, utility
computing will resemble a grid of inter-linked resources than a single
outsourced data centre.
The trend towards
utility-based computing, although currently at a very nascent stage, may be
helped by another major paradigm shift: movement towards large-scale IT
outsourcing. Most Fortune 500 CEOs do not need a hard sell on IT outsourcing as
the cost benefits are already very well documented. This is especially true of
IT systems and software that are not the core competence of organisations. For
instance, in most organisations, HR and payroll management systems are not the
core competency, but just an additional functional area that needs to be taken
care of.
Organisations are
increasingly outsourcing such systems to big integrators—the likes of IBM, EDS,
Accenture, et al. These integrators, in turn are looking for ways to cut costs
further by either subcontracting the work or utilising economies of scale, where
utility-based computing comes into play. Many of these big players have started
offering utility-based computing, especially industrial grade solutions, as a
suite of solutions to complement their outsourcing models. In the past few
years, IBM, HP and Sun have invested in developing technologies for utility
computing infrastructure, and with the big players marketing the solutions,
others are beginning to take the bite.
Let us now shift
gears and see what utility-based computing can do for a country like India.
There are two key arguments one could make for the adoption of utility-based
computing model in India:
* Lack of
basic infrastructure may be an advantage: Firstly, a look at the lack of
basic infrastructure and low rate of IT utilisation (outside the core software
industry), which may be a big advantage. This lack of infrastructure is almost
similar to the giant leap we have taken in the adoption of wireless technologies
where we basically started with a clean slate. With no “legacy” technology to
fall back on, Indian entrepreneurs and telecom companies were able to directly
leapfrog into the adoption of latest technologies with very little resistance,
done at a very low cost. This same argument can be made for the adoption of
utility-based computing.
Indian IT is
divided into two disparate groups: the haves, i.e. the big software giants and
IT companies; and the have-nots, i.e. the rest of the industry—traditional
companies which have been slow to adopt software technologies. This presents an
enormous opportunity to push the use of utility-based computing, whereby the
companies which want access to the latest payroll, HR or CRM systems only pay
for the transactions they have, instead of investing large sums of money in
laying the groundwork.
* Bottom of
the Pile (BOP) mentality in India. In a recent article on “Serving the
World’s Poor, Profitably,” Professor C K Prahlad, the renowned management guru
and thinker, talked about the various strategies for serving the BOP markets in
India. Although the article talked mainly about the consumer goods industry and
how Multinational Companies (MNCs) could fine-tune their strategies to serve the
bottom of the pile, this notion holds great promise for Indian IT companies too.
Indians are generally loath to invest large amounts on infrastructure and
utilities unless a definite ROI can be assured. If a large software vendor can
provide pay-as-you-go utility based computing assuring the latest systems at a
per-transaction cost, it is sure to capture the imagination of the large
traditional companies and multinationals in India.
With these two
arguments in mind, perhaps it is time for some of the big players in Indian IT,
or even some of the multinational software giants to start thinking of ways to
not only set up a base but to try and exploit the domestic market.
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