Customer Experience in the Clouds

This article took me a very long
time to write – actually months! I got delayed with it for many reasons and as
the delay mounted, interestingly, the cloudy” world kept marching on. And as
if the fast movement in the technology space was not enough, along came Apple
with iCloud!, then SAP attempting to acquire
, a cloud based provider of Human Resource solutions,
and now Oracle missing earnings (some analysts attributing this to slow cloud”
progress). Net result, I am too far behind….but rather than moving on to the
next topic let me go for the last hurrah….

Well, the original idea of this
article came after being asked several questions in town halls and
meetings/discussions about the newest jargon to enter the crowded jargonized”
computing world.  Suddenly, there is a rush to brand oneself as a cloud”
provider, lest be left behind.  Every IT player has a cloud” offering.
One is clearly amazed at the conflicting definitions/acronyms (IUaS, PaaS,
IaaS, SaaS etc.) that dominate this brave new offering”.  Hype aside, it
is unclear what this brave new thing” could mean for customers, products and
service providers.

To be fair, the cloud around the
cloud” has started to lift over the last several months and one can see that
the messaging from various players shows more maturity and importantly,
clarity. From the numbers perspective, Forrester says that cloud computing
market will grow from $40.7 billion in 2011 to $241 billion in 2020 (I like the
preciseness of the 40.7 and 241….no rounding off required, you know!!)

Disclaimer: some of the information
and data is taken from internet articles, reports”¦one report in particular from
CLSA, This is I.T”, was very insightful.
 Also, I prefer to avoid references to Amdocs and our strategy in the
cloud space.

I want to tackle this topic in three

1. Clouds: how do I see them and
what change can they potentially drive?

2. Cloud impact on IT industry:
what could they mean (and are already starting to) for the IT

3. Customer experience: what is
the relevance of customer experience and why it will become central as the ‘cloudy’ world evolves

Clouds” what
are they….?
: In the end state, to me a cloud”
(singular) in the IT industry is a toll highway for computing resources
(infrastructure and applications).  Once we have this highway, the need
for private roads” (read captive/in-house IT set-ups) is reduced or eliminated
and the customer pays for usage based upon the destination” (read application,
or service) they want to get to, speed” they want to drive, the capacity” on
the road that they need, the duration” they need to use the road for, and the
experience”/”service” expectations.  Needless to say that highway” is
not owned by the customer….but instead by a third party (read service
provider).  Since multiple customers can use the service, the term
public”.   Some corporation may decide to have private highways,
i.e. internal or private” clouds based upon security or competitive
considerations.  There could be blends of the two (private and public) –
Hybrid” clouds….and then living up to IT world’s fascination for jargon –
Virtual Hybrid clouds etc.

Several things will change when the
migration to this highway takes place, three that are key:

1. Move from CAPEX to OPEX in IT spend: Customers using clouds
will pay OPEX based upon usage.  Customers using the cloud will be
not be incurring the capital expense, the provider will.

 2. Tighter linkage between
hardware (infrastructure), software, and processes: Inevitably the three
will be more tightly coupled, leading to greater standardization.  IT
services would be provided from One provider (like a factory) to All”

3. Importance of customer
experience in the overall value delivered by the IT provider. BTW, this
will be an outcome of #1 and #2….but more on this later


The move to OPEX spend will imply
that customers won’t require their own IT set-ups and this in-turn will mean
reduction in future, large outsourcing contracts, and re-badging (moving of
employees from a customer to a IT provider as part of the outsourcing contract)
of employees that these contracts typically bring.  Also, in conjunction
with virtualization, greater hardware (servers,
storage etc.) utilization will result – when the service is provided by a
factory supporting All” customers, the ability for hardware optimization is a
lot higher.

The speed of change driven by clouds
will likely depend upon the following:

1. Maturity of offerings from
service providers; maturity includes the ability to provide performance
commitments, address latency and network congestion concerns etc.

2. Data security consideration of
customers and the associated appetite to have mission critical data hosted
in remote data centers

3. Customer segment adoption;
small and medium business (especially in developing economies) will likely
lead adoption.  The conditions in this segment are ripe for
productivity leapfrogging” using clouds

4. Ongoing march of wireless
connected devices and their penetration, which is accelerating several
aspects of cloud services

To discuss the Impact on the
IT industry
: Let me introduce a term cloud-ability” with a rating
scale of high, medium, low to define ability/likelihood of specific IT
computing resources/services to be obtained as a cloud service from third
parties (or through a private cloud).

The cloud-ability picture for
existing IT estate would look something like this:

  1.  Hardware infrastructure
    (aka IaaS-Infrastructure as a Services)

    • Servers/Hosting,
      Storage; HIGH

    • Operational
      management tools/applications: HIGH (goes hand in hand with

2.  Application/Software
infrastructure (SaaS-Software as a Service):

    • Enterprise
      applications (finance, supply chain, HR, F&A, customer relationship
      management); MEDIUM to HIGH
    • Productivity
      applications (email, team performance, office suites, travel management
       etc.): MEDIUM to HIGH
    • Non-differentiated
      business applications: applications core to a business but not providing
      competitive differentiation; MEDIUM
    • Differentiated
      (Niche) business applications: applications core to a business and
      providing competitive differentiation; LOW

Also, the ability of hardware and software resources to be
delivered as clouds will accelerate the following:

5. Ubiquity of B2C applications
that are data driven: Ability to manage, store data will add richness to
and improve utility of B2C applications of today.  This will also
give rise to new B2C applications

6. Application development
platforms on the cloud (PaaS-platform as a service): Platforms that allow
application developers to host applications will gain momentum. This is
akin to Apple developer platform, Facebook platform, Amazon (SimpleDB)

7. Plumbing to connect/integrate
cloud applications to in-house (on-cloud or off-cloud) applications

All five items above are providing opportunities to the
IT industry.  Besides opportunities to the IT industry, the network” (a
key asset of Communication Service Providers) underlies the highway” and hence
Communication Service Providers (CSPs) have an opportunity to expand and offer
services leveraging the network.

Coming back to the impact to the IT industry (hardware,
software, and IT services providers) could be as follows:

Provider type




Examples: HP, IBM, Sun (Oracle), EMC

1.    Provide IaaS offerings

2.    For IT hardware and services
providers,  offer cloud technology and services (including consulting)
to enterprises

3.    Target SMEs

4.    Non-linear revenue growth opportunity

Low: leverage own hardware to
set-up IaaS offerings
Medium: Invest in licensing, and configuring enterprise applications (SAP
etc.)for SaaS delivery

Aggressive moves by several to
setup IaaS offerings.
Hardware and services providers combining hardware and enterprise software
solutions (IaaS+SaaS) For example: IBM (AoD for SAP), HP (USS for SAP) etc.

Software (enterprise,
productivity, non-differentiated)
Examples:  SAP, Oracle, Microsoft, Salesforce, Rightnow, Intelliflo,
 Epicor, Fiserv, Sungard, Sabre etc.   

1.    Offer applications in SaaS mode
leveraging product/platform

2.    Develop industry specific SaaS
solutions (where applicable)

3.    Non-linear revenue growth

Medium: Configure applications for
SaaS delivery.  Invest in Multi-tenancy, partitioning, security

Enterprise providers moving
rapidly to developing cloud offerings
Vertical application providers making generic cloud ready modules
M&A very active

Software (niche /differentiated)
Examples: Finacle, Fiserv, Sungard, Polaris, Sabre etc.

1.    Offer application in SaaS mode
leveraging product

2.    Transformational for the vertical

3.    Non-linear revenue growth opportunity

Very high: market
differentiators/niche capability difficult to put on multi-tenant cloud since
the business process/logic often is the competitive differentiator. Requires
complex application design

Specific modules being targeted to
start out
Slow progress, come verticals more advanced (travel and transportation)

IT consulting and services
Accenture, HP, Wirpo, Cap Gemini, TCS, Infosys, Cognizant etc.

1.    Provide consulting on cloud strategy
and implementation

2.    Use enterprise software, configure
for enterprise and/or specific vertical

3.    Provide plumbing that connect clouds
application to in-house application/systems

High: Since IT services provider
own neither the hardware or software, they need to invest in obtaining these
and then configuring/customizing for SaaS delivery
Low: Consulting requires investment in building people capability

IT services providers don’t want
to miss the biggest bus since Y2K
SMEs being targeted in addition to large customers
BPO offerings being combined with IaaS+SaaS.  Differentiate themselves
from the pure hardware and software providers
Examples: Cap Gemini (SAP Ready-to-Run), HCL (IU4SAP), TCS-SMB offering etc.


Additionally, some CSPs are leveraging their massive investment
in the network to provide IaaS (hosting) services. This trend is likely to
continue and expand as CSPs look for new revenue streams.  Examples
include; AT&T (Synaptic hosting), Savvis-CenturyLink (Virtual Intelligent

In today’s cloud world, there are a lot of new names one
hears, just in IaaS – Rackspace, Joyent, Vaultscape etc….and while there will
be several winners in this cloudy” race, the players who can really benefit
are IT providers who have real assets” – hardware and/or software.  The
others will benefit as well, but financial return to them will likely be lesser
and risks higher.  The reasoning is simple, a provider who does not have
hardware and/or software….has to pay someone else to use the hardware/software
delivered as a cloud”. M&A will be very active in this space”¦a lot of
money will change hands”¦but I expect that the incumbent IT players will do a
lot of acquiring (the traditional hardware/software model is changing and the
incumbents will like to stay relevant)”¦only a handful of true-blue cloud
companies will likely remain in their current form.

BTW, I do not believe IT clouds” are new….I am biased, but
the first cloud application, SABRE was developed by IBM and American Airlines
and operational in 1960.  Since then Sabre (now a holding
company) and others like Amadeus, and
Galileo/Worldspan (now Travelport) have provided
several cloud based solutions for the travel and transportation industry, which
probably is the most clouded” industry vertical today.

Coming finally (thank God!!) to the changing role of customer
in the cloudy” world”¦.well this is rather straightforward, the
fact that a corporation incurs CAPEX forces stickiness”–meaning that once an
organization has spent a lot of money upfront (in hardware and software
licenses) and they need to spend more money again for the new platform, the
preference is often to retain the existing.  With the cloud world moving
the CAPEX to the provider the CAPEX barrier suddenly goes away, and hence
customer experience will likely (all things being equal) become the primary
consideration that determines the choice of IT providers.  Also,
enterprises will be more willing to change when the experience is poor,
incurring only OPEX.  This is no different from the shift in the telecom
industry from the times when the cost of a phone was such that a subscriber was
tied to service provider (on a long-term contract)….not anymore (well
almost!!).Customer experience will be measured through experience
factors like; response times, uptime, data security, compliance etc.

Standardization of services and inter-operability across IT
providers will be essential for the ascendance of customer experience as the
key decision making criteria.  For example, if a customer decides to move
from say; Capgemini-SAP Ready-to-Run to HCL-IU4SAP”¦they should be able to do so
seamlessly only with data migration..”¦.and guess what, cloud providers on the
other hand may want to delay” this process of standardization to increase
their lock-in.  BTW, development of standards itself could be a huge
business opportunity J

Net-net, a lot of if’s, but’s, maybe’s, likely’s….however, in
my view one thing is for sure…”clouds” (like their natural counterparts in the
sky)….are here to stay and will slowly but surely change the IT industry and
landscape”¦.with customer experience becoming central…….what do you think?

My next article is a toss-up between….”Rule of three and the
Indian Telecom industry v2.0″ (now that the India government has finally – almost
announced the draft national telecom policy….I think it is time to revisit the
Rule)”¦OR Of Anna, Corruption, and Dharma” (like him or not, Anna has changed
the corruption dialog in India….but I think there is a deeper erosion of the value
system….where is Dharma?).

Until next time keep reading, commenting and sharing your
feedback with me J I wish you and all your dear ones a Happy New Year filled
with success and joy!

By Anshoo Gaur, president and India Head, Amdocs
[email protected]