• Technology

Technology has always played the role of a disruptive force that has changed business models, ecosystems, or even the world order. This is evident all through out history right from the stone-age to the current age of convergence/mobility. Technology is often a savior during the downward economic cycles as it enables the creation of more efficient business models and ecosystems. Ironically, it also creates unrealistic market expectations that could lead to an economic downturn.

The Cloud is another such phenomenon that has stirred up interests and investments in many parts of the world. Research has indicated that the worldwide Cloud services revenue is forecast to reach $68.3 billion in 2010 and is projected to touch $148.8 billion by 2014*. A report released by KPMG titled The Cloud – Changing the Business Ecosystem provides a comprehensive coverage of the phenomenon called the Cloud, its impact on the industry and its role in the transformation of business ecosystems.

Recently, the world has gone through an economic downturn and there is an even stronger need for organizations to improve efficiencies by using collaborative solutions and real time information exchange. The Cloud could therefore be the next big thing with it gaining prominence during the recent credit crisis. The promise of the Cloud possibly lies in the flexibility, scalability and cost benefits made available through the ‘as-a-service’ paradigm.

Speaking at the global launch of the report, Kumar Parakala, Head of IT Advisory, KPMG in India and EMA said, “Technology has the ability to transform the world into the virtual space, enabling endless cycle of innovation. Advanced economies and enterprises have been able to effectively combine technology and innovation to gain a competitive edge. Emerging leaders like India and China are leveraging demographics and technology. Increased adoption of the Cloud could further strengthen their position to compete with the developed world and filling the economic and developmental void.”

The report highlights the need of a strong Cloud strategy for organizations to extract maximum benefit of migrating to the Cloud. It also investigates the drivers and challenges for Cloud adoption. “The Cloud is changing the way IT services / resources are being used and delivered. The Cloud also seeks to assure several techno-commercial benefits to enterprises and users. It’s time for businesses to redefine their business models and business leaders to revisit their IT strategy to better reflect the changing role of the technology deployment”, said Pradeep Udhas, Head of IT / ITeS Sector, KPMG in India.

One of the focus areas of the report was the Cloud’s impact on the industry sectors: Government, Healthcare, and Education. These sectors would benefit the most as the Cloud provides them with the socio-economic reach that they lacked for decades. Similarly, the Cloud promises to deliver affordable, reliable, and flexible computing solutions to SMEs, enabling them to compete more effectively with larger organizations. The report also covers the Indian context together with the tax implications for providing and using Cloud services.

“On the whole, the IT solutions and services industry could significantly change in order to accommodate this new service offering. Businesses have and would continue to adopt the Cloud in order to stay ahead of the curve. The Cloud is not just a passing phenomenon but a reality that has just begun to realize its potential”, added Nitin Khanapurkar, Executive Director, Advisory Services, KPMG in India.

Key points:
* The constant evolution of computing has helped businesses to automate and innovate providing them with a competitive advantage in the global marketplace. The Cloud takes the evolution to the next level.

* The global Cloud services market is estimated to reach $148.8 billion by 2014 from $68.3 billion in 2010

* The Cloud has the potential to transform business ecosystems that are relatively under penetrated by IT due to high capital requirements, such as Government, Healthcare and Education.

* Early adopters of the Cloud have become more nimble and efficient and are beginning to show a competitive edge, setting case examples for others.

* Challenges such as security, privacy of data, disaster recovery, etc. would need to be addressed before the Cloud becomes the utility it has been envisioned to be.

* The advent of the Cloud makes it imperative that IT service providers reassess their capabilities to ensure sustainable growth in the future

* Enterprises need to carefully plan their Cloud strategy after evaluating various business and technical factors including tax implications.

* The future belongs to those who will truly understand the present scenario, manage risks, and innovate with a vision to create a new order.

Tags:
business, cloud, ecosystem, IT, ITeS, KPMG, Kumar Parakala, Nitin Khanapurkar, Pradeep Udhas