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This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Zinnov
Cloud Opportunities in India – A CIOs Perspective Media Briefing 25th November, 2010
Zinnov Confidential
Survey Demographics: Distribution by Vertical, Revenues, Staff using IT & Size of Internal IT team
2
Distribution by Staff using IT
Note: Source: Zinnov’s Survey of 100 CIO 2010
Internal IT Team Size
Sample Size: 100
Distribution by Revenue
IT/ ITeS 21% BFSI 14% Telecommunications 11% Pharmaceuticals & Chemicals 7% Media & Entertainment 5%
Textile 5% Healthcare 4% Automobiles & Auto Components 4% Electrical Machinery 4%
Cement 3% Utilities 2% Steel 2% Food Industry 2% Tourism & Hospitality 2% Others 14%
Distribution by Vertical
More than 10000 (6%)
2500-10000 (8%)
750-2500 (18%)
250-750 (22%)
100-250 (12%)
Less than100 (26%)
Not Disclosed (8%)
Less than 10 (34%)
10-30 (32%)
30-50 (15%)
50-100 (7%)
100-250 (6%)
250-500 (3%)
More than 500 (3%)
200-500 Crore (16%)
500-2500 Crore (20%)
50-200 Crore (21%)
<50 Crore (15%)
Not Disclosed (13%) More than 10000 Crore
(5%)
2500-10000 Crore (10%)
Zinnov Confidential
IT-BPO 1.9%
Government 2%
Auto 2.1%
Telecom 4.2%
BFSI 12%
Energy 26.7%
Manufacturing 44.5%
Others 5.7%
Vertical-wise Spend Of IT Services In 2010
Domestic IT spend in India has been growing at a significant pace and is dominated by BFSI, Telecom, Government, Manufacturing & Energy verticals
3
Software
9.5
9.4
2.4
2.9
Hardware IT services BPO
FY2009 FY2010
Domestic IT-BPO Spend (Bn) 2009-2010
Vertical-wise Spend Of Software In 2010
Vertical-wise Spend Of Hardware In 2010
Note: Public Sector Enterprises are spread across verticals other than Government Source: NASSCOM Strategic Review 2010
Healthcare/ Pharma
1% Auto 1.4% Telecom
6.4%
BFSI 12.8%
Government 15.4%
Energy 18.4%
Manufacturing 39.1% Others
5.7%
Healthcare/ Pharma
1.4%
IT-BPO 1.6%
Auto 2.1%
BFSI 8.8%
Telecom 9.7%
Energy 12.3%
Others 12.9%
Manufacturing
24.7%
Government 26.2%
9.2
8.4
2.0 2.7
Zinnov Confidential
…and it is expected to grow going forward for majority of firms 4
Will remain nearly the
same (34%)
Decrease less than 10%
(4%)
0-10% increase (49%)
10-20% increase
(4%)
20-40% increase
(2%)
More than 40% increase
(2%)
Cant' Say (5%)
Change in IT Budget From 2010 To 2011
• Indian enterprises are starting to show signs of steep recovery with respect to their IT spending
• Around 60% of the CIOs believe that their IT budget will be growing next year
• While companies continue to invest on
IT, OPEX models are increasingly being favored
Note: Source: Zinnov CIO Survey 2010
Sample Size: 100
Zinnov Confidential
The findings highlighted that Cost of solution and brand of the technology provider are key parameters for evaluation during the decision making process
5
56%
42%
29% 26%
21%
12%
Key Parameters for IT Decision Making
Cost Brand of IT Vendor/ Best of Breed
Solutions
Time to implementation
Flexibility & Scalability Existing relationship with the IT vendor
Support Infrastructure
Sample Size: 100
• While Indian enterprises are cost conscious with respect to their IT purchase decisions, they would prefer to go along with the “Best in Breed” solutions – Price value focus of large enterprises in India
Note: Source: Zinnov CIO Survey 2010
Zinnov Confidential
Better agility , flexibility and cost visibility offered by cloud solutions are synchronous with the top priorities of a CIO
6
75%
51%
38% 34% 33%
14% 13%
Current IT Goals of Enterprises
Aligning IT with Business Goals/ Driving Business
Innovation
Cost Control/ Expense
Management
Developing New go-to-market Strategies & Technologies
Improving IT Operations and
System Performance
Cultivating IT/ Business
Partnerships/ Negotiating with IT
Vendors
Redesigning Business Processes
Implementing New Systems &
Architecture
Sample Size: 100
Note: Source: Zinnov CIO Survey 2010
Agility/ Flexibility
OPEX models Reach and customer
enablement
Efficiency enhancement
Best of breed
…Can Cloud be the
Answer?
Zinnov Confidential
A significant number of CIOs are now willing to leverage Cloud services and have already started evaluating it…
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38%
29%
10%
7%
4%
39%
Willingness to Use Cloud Services (2011)
Software as a Service (SaaS)
Infrastructure as a Service (IaaS)
Business Process Private Cloud Platform as a Service (PaaS)
Can't Say
• While cloud as trend is gaining attraction, many CIOs are currently in a wait and watch situation
• Some of the CIOs have already started running pilots for some of the non-core applications
• However for some of the core applications, CIOs are currently considering to adopt private cloud scenarios
Sample Size: 100
Note: Source: Zinnov CIO Survey 2010
Zinnov Confidential
…and the trend is only going to increase by 2015 8
58%
37%
19%
9% 9%
21%
Willingness to Use Cloud Services (2015)
Software as a Service (SaaS)
Infrastructure as a Service (IaaS)
Business Process Private Cloud Platform as a Service (PaaS)
Can't Say
• More and more CIOs would be investing in cloud technologies through 2015
• SaaS adoption would continue to grow at a rapid pace in India over the next 5 years; Business process as a service to grow rapidly as well in the SMB segment
• CIOs might take a cautious approach towards private cloud adoption; 3rd party datacenters may become a preferred option
Sample Size: 100
Note: Source: Zinnov CIO Survey 2010
Zinnov Confidential
Data security continues to be one of the key concerns with respect to adoption of Cloud technology among Indian CIOs
9
60%
23% 20%
13% 10%
8% 7% 6% 6% 4%
9%
Current Perception About Using Cloud Technology
Data Security or
Privacy
Integration with legacy
systems
SLA, Reliability &
business continuity
Loss of control on
IT
Lack of Maturity of
cloud service
providers
Lack of standards
Lack of trained
manpower
Legal/ regulatory constraints
Lack of Features &
functionality
None Can’t Say
• Data security and privacy still continue to be the key challenge towards cloud adoption in India
• Complexity of integration of cloud based systems with legacy investments is also a major cause of concern
Sample Size: 100
Note: Source: Zinnov CIO Survey 2010
Zinnov Confidential
Most of Indian CIOs would prefer to have the data centers located in India and run by MNC service providers
10
MNC with datacenter in India
50%
My own datacenter 28%
Domestic company with datacenter in
India 8%
MNC with datacenter outside India
7%
Can't Say 7%
Preference of Cloud Provider
Note: Source: Zinnov CIO Survey 2010
Sample Size: 100
Zinnov Confidential
The Cloud Computing market (including private cloud) in India holds a multi Billion Dollar potential
FY 2010 FY 2015
Domestic IT Market in India (Billion) FY’10 to FY’15
• CIOs will look towards cloud computing to reduce the ever increasing IT budgets
• Verticals such as BFSI, education, healthcare, retail will increasingly rely upon cloud computing for better reach
• Governments’ continued focus on e-governance will drive significant adoption of cloud pan India
• ISVs and IT services/ BPO companies in India will look at cloud computing for non-linear and rapid growth
Key Drivers for the Indian Cloud Computing Market
Note: Source: NASSCOM Strategic Review, 2009-10 & 2010-11; Zinnov Analysis
Total Cloud Market is less
than 0.5% of total Domestic IT
Spending
Total Cloud Spend will increase to around 5% of the total Domestic IT Spending with the following distributions:
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Zinnov Confidential
Other government projects also hold huge potential for Cloud technologies
• Around 300,000 bookings are done on IRCTC everyday • The traffic on the site fluctuates with the time of the day, highest being in the morning hours
IRCTC
• The government has committed itself to provide banking services by using information and communication technology to 73000 rural habitation in the country having population of over 2000 by March 2012
• Much stress is being given to the use of over 500 million mobile phone connections present in India to extend financial inclusion across rural and remote regions
Financial Inclusion
• Increasing awareness regarding Right to Information in the public is compelling the government to digitize its databases and make more and more information available to the public domain
Right To Information
The government will require huge processing power capabilities for projects of such large magnitude and
fluctuating demands. This in turn will favor the adoption of cloud for cost effectiveness and faster implementation
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Zinnov Confidential
Cloud Computing is here to stay!!!!
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