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The Cloud hovers right over India. While large enterprises have begun to outsource some of their work by way of cloud computing, Microsoft's recent launch of Office 365 could push the Cloud sky high.
Office 365, an online offering of its widely used e-mail, collaboration, conferencing and productivity capabilities, is available in the price range of $2 to $27 per user per month.
And that has caught the imagination of users, particularly the small and medium businesses in India. During the 45-days of pre-launch free-to-use period, over 12,000 small and medium businesses signed up. And the global number is two lakh.
It has generated a buzz in the IT industry, and among analysts too.
Avenue for SME
“This is a tremendous avenue for SMEs to use good-quality business software. Many companies cannot afford the normal licence fees (and so end up using unlicensed copies),” says Ramesh Loganathan, an advocate of product development at ITsAP (IT industry association of Andhra Pradesh).
Besides the price advantage, this also provides convenience. “Companies do not require any specific hardware to run the software. It runs on web browsers — so even basic desktops or laptops will suffice,” Loganathan, who is also Vice-President (Products) and Managing Director of Progress Software, says.
This, he argues, would go a long way in developing the ecosystem. “It will definitely have a positive impact on the user community and the SMEs. If Microsoft can see value in cloud-based delivery channel, then other independent software vendors (ISVs) could follow suit. This is a very good development for the overall software products' eco-system in India,” he says.
Mahindra Satyam feels that there may not be any major impact on the sales of software products in near term.
“In the short term, it will attract predominantly a new segment of customers. New applications can be built using Office 365 and this could open hitherto untapped segments,” observes A S Murty, Chief Technology Officer of MSat. The services or applications built on this platform could also be in subscription model, allowing a recurring revenue opportunity. “As more enterprise customers embrace Office 365, it will give fillip to cloud adoption in general, resulting in more service revenue opportunities,” he says.
In general, cloud offerings will bring some shift in infrastructure management services or IMS. It will create new opportunities that range from providing infrastructure and back-end support to cloud providers, to specialty services such as data centre designing.
“Microsoft's release of Office 365 is indicative of the evolution of the IT industry,” say Marvin Newell and Scott Bils, of research firm Everest Group.
Subscription pricing
Will cloud computing lead to reduced costs for IT vendors, allowing them to pass on benefits to clients?
Microsoft claims that an organisation with 1,000 employees could cut its IT costs by $3,50,000 annually by moving to the cloud.
Sanjay Manchanda, Director, Microsoft Business Division, says response to Office 365 has been tremendous so far. “We launched this to customers a few weeks before the official showcase. We have roped in over 12,000 clients,” he says.
“It is not just selling a solution. We are providing infrastructure and solution. For large firms Office 365 would be handy as they would need smaller teams for newer, remote locations. Small firms can have the luxury of solutions that their bigger peers enjoy, without having to spend much,” he says.
Newell and Bils of the Everest Group say the subscription pricing level appears to be reasonable.
But “a major challenge with the Office 365 pricing model will be the overall complexity, with eleven different pricing plans,” they point out. Microsoft has packaged Office 365 to enable flexibility for different types of users (some may require a core set of features, others may need the full-featured version), in order to bring about a better alignment of spending with actual business need, they say.
Whether this results in lower costs and billing for clients will be situation dependent — with factors such as the frequency of refresh cycles, rate of growth of IT infrastructure and employee base, coming into play.
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