"Walk On The CLOUD" How Businesses Need to Think to Profit from Cloud

Shantanu Upadhyay

Oct 12, 2011

Cloud Computing: An OLD idea whose time has come

Computation may someday be organized as a public utility. John McCarthy, 1961

2011 Deloitte Touche Tohmatsu India Private Limited

Cloud is driving consumerisation of IT

Paradigm shift Consumers Enterprises

Cloud is Blurring the line between consumer and enterprise IT

Innovations from the consumer space are finding

their way into enterprise space

Industrializing IT enabling pay-per-use, bringing IT to new segments

Bringing non-users like SMBs/ SOHOs into the fold Within enterprises, empowering lines of business
Democratizing innovation, enabling players to experiment with new models irrespective of size

New businesses such as Netflix, Groupon et al have

been built on Cloud platforms

Source: Deloitte Analysis, analyst reports, press releases, primary interviews with industry players, SMEs and end clients CIOs

2011 Deloitte Touche Tohmatsu India Private Limited

and will enable IT to inject itself more deeply into product functionality/ business processes
IT Expenditure Vs. IT price index (US)1
IT Expenditure Index (% of real GDP)
250 200 150 100 50 0 1990 1995 IT Price Index 2000 2005 2010 IT Expenditure Index 250 200 150 100 50 0

Illustrative example for IT scope expansion: ERP

Production scheduling (MRP), Inventory management Support processes integration (finance, HR, logistics) E-Commerce extensions, productivity improvements

IT Price Index

1960

1970

1980

1990

2000

2010

Customized production, budget and cost controls

Supplier integration, Customer management

Note: Year 2005 value normalized to 100

Traditionally, despite falling costs, IT budgets have remained constant or has expanded Going forward, cloud will further push current costs down, freeing up IT budget to be spent in new areas

Cloud could enable ERP/ IT scope to potentially expand to newer areas involving Leveraging unstructured data to drive optimization

Intelligent warehousing auto inventory management

Automating newer activities and workloads

1. Based on data for information processing equipment and software investments, including computers, peripherals, software and communication equipment Source: U.S. Bureau of Economic Affairs, Deloitte Analysis

2011 Deloitte Touche Tohmatsu India Private Limited

Cloud allows businesses to transform IT architecture from Inside-out to Outside-in

Key characteristics of an Outside-in approach

An ability to connect a very diverse set of external parties to a common platform A distinct policy layer that enables autonomous partners to set business policies and preferences

An ability to facilitate coarse-grained, long-lived transactions

Compensation mechanisms that cope with unanticipated developments and modify interactions

Source: John Hagel & John Seely Brown, Deloitte Center for the Edge

2011 Deloitte Touche Tohmatsu India Private Limited

The future is already here Rearden Commerce

One-stop travel network enabled by cloud
2.8 million consumers Over 5600 Corporate Clients A next generation e-commerce platform that offers apps, services, content and personalization for travel and expense management Travel Orchestrator For consumers, makes the web a highly intelligent, personalized and unified experience For merchants, provides a large-scale, relevance-based one-to-one market place
Travel Agents Car Rental Agencies Hotels and Service Restaurants Contractors

160,000 strong merchant network/ suppliers

Source: John Hagel & John Seely Brown, Deloitte Center for the Edge; Reardon company website

2011 Deloitte Touche Tohmatsu India Private Limited

The future is already here - redBus

Bus operators with limited or no IT redBus solutions for Bus operators

BOSS inventory management solution for bus operator Bus Operator Software Service (BOSS) Churn Internal IT Amazon web services IaaS Suite Seat Seller SaaS Business challenges Fragmented marketplace Significant customer churn Low differentiation Poor customer service
Source: Press releases, Amazon case study, redBus website

SeatSeller for eCommerce companies and travel agents

IT asset-lite bus operators

2011 Deloitte Touche Tohmatsu India Private Limited

The future is already here TradeCard

Supply chain collaboration and trade financing platform
Buyers Inspection Raw material companies providers TradeCard is a supply chain collaboration and trade finance platform Serves 4000+ manufacturers, retailers, suppliers and service providers in 50 countries In addition to connecting buyers and sellers, also includes providers for logistics, payment protection, inspection and export financing Lean financial and physical processes; visible flow of money, data and products enabling true multi-enterprise collaboration

Smart Sourcing

Trading Network

Symmetric Information

Financial institutions

Transportation and shipping companies

Suppliers

Source: John Hagel & John Seely Brown, Deloitte Center for the Edge; TradeCard company website

2011 Deloitte Touche Tohmatsu India Private Limited

Prescriptions for businesses

1. 2.

Evaluate cloud beyond pure IT cost-reduction and flexibility play Develop experience with Cloud platforms at an early stage to prepare for possible disruptions Explore Harnessing Outside-in approach to orchestrate Cloud-enabled scalable network-based differentiation/ business models

3.

2011 Deloitte Touche Tohmatsu India Private Limited

A pessimist only sees the dark side of the clouds, and mopes; a philosopher sees both sides and shrugs; an optimist doesn't see the clouds at all--he's walking on them. Leonard L Levinson

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