04:52 am - Thursday 27 April 2017

Customer Experience in the Clouds

By Anshoo Gaur - Thu Feb 02, 7:02 pm

 

Customer Experience in the Clouds

Anshoo Gaur

Mr. Anshoo Gaur, President and Head of Amdocs India, a member of Amdocs managements since 2007. Winner of the CXO Award 2010 as the Best Business head of the year, Anshoo has over 20 years of cross cultural leadership experience, playing a wide variety of roles on strategic IT planning, operations management, process reengineering, products management and development, customer and P&L management. Ashoo joined Amdocs in August 2007 and is responsible to help drive Amdocs’ India delivery and business growth. Amdocs India represents over 20% of the company’s global workforce and operations, transcending Implementation, Consulting, R&D and managed Services for Communication and Media/Entertainment industry.

InsightVAS brings you his views on Customer Experience in the Clouds have a look:

This blog post 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 SuccessFactors (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 the blog post 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 parts:

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 industry

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” customers

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)

o    Servers/Hosting, Storage; HIGH

o    Operational management tools/applications: HIGH (goes hand in hand with servers/hosting)

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

o    Enterprise applications (finance, supply chain, HR, F&A, customer relationship management); MEDIUM to HIGH

o    Productivity applications (email, team performance, office suites, travel management  etc.): MEDIUM to HIGH

o    Non-differentiated business applications: applications core to a business but not providing competitive differentiation; MEDIUM

o    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:

1.    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

2.    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)

3.    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 Opportunity Investment Status
HardwareExamples: HP, IBM, Sun (Oracle), EMC  1.    Provide IaaS offerings2.    For IT hardware and services providers,  offer cloud technology and services (including consulting) to enterprises3.    Target SMEs

4.    Non-linear revenue growth opportunity

Low: leverage own hardware to set-up IaaS offeringsMedium: 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/platform2.    Develop industry specific SaaS solutions (where applicable)3.    Non-linear revenue growth opportunity  Medium: Configure applications for SaaS delivery.  Invest in Multi-tenancy, partitioning, security Enterprise providers moving rapidly to developing cloud offeringsVertical application providers making generic cloud ready modulesM&A very active
Software (niche /differentiated)Examples: Finacle, Fiserv, Sungard, Polaris, Sabre etc.  1.    Offer application in SaaS mode leveraging product2.    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 outSlow progress, come verticals more advanced (travel and transportation)
IT consulting and services providersExamples:Accenture, HP, Wirpo, Cap Gemini, TCS, Infosys, Cognizant etc. 1.    Provide consulting on cloud strategy and implementation2.    Use enterprise software, configure for enterprise and/or specific vertical3.    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 deliveryLow: Consulting requires investment in building people capability IT services providers don’t want to miss the biggest bus since Y2KSMEs being targeted in addition to large customersBPO 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 Hosting).

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 experience 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.

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 blog 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!

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