Cult movies often help you understand complex changes in a jiffy. Followers of the Twilight series of vampire movies know that shape shifters are the most potent game changers. They transform and morph seamlessly between forms doing things vampires of the previous generation couldn’t have imagined. Shape shifters have changed the paradigm of vampire movies forever. Earlier, a vampire was a one-trick pony. Now, they offer a variety of services. Quite like computing.

You know paradigms have changed when what was a product is now a service. It happened in telecommunications, when a hardened plastic box with numbered buttons hooked on to a line exclusively for one person to chat with another became a mobile, handheld device that offered a variety of services. What changed was not just the size, but an entire ecosystem. A telephone changed from being a piece of hardware to a patch of software. It morphed from a touch and feel product to an amorphous device that could literally offer you the world at your fingertips. Quite like vampires.

For long, computing was defined exclusively by the heft of your machine. It was derived from the sheer raw power of a piece of hardware. Higher the RAM, faster the clock cycles, bigger the gigabytes, more powerful the computing. Almost like the American muscle car mania of the 1970s that kept pumping up power under the hood. Then internet shook things up. It brought out the power of many pooling in their little bits and bytes to create a powerful, collaborative and flexible network. With the internet unhinging itself from a computer and a browser-only environment, it transformed from an exclusively information-heavy network into an Internet of Transaction Systems and, increasingly, Internet of Things. Computing also coupled itself to the power of many. It morphed. Again, quite like vampires.

This morphed version of computing is called cloud computing. Computing is no longer a product. It’s a service that is provided to computers and other devices as a utility over a network, like electricity and internet. Convergence of infrastructure and sharing of services are the pillars of cloud computing. Computing as a Service (CaaS) model, just like Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) models, is a process innovation.

But that’s still not a paradigm shift. The real transformation is in manner in which centralised and tight control over data – till now the preserve of capital intensive proprietary server farms – is now available to medium, small and micro enterprises coupled with the flexibility and power of a collaborative network. In short, cloud computing has managed to mix the seemingly contradictory forces of centralised control with decentralised and autonomous management in one powerful cocktail.

It’s this potent concoction that has the ability to change the way India exchanges information, trades, transacts, does business and governs itself.

The suite of technologies that cloud computing is pulling into its orbit has the potential to transform business logic and social purpose. Early adoption of the cloud can provide organisations and institutions with an opportunity to transform their business and social models and gain a competitive edge. There are three critical drivers of cloud adoption today.

First, it makes for a compelling business case. It allows organisations to effectively reduce their capital expenditure (capex) by bringing digital infrastructure and services into a ‘pay-as-you-go’ model. Such a transformation allows organisations to reorient its balance sheets converting IT costs into operating expenditure (opex) leading to a better cash flow and profitability.

Second, it makes sense on purely technical grounds. Cloud computing allows organisations to scale up their operations quickly in a secure environment. This is especially true for companies that are critically dependent on logistics management, like pharmaceutical companies manufacturing high-end medicines requiring specific storage and refrigeration. 

Third, it is device and hardware agnostic. Cloud computing makes no distinction of the device that wants to plug into it. It’s precisely this ability that has the most transformative potential. While companies like Google and Amazon want to put its OS and transaction data on the cloud, closer home UIDAI wants to put its Aadhaar information on it. With data, software, analytical tools, email and multimedia content up there on the cloud, devices can afford to become thinner, portable and cheaper. Cloud computing can make information exchange, transaction and knowledge transfer truly democratic. And, in that lies the seeds of India’s governance revolution.

Venkatesh Hariharan, Google India’s head of public policy, says cloud computing in conjunction with open standards can transform the way in which government functions. “The ability to tap into computer applications and other software via the cloud frees government institutions from having to build and manage their own technology infrastructure,” he said. It’s a thought process that’s shared by UIDAI’s Nandan Nilekani who has already advocated the massive use of cloud infrastructure for hosting the biometric data required for Aadhaar. Cloud computing gives the Indian government the opportunity to leapfrog its knowledge gap and transform its service delivery mechanisms and systems.

The business potential of cloud computing is obvious. Just a few numbers from KPMG’s report ‘The Cloud: Changing the Business Eco-system’ will put the volume of business in perspective:
1. It is forecasted that the worldwide revenues from public IT cloud services will touch $55 billion by 2014.
2. It is predicted that 2.3 million new jobs will cumulatively be created in India due to cloud services by 2020.
3. Year-on-year adoption of cloud computing across organisations and institutions is over 30 percent.
4. Over 44 percent of global executives believe that cloud computing will bring down their costs and help in achieving massive scale.

These figures are believable going by the double-digit growth enjoyed by cloud service providers despite the recent economic downturn. Deepak Maheshwari, director of corporate affairs, Microsoft India, says that growth has in fact been spurred by the economic downturn. “Adoption of cloud computing allows enterprises and businesses to focus on their core competencies. Cloud is going to be the next disruptive job creator for the Indian IT industry. India has emerged as the IT service center of the world. But at the same time it will also become the innovation centre of the world. MSME’s innovation potential will be unleashed to the maximum with the adoption of cloud computing,” he said.

Research conducted by the World Economic Forum (WEF) and Accenture in 2009 and 2010 respectively found that the benefits of cloud computing technologies go beyond reducing IT costs. Researchers from both teams found that participants saw the adoption of cloud computing as a major facilitator of innovation. In the long term, they saw the cloud computing accelerating the creation of new products and services through innovative business models, effective collaboration, understanding customers through better data mining and analytics and lowering capital expenditure on data centres, servers, software licences and maintenance fees.

Critically, they also strongly believed that emerging economies would leapfrog to higher levels of technological development by innovating affordable and appropriate solutions to their specific problems and would also refine their governance models to effectively address socio-economic issues such as delivering healthcare and education, improving access to financial services (insurance, bank accounts, micro-payments) and disaster management provisions.

Prakash Rane, founder and managing director of ABM Knowledgeware Limited, shares this belief, but with caveats. “Reduction in expenditure in itself will not be a big driver for the government to start adopting cloud computing,” he said. “One has to start with small steps with the government, which has issues regarding privacy and security with respect to cloud-based solutions. The way forward is to advocate cloud computing solutions to the government for generic and non-sensitive data first and then move on to big-bang governance solutions.”

Rane is being realistic. But sometimes realism can get washed away by sheer business logic. Today fifteen emerging markets, including India and China, account for more mobile subscriptions than the rest of the world combined and this trend will continue over the next five years. Due to the sheer volume of mobile subscriptions in these markets, and continuing mobile penetration, they offer substantial investment opportunities. Market data from Informa Telecoms and Media indicates that these 15 emerging markets generated around 30% of mobile data services revenues in 2010. In 2014, these markets are expected to account for close to 36% of the global mobile data services revenues. China and India will have 730 million mobile Internet users by 2014.

The Reserve Bank of India has introduced electronic clearing service (ECS), national electronic fund transfer (NEFT) and the real time gross settlement (RTGS). All these systems offer a secure and efficient platform for transfer of funds between bank accounts without the need for paper-based payment instruments. Several large banks like HDFC and ICICI have already moved on to cloud services for their financial transactions. Over time, financial solutions will by default shift to digital devices, mainly hand-held ones. To store, mine and churn such stupendous amount of financial, professional and personal data in old style ‘on-premises’ server farms would be practically impossible. Financial and banking solutions will have to shift to cloud solutions. It’s inevitable. The government, which is already looking at smartcard solutions for direct subsidies and payments for social sector projects, will have to use the financial services backbone. Like it or not, the government will be on the cloud.

India doesn’t blink twice before aping the West on several fronts. But this is one area where it can afford to do exactly that. Vivek Kundra, who was the Chief Information Officer (CIO) of the US, said, “There was a time when every household, town, farm or village had its own water well. Today, shared public utilities give us access to clean water by simply turning on the tap; cloud computing works in a similar fashion. Just like water from the tap in your kitchen, cloud computing services can be turned on or off quickly as needed. Like at the water company, there is a team of dedicated professionals making sure the service provided is safe, secure and available on a 24/7 basis. When the tap isn’t on, not only are you saving water, but you aren’t paying for resources you don’t currently need.”

Maybe it’s Kundra’s Indian upbringing that is at the root of this insightful big picture. But his logic is uncannily similar to the unique Indian concept of frugality, simplicity and innovativeness. What India wants, and deserves, today is a frugal, efficient and simple system of governance. Technology can help provide it. All it requires is political will. n

Swaminathan is a National Internet Exchange of India (NIXI) Fellow. He is also a Senior Fellow in Observer Research Foundation (ORF). A dyed-in-wool digital native, he is one of the few surviving members of the original tribe of Internet crazies who used floppy diskettes, DOS prompts and WordStar.