Cloud computing helps companies bring their capex down and use resources more effectively. This lets companies focus on their core competence and innovate, rather than worrying about managing internal resources

The world of small companies, the word capex doesn’t find too much favour. That in someway explains why technology adoption by small companies has lagged for so many years. Now though new technologies like Cloud Computing are helping companies reduce costs.

Cloud computing helps in using computing resources more efficiently. It is changing the way enterprises look at their IT hardware and software requirements. It is a mix of technology and delivery models that treat Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS), and use the Internet for delivering services to the end-user. This means that access to infrastructure are delivered cheaply and efficiently over the Internet. And more importantly, a business is billed according to usage, thereby reducing its cost. “Currently, organisations are spending as much as two-thirds of their IT budgets just to maintain their infrastructure and applications—keeping the lights on; Cloud computing can dramatically alter this so that much more energy and investment can be directed toward real innovation and competitive advantage,” says Vikas Desai, lead technology consultant-India and SAARC, RSA.

Until recently, SMEs in India were not keen adopters of IT infrastructure. However, with increasing cost pressure on managing processes manually as well as the need to be more efficient in order to be competitive, many SMEs are now in the process of setting up an IT infrastructure. At this point, adoption of Cloud Computing can be of great advantage since it will mean no additional cost of migration due to lack of existing infrastructure and faster turn around on investments. What’s more, a “pay as you go” model offers an SME all the advantages of cost efficiency, scalability and flexibility, which are critical to its business.

As a number of users share a cloud, the cost gets distributed and enables economies of scale in terms of utilisation of resources including real estate, bandwidth and electricity. Over time, the costs of using a cloud are bound to come down as more users come in. The enterprise also saves on management costs, data storage costs, costs of software updates, quality control.

This lets a company focus on their core competence and also on innovating, rather than wasting time on managing their resources. It is almost like outsourcing the management of your resources.

India’s nascent cloud computing market, a platform where software applications and related resources can be shared online, is expected to touch $1 billion in the next five years, says Zinnov Management Consulting report. Google’s engineering initiatives in cloud computing (enterprise solutions) will be led by its centres in Bangalore and Hyderabad. Google’s cloud computing offerings are partly an extension of its consumer offerings-like Gmail, Docs and Calendar-to businesses. Docs include web-based documents, spreadsheets, drawings and presentations that let users edit the same file at the same time. Calendar is a web-based application that enables employees to easily schedule appointments, overlay multiple calendars to see when people are available, integrate with your email system, and share project calendars across the company or with co-workers.

The company also offers an application called Google Sites that is an easy way to create secure web pages for intranets and team projects, and an application for private, hosted video sharing. Most such applications are currently licensed by companies and hosted in in-house data centres. Google is trying to persuade companies to move everything to the cloud, so that companies can dispense with issues of maintaining a data centre and doing software upgrades.

Most SMBs function by way of storing their critical data on desktop and laptops and share data/information on CDs or USB drives making their critical information difficult to manage, protect and also the process proves to be more tedious and expensive. “Keeping in mind these issues, we see significant scope for cloud computing as it offers businesses increased agility and responsiveness to changing priorities, better use of data centre real estate, and consolidation and simplification of IT budgets,” says Manoj Chugh, president, EMC India and SAARC. EMC offers the Vblock Infrastructure Package which is a product of the Virtual Computing Environment (VCE) coalition, formed by the collaboration of three IT industry leaders-Cisco, EMC and VMware. The coalition aims to simplify and accelerate virtualisation and help customers transition to private cloud infrastructures.

The challenge in cloud computing however, is to ensure that safety is designed and built into the cloud so that organizations of every size, from the smallest merchant or agency to the largest government or multi-national, can make broad use of the cloud fully confident that their information and transactions are secure. Here companies like RSA can help.

“In the cloud, security protocols can be built into the virtualization layer, not just imposed at the application level where they are typically enforced. By embedding security policies deeper in the technology stack and diffusing them throughout the virtual infrastructure of the cloud, enterprises can establish stronger, smarter security to protect their users and their data,” says Mr Desai. RSA has one of the world’s largest SaaS security practices, with more than 3,700 organiSations relying on RSA Hosted Operations for a variety of products offered in this delivery model. RSA has been offering SaaS in India for a little over two years now. The RSA Identity Protection & Verification Suite is a complete SaaS portfolio of strong authentication and anti-fraud solutions. Organisations around the world are using RSA’s SaaS products for authentication, fraud detection and monitoring.
Source : SME times

NEW DELHI: Small and medium enterprises are optimistic about the business outlook in the October-December quarter on increased domestic activities coupled with improved prospects of credit availability, a CII survey said today.

The Business Confidence Index (BCI) of SMEs for the current quarter is estimated at 67, an improvement of 1.4 points over the July-September period, CII said.

“This is a positive sign of a sector emerging from the shock of the global economic meltdown, and having a huge employment potential,” CII Director General Chandrajit Banerjee said.

India’s SME sector was severely impacted due to the global economic downturn, leading to huge job losses.

The survey said much of the buoyancy in SMEs performance is on account of domestic demand rather than exports.

“Exports prospects for SMEs have come down significantly from the last quarter, which is not surprising given the slow and uncertain economic recovery in large part of the Western globe,” CII said.

The government has projected GDP growth of 8.5 – 8.75 per cent this fiscal. The GDP recorded 8.8 per cent growth in the first quarter of this fiscal.

The survey also reported improved outlook on prospects of credit availability for SMEs, even though it continues to be far below to be stated as ‘most favourable’.

“With given upward pressure on interest rates, it may not be too long before credit cost starts adversely impacting the capacity expansion of this critical sector of the economy,” it said.

While there is no separate data on SMEs, India’s micro, small and medium enterprises (MSMEs) sector contributes 8 per cent of the country’s GDP, 45 per cent of the manufactured output and 40 per cent of its exports.

The MSMEs provide employment to about 6 crore persons through 2.6 crore enterprises.

Appreciating Indian rupee against the US dollar is further adding to the woes of SME exporters, CII said.

It also said the services sector on average are expecting to perform better than their industrial counterpart.

Source: Economic Times

One reason why small and medium enterprises are in a bad shape is that large corporates are squeezing them by illegally delaying payments.

According to a study by rating agency Crisil, small businesses would generate 15% more profits if corporates adhered to the Micro Small and Medium Enterprises (MSMEs) Act, which requires MSMEs to be paid within 45 days.

An analysis of receivable levels of SMEs showed that SMEs with sales to corporate customers have average receivables of 80 days, which is significantly higher than those of SMEs with non-corporate clients.

The study found that had SMEs received payments from large corporate customers on a timely basis, they could improve their liquidity materially and enhance profits by 15%. On an average, SMEs with large corporate customers carry receivables valued at 80 days of sales on their balance sheet: Of these, SMES 15% carry receivables of more than 120 days on their books. “This has a significant impact on the financial position of SMEs, strains their balance sheets significantly and vitiates financial ratios,” said Crisil.

Crisil estimates that timely payments by large corporates in line with the provisions of the MSME Act will help SMEs reduce interest costs, and improve profitability by about 15%. This will have a critical bearing on the long-term health and sustainability of India’s SME sector.

The rating agency’s sample of more than 5,000 SMEs was classified according to the profile of their customers. Export-oriented units and SMEs selling to retail customers or traders were clubbed separately from those selling to large corporates.

An analysis of the receivable levels by end-user industry of SMEs reveals that the challenges of high receivables are endemic across industry sectors. SMEs supplying to sectors such as power, engineering and agro/specialty chemical sectors, which have inherently longer working capital cycles, appear to have the highest receivables position. With notable exceptions such as agriculture products, metal and metal product industries, most industries appear to be operating on a receivables cycle of 60 days and above.

Economics Times 11 Nov 2010

MSME Resourse Center – Get information relevant to MSMEs

http://www.fisme.org.in/ Federation of Indian Micro and Small & Medium Enterprises (FISME),

http://www.nsic.co.in/ National Small Industry Corporation

http://www.aigmf.com/index.php The All India Glass Manufacturers’ Federation

http://www.wasmeinfo.org World Association for Small & Medium Enterprises(WASME),

http://www.ciionline.org SME Development Council,Confederation of Indian Industry (CII)

http://www.assocham.org Associated Chambers of Commerce & Industry of India

http://www.ficci.com Federation of Indian Chamber of Commerce & Industry (FICCI)

http://www.lubindia.org Laghu Udyog Bharti (LUB)

http://www.fassi-india.org Federation of Association of Small Industries of  India (FASII),