VOL-3-INDUSTRY ANALYSIS
`100
DATAQUEST
www.dqindia.com
VOL XXXII No 17 I SEPTEMBER 15, 2014
THE BUSINESS OF INFOTECH
DQ TOP 20, VOL-3 SEPTEMBER 15, 2014
INDUSTRY INSIGHTS 98 pages including cover
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10 Edit 12 DQ team 13 Short Takes 96 Last Matter
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CONTENTS
IT EXPORTS
IT SECURITY
17 On a Roll, Once Again!
61 Need of the Hour
As the global economy shows signs of revival and discretionary spending by enterprises goes up, is the Indian IT exports...
Enterprise security is no longer just an IT concern, it is also becoming a business concern. Recent attacks on some big companies...
ENTERPRISE APPS
DOMESTIC IT OUTSOURCING
31 Sustaining Growth
69 Grabbing Eyeballs
Enterprise applications continue to be an interesting area as vendors continue to...
The need to look for new avenues of growth is triggering interest in the domestic...
DESKTOPS AND NOTEBOOKS
SERVERS
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75 Betting on Revival
Fighting for the Last Piece of Cake With increase in BYOD and touch technology, desktop market has witnessed a slow growth...
PRINTER
Servers as a category in hardware systems continues to face tough times. While x86 is on the threshold of revival, the outlook...
NETWORKING
47 Frost-bitten Growth
81 Out of the Box
Indian organizations are still largely paper-driven. But there is an increasing importance of digitization and the need to...
A gritty march of virtualization and cloud models into the hitherto forbidden realms of networking brought about a solutions...
IT SYSTEMS AND SOFTWARE 55 Challenges vs Opportunities To boost growth, vendors need to scale up their investments on innovation and...
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EDIT
T M Arun Kumar arunk@cybermedia.co.in
Who is Eating the Server Cheese? Not the Usual Suspects
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ver the last couple of years a new category of server manufacturers have emerged and who are threatening to disrupt the status quo, or perhaps have already disrupted the status quo to some extent. These aren’t the traditional server vendors or vendors like Cisco who entered the space a few years ago. These are what research firm IDC calls as ODMs or Original Design Manufacturers. Over the last couple of years as the overall server market has yo-yoed— expanding and contracting on a quarter-on-quarter basis—it has roughly remained, at least in terms of market size, where it was a couple of years ago. The global server market, according to IDC, was about $12.5 bn during the third quarter of 2012. After having increased to $14.8 bn in the fourth quarter of 2012 and fallen to about $10.9 bn in first quarter of 2014, it was estimated to be about $12.5 bn in the second quarter of 2014, the same size as about two years ago. But, what has changed in the last two years is the emergence of the ODMs and the steady increase in their market share. In the third quarter of 2012, according to IDC, the ODMs had a market share of about 4.3 percent of the server market with revenues of $540 mn. This has, over the last two years, steadily increased to a market share of 6.6 percent and revenues of $835 mn in the second quarter of 2014. So, what is the reason behind the emergence and growth of these ODMs? The answer lies in the way large public cloud service providers are procuring their server hardware. Increasingly, companies like Rackspace, Amazon, etc, are designing their own server hardware, which are optimized for their unique requirement, and getting them manufactured by the ODMs—typically the contract manufacturers from Taiwan. The inability of the large established server vendors like HP, IBM, and Dell, to tap this emerging market has left them fighting amongst themselves in the traditional market, while the ODMs have carved up the new market amongst themselves. And if the public cloud market expands the way it is projected to—and there is no reason to suspect why it wouldn’t—what does the future hold for the traditional server vendors? Thats a billion dollar question only time can answer, but if the numbers are an indication, then the future is certainly not going to be easy for them. They need to find a way to tap this emerging market, else risk getting marginalized in a market that they have dominated for decades. TM Arun Kumar Editor 10
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THE DQ 20
EDITORIAL
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INDUSTRY | SHORT TAKES
Prerna Sharma & Onkar Sharma prernas@cybermedia.co.in onkars@cybermedia.co.in
IRCTC App Officially Available on BlackBerry World
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lackBerry, a world leader in mobile communications announced the launch of IRCTC application for BlackBerry smartphones. With the app now being officially available on BlackBerry World, users can now make train bookings along with a host of other services by a single tap of a button.
Indian Railway Catering and Tourism Corporation, is a subsidiary of the Indian Railways that handles the catering, tourism, and online ticketing operations of the railways. IRCTC is known for changing the face of railway ticketing in India. E-ticketing through IRCTC website www.irctc.co.in has revolutionized the way common man deals with railways and has been the biggest success story of e-governance in India. IRCTC recently launched next generation e-ticketing system, which enhances the booking capacity to 7,200 tickets per minute against 2,000 tickets in the old system. With the accessibility of Internet-enabled smartphones, it is important to provide the customers with hassle free booking with minimum time-lag. The application has been developed in collaboration with IRCTC for BlackBerry devices. Apart from train bookings, the application also provides passenger information, booking history, recent history, cancellation, add to favorites, etc, through an user friendly interface giving an improvised experience to the user.
Seagate Completes Acquisition of LSI’s Flash Businesses from Avago
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eagate Technology announced it has completed its previously announced acquisition of the assets of LSI’s Accelerated Solutions Division (ASD) and Flash Components Division (FCD) from Avago Technologies. “There is a growing opportunity for mobile and enterprise flash-based storage solutions, which is why we’re excited about this strategic technology acquisition,” said Steve Luczo, Seagate Chairman and CEO. “Integrating LSI’s Enterprise PCIe flash and SSD controller products, and its engineering capabilities into Seagate’s leading storage technology portfolio and product development will expand our ability to meet a broader base of customers’ needs and drive new revenue opportunities.” This technology acquisition immediately boosts Seagate’s range and depth of flash storage capabilities and brings additional engineering expertise to accelerate its roadmap in the growing flash market. LSI’s ASD business |
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has the broadest PCIe flash product offering and intellectual property in the market today and its FCD business has best-in-class SSD controllers with proven support for a wide range of applications. www.dqindia.com
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HCL Partners with AppDynamics to Enable Digital IT
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CL Technologies, announced a strategic partnership with AppDynamics, the leader in application Intelligence IT Operations to help enterprises transform application operations. This is a significant step in HCL’s Digital System Integration offering. With increasing digital technology aspirations of the enterprises, a holistic and mature approach to IT operations is the key to compete in the digital era. However, even today, under high volume transactions, enterprises incur high application operations costs and loss in revenue. The HCL & AppDynamics partnership aims to radically improve applications performance, reduce costs and risk while increasing customer satisfaction. The partnership will bring operational excellence in customer IT environments to achieve a truly digitalized end-state, involving scale, automation and analytics to enable problem resolution across the most complex and mission critical environments. HCL will be integrating the
AppDynamics Solution as part of its MyCloud Platform to provide visibility and analytics for applications and next generationi nfrastructure.
PNB Selects Mphasis as a Strategic Partner to Deliver Customer Relationship Services
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phasis, a leading IT services provider, announced that it has signed a 5-year contract with Punjab National Bank (PNB), to set up contact centers in Noida and Mangalore. As a part of this strategic deal, Mphasis will offer end-to-end Customer Relationship Management (CRM) services that include inbound phone banking, outbound calling and complaints management. The scope of the services includes support for all banking products and services such as deposits operations, core banking processes, lending services, Internet banking and account & card related services Under this contract, Mphasis will implement a stateof-the-art Interactive Voice Response (IVR) system and a comprehensive CRM solution Advisor 360 which will cater to the bank’s customers, branches, and fulfillment requirements across 13 regional circles in India. Mphasis a leader in BPO services and customer relationship management has implemented end-to-end contact centers for several leading banks in India. Mphasis 14
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will provide services in multiple languages (English, Hindi, Malayalam, Kannada, Tamil, and Telugu) through their strategically located centers in North and South. Through this partnership, Mphasis will support Punjab National Bank in improving the quality of its customer service and enable intelligent customer engagement through optimal utilization of data. A CyberMedia Publication
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INDUSTRY | SHORT TAKES
HCL Bags Contract from Sydney Trains
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CL Technologies has been selected by Sydney Trains as a strategic partner to provide bespoke systems support services. HCL will provide end-to-end application management and support services to transform the company’s IT landscape.
Leveraging its integrated service delivery framework MaSCOTTM (Managed Services with Continuous improvement to Transformation) and ALT ASMTM, HCL will provide application development, support and maintenance services to support business and IT users improving application stability and availability for Sydney Trains. HCL will use its ASSeTTM Transition framework to ensure a seamless and risk free transition with zero business disruption. HCL will also be responsible for optimising the company’s application portfolio in alignment with business processes across its Australian operations. “Our objective is to bring in process efficiencies through vendor consolidation and ensure optimum resource productivity to continuously improve peak punctuality targets,” said Malcolm Pascoe, CIO, Sydney Trains. “HCL’s in-depth experience in managing complex applications landscape globally, strong delivery framework, knowledge management methodologies and core domain expertise in the transport sector made it an ideal choice for this engagement.”
KPIT Partners with EMC to Transform its Storage and Backup
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PIT has partnered with EMC to transform its storage and backup environments thereby reducing its back up window by 60%, ensuring 100% reliability, and achieving improved productivity of the datacenter team by over 30%. At the same time its cloud deployment times have reduced from eight weeks to one week and the deployment of virtual desktops on EMC’s ExtremIO flash technology is delivering huge energy and space savings while improving end user experience. KPIT has been an early technology adopter, and has been experiencing over 50% increase in data demands. Therefore, it needed a long-term strategy for its datacenter back up, and at the same time wanted to implement a flexible workplace technology that would simplify desktop management and double its number of virtual desktops without compromising end user performance. KPIT deployed integrated cloud offerings with data protection with the implementation of EMC’s Vblock archi16
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tecture that provides an integrated private cloud offering for a virtual desktop environment, enables rapid virtualization deployment and delivers on network performance and storage capacities. A CyberMedia Publication
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Smita Vasudevan smitav@cybermedia.co.in
IT Exports
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IT EXPORTS
On a Roll, Once Again!
As the global economy shows signs of revival and discretionary spending by enterprises goes up, is the Indian IT exports industry back on the growth track?
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ver the years, the Indian IT industry has been a power to reckon with in the global services space. Today it’s worth over hundred billion dollars and exports hold the lion’s share in it. These numbers say a lot. Out of the mammoth $118 bn Indian IT-BPM industry, exports constitute over 70%, which is $86 bn. Out of this, BPM exports is worth $20 bn. The remaining segment, collectively called IT services exports, thus, comes out to be around $66 bn. That is indeed huge. The global economy has been down, and subsequently organizations’ IT budgets have been shrinking. The extreme cost pressures have forced enterprise buyers to demand more for less from their IT service providers. Additionally, new IT sourcing destinations have emerged on the global arena, which boast of cultural affinity and certain amount of scalability to compete with India’s cost competitiveness. To add to that, concerns over immigration bill and rupee fluctuations. No doubt that the Indian IT exports industry has been through a lot in the recent past and the struggle continues. Yet there is one thing that remains undisputed. It still holds some power that makes it stand out. If we go by the performance of 18
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the Indian IT companies in FY14, then we can be hopeful of a strong comeback. After facing some turbulent times, the IT services exports industry registered its biggest growth in the last two years. On an average, the market grew by around 14% backed by signs of recovery in North America and Europe, the largest markets for India’s IT services exports. Global IT spending was said to be up by around 4.5% in 2013. As discretionary spending goes up www.dqindia.com
and companies look at technology led transformations, the momentum is expected to continue in the near future. Cloud-based delivery models and automated technologies are acting as key drivers for IT services. The growing adoption of SMAC is also playing a prominent role in driving growth. SMAC technologies are driving IT investments in start ups and this is set to create a massive opportunity for technology service providers. Trends like smart computing and anything-asA CyberMedia Publication
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a-service are also expected to drive demand. Technology enablement in the emerging markets and small and medium enterprise space will further accelerate growth opportunities for IT service providers. Rise in discretionary spending is expected to further drive exports in this fiscal.
Indian IT Exports FY2014 - Geographic Revenue Contribution (%) 2%
ADM LEADS THE PACK
According to Nasscom’s IT industry review 2014, infrastructure services outsourcing and testing segments are growing at a much faster rate than the total IT services. While IT services exports were estimated to have grown by around 14%, growth in infrastructure services was 18.5% and for software testing it was 18%. Infrastructure services segment is seeing high traction led by the growing popularity of cloud-based as-a-service infrastructure offerings. Service providers are hence investing in innovative cloud infrastructures to stay ahead in the race. The vendor landscape is also evolving and extending to hardware vendors, telecom and hosting service providers, etc. In the software testing segment, mobility and cloud-based testing will be creating interesting opportunities. According to a study by outsourcing analyst firm, Nelson Hall, factors driving global testing spending include buyers focusing on professionalizing their testing activities, largely through centralization of their testing function and adoption of factory-based delivery, with India being the core delivery element. Application development and maintenance (ADM) continues to be the bread and butter for Indian IT services companies accounting for over 50% of the IT revenues. Growing demand of consumers for digital applications will be driving growth in the space. Gartner points out that CRM |
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8% 12% 62% 17%
US
UK
APAC
ROW
Europe (excluding UK)
Source: DQ estimates
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IT EXPORTS
—SD Shibulal former MD and CEO, Infosys at the Q4 2014 press call
will be at the heart of organizations’ digital business initiatives and service providers will be competing hard to shorten time from lead to purchase and to provide service visibility. Nasscom points out that demand for services around SMAC, vertical specific expertise, and datacenter transformation will be the key drivers for IT consulting services. India has also established itself as an attractive destination for Engineering and Research and Development (ER&D) services. Moving beyond low and medium complex works, the industry is now capable of offering highly-skilled and complex ER&D services. Nasscom estimates that the market for ER&D and design will reach $40-45 bn by 2020. India is expected to hold a significant share in global ER&D offshoring pie. PLAYERS IN THE LEAD
It is an interesting phase for India’s IT services companies to demonstrate value to their clients who are increasingly seeking strategic engagements and are viewing IT as an enabler for business transformation.
IT companies are on an expansion mode and continue to invest in technology capabilities across domains. Diversification is the key as service providers enter new markets and geographies. There is more focus on building an onshore presence and most companies are opening their delivery centers onshore to serve their clients better. Also, there is more focus on attaining non-linear growth through platforms, products, and automation. Indian IT service providers saw a revival of fortunes posting doubledigit growth in fiscal 2014. The top five players TCS, Cognizant, Infosys, Wipro, and HCL saw a surge in IT services revenues and bagged some multi-year deals from large players in Europe and North America. Looking at company specific developments, TCS has led the race in FY14. It continued to be the largest IT services exporter in India growing consistently despite the falling economy. Its growth has been multi-dimensional across geographies, services, and verticals. Across geographies, Europe led the growth. The company’s acquisition of Alti SA, the
Based on the recent business momentum and our expectations of clients spending in the upcoming quarters, we have given a guidance of 7-9% for fiscal 2015
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IT EXPORTS
—Anant Gupta President & CEO, HCL Technologies on the announcement of partnership with CSC
leading system integrator in France also aided to its growth. It was also the leading recruiter in the industry adding more than 60,000 employees globally. Although the company has surpassed its competitors in tough times, it will be interesting to see how it manages to continue the reign. Sundaraman Vishwanathan, Manager, Consulting, Zinnov, points out that the company is more focused on application development and maintenance and it needs to be seen if the growth is sustainable in the long run. Cognizant has posted impressive growth in the last few years and it has been successful in carving a niche in IT outsourcing space. Vishwanathan points out, “Cognizant has been a significant beneficiary from the loss of the likes of Infosys. The company is going to grow another $100 mn from the last year.” It is making significant investments in SMAC technologies. Infosys holds the third slot. Over the last couple of years, the company was losing out to its Indian counterparts in the IT services battlefield.
Things seem to be picking up as the company posted double-digit growth in FY14 and bagged many multi-year, multi-million deals. Analysts point out that its growth is not going to go down from where it is now. The company’s 3.0 strategy seems to be working out well and its Lodestone acquisition is also paying off. Vishwanathan adds, “It is investing in the right places.” Wipro managed to put up a better performance over the last year in terms of overall growth rate and deal wins. It witnessed strong growth across all geographies, the momentum being led by Europe. The company added 174 new clients in its IT services business in FY2014. For HCL, the growth was largely led by Infrastructure services which accounts for a major part of its revenues. The company signed some large deals in FY2014 most of which were in the infrastructure space. It has also been focusing more on the developing markets. HCL’s partnership with rival CSC to deliver application modernization services was a significant move. The company is
CSC’s strong technology portfolio and client base coupled with HCL’s robust system integration capabilities will be a formidable combination in the application modernization market 24
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IT EXPORTS
looking at expanding offerings across service lines. Industry analysts point out that its high focus on infrastructure services will be a cause of worry going ahead. SMAC IN FOCUS
—Ganesh Ayyar CEO, Mphasis at the announcement of its new branding
Traditional IT services in the years to come is going to die. Our next billion will be very different from the current one. The focus would be on revenue per employee not number of employees
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According to Avasant’s Sourcing Trends 2014 report, Travel, Tourism and Transportation sector will see an increase in outsourcing spend especially for innovative solutions in the areas of cloud and analytics. It adds that in the developed markets where the telecom customer base is saturated, SMAC will enable innovation through digital technologies and diminish the silos powered by enterprise mobility and enterprise social media. Global surveys have underlined that enterprises across domains will invest a significant part of their IT services budgets on emerging technologies like mobility and cloud. Reportedly, IT research firm Offshore Insights predicted that India will be exporting SMAC software and services worth $15 bn in fiscal 2017. Big data and analytics, and cloud services will lead IT spending in SMAC technologies globally. The disruptive forces of social, mobile, analytics and cloud are set to change the game for IT service providers. Players who are foreseeing the technology disruptions and investing in the right places are likely to benefit in the coming years. Industry experts point out that with SMAC gaining favor, IT companies will be able to achieve non-linear growth and will be able to deliver more value to their clients. It is evident that SMAC technologies are capturing focus of the large Indian IT companies. Currently, SMAC forms just about 5-10% of the Indian IT revenues, but the share is expected to go up significantly in the coming years. The SMAC investments in FY2014 by top www.dqindia.com
Currently, SMAC forms only about 5-10% of Indian IT revenues, but the share is expected to go up significantly Indian IT players is indicative of the developments on that front. HCL reportedly has set a goal of $1 bn revenue from SMAC in the next five years and it will be leveraging its big data capabilities to achieve it. Rivals Wipro and Infosys are not left far behind. Wipro has strengthened its presence in the SMAC space with its acquisitions of big data company Opera Solutions and cloud computing company Axeda. Infosys is also known to be investing significantly in social media and analytics space. OUTLOOK FOR FY15
With its talent quality, scalability, and cost competitiveness India still remains the most favored IT services destination in the world. According to Outsourcing Advisory firm ThoA CyberMedia Publication
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IT EXPORTS
—Ajeeth Jagannath Senior Vice President, India & Asia Pacific, ITC Infotech
Increasingly our target customer is beyond the CIO—it’s the CMO, the CFO—it’s the business. Hence ability to have deep domain knowledge is a must
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lons’ 2014 Top 100 Outsourcing Destinations report, India’s role as a global outsourcing player should continue to increase in the near term. The development of tier-2 and -3 locations within the country will strengthen its service delivery capability and also the growth of Indian IT companies will increase the influence of Indian IT industry in the global outsourcing arena. In a highly competitive IT services landscape marked by changing business conditions and technology disruptions, service providers are attempting to redefine business models. The Avasant report states that effectiveness of sourcing relationships is now increasingly measured by its impact on overall business related outcomes and not just on cost and efficiency improvements. According to it, service providers are leveraging their domain expertise and use of tools and technologies to move from FTE or transactionbased delivery models to that of a Managed Services Model (MSM). Innovative ways of pricing and service delivery are also being attempted as enterprise buyers seek more flexibility and value from outsourcing relationships. As traditional markets mature, emerging markets and new technologies need to be leveraged to accelerate growth. The ability to transform from service providers to strategic partners will also play a vital role for Indian IT service providers in staying ahead of their global competitors. Nishchal Khorana, Head - Consulting, ICT Practice, Frost & Sullivan had shared with Global Services that going forward, increasing operational costs will continue to negatively impact large and emerging Indian players. Ensuring competitiveness will be critical while contending with global players. “The industry is expected to witness increased collaboration to drive business growth. www.dqindia.com
Ability to offer end-to-end services, expertise for working with start ups and investments in emerging technologies will make the difference for service providers IT players will need to form alliances and partnerships to augment existing capabilities with new technologies and adapt to the IT as a service model,” he wrote. Additionally, Vishwanathan points out that sticking to traditional business models and doing more of the same is not going to work for IT companies. Ability to offer endto-end services, developing the expertise for working with start ups and investments in emerging technologies will make the difference. With new technologies, new pricing models, new geographies and new service lines and segments, it will be a new playing ground altogether for the Indian IT companies. A CyberMedia Publication
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Machine-to-Machine communications are fast becoming the difference between whether an enterprise is ready for the future or not. These solutions are applicable for all industries, of all sizes and operating in all markets – whether in India or abroad. Up until five years ago, M2M services were considered expensive and the ROI [Return On Investment] was dubious. But now, with the hardware prices coming down to an affordable threshold, enterprises have begun to heavily invest in technologies that not only lower their costs and increase operational efficiency, but at times, open a new revenue stream for them
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Enterprise Apps
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ENTERPRISE APPS
Sustaining Growth
Enterprise applications continue to be an interesting area as vendors continue to adopt innovative ways to reach out to customers
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n FY14, India underwent a lot of change. Elections in several states including the general elections kept a number of businesses away from investing in newer technologies or systems. Enterprise apps market had thus a direct impact of the social and political scenes in India. Elections and lower profits from government sector investments led the software market in India to grow at a lower pace, research firm IDC claimed in one of the statements. In our estimation too, the scene was no different. Software market in India witnessed slow growth, due to multiple factors including delayed payments, lower profits from government sector investments, and rupee depreciation among others. However, a number of areas showed growth and investments, including e-commerce and mid-tier companies. Cloud computing helped them embark on the enterprise apps journey. Gartner and IDC both are positive with regard to the mood in the ongoing year. For 2014, IDC expects the software market in India to grow at a CAGR of 10.3% over the five-year forecast period (20142018), primarily driven by segments like security software, system software, enterprise applications and analytics, which continue to be the top priorities for enterprises in terms of IT investments. 32
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Application software markets include enterprise resource planning (ERP), customer relationship management (CRM), business intelligence (BI), supply chain management (SCM), business intelligence (BI), etc. The growth was primarily driven by new spending on SaaS and cloud based deployments, as well as upgrades and improvements to continue the modernisation of established, mission critical software. Unlike other markets India has a lot of scope of adoption since there is less legacy. Vendors are trying to come out with long-term strategies to woo Indian enterprises. The software industry is in the middle of a multiyear cyclical transition as organizations are focusing investment on technologies to support existing systems, in order to maintain competitiveness, while still taking advantage of cloud/ subscription-based pricing where it makes sense to grow and advance the business. The top five vendors in India remained stable, but their success and performance varied. ERP, CRM, and BI and analytics were the largest software markets. SAP, Oracle, IBM, Salesforce and Microsoft continued to be in limelight.
cially small and medium businesses (SMBs), are now looking at adopting ERP solutions on the software as a services (SaaS) model for faster deployment and enhanced cost effectiveness, research firm Gartner stated in one of the releases. According to Gartner, SaaS ERP in India is expected to grow at a compound annual growth rate (CAGR) of 28%. In line with the global trend, end users in India and China deploy SaaS ERP because of the benefits of faster deployment and the perception that it is cost effective. Also, for organizations looking for solutions that can scale up as their businesses grow, SaaS seems like a good option. According to an estimate, there are over 500 user organizations that have adopted SaaS-based ERP in India and China combined. However, SaaS ERP applications in India constitute less than 5% of the overall ERP market in India. On-premise ERP market in India is expected to touch $538 mn by 2017 from $178 mn in 2013, growing at a
Indian ERP Market Revenue Growth FY2013-14 2,233 12% FY2012-13 1,993 Source: DQ estimates revenue (`crore)
Indian ERP Market
1% 3% 1%
20% 47% 11% 17%
SAP
Oracle
Microsoft
IBM
Sage
Infor
Others Source: DQ estimates
ERP: GROWING STEADILY
Enterprise resource planning (ERP) is an integrated suite of solutions that help a company plan and manage its core business processes like production, inventory management as well as other operations like HR and accounting. The ERP market continued to grow at a stead rate of 12 %. However, top vendors continued to poach customers from each other’s kitty. New customers acquisitions were done only through new delivery models such as SaaS (Software-as-a-service) ERP. An increasing number of companies, espe|
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ENTERPRISE APPS
SAP
Oracle
JDA
IBM
Oracle
SAP
CAGR of 17%. In rupee terms, Dataquest estimates the ERP market in India at `2,233 crore. It is a growth of 12% over last year’s `1,993 crore. When it comes to marketshare, SAP is an undisputed leader in the ERP space as it holds 47% of the market followed by at a far end by Oracle with 17%. Microsoft owns 11% of the market. Besides, smaller players are increasing their footprint in this market. Players such as Infor, Sage and others, including open source solutions are gaining footprint in the mid-tier segment. Traditional sectors continued to rest faith in ERP solutions. Particularly, heavily regulated sectors such as banking, insurance, telecom and public sector continued to use onpremise ERP solution. Even manufacturing sector chose to use onpremise ERP solutions since most players do not want to share sensitive data with third party organizations.
Infor
Sage
Salesforce
Microsoft
SCM MARKET IN INDIA
Infor
IBM
Avaya
Others
Indian SCM Market Revenue Growth FY2013-14 1,222 20% FY2012-13 1,018 Source: DQ estimates revenue (`crore)
Indian CRM Market FY2013-14 FY2012-13
Source: DQ estimates revenue (`crore)
Indian SCM Market
25% 1% 3% 1% 1%
Others Source: DQ estimates
Indian CRM Market
10% 1% 2%
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12% 19%
7%
Source: DQ estimates
34
23%
28%
35%
32%
Revenue Growth 1,600 2,002 25%
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Supply chain management is a critical component for several logisticsbased organizations, since they can not afford to lose customers over poor logistics. Perhaps this is the reason that SCM software market is constantly growing significantly in India. While India witnesses an onrush of e-commerce companies, it is critical for them to improve their logistics for better customer service. Besides, manufacturing players and suppliers are always wary of their supply chain. According to PwC, the next wave of transformation is likely to happen in the logistics space as companies embrace the new success mantra of delivering superior customer response while managing minimum inventory across supply chain. Dataquest estimates this market to be at `1,222 crore in FY14 with 20% growth. Major players who dominate this space are SAP (35%), Oracle A CyberMedia Publication
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ENTERPRISE APPS
Indian BI Market FY2013-14 FY2012-13
Revenue Growth 1,790 2,058 15%
Source: DQ estimates revenue (`crore)
Indian BI Market 1% 3%
13% 27%
7% 10% 16%
23%
SAP
IBM
SAS
Oracle
Microsoft
Qilk Tech
Tibco
Others
Source: DQ estimates
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(32%), and Infor (4%), among others. Given the huge investment and development taking place in this area, this is the opportunity that Indian corporates are likely to explore and leverage going forward. Managing profitability, reducing costs, and meeting customer requirements are the top three priorities of supply chain executives globally today. The companies are adopting different supply chain capabilities like collaborative planning, vendor-managed-inventory and best country sourcing. Moreover, they are also open to increasing interest in next-generation technologies, automation, and sustainability. CRM MARKET IN INDIA
Indian customer relationship management (CRM) software totaled `2,002 crore in FY14, up 25% from `1,600 the previous year. High levels of enduser investment in digital marketing and customer experience initiatives were the primary growth drivers of the market in 2013-14. It is believed that CRM will be at the heart of digital initiatives in coming years. According to
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Gartner, this is one technology area that will get funding because digital business is critical for companies to remain competitive. Strong demand for software as a service (SaaS), which represented a significant part of CRM total software revenue in 2014, was driven from organizations of all sizes seeking easier-to-deploy alternatives to replace legacy systems, implement net-new applications or provide alternative complementary functionality. Competition intensified as major players continued to vie for broader market penetration in the mid and SMB segments. The top five CRM vendors accounted for more than 50% of CRM software revenue in 2014. Oracle continued to be the largest vendor overall in the CRM market with 23% marketshare followed by Salesforce.com which claimed 19% of the market. SAP was pushed to #3 spot whereas Avaya held 10% of the market. Microsoft had a number of customer wins in the growing digital and e-commerce subsegments and claimed 7% of the market. Organizations are leveraging CRM as a major part of their digital initiatives to enhance the customer experience, according to Gartner. The outlook continues to be positive for CRM as buyers focus on technologies that enable more targeted customer interactions in multichannel environments. CRM market growth is expected to stay upbeat in
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ENTERPRISE APPS
2015, following three strong years of investment as high-tech, banking, insurance, securities, telecommunications, pharmaceutical, consumer goods, IT manufacturing and IT services vertical industries are expected to be the largest spenders on CRM as they have the widest use of different types of CRM applications and technologies. According to Gartner, e-commerce is on the top of mind for CEOs, chief marketing officers (CMOs) and senior executives as they seek the ability to improve overall customer experience, profitability and sales. At the same time, marketing technology is a hot area for IT investment, but solution decisions are increasingly being driven by CMOs and the marketing organization, with little to no IT involvement. CIOs will need to work more closely with CMOs and marketing leaders to adapt to the increasing technology demands emanating across the marketing organization. Mounting pressure on CMOs to drive growth, improve accountability and reduce costs is pushing marketing organizations to make significant marketing technol-
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The ERP market continued to grow at a steady rate of 12%. However, top vendors continued to poach customers from each other’s kitty
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ogy investments across a broad set of applications and functionality. BI MARKET IN INDIA
Indian business intelligence (BI) software revenue grew 15% in FY14 as businesses focused on using analytics and big data. BI revenues, which includes revenue from BI platforms, analytic applications and corporate performance management (CPM) software, stood at `2,058 crore in FY14 over `1,790 crore over last year. Business intelligence software are tools designed to retrieve, analyse, and report data. These tools help identify and develop new opportunities, providing companies competitive market advantage and long-term stability. According to a research firm, pressures from consumers, environmental policies, government and industry regulations, international standards of quality, and internal operational efficiency are forcing enterprises to improve their operations and processes to become both agile and efficient in a volatile marketplace. BI platforms are expected to comprise the largest chunk of the market in 2015 because of trends such as big data. Analytic applications and performance management segment are also expected to see the fastest growth. Gartner in one of its earlier reports had predicted that signs of the emerging importance of BI in India are high as senior executives are increasingly exploring the different styles of analytics to resolve their business imperatives. There is an increased emphasis on the metrics management and growing use of performance management and software and service providers are increasing marketing spend on BI, thus, leading to higher visibility. SAP leads the BI market with 27% marketshare followed by IBM with 23% marketshare. SAS and Oracle remained at #3 and #4 respectively. A CyberMedia Publication
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Prerna Sharma prernas@cybermedia.co.in
Desktops & Notebooks
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DESKTOPS & NOTEBOOKS
Fighting for the Last Piece of Cake With increase in BYOD and touch technology, desktop market has witnessed a slow growth. Experts believe that soon tablets will be eating up PC’s share
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T
he story of Indian PC market is not less than a roller coaster ride. In FY14, the industry went through a major transition. One can see the desktop market is getting trounced by notebook storm. Various research firms bet high on the future of desktops and notebooks in FY14. But during the year, the demand for consumer PCs remained suppressed against forecast expectations.
Analyzing PC Vendor Market Share 30%
44%
GOODBYE PCs
There had been a rapid decline in the overall PC market owing to fluctuating technology habits driven by changing user needs, as the preference for devices which offer greater portability increased. Over the last year, the market has seen some instability in terms of some domestic brands exiting the PC business after struggling with a turbulent market scenario. The industry witnessed closed doors from big giants like Wipro and HCL. The sudden exit of these PC vendors shattered the whole industry. Even though these vendors were big in volume but they have to compete with many multinational giants like HP, Dell, and Lenovo in this space. After shutting down its PC business, HCL shifted its focus on distribution. HCL is also shifting some of the employees from manufacturing division to other roles. In the last few years, most PC makers in the country have incurred losses due to the rupee’s fluctuation against other currencies, especially the US dollar. This has hurt the PC business in India as it is low-margin and almost 90-95% of the components are imported. The PC business came under tremendous pressure. The main reason behind this slowdown was special education projects that got affected with the change in states govern|
A CyberMedia Publication
14% 12%
HP Total Shipment
Dell
Lenovo
Others
11 mn
Source: DQ estimates
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September 15, 2014
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DESKTOPS & NOTEBOOKS
India PC Market FY2013-14 FY2012-13
Revenue Growth 28,154 -7% 30,273
Source: DQ estimates revenue (`crore)
PC Market Composition
shows that PC sales shows a niche growth during the Windows 8 days. Similar view can be seen in semiconductor market where Intel, AMD, and other PC-oriented chip makers witnessed a huge downfall whereas mobile chip suppliers experienced huge growth. MARKET DRIVERS
40% 60%
—Indrajit Belgundi Director & General Manager, End User Computng, Dell India
The uptake for notebooks and ultrabooks has been rampant on both the personal and professional front as customers increasingly look towards portable devices that help them stay connected, onthe-go 42
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Notebook
Desktop
Source: DQ estimates
ments like UP, Tamil Nadu, and Rajasthan. Last year the industry was hoping for a brighter day with the initiatives started by the state governments. But with discontinuation of these schemes, the marketshare of PC vendors was affected badly. A Lot of smaller companies are moving away from desktops and are buying laptops for their employees. Whereas in consumer front PC adoption continue to drown. All these factors have largely skewed the overall growth in this segment. WINDOWS FURTHER
8:
KILLS
PC
MARKET
With the launch of Windows 8 desktop, industry had hoped that it would bolster sales—but instead, Microsoft’s new OS didn’t prove be a miracle for the PC future. It was observed that consumers chose tablet or smartphones over touch-based desktops. Various analysts report www.dqindia.com
Notebook: Today the technology gain acceptance among consumers make life more convenient and productive. Recently, this productivity has been determined by the mobility a device can provide, with technology providers innovating to suit that need. “Today with cloud client computing, data storage is no longer a hurdle with hybrid devices. To this end, the uptake for notebooks and ultrabooks has been rampant on both the personal and professional front as customers increasingly look towards portable devices that help them stay connected, on-the-go,” says Indrajit Belgundi, Director & General Manager, End User Computng, Dell India . Each year, companies around the world spend their IT budget in buying new computers in bulk. But after the concept of BYOD has taken pace among enterprises, companies are now allowing employees to bring their own products into the office and use them for corporate activities. This in turn helps companies to invest their budget in other technologies. Desktop: The desktop category sees a more focused audience drawn towards it. There are still some sectors which are using desktop for their work. That work cannot be performed on notebooks. For example, a graphic designer has differing computing needs than a person from a manufacturing business. In this case, the enterprise, depending on the usage, is free to customize parts of the desktop to suit needs. The scope of customization specifications is greatly altered A CyberMedia Publication
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DESKTOPS & NOTEBOOKS
with notebooks. While it is true that mobile devices provide convenience, the definition of convenience itself may be different for different users. The market is poised such that, while portability and mobility becomes a popular trend and is widely accepted, there remains a unique and separate space for desktop. However, there are some features that tablets and mobile devices can’t provide—such as storage capabilities for large amounts of data or high graphic performance for in-house design projects. VENDOR DYNAMICS
—Ketan Patel Director, Computing Systems, PPS, HP India
FY14 has given enough reasons for HP to celebrate. They were able to retain its top PC vendor title with a marketshare of 30% while Dell and Lenovo closed the year with 14% and 12% respectively. The kick start for HP was its execution of the largest education deal in the state government of UP which ensured them high
volumes driving their marketshare to its peak. Other factors like pricing, widespread retail presence, and strong support from channel partners ensured their lead in the consumer market. Whereas Lenovo is strongly placed in the enterprise business and in the all-in one desktop category. They moved to the third spot with a marketshare of 12%. Also, they continue to remain focused in the consumer segment through partner programs, expanding coverage and price aggression. With the new line of business towards tablets and phones, Lenovo will be able to leverage their reach and grab more consumer mind share. In Q12014, Dell was able to occupy 1st position among other PC vendors. According to industry experts, Dell is doing well in re-energizing their channel focus in both consumer and commercial business. Renewed approach in their go-to-market strategy, product refresh on their commercial
New technologies in notebook has allowed HP to deliver a more intuitive computing experience where our customers can now use their hands to make models and presentations 44
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DESKTOPS & NOTEBOOKS
portfolio, and deeper penetration in the upcountry markets have been their driving forces. The company is aggressively focusing on increasing penetration across all segments and is reaching out to the small business and commercial segments with products and solutions through its strong channel and distribution network. To sustain its position in top notch, Dell has been actively increasing its consumer retail presence. TRENDS THAT WILL RULE
Experts believe that 2014 has seen a growth in technology trends which had been sparked off in the previous year. “Ultrabooks and all-inones were chosen as form factors by vendors to deliver a swift, compact, and convenient experience to users. Another rapidly adopted technology trend however, has been the inclination of PC vendors to shift towards touch technology,” added Belgundi. Today, the technology which has
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changed the rules of the game in both enterprise and consumer space is touch technology. It has seen immense positive response from users in both the consumer and commercial categories in the past year. This change in form factor has been a result of rapidly evolving consumer trends. The new age consumer wants to make the most of what technology has to offer. According to IDC, by 2017, PCs will account for 17% of the smart connected device market—PCs, tablets, and smartphones—worldwide, but manufacturers are still expected to ship more than 380 mn computers that year. Technology must keep reinventing itself in order to make end-user experience better each time. It is to suit this need that touch technology has extended beyond the mobile phone space and pervaded the PC segment. The end goal is to create a seamless user experience, with an increase in the productivity and performance a
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consumer can achieve with the use of innovative technology. “As consumer-demand continues to push the boundaries of design, we will start to see the next generation of connected experiences powered by emerging technologies such as gesture control. Leap MotionTM technology, for example, can sense natural hand and finger movements in the air. Incorporating such technology to a notebook has allowed HP to deliver a more intuitive computing experience where our customers can now use their hands to make models and presentations” added Ketan Patel, Director, Computing Systems, PPS, HP India. Apart from these technology trends, major PC brands will continue penetrating deeper into the Indian hinterlands either on their own or by leveraging the existing infrastructure of others. But overall it is difficult to say whether tablets and smartphones have eaten PC’s share.
A CyberMedia Publication
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Onkar Sharma onkars@cybermedia.co.in
Printers
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A CyberMedia Publication
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PRINTERS
Frost-bitten Growth
Indian organizations are still largely paper-driven. But there is an increasing importance of digitization and the need to access information anytime, anywhere. This led the market to grow merely at 8%
T
he printer market is one of those territories where blind growth has dried up in the last couple of years. While this market suffered setbacks during the slowdown because of the heavy focus on digital document management by enterprises, it has witnessed partial growth in some of the categories in FY13-14. Yet it is no surprise. As many vendors believed that the market was looking for better and affordable alternatives, they have tried to make printers more efficient at lower cost. As a result, vendors tried to woo customers through their new launches that claimed better performance at lower cost of ownership and operation. This year Dataquest tried to revisit the estimates with the help of CyberMedia Research (CMR) so that we could reach the exact market figures. With our joint effort, we discovered that the printer market in India witnessed a growth of about 8%. Last year, the printer market stood at `2,406 crore, whereas it jumped to `2,587 crore. A number of factors attributed to the growth of the printer market including the new launches by HP, Samsung, Canon, and Epson. Indian organizations are still largely paper-driven. But there is an increasing importance of digitization and the need to access information anytime, 48
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A4 Printer Market FY2013-14 FY2012-13
Revenue Growth 2,587 8.00% 2,406
Source: DQ estimates revenue (`crore)
anywhere. This represents an opportunity for print providers to expand their services into optimizing the document workflows that support business processes. Overall printer market in India stood at `2,587 crore with 8% market growth from last years `2,408 crore. In the overall market, HP is the leader with 41% marketshare followed by Epson with 17%, Canon 14%, Samsung 8% and Brother with 5%, among others. In the A4 market, the competition is very tough in the stagnating market. It is important that vendors innovate to reduce the cost and show viability. The combined serial inkjet and page printer, copier and multifunction product (MFP) market in India drove growth. But the decline in shipments continue to worry the vendors. According to Gartner, total end-user spending remained almost flat. It further outlined in one of its surveys that vendors are targeting the small and midsize business (SMB) and small office home office (SOHO) markets in India with increased focus on the cost and quality needs of office users. Key market players are trying to stimulate demand with new offerings and working closely with channel partners for market expansion. HP remained the market leader in the Indian printer, copier, and MFP market. Other important players which dominate the market include Canon, Epson, Samsung Electronics, etc.
A4 Printer Market
1% 2% 2%
9% 41%
5% 8% 14% 17%
HP
Epson
Canon
Samsung
Brother
TVSe
WeP
Panasonic
Others
Source: DQ estimates
INKJET: REDEFINING THE MARKET
The biggest reason which led the market to grow is the emergence of inkjet printers. A number of vendors |
A CyberMedia Publication
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PRINTERS
Dot Matrix Printer Revenue Growth FY2013-14 242 -16 FY2012-13 287 Source: DQ estimates revenue (`crore)
A4 Printer Market (DMP)
Inkjet Single Function Revenue Growth FY2013-14 134 -8 FY2012-13 146 Source: DQ estimates revenue (`crore)
A4 Printer Market (Ink SF) 8%
21%
20%
52% 27%
Epson WeP Source: DQ estimates
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72%
TVSe
Epson HP Source: DQ estimates
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Canon
including HP, Canon, and Epson exploited CISS (Continuous Ink Supply System) technology which helps inkjet printers to perform at par with laser printers and that too, at a lower cost. The year witnessed a host of launches by HP, Epson, and Canon. HP was heavily focused on this segment and experimented in the newer markets. It tried to reach out to new segments including the SMBs where the adoption levels are low. “As the printer market continues its journey towards revival, some interesting patterns emerge. The multifunction segment increases its dominance over their single function counterpart. Innovations around ink multifunction printers help grow the category from 19% to 22% in FY14 in terms of revenue contribution, from a year before; while the single function laser printers contribution declined from 30% to 28%. One of the key reasons have been the new found ability of an inkjet printer to print at a low cost (through CISS). It has certainly influenced a segment to choose inkjet printers over laser,� opines Maninder Singh, Analyst, Infotech Practices, CMR. Even the inkjet printer market has not been an easy ride, since the single-function inkjet market witnessed a downward trend. Many believe that it is mainly due to the focus on the multifunction. All said and done, the vendors have to sell hard for growth and marketshare. The single-function was `146 crore in FY13 whereas it declined to `134 crore in FY14 with a decline of 8%. With the decline in the single-function market, HP seems to be a little nonchalant to cater to this space and stands second with mere 20% marketshare, whereas Epson leads with more than 72%. Multifunction inkjet market grew significantly in FY14. This segment in the inkjet market registered exponential growth of 30%. The market stood at `586 crore in FY14 from `448 crore A CyberMedia Publication
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PRINTERS
Laser Single Function Revenue Growth FY2013-14 734 0.4 FY2012-13 731 Source: DQ estimates revenue (`crore)
A4 Printer Market (Laser SF) 15%
Inkjet Multifunction FY2013-14 FY2012-13
Revenue Growth 586 31 448
Source: DQ estimates revenue (`crore)
A4 Printer Market (Ink MF) 7%
23%
40%
17%
13%
LASER’S FADING GLOW
43% 38%
5% HP
Brother
HP
Epson
Others
Canon
Canon
Brother
Samsung Source: DQ estimates
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Source: DQ estimates
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last year. HP renewed its strategy to win markethsare and increase footprint as it launched campaigns to woo customers in tier-2 and -3 markets. The company announced a range of printers to increase the variety for all kinds of customers. HP led the market with 43% marketshare, followed by Epson with 38%, Canon 13%, and Brother 7%.
During the recession, it was the laser printer market which saved most of the printer players. While other segments were not performing up to the market, only laser printers had customers. However, the trend seems to fade as evident in the figures for FY14. Single function laser printer seems to hit a roadblock as customers showed interest in buying only multifunction printers. This is the reason why single-function laser printer market was flat in FY14. However, the market has witnessed the entry of new players in the last few years. Another reason why laser printer market is witnessing a low growth is the high cost of printing. Plus vendors have found the way in inkjet printers for low-cost printing. So inkjet printers have started to eat laser market. Single-function market stood at `734 crore in FY14 whereas it was `731 crore last year. So the growth in the laser single-function was flat for the reasons cited above. The market was led by HP with 40% marketshare, followed by Canon with 23%, Samsung with 15% and Brother with 5%, among others. Multifunction laser is still able to grow in double-digits in India. The market stood at `892 crore with 12% growth in FY14 from last years `794 crore. The market is again ruled by HP with 55% followed by Canon and Samsung with 13% and 11% respectively. HP is the undisputed leader in the laser printer market. Brother owned 5% market. A CyberMedia Publication
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PRINTERS
Laser Multifunction FY2013-14 FY2012-13
Revenue Growth 892 12 794
Source: DQ estimates revenue (`crore)
A4 Printer Market (Laser MF) 3%
5%
PUTTING THE DOTS TOGETHER
13% 55%
13% —Nitin Hiranandani Director, Printing Systems, PPS, HP India
11% HP
Samsung
Canon
Others
Panasonic
Brother
Source: DQ estimates
HP has also continued to innovate our inkjet and MFP technologies to provide faster, more complete and more efficient printing solutions for SMBs to large enterprises
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Overall printer market in India stood at `2,587 crore with 8% market growth from last years’ `2,408 crore www.dqindia.com
Since most of the vendors are struggling to meet customer expectations of low cost printing in this segment, they have decreased their focus from launching new products. However, they continue to bring in new products but the frequency at which they used to do was not there.
Dot-matrix market continues to go down in India. However, it is believed that it will not vanish completely because of its heavy usage in the retail, banking and other sectors to generate memos and other documents are low cost. In numbers, the decline in the dotmatrix printer is apparent. In FY14, the market stood at `242 crore from `287 crore. It shrank 16%. Well there is no surprise if the market has gown down. The users have heavily moved to laser and inkjet. The players in this segment continue to launch printers for some of their loyal customers in the government and retail space. Epson is an undisputed leader in the dot-matrix printer space with 52% marketshare followed by TVSe and WeP with 27% and 21% share respectively WILL IT EXIST?
The trends in the printer market cast doubt whether the printer market will exist tomorrow or not. No doubt, it is a heterogeneous thought that is far from reality. But it points out towards the fading role of printers in today’s business world. A number of organizations have begun to focus on digitization of documents to save on paper and file management. But everything can not be digital. Print will remain and so the demand for printers in the market. The vendors would need to innovate and reduce the cost of printing even further. A CyberMedia Publication
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Onkar Sharma onkars@cybermedia.co.in
IT Systems Software
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A CyberMedia Publication
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August 31, 2014
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IT SYSTEM SOFTWARE
Challenges vs Opportunities
To boost growth, vendors need to scale up their investments on innovation and should focus on offering value to the customers
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B
ig data and cloud set the tone of this market in FY14. The vendors continued to carve ways to reach out to customers and show them value putting in perspective challenges that might crop up in their businesses. While many segments witnessed a laggard growth, customer sentiment was upbeat but limited to knowledge-enhancement. Investments trickled out slowly. Like every year, this segment was purely dominated by the biggies such as Oracle, Microsoft, IBM, HP, and SAP. They steered into new areas and verticals in search of customers and tried to open up doors for mid-tier market.
FY 2013-14 2012-13
Revenue Growth 2,468 8% 2,285
Source: DQ estimates revenue (`crore)
FY 2013-14 2012-13
Source: DQ estimates revenue (`crore)
RDBMS Market 3% 4%
Revenue Growth 1,788 5% 1,702
Indian Middleware Market 6% 2%
34%
28%
14% 63%
16%
30%
DATABASE UNDER SPOTLIGHT
It is a universal truth that a number of enterprises are concerned about the data they are generating on day-today basis. This led them to invest in database managment. In addition, an aggressive marketing strategy supporeted by best-of-breed products and solutions by vendors drove this market further. Plus big data is really big and will stay, influencing market dynamics in the enterprise sector. Looking at the growing market for data storage and data management needs, several vendors such as Oracle, SAP, Microsoft, etc, have left no stone unturned to grab the marketshare. Surely Oracle holds the 63% database market in India. However, the opportunity is so big that even the smallest vendors tried to make their ways into the growing database market in India. Players such as MangalDB and EnterpriseDB sought their way in the market. MangalDB is a growing startup which has of late grabbed attention from peers and customers. Its biggest customer in India is UIDAI. In FY14, Oracle continued to be an undisputed leader in the RDBMS |
A CyberMedia Publication
Oracle
Microsoft
IBM
SAP
IBM
ORACLE
MICROSOFT
SAP
Others Source: DQ estimates
Others Source: DQ estimates
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IT SYSTEM SOFTWARE
space with 63% marketshare, followed in distance by Microsoft with 16% marketshare. IBM was a close with 14% whereas SAP still holds 4% market. Although SAP is trying its best to woo customers for its HANA platforms, the company is still not able to count beyond a few customer wins. MIDDLEWARE MARKET
The use of multiple delivery models, increased reliance on governance technologies, and the convergence of application and data integration requirements drove organizations to sustain investment in middleware technologies and skills. In addition, emerging opportunities such as cloud computing, Internet of Things, mobile enablement, intelligent business operations and in-memory computing are all areas in which middleware providers continued to play an active role as innovators. In India middleware market witnessed a growth of mere 5% but vendors are hopeful of demand growing in the backdrop of cloud, IoT, and mobile. Slow growth is a result of the previous year effect when enterprises tried to stay away from middleware investments.
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In terms of vendor dynamics, IBM retained the #1 position with 34% marketshare closely followed by Oracle with 30% marketshare. The rankings of the top four vendors have not changed over the last three years; however, they are showing mixed performance under pressure from specialized vendors, in particular PaaS providers and open source software suppliers. According to Gartner, organizations that take advantage of the digital era’s opportunities are realizing that their established application infrastructure middleware strategies are no longer adequate. Enabling digital business transformation requires IT organizations to operate with much greater agility and “on demand”. They must provide much deeper business insights, web scale systems and the ability to integrate myriad of endpoints, such as mobile apps, cloudbased applications, social networks, heterogeneous data sources and a growing number of ‘things’. To support these requirements, IT departments need to refresh their application infrastructure adding the capabilities needed to rapidly scale their systems, inject real-time operational intelligence into business processes, and target an adaptive approach to integration. To this end, traditional, featurerich, but also expensive, middleware products are being increasingly complemented—and at times replaced— by lightweight, low-cost technology aimed at enabling much faster time to value. This is one of the reasons why most traditional middleware vendors are growing only modestly, whereas open source software middleware vendors and PaaS providers are achieving double-digit growth. The need for web scale and operational intelligence is paving the way for the adoption of in-memory computing technology and is boosting the rapid growth of in-memory comwww.dqindia.com
FY 2013-14 2012-13
Revenue Growth 1,660 9% 1,519
Source: DQ estimates revenue (`crore)
Infrastructure Managment Software Market 5%
16%
44%
35%
HP
CA
IBM
OTHERS
Source: DQ estimates
puting vendors. Adoption of these new technologies poses formidable new challenges to IT departments, but those who do not have the nerve to tackle them and become change agents will risk being marginalized as more IT budgets move toward lines of business and departments within the organization. DEVELOPMENT AND PRODUCTIVITY TOOLS
Microsoft’s constant effort to catch on the cloud race ahead of competition paid off well for the company in India. The company has begun to adopt innovative ways to add customers to its Azure platform. In an attempt to multiply numbers and reap A CyberMedia Publication
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IT SYSTEM SOFTWARE
FY 2013-14 2012-13
Revenue Growth 2,227 18% 1,887
Source: DQ estimates revenue (`crore)
Development Tools Market in India
Productivity Suites Market in India FY 2013-14 2012-13
Revenue Growth 970 9% 890
Source: DQ estimates revenue (`crore)
FY 2013-14 2012-13
Revenue Growth 3,262 7% 2,960
Source: DQ estimates revenue (`crore)
Systems Software Market in India 3%
12% 8% 17%
63%
Microsoft
HP
IBM
OTHERS
Source: DQ estimates
on the cloud hype, Microsoft recently allowed its over 10,000 channel partners in India to offer the Azure cloud platform to enterprises, a move that can enable the company to reach thousands of small and medium enterprises (SMEs) in the country. Microsoft is making Azure available in the open licensing catalogue for India. With this move, SMBs in India will be able to purchase Microsoft Azure cloud platform from their local IT partner. Earlier customers purchased Azure either directly from the Azure website or as part of an Enterprise Agreement (EA) with Microsoft. Its innovative efforts have taken the market up by 18% in India. It accounts for `2,227 crore in India. As far as productivity suites market is concerned, Microsoft is again an undisputed leader with no near competitor. However, it faces challenge 60
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from Google Docs and OpenOffice which are gaining marketshare slowly. To counter this challenge the company tried to enhance its online email portfolio making all its solutions available. Plus its efforts to boost Office 365 in which it bundles its productivity suites also witnessed traction. The size of the market for productivity suites is witnessing a slow growth. While it accounted for `970 crore in FY14, its growth was only 9%. Microsoft seems to have sensed the challenges in this space. That is the reason it is investing in cloudbased solutions to woo customers. Its focus on Windows 8 is one such step to make all its applications easily accessible from a single point. SYSTEMS SOFTWARE MARKET
Systems software market witnessed 7% growth in FY14. Most businesses were confused as far as investments on new PCs was concerned. Even Microsoft’s Windows 8.1 struggled to spark the growth. It was only until Microsoft rang the death bell to its XP operating system. So in the latter part of the year, a movement began in most verticals to upgrade to a newer operating system. The biggest buyers to upgrade to a newer software were BFSI customers. Plus Microsoft
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3%
14%
65%
14%
MICROSOFT
LINUX
HP
IBM
Others Source: DQ estimates
ran a campaign to woo customers and spread awareness on the risks of XP without support. Microsoft is facing a big challenge from Google’s Andriod platform as many sales-oriented enterprises are investing in Andriod-based tablets and not buying notebooks for their workforce. Plus Google has pitched its Chromebook in the market to compete with Windows. During the year, there were reports showing the user interest in the Chromebook. As the connectivity ans speed of internet improves in the country, Chromebook and solutions similar to this are expected to catch user interest. Besides, enterprises from logistics and other sectors sought open source solutions such as Linux. Linux is a primary operating system in several datacenters across verticals because of openness. A CyberMedia Publication
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Prerna Sharma prernas@cybermedia.co.in ( with inputs from CMR)
IT Security
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Need of the Hour
Enterprise security is no longer just an IT concern, it is also becoming a business concern. Recent attacks on some big companies indicate how these attacks not only create a huge financial dent, but can also tarnish the reputation of the company
G
one are the days when CIOs and CISOs role was only to ensure a secured network by dealing with firewalls and perimeter based defenses. “Organizations worldwide have ranked IT security as one of their priorities as increasingly sophisticated attacks, new data protection regulations, and most recently insider fraud and data breaches, threaten to disrupt and irreparably damage their businesses� says Sanjay Gupta, Vice President, Fusion Middleware Business, Oracle India. With ever-changing technologies, IT teams can count on the amount of security challenegs they have to deal with on daily basis. Today, apart from ensuring trutsed interactions and protecting the information, IT managers have to create a secure enivronment for newly emerging technologies like BYOD, consumerization of IT, cybersecurity, SMAC, etc. Today, leaders in every sector have to grapple with these implications. More than 80% of IT managers think enterprises with a bring-yourown-device (BYOD) policy have a competitive advantage over other organizations, says a research commissioned by BT. Though each year, companies around the world spend a lot in buying new computers in bulk. But after the concept of BYOD has 62
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India Security Market FY2013-14 FY2012-13 FY2011-12
Revenue Growth 2,956 2,593 2,325
14%
Source: DQ estimates revenue (`crore)
taken pace among enterprises, companies are now allowing employees to bring their own products into the office and use them for corporate activities. This in turn help companies to invest their budget in other technologies. As it is rightly said that there is no free lunches in this world. This saying is well suited for BYOD, as it not only allows employees to bring their own devices at work but also open the gates for BYOA, ie, bring your own applications, which in turn requires robust enterprise secuirty. According to Forrester, 53% of employees use their own devices for work and 29% of the global workforce have three or more devices. BYOA poses real risks for corporate enterprises managing unsecure applications, malware and data loss, data breach risks and application security sprawl. Whereas, “Vertical markets, such as banking and financial services, that have had a strong focus on security are now preparing themselves for the Third Era of IT Digitalization by investing in technology approaches that can enable them to grow their business securely while embracing digital business models,” added Sanjay Gupta, Vice President, Fusion Middleware Business, Oracle India. According to Gatner, organizations are today increasingly more aware of security considerations in India, driven by the following factors: Highly visible security incidents in 2013 and 2014 Increasing financially (corporate espionage, underground economy) and politically (hacktivists and nation |
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states) motivated advanced targeted attacks Renewed regulatory focus on security and privacy (both at a country and industry level) Overall IT spending growth KEY PLAYERS
Though a contribution in security software market came from endpoint, the network security software as well as identification and access management segments grew while business from security software and security and vulnerability management applications remained by and large constant. Players like Symantec, Intel, and Trend Micro lead the end-point security market though seeing tough competition from the local security www.dqindia.com
software vendors in certain regions. Network security continued to see good growth as it witnessed market consolidation with Sourcefire acquired by Cisco, Stonesoft acquired by McAfee, and Cyberoam acquired by Sophos. With changing landscape of cyber threats and growing adoption of disruptive technologies like mobility, virtualization and cloud is pushing security vendors to expand their network security solutions capabilities and merging of technologies, for example, virtualized firewalls; hardened OS for security appliance, and running firewalls with hypervisor. CHALLENGES
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in products, structures, and processes—to achieve new growth markets and opportunities. The business impact of adopting models like cloud computing, mobility, big data, and virtualization has been experienced by all organizations, big and small. At the same time, in the wake of major security breaches and attacks across the globe, network security for the connected enterprise has become a serious area of concern. For example, migrating to the cloud from an in-premise model fundamentally changes the way IT security is to be addressed. The challenge is that organizations are still developing cloud security processes and solutions, which potentially gives hackers and attackers a wide window of opportunity. Likewise, a BYOD traction creates challenges around management and security of mobile devices, which must be addressed proactively by IT. Network security threats are also continuously evolving and expanding with added levels of sophistication with each passing phase. This has
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contributed to the rise in organized cyber crimes, with phishing syndicates innovating in no less measures to trick users into their traps. Lately, online attacks comprising blended threats, hybrid attacks, and APTs have increased in speed and sophistication exponentially. Further, spam emails are not generally a selfcontained attack anymore, but rather a social engineering component of a larger attack. These are designed to convince a potential victim to interact with the web-based content, which could crack open an organization’s security system to an ill-intending hacker. All these developments have led the security vendors into continuously evaluating their products and enhancing protection features. Besides, there is a growing threat due to abuse of trust within organizations. Due to lack of a thorough control or visibility, insiders are able to take organization’s intellectual property in ways as simple as copying information on a pen drive or mailing it out of the organization’s network.
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KEY DEVELOPMENTS IN NETWORK SECURITY
In July 2013, Cisco acquired Sourcefire, a maker of network security hardware and software, for $2.7 bn. The acquisition is considered to have worked positively for Cisco and strengthened its position in the security market. In India, reports suggested that the security team has doubled in size in the past couple of years. “One of our major announcements in the last fiscal year was the acquisition of ThreatGRID. This announcement addressed customers’ needs to combat zero-day attacks and advanced persistent threats (APTs). Cisco also broadened its Advanced Malware Protection and datacenter security offerings with this announcement” added Pravin Srinivasan, Lead, Security Sales, Cisco India & Saarc. Palo Alto Networks was one player that became significantly more aggressive in India last year. It was reported to have hired 50-60 channel partners and was engaging them in roadshows to sensitize on security issues in tune with the enterprises focusing more on cloud, mobile and collaboration tools. The California-based company said it would be setting up regional offices in cities like Mumbai, Bengaluru, Delhi, and Chennai and also ramping up its team sizes. Until 2013, the company had a team of 15-18 people in India and up to 200 customers locally. The surveillance function at enterprise was getting more and more integrated with the broader enterprise security strategies. Terrorism, employee and company assets safety, and theft drove a growing demand for video surveillance in government, transportation, hospitality, and BFSI sectors. Organizations are changing gear from analog to IP-based surveillance. Urban security, hospiA CyberMedia Publication
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IT SECURITY
tality, airport security, and education sectors are witnessing higher investments for installation, as well as upgrading the existing security surveillance infrastructure. Enterprises saw the benefits of integrating IP surveillance with IT security, including a single view of their security architectures, comprehensive and proactive monitoring, faster response time, greater interoperability, and reduced costs. At the same time, surveillance market is increasingly witnessing convergence with software platforms and access control solutions. Vendors like Tyco, Honeywell, Siemens, Bosch, and Milestone and so forth are developing next-generation surveillance solutions on IT platforms from IBM, Dell, and HP that is contributing to IT convergence. Even though 2013 was a challenging year because of the economic slowdown and rupee depreciation, the overall demand for network security from enterprises remained robust. The market is expected to continue
the growth momentum in the short to medium terms, as enterprises are likely to deploy security solutions. KEY DEVELOPMENTS IN CONTENT MARKET
The year was good for CISOs or CIOs as they don’t have to struggle for security budget. Various reports mentioned that in FY14 IT security budgets among enterprise increased at a global level. Today irrespective of its size, every organization has realized the importance of security in this numerous data breaches and the NSA scandal. With increase in the SMAC technology, exposure to new threats have increased by leaps and bounds. According to Canalys report, security solution providers have been focusing on providing more tailored products to suit small businesses. Many of the solutions focus on simple deployment, a combination of data protection features and ease of management. Hosted services have grown in popularity as they provide a financial
shift to capex rather than opex and can be remotely managed by a third party. In response to the changing threat landscape and customer needs, McAfee acquired StoneSoft in 2013 to expand its Network Security product line with a market leading Next Generation Firewall. In 2014, McAfee is looking forward to further integrating the NGFW into the Security Connected Architecture to provide intelligent comprehensive, uniform, real-time, layered protection to any enterprise from endpoint, network and out to the cloud. They have introduced a new solution, enhancing our existing capabilities to address advanced persistent threats (APT’s) called Advance Threat Detection (ATD). “We acquired over 26 customers in the initial 30 days of launch of the product. This shows our capabilities and value customers are able to see in our offerings” added Jagdish Mahapatra, MD India & Saarc McAfee, part of Intel Security. KEY TRENDS
One has to agree that the concerns among the industry have been increased but the threats have grown by leaps and bounds. It is important to understand the upcoming threats and adopt preventitive measures. “Companies need to look at security as a business issue and not an IT issue. The same thing applies to the government. With citizens reaching out to them, for all sorts of information, they will want to know what’s happening to the data that the government is responsible for,” says Surendra Singh, Regional Director, India & Saarc, Websense India. “CIOs and CISOs need the agility to respond quickly and must continuously monitor current and emerging threats, understand the dangers they pose to the assets they protect, and dynamically adapt their plans to the evolving threat landscape. It requires 66
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IT SECURITY
collecting, processing, and correlating multiple streams of internal and external data, then understanding their local implications in a global context,” added Jagdish Mahapatra, MD India & Saarc, McAfee, part of Intel Security. Some of the trends which one should look for: n MOBILE COMPUTING
“Mobile devices are becoming an attractive target for cyber criminals. For enterprises, limiting the devices that can be used to access enterprise applications is a losing strategy. It’s simply not reasonable for companies to tell customers or even internal stakeholders that mobile access via Android, Apple or other mobile platforms won’t be supported,” added Sajan Paul, Director Systems Engineering, India & Saarc, Juniper Networks. Instead, enterprises need to improve security by exerting greater control over their mobile exposure. For example, complex financial institutions gather data about their customers’ or members’ devices and meticulously monitor mobile behaviors. When suspicious activities arise, the organizations can restrict or limit the customer’s mobile access rather than locking out large groups of mobile users based on device type. n SOCIAL MEDIA
“Cybercrime has been an industry bugbear that has tormented CSOs and CTOs in a multitude of organizations and made them constantly reassess their security policies. Security measures have become of utmost importance to the industry since these businesses are undergoing a constant evolution in terms of infrastructure, technologies and business requirements. Ensuring integrity of business data is by far one of the most important priori68
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BYOD not only allow employees to bring their own devices at work but also open the gates for BYOA
“Enterprises are beginning to realize that BYOD introduces a slate of new security challenges into the organization. When employees connect to company servers and databases with devices that are beyond the direct control of the organization’s IT department, it inevitably raises the organization’s risk profile and the volume of unauthorized intrusion attempts,” added Sajan Paul, Director Systems Engineering, India & Saarc, Juniper Networks. For most enterprises, the right solution isn’t to ban BYOD but to implement BYOD policies that clearly define the proper use of employee-owned devices in the enterprise. BYOD security risks can also be mitigated with robust data leakage prevention solutions and fraud detection systems and restrictions on the types of information that can be accessed via BYOD.
ties,” says Shashank Mehrotra, General Manager and Business Head, BigRock More and more networking sites such as Twitter, Facebook, Google, and Linkedln are becoming the target for Trojans and other forms of malicious activities. Cyber crooks are using social media’s most important value propositions to gain access to protected systems and information. After taking control of users’ account and information, criminals are leveraging and sharing features of social media to effortlessly send infected links to thousands or even millions of followers.
WHAT’S NEXT?
n BRING (BYOD)
YOUR
OWN
DEVICE
BYOD is one of the hottest topics in enterprise security. In addition to reducing an organizations overall cost of technology, they are permitting employees to use their preferred device platforms, promoting higher productivity levels throughout the workforce. www.dqindia.com
In the coming years, Internet of things (IoT) and machine-to-machine (M2M) are going to be the focus areas for network security players. The industry has still not forgotten how the Stuxnet virus brought down Iran’s nuclear program to a screeching halt a few years ago. Tarun Kaura, Director, Technology Sales, India, Symantec says, “The Information Security space has been immensely threatened with businesses, government and individuals relying on the internet, for their dynamic needs. At the same time, cybercriminals were also seen devising more sophisticated methods and focused techniques to trap victims.” It has been feared that similar malware could potentially spew havoc on a wider variety of systems in a developing M2M era. In fact, a Symantec study findings release in 2013 said the Stuxnet virus had not fully been doused on the computer networks globally and its traces are still out in the wild. A CyberMedia Publication
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Smita Vasudevan smitav@cybermedia.co.in
DOMESTIC IT OUTSOURCING
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Grabbing Eyeballs The need to look for new avenues of growth is triggering interest in the domestic IT services space
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or years, the Indian IT industry’s fate was solely being decided by foreign markets, especially the US and European regions. Although, still these two markets together hold the lion’s share in the total IT revenues, there has been a gradual transition in this trend. With the economic downturn post 2008 significantly cutting down IT spending in the global markets, IT companies have been forced to look out for new avenues of sustaining growth. A part of the focus thus started shifting to the domestic market. IT service providers are realizing the potential of the domestic market and are building specific plans to work with Indian enterprises. Industry experts point out that the domestic IT market is expected to grow at a CAGR of around 7% between FY10 and FY16 and reach more than $36 bn by the end of FY16. It’s predictable that most of the leading IT companies will be eyeing a share of the pie. Until now, the domestic market for IT has not been a very happening space considering that the level of awareness has remained low and there hasn’t been much emphasis by organizations on discretionary IT spending. According to the BCGCII’s 2013 report on IT Enablement of Indian Business, there is significant headroom in the addressable IT adoption opportunity for India Inc, and there are sizeable untapped opportunities across a wide spectrum of verticals. The booming middle class population, rising income levels, changing spending habits, and the power of an—aware and connected—customer are together posing new threats as well as opportunities for Indian enterprises. Moreover, as organizations focus on core business objectives and in most cases are reluctant to hire |
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internal IT staff, the need for specialized IT services has visibly gone up. According to Praveen Bhadada, Senior Director, Zinnov Management Consulting, “The domestic IT services market is growing rapidly and companies are gaining maturity in terms of IT adoption. India is going to be a strategic market for IT companies and the next five years will be very important for the domestic IT space.” If we look at the key segments for domestic IT services, the government sector should figure on top. The Indian government might have to do a lot of catching up when compared with the IT adoption of government organizations in many other developed economies, yet with many large e-governance projects coming up the opportunity in this space is going to be huge. Also considering that public sector organizations are increasingly looking at process efficiencies and cost savings, the case for IT services becomes stronger. Like enterprises, government organizations are also dealing with humongous amounts of complex and critical data, face budget constraints and need to improve the quality of services. Hence, IT clearly has a role to play here. www.dqindia.com
Additionally, enterprises across verticals like BFSI, telecom, retail and healthcare are increasingly realizing the need for IT adoption and spending is subsequently going up. EY India Attractiveness 2014 report states that Telecom Enterprises are migrating towards cloud computing platforms, in order to address IT service agility, based on software-defined networking and network functions virtualization technologies. CIOs are struggling to demonstrate more value out of IT investments and are looking at innovative technologies that can help in delivering business outcomes. New technologies like cloud, analytics, and mobile are creating massive disruptions for enterprises of all sizes and across all domains. The combination of these forces also presents bigger opportunities for technology service providers to display their capabilities and attract clients in new technology areas. TECHNOLOGY CLOUD
WAVE
DRIVEN
BY
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Factors Influencing IT Budgets Business Expansion
72%
Emerging Technologies
69%
Internal Organizational/Process change Macroeconomic Uncertainties
67% 39%
Source: EY Domestic IT Market Report 2014
in data center and storage areas, and service providers are investing big on enhancing their cloud infrastructure capabilities. Milan Sheth, Advisory Partner & Leader, Technology Sector, EY says, “Indian companies are increasing their cloud computing budgets. According to EY’s Enterprise IT trends and investments survey, 56% of Indian CIOs ranked cloud services and IT consolidation as top investment priorities.” Companies need a flexible and scalable IT model and are looking at options to reduce infrastructure and administrative costs. This is leading to growing acceptance of cloud computing among Indian businesses. “Cloud computing is relevant for Indian SMBs, due to their limited IT budgets and need to enhance operational efficiency and manage costs. Indian SMBs are expected to increase cloud adoption at CAGR of 20% between 2012 and 2016,” adds Sheth. 72
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Social media is also a big opportunity area to watch out for in the coming years. According to research group Gartner, social media has witnessed enormous growth in the recent past with enterprises using it as a channel to interact and connect with their customers. Gartner outlines that much of this growth can be attributed to increasing Internet penetration—which reached 198 million users (including mobile) as of June 2013—making India one of the three most connected countries in the world. According to Sheth, across Indian enterprises, typically 60% of the data stored is structured, while unstructured data makes up for the remaining 40%. The unstructured data in Indian organizations is expected to grow annually by 60%. “With time, there would be a growing need with organisations to decode these data,” he says. There is a lot of hype surrounding big data or analytics and most companies are claiming it to www.dqindia.com
be a part of their IT transformation agenda, yet in reality it is still in the evaluation stage. SMB OPPORTUNITY IS HUGE
If we go by the numbers, SMBs are going to be key drivers in the IT spending growth. According to EY, India is home to more than 50 mn SMBs, out of which only 20% are technology-ready. The SMB IT spending is forecast to grow at a CAGR of 15% between 2012 and 2015 to $15 bn. Indian SMBs are increasingly relying on technology to improve different aspects of their business. “Increasing efficiency, finance control, improving competitiveness, reducing costs are some of the drivers behind technology adoption by SMBs,” Sheth points out. Cloud technologies present a huge opportunity in the SMB space. There is growing demand for cloud services in areas like disaster recovery, remote database management and email hosting. A CyberMedia Publication
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In another interaction, Sumeet Kapur, CEO, EmployWise, a SaaS provider, states that there is a transition of the software products business from the traditional on-premise software to the Software-a-a-Service or SaaS model of software purchase and delivery. “CEO and IT managers in SMB organisations are quickly realising the advantages of not having to buy, install and manage the running of business software systems and prefer the fullymanaged service model that SaaS presents,” he adds.
`230 bn on e-governance initiatives under the 12th Five Year Plan. Although the last year has not been very good in terms of government spending, there are chances of revival with the new government coming in. “The last 18 months have been slower in terms of government IT spending. Real traction was in sectors like Education,” says Bhadada. Also, there are ongoing projects like UID that are expected to drive IT spending. “If the new government plans to continue with UID then it will be a good opportunity,” he adds.
GOVERNMENT—THE KEY DRIVER
SERVICES IN DEMAND
The government sector holds enormous potential for IT adoption. Apparently, many large IT service providers in India are working on building their expertise in governance projects. There is increased spending on e-governance initiatives to upgrade technology infrastructure across all departments. According to EY, the government has set aside
IT services is the second largest revenue generator in the domestic IT industry, after hardware, with about 38% share. If we add the software products and R&D segment which holds 12%, the combined revenue share would be 50%. According to Sheth, IT services is expected to continue to contribute to a major chunk of revenue in the
—Sanjeev Nikore President, APMEA, India Business and Sr Corporate Vice-President, Strategic engagements, HCL Technologies
Workspace transformation through enterprise collaboration and user mobility are areas where we are seeing investments, so as to bring in the agility and flexibility that businessusers would need to be productive in the new-age IT landscape |
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—Ajeeth Jagannath Senior Vice President, India & Asia Pacific, ITC Infotech
domestic IT market mainly driven by technology upgrades in BFSI, telecom, government and areas such as cloud, managed services, and unified communications. There is also a visible transition in the service provider landscape. IT services players have moved beyond application development and maintenance services to offer a wide spectrum of services including infrastructure outsourcing, IT consulting and network integration services to domestic clients. Application development and maintenance (ADM), consulting, system integration and product engineering services are the key segments in IT services. ADM continues to hold the biggest chunk of the IT services market. Bhadada points out that companies are looking at enterprise digitization and a lot of focus is being given on productization of ADM. Number of players like TCS and Wipro have also started offering dedicated consulting. “Once adoption starts on modern technologies, system integration market will also evolve”, he adds. IT VENDORS BETTING BIG
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Many of the large IT service providers are increasingly seeing India as a strategic market. TCS has reportedly mentioned in one its recent reports that India is its fastest growing market. The company is visibly putting a lot of focus on its domestic market strategy. Over the last few years, it has bagged some large government contracts, including the one with India Post for computerizing counter operations, said to be worth around `11 bn. Although companies like IBM, TCS and Wipro have been the early movers in the domestic IT services space, rivals like Infosys have also been catching up. In the previous fiscal, Infosys had signed a large contract with India Post to transform its financial services. But the share of its domestic revenues is still relatively on the lower side. www.dqindia.com
In government contracts, challenges are more as the contracts take longer to finalize and have long implementation cycles. For diversification, verticals like manufacturing, energy and BFSI will also be looked at. According to Sheth, manufacturing, energy, government, and BFSI verticals with a combined spend of 75% in FY14 led IT spending in India. “Large IT service providers are looking at government IT spending and large corporate houses for large IT deals, whereas small and medium service providers are focussing on niche areas to differentiate themselves from the large IT vendors and attract business,” adds Sheth. CHALLENGES IN THE DOMESTIC PLAY
Despite the attractive opportunities in the domestic IT services market, the ride is not a smooth one. There are serious issues that need to be tackled to cut deeper into the market. Awareness levels are still low, also issues like low internet speed and supporting infrastructure continue to hinder growth. Bhadada points out that there is low maturity in terms of IT adoption. “There is lack of willingness to pay for standalone services,” he adds Also in the SMB space, though the scope for IT adoption is huge, there is lack of a clear technology roadmap and the processes are not mature enough to handle complex transformations. There is need for a well-defined framework for IT adoption on part of the enterprises and at the same time service providers need to work more closely with enterprise organizations and develop specific plans based on their varying needs. Sheth points out, “The different stakeholders such as enterprises, IT vendors, and the Government need to come together to develop a more conducive ecosystem for technology investments.” A CyberMedia Publication
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Prerna S prernas@cybermedia.co.in
SERVERS
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SERVERS
Betting on Revival
Servers as a category in hardware systems continues to face tough times. While x86 is on the threshold of revival, the outlook for non-x86 remains grim
T
he decline continues on the server market as we do an audit of FY14. The last few years have seen a steady decline in unit shipments of both x86 and non-x86 UNIX but as we look at FY14, the silver lining is the strong uptick in Q4 in which as per market estimates, the x86 unit shipments almost touched 10% growth during Q4’14 as compared to the corresponding quarter in the previous year. But the bad news is, the non-x86 UNIX market further slid into red with almost 50% decline in revenues. As we take an overall picture, as per DQ Estimates the servers’ revenues (x86 and non-x86) stood at `2,200 crore, signifying a drop of -17%. If we further slice the revenues, the x86 component stood at almost 85% of the overall revenues clearly signifying that UNIX based mission critical systems heading for the sunset. THE X86 DYNAMICS
The biggest event that upset the x86 cart over the last year relates to Lenovo acquiring IBM’s x86 server business that included System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and DataPlex servers and associ76
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Indian Server Mkt FY2013-14 FY2012-13
Revenue Growth 2,200 -17% 2,650
Source: DQ estimates revenue (`crore)
ated software, blade networking and maintenance operations. The purchase price was pegged at $2.3 bn. Interestingly, IBM retained its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances. IBM will continue to develop and evolve its Windows and Linux software portfolio for the x86 platform. IBM is a leading developer of software products for x86 servers with thousands of products and tens of thousands of software developer and services professionals who build software for x86 systems. Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time, so customers should see little change in their maintenance support.
The x86 Servers: On the Threshold of Revival (Units marketshare FY 14) 14% 36% 20%
30%
HP
Dell
IBM
Others
Source: DQ estimates, total units 99,500
VENDOR DYNAMICS
From a vendor perspective, HP took the lead position in terms of x86 unit marketshare and followed by Dell and IBM. Its needs to be seen how Lenovo will leverage the IBM x86 assets in India and grow its marketshare, which has gone down significantly in the recent times. HPs product depth—for instance in addition to the traditional x86 form factor significantly expanded over the year. For instance HP launched its revolutionary Moonshot servers powered by Intel Atom falls in the micro server category. HP’s Moonshot has opened up a new category in itself as it’s called |
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Non x-86 UNIX (Overall Units) FY2013-14 FY2012-13
Revenue Growth 1,500 2,650
-37%
Source: DQ estimates
—Vikram K Director, HP Servers, India
Growing popularity of cloud computing, virtualization, and big data is boosting the server market in India, wherein, blade servers and micro servers are the major drivers. Scientific high performance computing was on the rise
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‘the application defined servers’ for scale out workloads as per the demands of the computing. It’s not powerful but just meet the task of applications, which does not require large server power. In India Moonshot saw good responses as per company sources. Clearly HP has proved its expertise in the server space by its Moonshot. It’s the first ultra-small server that uses up to 89% less energy, 80% less space, reduces cost by 77% complexity by more than 97% over traditional servers. HP is among the first vendors who have deliver servers based on processors more commonly found in smartphones and tablets. Meanwhile IBM’s dip clearly helped Dell to up its ante on its PowerEdge series across form factor—tower, rack and blade servers. THE NON-X86 DYNAMICS
Long back India was dubbed as a UNIX country. But that distinction has faded out in the recent times as UNIX as the market has contracted significantly and hence now represents just about 15% of the overall server pie. HP Business Critical Systems (BCS) powered by Intel Itanium and IBM’s System P are the lading vendors here and both have seen the large decline in numbers compared to the previous years. While more powerful and easier to manage x86 architectures are to blame, at the same UNIX will co-exist in parts in verticals like BFSI and it will be no longer pure play UNIX deployments rather than a hybrid architecture with a mix and match of x86 as well. Moreover, the biggest www.dqindia.com
Large deals in banking (driven by both refresh and upgrades) and government (particularly state-owned departments) are leading to investment in technology advancement and are key to the growth in Q1 2014. Cooperative banks and universities are also investing in technology and are aggressively upgrading their IT infrastructure —Janmaijai Dhyani Market Analyst, Enterprise Computing Servers, IDC
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SERVERS
worry is fresh buying on UNIX is going down south and by and large the outlook for the non-x86 market remains grim. OVERALL SECTOR CONTRIBUTORS
We are seeing that the historic shifts transforming businesses and technologies are creating a greater need and urgency to deploy a computing infrastructure that can support their business results. India’s sever market is expected to grow significantly and the major markets for server market in India will be verticals such as retail, telecos, BFSI and government —Viswanath Ramaswamy Country Leader, Server Solutions (POWER & Mainframe), IBM India
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The Indian server market is driven by sectors like SMBs, e-retailers, IT & ITeS, manufacturing and BFSI on account of growing demand for blade and rack servers from these sectors. Within these sectors, the growing demands of new concepts, such as ERP and CRM is also contributing to the growth of servers in India. Today, enterprise who have IT infrastructure in place, are now consolidating the infrastructure and looking at virtualization as one of the solutions. OUTLOOK
According to a recently published report by TechSci Research, ‘India Server Market Forecast & Opportunities, 2019,’ the country’s server market revenues are projected to grow at a CAGR of around 7.4% during 2014-19. The server market has always been dynamic and brewing with changes prompted by the emergence of new technologies and the low-end server market is no exception. Increasing IT spending from the government as well as private companies to revamp their IT infrastructure is expected to drive the country’s server market over the next five years. This is further supported by emerging trends of cloud-based servers with concepts of big data and virtualization gaining market adoption. A rapid growth in the use of complex computations and increase in number of real time data transactions in enterprises are also augmenting the demand for servers in the country. Meanwhile, the traditional HPC www.dqindia.com
Increasing IT spending from the government as well as private companies to revamp their IT infrastructure is expected to drive the country’s server market over the next five years space revolved around high-end research facilities particularly in science and engineering. However, with each year technological innovations and tailored systems have brought the realm of HPC closer to reality for many SMBs and enterprise. A CyberMedia Publication
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Networking Networking
NETWORKING
ENTERPRISE COMMUNICATION Solutions & Applications
15%
V&D-CMR Telecom Industry Survey FY2013-14
FY 2013-14 in `crore
`3,870
Others
Juniper Networks
7%
Communications Devices & Equipment
`4,954
10.2%
68%
HP
Cisco
Enterprise Networking
`8,635
Overall Enterprise Communication market ` 17,459 crore V&D-CMR Telecom Industry Survey FY2013-14
Solutions & Applications
ENTERPRISE COMMUNICATION FY 2013-14 % Market Share 49%
V&D-CMR Telecom Industry Survey FY2013-14
Active Networking Components 22%
28% Communications Devices & Equipment
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September 15, 2014
Enterprise Networking
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Top 3 Companies by Revenue FY 2013-14 (in `crore)
Company Cisco
3,961
HP
596
Juniper Networks
380
Others
903
Total Active Networking Component maket
5,839
Others include Alcatel Lucent Enterprise, Brocade, SmartLink, DLink, Netgear, DAX V&D-CMR Telecom Industry Survey FY2013-14
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Enterprise Networking
Out of the Box
A gritty march of virtualization and cloud models into the hitherto forbidden realms of networking brought about a solutions-driven approach to the fore
T
he networking equipment industry continued to undergo a technology transformation, which reflected on the market dynamics as well. The players were busy realigning with the shifts that have been pushing the industry out of its legacy box models into the more agile and nimbler models such as those shaped by cloud and software defined networks. While almost all of the IT pieces, including servers, storage and applications, have been virtualized for quite some time now, the networking majors had managed to resist change for long, in the interest of their proprietary businesses. No more. With the maturing of network functions virtualization (NFV) algorithms
`5,839
and the likes of VMware putting their weights behind those developments, the change got inevitable. KEY PLAYERS & DEVELOPMENTS
Cisco: No other player’s market position is perhaps more threatened by the disruptive changes brought about by the new technological paradigms. No wonder, the networking major has been busy pulling up socks on various fronts and has been realigning with the rapidly evolving market expectations and needs. It was not only working on the offerings, but also worked to re-orient its key partners in preparation of securing business in a changing market ahead. It introduced the cloud services reseller program, primarily aimed at its gold partners, and also announced three new business transformation
Active Networking Components Structured Cabling Systems
`2,796
Total Enterprise Networking Market is `17,459 crore
certifications—Cisco Transformative Architecture Specialist, Cisco Business Value Specialist and Cisco Certified Business Value Practitioner. The company is initially eying its large gold partners. This was seen as a strategic channel program, aimed at enabling key partners over the next three-to-five years. These moves came within months of Cisco having announced its SDN platform in mid-2013 and given a picture of its SDN roadmap, after the acquisition of the SDN specialist company Insieme. The SDN platform has two major components—the application policy infrastructure controller and the Nexus 9000 series of switches. Meanwhile, in a major management change in 2013, Naresh Wadhwa left Cisco India as its President and Country Manager to pursue en-
As the penetration of ICT within India SMB sector grows, the enterprise networking business also sees continued growth YoY. SMBs, essentially e-enabled business models are implementing sophisticated enterprise networks. Compared to active components, structured cabling system segment saw higher growth rate of 18.7% as against 11.5%. This is mainly attributed to the increased usage of fiber optic and other optic networking passive components within a network. Active networking components market stood at `5,839 crore while the structured cabling systems market was pegged at `2,796 crore in FY 2013-14. SDN and Network Virtualization remain the two key technology trends that are witnessing higher attention and are likely to change the entire networking philosophy in years to come.
V&D-CMR Telecom Industry Survey FY2013-14
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trepreneurial interests, which created a leadership vacuum. Jeff White was brought in as President India and Saarc. (White was to be replaced in June 2014 by Dinesh Malkani) Juniper: Juniper, which is the second most significant player in the networking segment after Cisco, and is particularly strong in the routers segment, was not untouched by the SDN waves. However, instead of attempting to develop a full suite of offerings by itself, the router major chose to ally with a partner that could offer more holistic software-based virtualization solutions for diverse network environments. In August 2013, Juniper Networks said it had expanded its partnership with VMware to deliver a broad range of solutions for unifying virtual and physical networks within a virtualized data center environment. These solutions, which will include VMware NSX L2 Gateway integration and VXLAN routing capabilities across access, aggregation, core and edge tiers of the data center network, will offer enterprise customers seamless management of workflows across virtualized and non-virtualized systems. Juniper Networks said the VXLAN routing and gateway capabili-
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ties would enable both intra- and interdata center solutions and accelerate the transition to software-defined networking. Juniper noted that the partnership between Juniper Networks and VMware represented a shared commitment to delivering simplified, flexible solutions that enable customers to more easily migrate to SDN as their business needs evolve. However, Juniper also had its own SDN building blocks in place, notably the JunosV Contrail, which it built over the intellectual property gained from its acquisition of Contrail Systems earlier. In May 2013, Juniper introduced JunosV Contrail, as a family of products which includes the JunosV Contrail Controller, an open, standards-based controller for SDN. In line with the various SDN related announcements, Juniper, like Cisco, also made a number of updates to its Partner Advantage program, and sought to incentivize around aspects such as cloud, services and distribution. Hewlett Packard: Hewlett Packard (HP), which has historically been
www.dqindia.com
strong in SMB segment in the LAN market, saw SDN as a key opportunity to penetrate deeper into the enterprise segment, which has been a Cisco bastion. It devised new strategies around SDN to take on market leader Cisco. The IT behemoth, which also has its fingers in more pies than Cisco, took to an “app store” model to make its SDN proposition more attractive and open to customers as well as partners. Much like the mobile app stores, HP’s SDN app store creates a platform where partners could place their applications developed using HP’s SDN developer kit. The company then said a large number of partners including Intel, Microsoft, Samsung, PwC, Riverbed, Citrix, ShoreTel, SAP, Tech Mahindra, VMware and Websense had signed for the SDN developer kit. However, like Cisco and Juniper, HP too put forth its Virtual Application Networks (VAN) SDN Controller, which lay at the control layer of the SDN stack. WHAT NEXT?
While models like SDN and NFV are helping to punctuate the flow of the market streams, some of the larger themes—like the Internet of things— stay on course. In a significant recent development, Cisco announced a strategic engagement with the Electronics City Industries Association (ELCIA) in Bangalore to develop its first end-toend Internet of Things (IoT) innovation hub in Asia. This collaboration will help establish the foundation for a new ecosystem to help Electronic System Design & Manufacturing companies and other companies of electronic city engaged in IoT product development. As part of this effort, Cisco will help provide the network infrastructure and expertise for testing and production of electronic product prototypes for an IoT enabled smart city environment. Through the ‘Living Lab’, ESDM startA CyberMedia Publication
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NETWORKING
ups and other electronic city companies can build solutions for city infrastructure management including smart parking, smart CCTV surveillance, smart street lighting, smart water management/leak detection and community messaging. The project will utilize the Cisco Smart+Connected City Wi-Fi solution that will help enable community Wi-Fi services and allow access to public utility offerings. ELCIA will also embed Cisco network equipment comprising access points, routers, switches, and other required hardware and software applications that will be connected to the smart city’s fiber-optic backbone network. The first phase of this smart city project will be rolled out in electronics city and will serve as a replicable model for the rest of Bengaluru as well as other cities in India. At the beginning of 2014, Juniper’s Managing Director for India and Saarc, Ravi Chauhan, left the company after a stint of four-and-a-half years while some senior managers from the India operations were also relieved. Ashish Dhawan, who was Country Manager, Enterprise, at Juni-
per India, was later given the charge as the Managing Director for the company’s India &Saarc operations. More recently, Juniper Networks appointed Candensworth as its distributor for India and South Asia. Cadensworth, which is a wholly owned subsidiary of distribution major Redington, became an authorized distributor of Juniper’s products and solutions and gain partnership benefits from Juniper’s Distributor Advantage program. Wi-Fi is becoming a more central and unified part of the emerging themes in networking. Where the players don’t have enough strengths in either LAN or WLAN, they are coming together to complement each other’s offerings in a more strategic and integrated manner. In one such significant move, Juniper Networks and Aruba Networks announced they signed a strategic agreement to deliver open, converged wired and wireless network solutions, targeted at the mobility market. The partnership includes both joint development efforts and go-to-market collaboration. Juniper said, as part of the collaboration, it is enabling technology partners
like Aruba to take advantage of Juniper’s programmable silicon by making available key software elements and new programmable APIs. Juniper and Aruba would be addressing mobility market trends with product-level integration that leverages open protocols and open APIs on Juniper switches and routers, and contextual data on users, devices, applications and location available from Aruba’s enterprise WLAN products, it said. In the Wi-Fi segment, an important development that took place in December 2013 was the ratification of the latest WLAN standard, 802.11ac. The standard gives Wi-Fi the teeth it has lacked due to the limitations present with the earlier standards. Some of the most significant features of 11ac include the speed, which could reach up to 1.3 Gbps, and the ultra-wideband channels, which could range from 40 MHz to as much as 160 MHz. Also, the standard used the uncluttered frequency band of 5 GHz unlike the earlier standards that mostly operated in 2.4 GHz frequencies, which are increasingly surrounded by various 3G and 4G frequencies.
39.4% Others
29.4%
TE Connectivity
22.1%
9.1%
Schnedier
V&D-CMR Telecom Industry Survey FY2013-14
Structured Cabling Systems
Molex
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September 15, 2014
FY 2013-14 (in `crore)
Company TE Connectivity
822
Schnedier
618
Molex
254
Others
1,102
Total Structured Cabling Systems Market
2,796
Others include Commscope, DLink, R&M, Belden, Penduit, Belkin, DAX, Nexans, iball
Company % Share in the overall Structure Cabling Revenue of `2,796 crore 88
Top 3 Companies by Revenue
www.dqindia.com
V&D-CMR Telecom Industry Survey FY2013-14
A CyberMedia Publication
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Visit: www.techbzar.com
NETWORKING
Structured Cabling
The Year of Drought?
While growth remained subdued at large, the worst seemed to be over for an industry that accommodated more players than it could feed
T
he structured cabling market in India has been facing a few challenges in the recent years. Enterprises have been going slow on their expansion and related investment plans on account of weak market sentiment that continued to prevail. The currency fluctuations in the past and depreciation of the rupee only perpetuated the sentiments, even though the long-term potential of the economy continued to be promising. Also, an increased preference for Wi-Fi over LAN in select sectors, driven by cost optimization and mobility needs, impacted the scale of cabling installations. Towards the end of year 2013, things started to improve in certain sectors though. For example, the regulatory environment became more conducive for telecom. Meanwhile, trends like Bring Your Own Device(BYOD) prompted CIOs to improve both wired and wireless networks in the premises. This helped the structured cabling market, which has a key enabling role for both the networks. The growing preference for FTTX/ FTTH in pockets was another key driver for the structured cabling businesses in the country. Overall, around 20 vendors were competing for a share of the market. These included TE Connectivity, D Link, Commscope, Molex, Schneider, R&M, Sterlite, Levitan, Belden, 90
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Belkin, Panduit and Dax Networks, among few others. KEY TECHNOLOGIES
Though Cat6a is considered as a major upgrade over the Cat6 standard and offers capabilities to support 10G speeds in the 100-meter configurations, the uptake was limited, partly due to RoI considerations and partly due to lack of awareness. The deployment of more advanced standards like Cat7, which offer even more improved efficiency but for a cost, remained in early stages. On the other hand, majority of the datacenters are expected to use Cat 6a. Cat 6a is the evolution of UTP cabling to support 10G needs over longer lengths when compared to Cat 6. However, experts see no major advantages between Cat 6a and Cat7, which also has its own set of installation related challenges and physical specifications that have led to its deployment being limited to niches. Customers are more likely to move directly to Cat 8 later instead of testing the potential of Cat 7. MAJOR PLAYERS
TE Connectivity invested an estimated `300 crore to build its ninth manufacturing facility in India to tap local market and contribute to global exports. This new facility is being brought up near the Bangalore International Airport and it expected to be operational in 2014. At present, TE has over eight manufacturing facilities in India—five www.dqindia.com
in Bengaluru, two in Pune and one in Kochi. At the new plant in Bengaluru, TE had said it would be designing and manufacturing next-generation connectivity solutions. These solutions would cater to needs of various industry verticals, with focus on automotive, aerospace, and defense. TE Connectivity had, globally, acquired Deutsch last year, which is a provider of connectivity solutions for harsh environment applications. TE had also acquired ADC in 2010, which had strengthened its product portfolio. Commscope has been consistently exploring global markets to grow its revenues. In India, the company has some key client in the IT/ITeS, healthcare and hospitality sectors. It is offering its solution under two enterprise brands—Systimax and Uniprise. In India, the company is expecting a significant uptake to meet the needs for higher speeds. Another major player D-Link, which has its major business coming from the copper solutions, has also launched new fiber-based solutions like OM4. Some of its major customers working with the company included NTPC, BARC, Western Railways, Jaipur National University, Kiran Jewels, Persistent Systems, Goa Airport, Reliance Infrastructure and Symbiosis Institute, among others. D-Link is offered wall mount enclosures designed for small networking, domestic application, audio-video, telecom, and lab applications, and A CyberMedia Publication
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are available from 4U to 15U variants with 400 mm, 4450 mm, 500 mm, and 600 mm configurations. Another major, R&M, was understood to have planned large projects in tier-2 and -3 cities. The industry saw a continued gradual shift from deploying regular cabling to intelligent cabling systems, as it gives complete visibility of the physical layer of the network to the enterprises. CHALLENGES
While the market is expected to perform better in 2014, the industry is also battling with some challenges that require immediate attention. The volatility in copper prices, increased pricing pressures due to competition, and the presence of too many players are the key challenges that the industry is facing today. The industry is also finding it tough to meet fixed contract obligations due to currency fluctuations. The challenge is further compounded by the fact that a majority of the OEMs have their offices outside India and hence rise in import costs results in a vast increase in the cost of material, thus leading to higher cost of
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ownership. However, the situation on the currency front has stabilized in the recent months. Another dilemma being pointed out by experts is the lack of clarity on the role of copper in times to come. While copper will continue to be a preferred choice for some time as it offers better RoI but when data centers migrate to beyond 40G, fiber will take center stage. The requirements set by customers are becoming more stringent. In particular, vendors are expected to align better to meet the RoI requirements. OUTLOOK
Even though copper cabling has a dominant role in Indian structured cabling market, the long-term future is expected to be driven by fiber. In the fiber market segment, vendors would be majorly focusing on the last mile fiber to homes. This is principally because of a growing demand from the digital homes at residential complexes where a single service provider is expected to meet the demands of voice, data and video. In data centers, fiber is considered as an appropriate medium for supporting mission-critical applications. While installing optical fiber cables might be on an expensive side in the beginning, as compared to traditional solutions, it has its own future benefits, especially given the rapidly rising enterprise mobility needs and the consequent benefits of having fiber in the backbone. Fiber is also beneficial since it can be laid out for longer distances and is immune to electromagnetic interferences. This makes it useful in campus installations as well. The 4G rollouts are also likely to drive FTTH and FTTP adoptions, given the need to support Wi-Fi offloading in the enterprises. Fiber would be a preferred choice since it is better suited to meet the exponential data growth associated with wireless broadband networks like 3G and 4G. www.dqindia.com
The next 24 months are likely to see the flow of new investments, largely from tier-2 and -3 cities. Most of the demand is expected to be generated by increased government spending, real estate expansions and infrastructure developments. The industry is also likely to see another round of consolidation as the current market does not offer enough growth potential for more than eight to ten players. Overall, IT, telecom, IT-ITeS and government are expected to be the major contributors to growth during the next 12 months. The underlying IT of the enterprises are also changing and so are the IT delivery models. There has been a growing focus on concepts like cloud computing, IP-based networks, virtualization and software defined networking. All this is driving the need to have more intelligent and responsive network infrastructures and structured cabling solutions would be expected to keep pace. The Government’s National Optical Fiber Network (NOFN) initiative, for which Bharat Broadband Nigam Limited (BBNL), has been assigned to connect 2,50,000 village panchayats with high-speed broadband could lead a range of direct as well as indirect businesses for the structured cabling players. The upcoming rollouts of new 4G networks will also contribute to growth, as will the commissioning of new data center projects. Telcos are expected to go aggressive with their plans to launch 4G LTE services around 2015. Greenfield majors like Reliance Jio Infocomm, which also has a pan-India license for 4G, plans to use fiber-to-the-home (FTTH) as well for providing rich indoor connectivity in 40 million homes. As floodgates of data are expected to open on various fronts, new set of challenges and opportunities are bound to emerge. 2014 may be the year for the structured cabling industry to strategize for the growth ahead. September 15, 2014
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NETWORKING
Communication Equipment & Devices
`1,620 PBX Systems `685 Audio Video Conferencing
Total Communication Equipments & Devices Market is `4,954 crore V&D-CMR Telecom Industry Survey FY2013-14
Desk Phones
21%
Top 3 Companies by Revenue
Cisco
FY 2013-14 (in `crore)
Company Cisco
556
Avaya
318
Alcatel Lucent Enterpise
212
Others
1,563
Total Desk Phones Maket
2,649
59%
Others
12%
Avaya
Others include Snom, Grandstream, Panasonic, Siemens V&D-CMR Telecom Industry Survey FY2013-14
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Company % Share in the overall Desk Phones Revenue of `2,649 crore A CyberMedia Publication
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V&D-CMR Telecom Industry Survey FY2013-14
`2,649 Desk Phones
Overall, IP-fication is the main trend to witness and enterprises are adopting more and more of IP-based devices and equipments. The credit goes to the National Telecom Policy of 2012. Other than the inherent call centre solution deployment industry verticals of IT/ITeS and BFSI, there is a change happening in adoption as new segments of real estate and hospitality are also commissioning their call centres for outward sales and proactive servicing. Majority of the revenues in Desk Phone market comes from IP Phones while the total installed base in the country is still dominated by the PSTN phones. Within the IP Phones segment Cisco, Avaya and Alcatel Lucent Enterprise are the three main players, PSTN / Digital Phones is still dominated by Panasonic, where there is no other major player after the exit of Beetel and failure of ITI. Mobile phones are affecting the desk phone market of enterprises as several organizations are not going for desk phone extensions. This is typically in the SOHO segment. PBX market revenues continue to be mainly contributed by IP-PBX sales in the country. However, as in the case of desk phones, this segment also has the maximum installed base of legacy systems including ePABX, etc. Audio-Video Conferencing solution market is facing a tough competition from the advent of social media applications that are heavily used across organizations for audio-video conferencing. Solutions such as Skype, Viber and Google Hangout are giving a serious competition to standalone conferencing market. Even, the client facing meetings are done through these platforms in several organizations, largely the SMB segment. PBX systems saw a growth of 10.5%, followed by Desk Phones with 9% growth and Audio-Video Conferencing Equipment with 7.9% growth for FY 2013-14 within this segment of Enterprise Communications.
XXI
IT PERSON OF THE YEAR
?
2014
HOST
CP Gurnani 2013
Francis Dsouza 2012
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Pramod Bhasin 2010
Government Appointed Board of Satyam 2009
Lakshmi Narayanan 2008
Ajai Chowdhry 2007
Nandan Nilekani 2006
Kiran Karnik 2005
S Ramadori 2004
Deepak Puri 2003
Sunil Bharti Mittal 2002
Pramod Mahajan 2001
B Ramalinga 2000
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NETWORKING
Sum is Better than Parts
T
he enterprise communications market, with each passing year, has been becoming a more closely-knit whole comprising the two broad discrete pieces—Enterprise Telephony, and Unified Communications & Collaboration (UC&C). Various events in 2013 made that progression more pronounced. Notably, two of the key enterprise telephony vendors, Mitel and Aastra, merged to form a single entity under the Mitel brand. The merger was estimated to have made the combined entity a top-5 brand in the enterprise telephony segment. In another significant development, that more specifically reflected the blending of the telephony and UC segments, Siemens Enterprise Communications was rebranded as Unify. The new entity was timed well ahead of launch for its Project Ansible, a communications and collaboration platform that earned much acclaim from customers and analysts on previews. The platform is currently in beta and its general availability is due anytime soon. 94
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KEY PLAYERS & TRENDS
Competition stayed intense in the Enterprise Communication market, with the presence of heavyweights like Cisco, Microsoft, Avaya, Google, Polycom and Siemens (now Unify) among others in-the-fray, with their diverse offerings ranging from enterprise voice to UC&C applications. Of late, Microsoft Lync has been gaining significant traction. At the same time, Cisco and Polycom are competing more aggressively in the video conferencing systems segment. Unified Communications & Collaboration (UC&C) platforms are now inseparable part of enterprise communication. Enterprises have also mostly deployed IP infrastructure to make the most of their UC&C investments, which have grown over time. With the essentials already in place, businesses are now weighing between the various vendor offerings so as to select the best-of-breed solutions for meeting their business goals. These include increasing productivity, improving customer satisfaction, and reducing cost. They are also putting due emphasis on the integration of the underlying processes and infrastructure, as the efficacy www.dqindia.com
15%
Avaya
14%
Alcatel Lucent Enterprise
Company % Share
PBX Systems Top 3 Companies by Revenue FY 2013-14 (in `crore)
Company Cisco
292
Avaya
243
Alcatel Lucent Enterprise
227
Others
859
PBX Systems
1,620
Others include SingTel, Panasonic, NEC, Accord, Tadyran, Matrix, Coral Telecom V&D-CMR Telecom Industry Survey FY2013-14
A CyberMedia Publication
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V&D-CMR Telecom Industry Survey FY2013-14
The industry worked to achieve more seamless integration of IP voice and UC modules to meet enterprises’ business-centric communication needs
18%
Cisco
of the solutions also depends significantly on how well the legacy and new applications are assimilated. KEY DRIVERS
The key driving factors that determine the use of UC&C along with enterprise telephony across various enterprise verticals are mobility, video, social business, and managed and hosted services. The number of mobile workers is increasing almost at an exponential scale, across all verticals, including healthcare, hospitality, logistics and transportation, IT and BSFI, though the scale of adoption would vary from one sector to another. The new generation of mobile workers, armed with smart devices and a host of enterprise mobility apps, is highly productive even on the move. The rise of geographically dispersed workers to support the needs of an increasingly globalized economy requires that communication is also more collaborative. This has continued to be a driving factor for the enterprise communications market.
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The need to integrate the diverse subsystems could also trigger a related need for consolidation in the industry
threats. As such, they also invested more in mobile data management solutions and secure mobile-based UC&C applications, among others. A key engagement sub-system of the broader UC&C system is social media. These social media platforms play an increasingly critical role in building brands and security loyalty from employees, customers and partners by way of communicating the right messages effectively. In addition, social media engagements also encourage a collaborative temperament to work towards the common organizational goals of innovation, business development and improvement of total customer experience. The new-age enterprise communication platforms are also letting organizations reduce the IT cost per employee with hosted and managed services.
Enterprises are also conscious of the need to ensure that as communication platforms move to an IP environment, they are not vulnerable to the usual information and IT security
WHAT NEXT?
www.dqindia.com
Going forward, a greater integration of IP PBX and UC&C platforms would be expected. While some of the existing hosted platforms do offer certain UC stacks along with IP PBX, the features are not thorough enough, chiefly because the integrations are not as deep and wide as an enterprise-grade offering would need to be. The Unify Ansible, due for general availability in 2014, could prompt the industry into further integrating the various enterprise communication platforms. The need to integrate the diverse sub-systems could also trigger a related need for consolidation in the industry. In February 2014, Alcatel-Lucent received a binding offer for the acquisition of its Enterprise business. As a consequence it will move forward in exclusive discussions with Huaxin, an existing partner of Alcatel-Lucent’s Alcatel Shanghai Bell joint venture in China. The deal is expected to close in third quarter of 2014. September 15, 2014
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LAST MATTER
Ed Nair ednair@cybermedia.co.in
It’s a Software World
W
e have been witnessing that much of the hardware functionality in traditional enterprise IT is increasingly getting absorbed into software. Virtualization is one aspect of this phenomenon. Virtualization of servers and desktops is now a mainstream practice with the efficiency and economics of software clearly delivering value over hardware. Now we have software taking over networking under the name of software-defined networking, ripe for commercial adoption. Similarly, software-defined storage is also under development and fast moving into commercial phase. Taken together, we have software-defined datacenter, a term much bandied about by various vendors. The overarching theme here is that software is wielding power over hardware and this is changing the balance of power in all things IT. It is a powershift of sorts in IT and it is shaping the next phase in enterprise IT. Of all things, it is making enterprise IT richer and powerful. The direct consequence of the software-defined world is that the traditional stack of enterprise IT comprising server, storage, networking, database, middleware, and applications is breaking out from silos to create converged blocks of enterprise functionality. Vendors are coming at it from various directions with proprietary versions like engineered systems, converged infrastructure, open network environment and such others and also open standards based OpenStack. The net effect of it is that IT is moving from being infrastructure-centric to being service-centric. This is the biggest import of the software-defined world. I often wonder where it all began. Are things like virtualization and cloud the cause or the effect? It takes me to 1984, which is thirty years back, to a prescient statement I didn’t quite understand then as a student of engineering taking one of my first courses in computer science. Here’s the statement (verbatim) from a textbook authored by Andrew Tanenbaum, who is read even today: “Hardware and software are logically equivalent. Any operation performed by software can also be built directly into the hardware and any instruction executed by the hardware can also be simulated in software. The decision to put certain features in hardware and others in software is based on such factors as cost, speed, reliability and frequency of change. There are no hard and fast rules to the effect that X must go into the hardware and Y must be programmed explicitly. Designers with different goals may, and often do, make different decisions ... the boundary between hardware and software is arbitrary and constantly changing. Today’s software is tomorrow’s hardware, and vice versa.” Welcome to the world of software-defined IT!
Ed Nair Editor-at-large 96
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September 15, 2014
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