Shared services: adoption and business model for SMB

Abstract

Cloud computing is poised to be the next big wave and is generating huge interest. However for all the hype it has generated over the years, the adoption is nowhere near the predicted levels. Hewlett Packard (H.P.) is proposing a new offering to market for Shared Services. The service is targeted at Small and Medium Businesses. H.P. will offer the service to the targeted customers not directly but through a network of intermediaries. In the proposed structure H.P. would sell its hardware to Data Center Services (DCS) Provider, who in turn would approach the customers. The Data center provider will be supported by Independent Software Vendors (ISV). The ISVs would have cloud ready applications and host them in the Data Center. These ISVs will be pooled in by HP. Customer interfacing will be done by Data Center Services Provider and HP reseller partners will handle the after sale service portion. Since we are proposing this service for SMBs (small and medium business units) in tier 2-3 cities the targeted customer base would be located far from the city, HP Resellers would be able to support Data Center Service provider with on-site service requirements. To make the offering credible, the key concerns that have blocked the adoption so long would need to be addressed. Among the key concerns for SMB are: 1. Information Security and Availability 2. Perceived Complexity of using cloud based services 3. Perceived doubts in credibility of solution. The cloud however offers the following benefits to SMB segment: 1. Reduction in operating costs 2. Allowing companies to reduce CapEx and convert it into OpEx 3. Freedom from managing IT staff 4. Improved security - as the entire process monitored by provider 5. On demand computing to handle fluctuations in computing requirements We believe that business model with HP collaborating with other participants to reach the customer holds lot of promise. The details on the proposed business model are presented in the following sections and key SMB expectations and concerns are in the coming sections. The method followed for the study is a mix of Primary Research in the form of interviews with representative SMB customers and software vendors, along with secondary research in the form of publically published articles and results of studies conducted already.