Thursday, June 18, 2009

Cloud Computing At The Bottom Of The Pyramid

I see cloud computing play a big role in enabling IT revolution in the developing nations to help companies market products and services to 4 billion consumers at the bottom of the pyramid (BOP). C.K.Prahlad has extensively covered many aspects of the BOP strategy in his book Fortune At The Bottom Of The Pyramid that is a must-read for the strategists and marketers working on the BOP strategy.

This is how I think cloud computing is extremely relevant to the companies that are trying to reach to the consumers at the BOP:

Logical extension to the mobile revolution: The mobile phone revolution at the BOP has changed the way people communicate in their daily lives and conduct business. Many people never had a landline and in some case no electricity. Some of them charged their mobile phones using a charger that generates electricity from a bike. As the cellular data networks become more and more mature and reliable the same consumers will have access to the Internet on their mobile phones without having a computer or broadband at home.

The marketers tend to be dismissive about the spending power of the people at the BOP to buy and use a device that could consume applications from the cloud. BOP requires innovative distribution channels. The telcos who have invested into the current BPO distribution channels will have significant advantage over their competitors. The telcos, that empowered people leap frog the landline to move to the mobile phones, could further invest into the infrastructure and become the cloud providers to fuel the IT revolution. They already have relationship with the consumers at the BOP that they can effectively utilize to pedal more products and services.

Elastic capacity at utility pricing: The computing demand growth in the developing countries is not going to be linear and it is certainly not going to be uniform across the countries. The cloud computing is the right kind of architecture that allows the companies to add computing infrastructure as demand surges amongst the BPO consumers in different geographies. Leaving political issues aside the data centers, if set up well, could potentially work across the countries to serve concentrated BOP population. The cloud computing would also allow the application providers to eliminate the upfront infrastructure investment and truly leverage the utility model. The BOP consumers are extremely value conscious. It is a win-win situation if this value can be delivered to match the true ongoing usage at zero upfront cost.

Cheap computing devices: OLPC and other small handheld devices such as Netbooks are weak in the computing power and low in memory but they are a good enough solution to run a few tools locally and an application inside a browser. These devices would discourage people from using the applications that are thick-client and requires heavy computation on the client side. The Netbooks and the introduction of tablets and other smaller devices are likely to proliferate since they are affordable, reliable, and provide the value that the BOP consumers expect. Serving tools and applications over the cloud might just become an expectation, especially when these devices come with a prepaid data plans.

Highly-skilled top of the pyramid serving BOP: Countries such as India and China have highly skilled IT people at the top and middle of the pyramid. These people are skilled to write new kind of software that will fuel the cloud computing growth in these emerging economies. The United States has been going through a reverse immigration trend amongst highly skilled IT workers who have chosen to return back to their home countries to pursue exiting opportunities. These skilled people are likely to bring in their experience of the western world to build new generation of tools and applications and innovative ways to serve the people at the BOP.

Sustainable social economies: It might seem that the countries with a large BOP population are not simply ready for the modern and reliable IT infrastructure due to bureaucratic government policies and lack of modern infrastructure. However if you take a closer look you will find that these countries receive a large FDI [pdf] that empowers the companies to invest into modern infrastructure that creates a sustainable social economy.

Most of the petrochemical refineries and cement manufacturing plants that I have visited in India do not rely on the grid (utility) for electricity. They have set up their own Captive Power Plants (CPP) to run their businesses. Running a mission critical data center would require an in-house power generation. As I have argued before, local power generation for a data center will result into clean energy and reduced distribution loss. There are also discussions on generating DC power locally to feed the data centers to minimize the AC to DC conversion loss. Relatively inexpensive and readily available workforce that have been building and maintaining the power plants will make it easier to build and maintain these data centers as well. The local governments would encourage the investment that creates employment opportunities. Not only this allows the countries to serve BOP and build sustainable social economy but to contribute to the global sustainability movement as well.


gEEk said...


If I may call you by your first name...

I am not in agreement with you on cloud computing due to my concerns about data security and the fact that data could be held hostage by someone who does not like what a particular company does.

I don't mean that the cloud company would be holding the data hostage but an individual.

What about hackers or malcontents in the cloud?

I suppose I run those risks in my own company but they are far easier to control than if it were away in a 'cloud' and the operators of the cloud could conceal the mishap.

Computing devices are very cheap in all of their forms today as compared to years ago when Big Blue (IBM) used the mainframe to control the terminals.

What you are describing is having a group of larger powerful computers in the 'cloud' on the internet and having little terminals that connect to the mother ship if you will.

If we have data on the servers and they crash then what?

I have worked on a main frame with a terminal much like the configuration you are talking about.
I got disconnected from the mainframe but my account and data was still open for someone to access and very bad things happened.
The person who was able to access the account wiped out my data and sent a message to the sysop about how bad of a job he was doing and made some very charged accusations.

I do however think the idea of cloud computing is good in the respect that companies that control them within their 'four walls' can scale and control what applications are available to the user and that all data would be securely stored and backed up on a daily basis.

You presented another topic about distributed electricity and keeping the clouds running autonomously. If you take a look at the idea that you are presenting there it is much like the idea of distributed computing.
If the communication services are down into a specific area, the cloud is cut off from the business and the business may loose a large sum in a short period of time. In distributed computing the data can be uploaded to the servers any time and work continues to flow. In my opinion by sending everything to a cloud company the businesses are open to all sorts of mayhem.

Donald said...

While people may have different views still good things should always be appreciated. Yours is a nice blog. Liked it!!!

Chirag Mehta said...

Hello "gEEk":

Let me make an attempt to address your security and data hostage concerns.

The public clouds are run way more securely compared to private and closed systems simply because the threshold to support the adequate security and compliance requirements is much higher for the cloud vendors. If you closely examine the security breaches they are mostly a process breach and not a system breach. It is not the security supported by the system but how securely you use any system, cloud or otherwise, determines the overall security of a deployment. Some of the examples of deployments that run into a risk of a security breach are unencrypted backups, weak passwords, lack of security awareness to prevent hacks that involve social engineering etc. Just because the cloud is public it does not automatically make it secured or unsecured.

The other issue that you raised about someone holding your data hostage is popularly known as “rouge admin”. These kinds of admin exist everywhere. Once again the key is to use the right kind of measures in place to prevent such situation such as two password requirements (like a safe deposit vault), not allowing DBA to have access to application data (supported by Oracle Data Vault) etc. I would argue that the cloud actually makes it a good platform to prevent such situations since the cloud vendors are under pressure to use open source and open standards for their infrastructure and publicize their data retrieval and privacy policy. In fact many have suggested in the United States to force the public companies to put their financials on the cloud so that SEC can access that without any roadblocks due to the companies sabotaging their own internal systems. The developing nations can use any and all governance transparency that they could get and the cloud is a great way to bring in transparency.

You seem to have mixed up the cloud computing with distributed computing. The distributed computing could exist with or without cloud but what makes it a cloud is the elastic and utility nature that is logically centralized but physically distributed. The cloud vendors run their data centers in all geographies and have systems in place to switch to a data center across the ocean and restore data in seconds in case of a catastrophic failure. Performance and availability are not mutually exclusive when it comes to cloud computing.