Cloud will unlock the country’s endless possibilities: Microsoft India enterprise biz head Peter Gartenberg

Banking sector has seen a disruption in last decade with intensified competition with new entrants that makes brand creation and offering a unique value proposition to customers a huge challenge. Compliance and regulatory norms regarding security and data residency highlighted by the Reserve Bank of India (RBI), have mandated banks to store their data in datacenters that are physically located in India.

Peter Gartenberg, who leads Microsoft India’s Enterprise business segment, believes that migration to cloud services hosted locally will enable financial institutions to cut costs and manage operational risk while meeting customer demands for innovative products and services. The urgency for banks to transform to digital businesses has become more acute because of new competition and regulatory pressures, as well as the growing percentage of millennials (projected to be 75 percent of the workforce by 2025), who expect similar digital experiences whether as a consumer, employee or corporate customer. Speaking to Tech2, Gartenberg elaborates on the regulatory requirements and what Microsoft is doing to help banks in India. He also shares his views on how the company can take on competitors like Google and AWS.

What is the regulatory requirement behind BFSI migrating to cloud services through local datacentres?

Technology has become an integral part of banks and financial institutions’ operational strategies. The BFSI industry started adopting digital technology partly due to government policies and largely due to changing requirements of business i.e. meeting customer experience.

International regulations such as Basel III and Dodd-Frank are having a profound effect on the business models of financial institutions. Indian regulators like IT ministry, IRDA and Reserve Bank of India (RBI) have introduced multiple guidelines for BFSI sector on IT policies, technology outsourcing, procurement and cyber security. These guidelines mandate the banks on the following:

i. To have a privacy and information security policy ii. Ensure protection, prior consent of the user and restriction on the use of customer data iii. Disclosure of data location, data residency and data encrypted at rest and in transit iv. Confidentiality, privacy and security while sub-contracting and/or offshoring v. Comprehensively address network and database security vi. Cyber Crisis Management Plan

Microsoft is committed to help banks address the above regulation mandates while helping them make a smooth digital transition with an enhanced customer experience. We announced the availability of our commercial cloud services – Microsoft Azure and Office 365, from three local datacenters in India towards the end of September 2015. These three datacenters are located in Chennai (South India region), Pune (Central India region) and Mumbai (West India region). These are hyper scale datacenters with thousands of servers, petabytes of storage and massive network capacity. We make these investments in the cloud datacenters to ensure that CIOs never have to worry about regulatory mandates and capacity planning in the future.

How is Microsoft equipped to take on competitors like AWS and Google in the cloud space in India?

Microsoft is the first hyper-scale global cloud provider to offer a complete portfolio of cloud services from local datacenters in India - Microsoft Azure, Office 365, and Dynamics CRM online. Our Trusted cloud principles address customers concerns of security, privacy & control, transparency, and compliance. As a result, Indian companies have access to exactly the same advanced infrastructure platform that is available globally. Advanced services like analytics, machine learning and media services are now available to Indian companies on pay-as-you-go model, locally. The reduced network makes hybrid cloud a reality for Indian companies. This will also create newer opportunities for ISVs and partners and fuel innovative business models.

According to Gartner, the Indian public cloud market is estimated to be $713 million. We have already seen tremendous momentum in adoption of our local cloud from across segments since our services went live from the Indian data centers and our revenues from cloud services in India have grown over 100 percent in the past couple of years. Several leading banks, financial institutions, hospitals, media companies, e-commerce organizations, government departments, and telecom have moved to our local cloud services

In the BFSI sector, several leading institutions have adopted Office 365 to redefine productivity and enable quick decision-making, reducing cost at the same time. These include IDFC and ICICI Lombard. Kotak Mahindra Bank’s payroll processing and portfolio analytics and HDFC Bank’s customer experience analytics.

Our cloud is also powering the e-commerce sector. E-commerce pioneers PayTM, JustDial and Snapdeal are planning to use a range of cloud and mobile technologies from Microsoft including advanced cloud services such as machine learning, Bing, Skype and Microsoft’s digital assistant, Cortana, to drive business innovation and customer delight.

Chinese e-commerce giant Alibaba is looking to push its cloud business in India and has plans to build its own datacenters too.

We are one of the largest cloud operators in the world and have made significant investments both globally and in India to build a resilient cloud infrastructure. We are committed to delivering the most open, hyper-scale and trusted cloud solutions through our partners and ISVs that are perfectly suited to meet the changing needs of Digital India

With this in mind, are empowering the local ecosystem to create solutions that will help individuals and businesses exploit the full potential of cloud. From providing cloud assessment to cloud roadmap creation; from writing new cloud ready applications to migrating existing workloads to cloud; locally delivered cloud services will help them scale their business using the cloud and in turn accelerate public and hybrid cloud adoption in India

There are reports that suggest that data localisation might harm the startup culture and investment prospects in India and that it should not be made mandatory to set up datacenters in India. Comments?

India is currently at a turning point where cloud technology will be the true enabler to unlock the country’s endless possibilities in the start-up ecosystem. With our disruptive technologies, our expertise and our offerings, we see tremendous opportunities to contribute to India’s accelerated growth.

Indian banking and securities companies will spend 462 billion rupees on IT products and services in 2014, an increase of nearly 9.8 percent over 2013 revenue of 421 billion rupees, according to Gartner, Inc. This forecast includes spending by financial institutions on internal IT services (including personnel), IT services, software, data center technologies, devices and telecom services.

This creates tremendous opportunities for the startups and ISVs to capitalize upon. Several such innovative companies are partnering with Microsoft to deliver innovative solutions for BFSI clients. For example CloudCherry provides enterprise-grade customer experience management system, hosted on Microsoft Azure Provides. Its customer engagement framework is used by one of India’s top private sector bank in the country. ZingHR provides BFSI organizations like Kotak Mahindra Bank niche HR solutions for a geographically dispersed workforce. Does India have the infrastructure in place to support the entire country’s datacenters?

Datacenters are only one aspect of the country’s digital infrastructure. The real benefits of the digital transformation will only reach every corner of the country when its citizens are digitally empowered. Today, only 19% of Indians are connected to the internet. To truly make India a digitally empowered economy, it is crucial to extend broadband services in rural India, and bring several millions of people on the right side of the digital divide.

It is also equally important to support policy initiatives that enable thriving and competitive local knowledge economies. These include open technology standards, intellectual property rights, freedom of expression, and addressing evolving challenges in areas such as data security and privacy.

It requires a holistic and collaborative approach that spans the institution to the end-user. It is critical for stakeholders across the ecosystem to come together - governments, industry players, academics, NGOs and citizen groups, to maximise the impact of the cloud and innovation for sustainable impact across the society.