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Cloud Computing At MBR – Indian Rural Business Opportunities

Dr. Bruce White Professor of Computer Information Systems

Prasad Maganti Student of Computer Information Systems

School of Business, Quinnipiac University, School of Business, Quinnipiac

University,

Hamden, CT – 06518

Abstract

Hamden, CT - 06518

India’s 73% of population lives in the rural areas and villages. This rural segment, commonly referred to as the ‘bottom of the pyramid’ showing a huge opportunity for companies. Even for the people, who can afford a computer become a headache to maintain, upgrade and buy licenses for the software on regular basis. Also, they need to carry their computer everywhere they go. If a “personal computer” can be made available on cloud, accessible from any where, that too free or minimal charges (pay-as-you-use) rural people can afford and grow their personnel life. The Cloud Computing can help the rural population in overcoming the huge costs incurred on infrastructure, software etc., hurdles and it can lead to rural area development and an overall economic progress of the nation. Using cloud computing to reduce price will create a world without poverty.

Case Summary

This case presents a cloud computing technology solution that gives promising to MBR Company will get better service for using information technology which will improve business opportunities in rural villages. MBR company using ‘Cloud computing’ solution to overcoming huge cost of IT expenses in rural supermarket expansion hurdle and with minimal set up fees to implement existing technology to move cloud technology. This Cloud IT solution helps to the company centralized inventory management and distributes system to track their inventory reports by store level and with user access to company data any where internet permits. With ERP solution, multilevel of access and enterprise security will benefit to the company more matured and it helps to find investors to expend their business in the near future.

Keywords

Cloud

computing,

rural

development,

Indian

rural

opportunities,

Indian

rural

business,

Business

opportunities

 

The space between rural sectors

Rural India has seen impressive growth in the past few years. Substantial improvement in purchasing power, increasing brand consciousness, changing consumption patterns and rapid spread of communication networks in rural areas has presented a growing potential for the corporate sector.

According to a National Council of Applied Economic Research (NCAER) study, the consuming class households in rural areas equals the number in urban. For a number of Fast moving consumer goods (FMCG) companies and service industry in the country, more than half their annual sales come from the rural market.

A rising trend has also been observed in terms of rural networking. For instance the rural share was only around 25 per cent of the total market in the 1980s has been growing rapidly and exceeds 50 per cent today.

The gaps to develop rural sector

Rural areas are small pockets which hinder major companies to operate efficiently alone. Providing single services in rural areas cost more for the companies or the consumers. In case of urban areas where more consumers are present the companies can provide cost effective services. There is a need to create a platform to provide services cost effectively at rural areas.

The rising importance of the rural markets reflects not only the saturation in urban markets, but also the huge potential, which rural markets have to offer, both in terms of the emerging middle class and the impressive growth rates of the rural consumer market.

Rural Opportunities

India has more than 0.6 million villages, housing two third of its people, earning one-third of the national income. The steep rise in size of the rural market has been the most important marketing phenomenon of the nineties, providing volume growth to all the leading consumer goods, services as well as agro-input companies. Higher rural incomes and increasing penetration of television and other mass media, have induced propensity to consume branded and value added products and services in rural areas.

According to NCAER the rural consumers represent more than 50 percent of India’s ‘Consuming Classes’ and have become the prime target market for consumer durable and non-durable, food, construction, electrical, electronics, automobiles, banks and other sectors.

According to the NCAER Indian Market Demographics Report 2001, the consuming class households (annual income between Rs 45,001 and Rs 215,000) in rural areas equal the number in urban areas, which means more disposable incomes in rural areas, as the cost of food, shelter, primary education and health is much lower.

Research also shows that today around 68% of the rural market lies untapped due to various reasons ranging from inaccessibility to lack of awareness to high cost of reach.

Company Background

Founded in 2005 by Rama Krishna, MBR Consumer Services Pvt Ltd begin as a super bazaar based out of Eluru, India. It is initially setup only 10 villages and gradually expending to 55 villages enable the consumer to have day to day transaction with the company. MBR Consumer Services Pvt Ltd is a family based business and pioneering micro franchising level efforts to create a far-reaching positive impact in bringing a qualitative change and implement revolutionizing super bazaar model in rural areas. It is an example of how well corporate can contributes to development of stores by building sustainable business models.

Company started with retail service sector dealing with consumer goods like grocery, detergents, bath, soaps, oils etc, and started for profit social enterprise to create a platform to provide multiple services like financial services, insurance services, healthcare services, travel services, courier and parcel services, marketing and promotion of MNC products, Local Business promotion services, educational consultancy services, Matrimony services, Agriculture allied services, Agriculture produce marketing services, etc to rural residents.

IT has been a critical backbone to the chain of centers. It is being used to provide online support on latest technical advancements, E-tickets service, E-education, E-health camps, market prices, fair & transparent billing to consumers as well as in maintaining extensive rural consumer databases with micro information about the rural consumers to provide customized services.

So far 55 village outlets have been set up around Eluru, Andhra Pradesh. Concentrate it in these 55 village outlets to build customer trust and confidence in rural area consumers. Company establish warehouse with trained sales, purchasing, administrative and field staff to run the business at centralized warehouse. Employee training, excess IT staff to maintain store data and IT software costs are expensive to the company survivor to profits.

MBR is setting up a chain of centers aimed at providing end-to-end ground level support to the Indian rural consumers and improving rural consumer’s profitability & productivity. The “MBR Consumer Services” setting up centers for empower the rural consumers to provide all encompassing solutions to the rural customers under one roof.

Each MBR Consumer Service center operates around 25 km distance apart. A typical store is about 1000 – 2000 sq ft and impacts the life of approx. 500 families in each store location. All franchise locations are

owned by company and run by their own funds. It is quite opposite to traditional franchise model and each store management staff employed under the company payroll.

Rural areas are small pockets which are not economically viable to deal with single service and hence the need for the platform to provide multiple services supported the origin of our enterprise.

For last four years company experimented with every delivery model to penetrate to rural residents.

Developed proven business model and created our presence at nearly 55 villages with a consumer base of nearly 500 families in every village.

To have day to day transaction with the rural residents to establish super bazaars in every village.

Create good rapport with the rural residents and won the confidence by providing quality and cost effective MNC products (FMCG).

On the verge of delivering other services after creating our presence at another 100 villages.

Create well established office with trained sales, purchasing, administrative and field staff.

Developed proven systems for inventory management, accounting practices, distribution systems, etc pertaining to rural area.

Each center is engaged in the following services to the Indian rural residents.

FMCG (Fast moving consumer goods) Products Sales and Promotion

Educational Services

Financial Services

Healthcare Services

Insurance Services

Mobile Phone Services

Rail and Bus ticket Services

Matrimonial Services

Courier and Cargo Services

MNC (Mutli-National consumer) Products Promotion

Agriculture Allied Services

Soil and water testing services

Crop finance

Supply of agriculture inputs & animal feeds

Information services

Procuring fresh fruits and vegetables, their handling, storage and processing

Other services, which pertaining to customized customer needs

These centers provide the much needed respect/dignity and freedom to the Indian consumers. In the near future, MBR Consumer Services plan to move beyond agriculture, BPO, Procurements, other opportunities to meet the needs of rural consumers as customers.

Company developed proven system using TALLY ERP accounting software for inventory management, accounting practices, distribution systems etc., pertaining to rural areas. Due to infrastructure costs, IT expenditure, power outage Issues Company operates their IT staff at main location. Every day route managers get the each store stock report and IT staff enters all the stores data in one single company data.

Last 5 years, company management understands the rural business, consumer market and needs for the customers. Now company management decided to establish more villages to offer better services. With the same staff, purchasing power to reduce cost, transport costs will benefits to see profits to the company. But current system is not enough to support to expend different warehouse location and tracking inventory in store level. Route managers calling to the warehouse staff to find out the inventory data. It is wasting of staff time and sometimes improper information provided to the route mangers.

Definition of Cloud Computing

As defined by the National Institute of Standards and Technology (NIST), “Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction”.

Characteristics of the Cloud

On-demand self-service: A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service’s provider.

Broad network access: Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, laptops, and PDAs).

Resource pooling: The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and

reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, network bandwidth, and virtual machines.

Rapid elasticity: Capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale up and rapidly released to quickly scale down. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be purchased in any quantity at any time.

Measured Service: Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported providing transparency for both the provider and consumer of the utilized service.

Benefits of Cloud Computing

There was a time when every household, town, farm or village had its own water well. Today, shared public utilities give us access to clean water by simply turning on the tap; cloud computing works in a similar fashion. Just like the water from the tap in your kitchen, cloud computing services can be turned on or off quickly as needed. Like at the water company, there is a team of dedicated professionals making sure the service provided is safe and available on a 24/7 basis. Best of all, when the tap isn’t on, not only are you saving water, but you aren’t paying for resources you don’t currently need.

Economical: Cloud computing is a pay-as-you-go approach to IT, in which a low initial investment is required to get going. Additional investment is incurred as system use increases and costs can decrease if usage decreases. In this way, cash flows better match total system cost.

Flexible: IT departments that anticipate fluctuations in user load do not have to scramble to secure additional hardware and software. With cloud computing, they can add and subtract capacity as its network load dictates, and pay only for what they use.

Rapid Implementation: Without the need to go through the procurement and certification processes, and with a near-limitless selection of services, tools, and features, cloud computing helps projects get off the ground in record time.

Consistent Service: Network outages can send an IT department scrambling for answers. Cloud computing can offer a higher level of service and reliability, and an immediate response to emergency situations.

Increased Effectiveness: Cloud computing frees the user from the finer details of IT system configuration and maintenance, enabling them to spend more time on mission-critical tasks and less time on IT operations and maintenance.

Energy Efficient: Because resources are pooled, each user community does not need to have its own dedicated IT infrastructure. Several groups can share computing resources, leading to higher utilization rates, fewer servers, and less energy consumption.

Deployment Models

Private cloud: The cloud infrastructure is operated solely for one organization. It may be managed by the organization or a third party and may exist on premises or off premises.

Community cloud: The cloud infrastructure is shared by several organizations and supports a specific community that has shared concerns (e.g., mission, security requirements, policy, and compliance considerations). It may be managed by the organizations or a third party and may exist on premises or off premises.

Public cloud: The cloud infrastructure is made available to the general public or a large industry group and is owned by an organization selling cloud services.

Hybrid cloud: The cloud infrastructure is a composition of two or more clouds (private, community, or public) that remain unique entities but are bound together by standardized or proprietary technology that enables data and application portability (e.g., cloud bursting for load- balancing between clouds).

Service Models ∑ Cloud Software as a Service (SaaS): Provides the consumer the ability to use

Service Models

Cloud Software as a Service (SaaS): Provides the consumer the ability to use the provider’s applications running on a cloud infrastructure. The applications are accessible from various client devices through a thin client interface such as a web browser (e.g., web-based e-mail). The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, storage, or even individual application capabilities, with the possible exception of limited user-specific application configuration settings.

Cloud Platform as a Service (PaaS): Provides the consumer the ability to deploy onto the cloud infrastructure consumer-created or acquired applications created using programming languages and tools supported by the provider. The consumer does not manage or control the underlying cloud infrastructure including network, servers, operating systems, or storage, but has control over the deployed applications and possibly application hosting environment configurations.

Cloud Infrastructure as a Service (IaaS): Provides the consumer the ability to provision processing, storage, networks, and other fundamental computing resources where the consumer is able to deploy and run arbitrary software, which can include operating systems and applications. The consumer does not manage or control the underlying cloud infrastructure but has control over

operating systems; storage, deployed applications, and possibly limited control of select networking components (e.g., host firewalls).

Solution to MBR Consumer Service Problem

After company management further research and one of the directors Prasad Maganti suggest to move on cloud computing to reduce cost. After further research and company management chooses A2Zapps company to setup their current technology move to cloud ERP application with minimal setup fees. Company is initiative to move their IT solution using Cloud Computing to greatly reduce staff time, serving accounting & inventory at store level, and lower operating costs. As company moves to the cloud to ensure that the standards are in place for a cloud computing environment that provides for security of the company data.

Now company IT staff coordinate with A2Zapps Company to migrate current inventory system to cloud ERP system and they will see more power to see instant data where ever internet provide with well secure permission. Now route managers using internet connection data card and carrying laptop to view & enter company store level data. Management instantly views company inventory data reports and also streamlines process to provide access to manufacture to view inventory data and ship inventory to warehouse. Management decided to purchase other apps such as CRM, payroll, HR, Education, Financial services, Insurance services apps to provide better services and centralized data provides customized reports to make strategies to grow business.

Moving to cloud benefits to the company

Cloud computing allows each store to avoid upfront software licensing and IT infrastructure investments by paying A2Zapps vendors on pay-as-you-go model, and access services related to Inventory, accounting, CRM, HR, finance and procurement.

Here are some of the upfront savings to the company

No hardware investment

No software to purchase

Zero on-going maintenance

No upfront cost

Pay just subscription fee

Get up and running in few days

Add users/apps instantly

About A2Zapps.com

A2Zapps.com is world’s first True Business Platform-as-a-Service – founded by SaaS industry veteran from leading enterprises enables all businesses, primarily micro, small, and medium enterprises, achieve the desired success and growth by providing business software (CRM.ERP/Collaboration) as utility services, such as electricity, mobile phone, as opposed to a large packaged traditional or hosted business software. It eliminates the upfront cost, hardware investments, software installation, on-going maintenance, and provides instant access to new features and free upgrades.

Data Security

At A2Zapps.com, protection of customer data and applications is prioritized at any cost without compromising with security. A2Zapps.com will take all precautions at all levels to keep data safe and secure. The platform is hosted at the state of the art data centre, using the latest firewall protection, intrusion detection systems, SSL encryption and proprietary security products and managed by a team of experts to keep customer data stored in a high security facility where even physical access is audited and controlled. The data in transition from user's web browser to servers is encrypted by 128bit SSL encryption. In addition to this, the platform provides various security mechanisms to protect a set of data from certain group of users/employees. These security mechanisms will be implemented as per the needs of customer’s organization.

Data Backup

A2Zapps.com employ industry best practices to keep company data intact even in the worst of calamities. All data is regularly (nightly incremental and weekly full) backed up to ensure that company data is never lost.

Uptime

Uptime for A2Zapps.com servers are guaranteed as they are housed within one of the best internet data centers and also monitored 24/7 by a group of hardware and operating system experts, and A2Zapps.com software architects. A2Zapps.com uptime is comparable to any highly available web applications like gmail.com and yahoo.com. A2Zapps.com are proud to say that have not experienced any down time since our launch in mid-2008. As any adverse situations may arise like it happened for Google in 2009, A2Zapps.com engineers are well equipped to bring the servers to its normal state very quickly.

Speed

A2Zapps.com expects the customers to access our platform through broadband connection with moderate speed which is generally available with home or office connection. A2Zapps.com has also seen that

accessing our platform over wireless data card is satisfactory one given the bandwidth supported by data card technology. As all A2Zapps.com screens hardly use any images, data flow is much faster compared to other web applications.

About Internet Connection

Company can opt for any normal broadband Internet connection for HQ from any providers with a basic plan. Or if company has one, company can use the same also. It doesn't consume much bandwidth.

For mobile executives, company can give them data card (could be bit higher than home connection) or internet facility at home or they can use at HQ. Data card pricing is coming down. With many options available from many vendors these days, company can find data card for Rs. 200 (Tata prepaid) to Rs. 650 (Reliance post paid with higher speed)

Consulting Charges

Any minor changes to App such as field label change, adding new field etc. will be at free of cost. Company can export company data as spread sheet any time for local backup copies. A2Zapps.com support is also free. For any major customizations (changes to existing app, or adding new app), integration with external systems, A2Zapps.com charge professional services fee at Rs. 400 per hour.

User pricing

per user pricing that A2Zapps.com have offered company will remain same for the contract period. Company can sign contract for 1, 2 or 3 years. Company have no obligations, hence company can cancel anytime. Company data will stay with us for 30 days from cancellation time. With in that time period, company can export their data own or take help from our professional services team. There will be a small fee for the hours our consultant takes to export data.

Conclusion and estimating Cloud Saving

There are wide ranges of cloud saving estimates from various sources, some of which are much more optimistic than others. According to IT Office and one of the directors Prasad Maganti says migration to the cloud will save 90 to 99 percent of IT operating costs. It involves simple migration with A2Zapplication and there is no setup cost for this migration. Due to small size business and limited to small IT budget to chose to deploy public clouds. Where as Private clouds typically cost more due to greater security needs and lower storage utilization rates. If migration to a cloud increases utilization to 60 percent, that translates directly into dollar savings.

The level of privacy and security protection is another big variable in cloud migrations for MBR Consumer services. As a small size company that has sensitive or classified information obviously require greater safeguards, both in terms of monitoring and firewalls. This subsequently affects the cost of cloud storage and service delivery.

One final significant factor determining the level of cost economies is the extent or labor savings, or whether migration to the cloud enables company to reduce personnel. If organizations are able to downsize their IT departments based on cloud migration, it increases their cost savings.

Exhibit 1:

The level of privacy and security protection is another big variable in cloud migrations for MBR

Exhibit 2:

Exhibit 2: 13

Exhibit 3:

Exhibit 3: 14

A2Zapps.com vs. ON-Premise vs. Hosted

A2Zapps.com vs. ON-Premise vs. Hosted A2Zapps.com tariff plan 15

A2Zapps.com tariff plan

A2Zapps.com vs. ON-Premise vs. Hosted A2Zapps.com tariff plan 15

References

Nirvikar Singh – “Information Technology and Rural Development in India” University of California, March 2004

Dr. Prabhudev Konana, Dr. Sridhar Balasubramanian – “India as a Knowledge Economy: Aspirations versus Reality” McCombs school of Business VT-Austin.

Shaily Malik and Vineet Sinha (2010) “Cloud Computing – A Hope for the Rural India” International journal of computer applications (0975 – 8887)

Gaganpreet K. Sidhu, Jujhvir s.Saini, Ramneet Kaur – “Information and communication technology – Heading towards Rural India”

Abhinav Pandey, Akash Pandey – “Cloud Computing: Exploring the scope”

Nirvikar Singh – “ICTs and Rural Development in India” University of California, October 2006

Vivek Kundra – “State of Public Sector Cloud Computing” CIO Council, May 2010

Darrell M. West – “Saving Money Through Cloud Computing” Governance Studies at Brookings, April 2010