Cloud Computing and its Effects on the CAD Industry : Sachin Chowghule, Director, DesignTech Systems Ltd

Over the years it has been observed that every new technology is first looked at with scepticism. Not all the technologies that are newly brought into the market affect the market and their functioning dynamics. Some fail to create the desired impact and are easily forgotten than noticed and taken into consideration.
Cloud Computing is the new talk to the technology town. Will it stay or be rejected and slip away as fast as it came?
Like every product, and technology, cloud computing has its own pros and cons. In this article, we will try to estimate whether the pros outweigh the cons with respective to the CAD/CAM/CAE and PLM market in India, or vice-a-versa.
It will be prudent to first understand the fundamental concept of cloud computing, before the in-depth analysis of the effects of cloud-computing.
Cloud Computing:
In simple words, Cloud Computing is a reservoir of information/data/software to be stored or accessed by individuals and/or companies any geographical location through any internet enabled electronic devices.
It basically is an external virtual data storage system made available to the companies to opt the information as per their need and requirement. The service providers set up a large server spaces and lease them out to the companies to use as their back-up or primary data storage system as per the demands of their clients. The companies can also avail i.e. rent out software applications through the cloud and use it as and when required without having to out rightly purchase them. The client companies are to pay the software developers/service providers with respect to the tenure for which they will be utilizing the service. E.g. Autodesk has launched a new service named ‘Autodesk 360’which allows the users to subscribe to an Autodesk product or suite with 25GB Atuodesk 360 cloud-based storage.
The leading companies have already started investing in the technology. Although we do not know the number of users who are signing up to subscribe to the Software-as-a-Service; from the given data we can see that the demand is on the rise and the Software Technology developers are capitalising heavily on it. They are leaving no stone unturned to reach the users directly to offer them ahead-of-the-time services through latest technology platforms. Software Technology developers do not just want to match the speed of change of market and technology, but they are infact inspiring and expediting the change which is bound to benefit them the most. They want to provide services using latest technology platform to be able to support the users better and better at less-than-before costs. As cloud computing starts gaining popularity and people start believing in the system, it might become the primary buying channel for users by logging on to the company websites and subscribing to their desired software-as-a-service. This will make the competition even more intense as software can quickly be purchased right off the virtual shelf.

Though the concept is just at a budding stage, like every other product cycle, it will take time to mature. Before delving deeper to better understand the concept of cloud computing, let us begin by exploring the general characteristics of cloud computing.
General Characteristics and Benefits of Cloud Computing:
Centralisation of Data: Companies can now store all their data in one location thereby making it easier to share and access.
Enhanced Storage Capacity: Companies can now avail the benefits of increased storage capacity than before.
Ease of Operation: the users need not have to be trained engineers or Technical IT personnel to be able to use this technology effectively. The user interface is simple, easy to understand and learn, and as same as the user interface of a computer.
Independence and Mobility: the data can now be accessed from any remote location through any hardware device connected to the internet.
Highly integrated and automated system: the applications or software installed on any of your hardware device are automatically updated without any manual input. You can now have the latest software at your disposal for immediate use.
Cost Effective: the necessary infrastructure is provided by the third party and all the data is securely stored off site without maintaining their own infrastructure and facility. This facilitates Cloud Computing as a service rather than a product. Hence the cost of ownership and operations turns out to be significantly low.
Dependability and Reliability: Anxious moments like Retrieving vital information during desperate times would now be reduced to accessing the computing software through your internet enabled device in a few clicks. This thus makes cloud computing a highly reliable and dependable system.
Scalability: Subscribing to a service rather than investing in offers you the flexibility of scaling it up or down depending upon the demand and need of an hour. It is thus highly cost effective as you pay for the space that you have subscribed to. Companies stand to benefit greatly as they now pay exactly proportionate to their use of Cloud Computing.
Enhanced Performance: the overall performance and efficiency of operation will experience a significant surge with this new revolutionary technology with a high speed internet connection and any regular web browser. It is a great mechanism to boost up Knowledge Management and Knowledge Sharing within the company. This three steps process – uploading the heavy files on FTP, mailing the access code and then the download – will now be compressed into one – log into your system and pull it out. This technology has given impetus to transform the conventional methods of transferring the data for the companies who are always time bound and cost strained.
Security: As mentioned earlier, because Cloud Computing is provided as a service by the Third party companies, they need to ensure that all the necessary security measures are put in place to protect and/or prohibit the access of the sensitive data by the unauthorised people.
Servicing, Support and Maintenance: keeping the system up and running is the primary prerogative of the Cloud Computing Service provider. The companies who have subscribed to this service are not expected to incur or contribute any cost towards this objective and hence it is not their worry. Also, these applications are not installed on the User’s computer and hence are easy to maintain.
Implications of Cloud Computing to the CAD Industry:
Leading Software/Technology Developers can now directly reach the customers through cloud computing. If the product has enough pull then the companies can make it directly available to the consumers through cloud computing. Because of the absence of channel partners or dealer networks, the costs of the product will reduce significantly. The profit margins of the Technology Developers will not increase as high as one might think, because the software developers pass on most of the costs to their customers.
Also, for the consumers, they can now easily avail the software when required and will have to pay only for the actual time of usage unlike current scenario of regular service and upgrade to the software. The cost of ownership for clients will significantly reduce if the software is made available through cloud for the actual duration usage of the software. Basically the software will be provided as a service (SAAS – Software as a Service) which the users can hire and pay as per their usage. This will be a highly cost effective solution for the clients.
The companies providing Engineering Services will highly benefit from this. Their cost of operation will drastically go down, as they will get to use software as a service when required and pay proportionate to their usage. Thus their profit margins and bottom lines will subsequently go up.
Cloud computing will be a biggest threat to the Channel Partners or Distributors/resellers of CAD Software and solutions to the industries. Their businesses will inarguably slow down if the clients started and preferred renting applications through cloud rather than purchasing them. Once the customers directly avail the applications and software through the cloud, they won’t approach channel partners. However, they do not have to worry about going out of business as there are several barriers restricting the software developers to eliminate the channels and reach the consumers directly.
Cloud computing as a technology is receiving lot of resistance, scepticism and even criticism in the CAD industry. Apart from the technical challenges and difficulties, cloud computing also needs to surpass and overcome the psychological barriers of the people who are being very careful, cautious and doubtful about this new technology. But meanwhile, let us explore some of the biggest roadblocks laid on the path of growth and acceptance of this technology.
Pre-requisites, Challenges and Concerns:
High Speed Internet Connectivity: The smooth and effective establishment and functioning of cloud computing is with fast, seamless and uninterrupted internet connection. In a developing country like India, where infrastructure is yet not as robust as the western countries, the companies have to battle various working challenges such as power cuts that also result in internet connectivity failure. These technical difficulties will pose a serious concern to the companies thinking of storing their data outside their company premises.
Product Pull: the intense competition of multiple CAD/CAM/CAE and PLM solutions has created an excess need for the Software developers to reach the industry through channel partners. The Software developers cannot do away with the channel partners at this point in time, as the role the resellers play is very crucial for their market expansion, penetration, service and overall business. One of the biggest challenges for the software developers is to over throw the competition and create a tremendous pull for their product through cloud computing. When people have too many options, they need help to decide which one would best fit and cater to their requirements. Till the time this market situation prevails, software-as-a-service through cloud computing will not pick up.
Product Training: Even when people are certain about which software they want to buy, and decide to avail it through the cloud, the first time, or relatively new users will still not know how to operate it. Product/ Software training is key which remains unaddressed when customers use software-as-a-service through cloud, unless of-course they have prior knowledge of product operation.
Customization:  Another key aspect of using software-as-a-service is that, as long as the software is ‘Stand alone’ and can be used right away, it will serve the purpose. But if the software requires customization or integration of company specific processes into the software, then again it is a huge bottleneck for the software developers to cater to that through cloud computing. In such cases they might want to go to their current resellers and make them the software consultants who will impart training to the clients.
Security: one of the biggest psychological barriers, which will prevent companies from saving their data on the external server systems, is Security. The companies are extremely cautious and want to ensure that utmost security measures are placed in the system to avoid leaking and hacking into the system for access of highly critical data. In the cut throat competitive environment wherein the market literally changes overnight through radically innovative products, the companies rightly and understandably do not want to take risks that might result in leaking their product data. Even after the company gets into all the possible service Level agreements with the service providers who guarantee that the client data will be highly secured and treated confidential, still the companies will always loom under the fear of system being hacked because the data is stored at the out-of-our-control remote location outside their company premises.
In Conclusion:
Cloud Computing is currently at a nascent stage for the CAD/CAM/CAE & PLM industry and the companies will have to decide how they want to make the most of this technology and accordingly develop new business models around it which will subsequently transform and re-structure the entire ecosystem of CAD Industry.
After all that is said, understood and perceived about cloud computing, it may not be wrong to say that despite its pros and cons, cloud computing is a non-conventional and path altering technology which will make an enormous impact on companies’ business; managing consumer relations, supply chains; and will re-shape the overall business and market dynamics.
Companies have to look at Cloud Computing as the next big Technological revolution that would change the rules and the platform of conducting business. Especially in India, where one of the biggest industries is IT and Software development, the companies will now have to start exploring and researching on utilizing this technology and provide value added services, support and updates through cloud computing. Companies that change corresponding to the changing times, never fail to lead and succeed.