December 20, 2010


Cloud Computing Opportunities - A Reality in Emerging Markets

There has been a paradigm shift in the Cloud computing landscape in the emerging markets, especially amongst the BRICSS nations

Global IT spending is inching northwards again, post the recession period, mostly fuelled by the BRICSS nations, with China in the lead, followed by Russia, Brazil, India, South Africa and South Korea.

IT Spend contribution by BRICSS countries of US$ 167 Billion in 2010E, which is ~11% of the worldwide spend.

Cloud Market in BRICSS nation

Public Cloud Spending in the BRICSS countries has increased by a whopping figure of ~120%, from US$ 310M in 2008 to US$ 688M in 2010. CAGR forecast in public cloud spending in this region is expected to be at 38.3% between 2010 and 2015, reaching US$ 3480M by 2015.

Major Cloud technology players are considering BRICSS opportunities as part of their cloud plans. The BRICSS markets show a strong growth in cloud services as they seek to close capability gaps, such as in-house networking capability, by purchasing IT as a service.

Analysts estimate, for example, that the Chinese software-as-a-service market will grow from US$ 24 billion in 2008 to US$ 77 billion in 2012, driven by platform operators like Alibaba and Digital China.

Characteristics and enabling factors which make Cloud computing solutions a favorable option for the BRICSS nations

They have a large base of SMBs and fast growing enterprises.There’s been a steady rise in the number of BRICSS companies (SMBS / Enterprises) featuring in the FORBES 2000 list, from 162 in 2006 to 304 in 2010, to a predicted figure of 622 by 2015.

Revenues are lesser than counterparts in developed nations, thus there is a constant pressure for higher cost control from the IT departments within the SMBs and enterprises of the BRICSS market.

With cloud, the fundamental model there is that the customer gets to offload a lot of the upfront capital expenditure and the complexity to the service provider. Thus a SMB can right away get the benefit of what they want to buy, whether it is Sales-force Automation or HR Package, or storage, compute and backup / recovery.

There is a need to attach to local channels for market acceptance. This region also supports more than 2.8 Billion Mobile Subscribers and more than 899 Million internet users. Cloud Technology providers are sensitized to these characteristics and are tapping into the potential. They have focused, strategic plan to address the BRICSS market.

For example, HP, with the 3Com purchase, has gotten entrée into the networks of 300 of China's 500 largest corporations. In India, HP has launched a cloud service for the rapid creation of mobile applications. These applications, now being tested outside the lab, will be hosted on existing Web sites and can be created even by nonprogrammers. They can then be accessed through both text messages and voice interfaces or even downloaded in the form of mobile widgets.

Governments in BRICSS are extremely active participants in the Cloud ecosystem

The Chinese government has specific focus on cloud computing in the 12th five year plan; E-governance spending on a fast pace in China with a strong focus on cloud.

The Korean government plans to invest about US$ 540M till 2014 to stimulate the domestic cloud computing market

The Russian Government is currently developing a modern center for R&D near Moscow and the first innovation project is a cloud computing based project worth US$ 29 M

Internet Infrastructure is increasingly gaining traction in BRICSS

The penetration of broadband and 3G is building a promising opportunity for cloud solutions in the BRICSS nations

To conclude, due to the distinctive characteristics of the BRICSS nations complimented by key enablers, these BRICSS nations will find cloud computing particularly attractive; it will be fueled by fast-proliferating wireless data coverage, wide use of internet and the ability to use cloud-based services to fill skills gaps. The economics of the cloud—its scale and flexibility— are particularly well-suited to the forecasted rapid growth in BRIC markets, especially as concerns around public cloud adoption decrease.