Cloud Opportunities and Challenges in Asia Pacific

Since 1800s, India’s gross domestic product (GDP) has grown from a small base to over USD 1.5 trillion today and is projected cross $2 trillion within the decade. Correspondently, China are expected to leapfrogged from USD $8 trillion to USD48 trillion by 2050. To put this into context, India and China will experience more wealth creation during the next few decades than it did the previous 2 centuries!

This story is being played out in several emerging markets around the world. Microsoft’s fastest growing market , for example is Brazil. Apple’s fastest growing market is China. Whereas established markets may have reached saturation points and experience stiff competition that drives down margins, emerging markets promise many millions of potential new customers who are eager for the conveniences that wealthier countries take for granted.

Empirical evidence from around the world shows that for a country to achieve enough growth to transition from emerging to a developed market, it needs infrastructure support. In addition to physical infrastructure (power, water, roads, bridges, airports, and so on), a robust IT infrastructure will be essential to experience this kind of growth.

Opportunities: Leapfrogging Legacy Technology

To the astute, the trends of emerging markets are skipping one generation of technologies such as landline phones, which are still entrenched in mature markets. These present opportunities for businesses for offer newer standards and technologies such as cloud services more quickly and in greater numbers. One such notable opportunity involves mobile phones. Even in areas that lack basic infrastructure such as roads , mobile phones are widely used. According to figures published in the Central Intelligence Agency publication, “The World Factbook”, China and India are the top 2 most mobile users at 860 million and 750 millions mobile users where US at third spot dwarfed at 280 millions.

Through mobile phones, businesses can bring services to those who may not have access through any other means. The other opportunity presents itself in the form of inexpensive PCs or thin clients, tablets etc. Cloud services, particularly Software as a Service (SaaS) offerings, do not necessary requires the fastest processors or the largest hard drives. Although, in some areas of the emerging markets, broadband may not be viable but most the providers in these countries are continuing to expand and enhance their networks which makes internet connectivity(via 3G or 4G networks) possible in the near future. These present huge potential to the enterprises.(China and India makes up of 40% of the world population with the highest mobile phones adoption according to the “World Factbook” survey).

Another interesting notable trends is that as economies grow, so will their need and desire for solutions that IT can enable. Today, the type of customized enterprises solution hosted in Europe and North America are unaffordable or unfeasible for emerging markets. For example in India, power requirements make hosting data centers cost prohibitive for all but the large enterprises. Moving to cloud services create a viable business case for the rest of the businesses (small and medium) and in return reciprocate by offering vast market potentials for the service providers.

Challenges and Risks

We are also seeing that governments across the globe are making huge investments as they see the potential of cloud that could help their economies. Apart from the United States, other countries too are making significant investments in the cloud and charting out a path for wide spread adoption across functions. Governments in Asia too are looking at cloud services to bring in efficiencies in their ICT usage.

China Leveraging Cloud Computing to Transform City of Dongying
Cloud adoption in the public sector in China is being driven at a local level in cities such as Dongying and Wuxi. The Yellow River Delta Cloud Computing Center, being built by IBM, will provide cloud-based platform for the petroleum industry to develop more innovative application services. In the city of Wuxi, the Government has developed a Cloud Services Factory to provide adequate computing resources to the enterprises located in the Software Park.

Hong Kong Government’s New IT Strategy Focus on Cloud Computing
The Hong Kong Government has begun to roll out its new IT strategy since 2011. The strategy, will have cloud computing as a major focus area. The Government is evaluating the use of cloud computing for sharing infrastructure, software components and data. The cloud strategy, which is still a work in progress, will focus on adoption over a period of time rather than a big band transformation, the time frame for which has also not been planned

The Singapore Government Promoting Cloud Computing through Subsidies
In order to promote cloud computing in the country, the Infocommunications Development Authority (IDA) of Singapore has taken up the development of relevant infrastructure as a primary focus area. IDA is also offering subsidies in the range of 50 to 100 percent to further boost industry participation.

The Malaysian Government Creating the Right Environment to Push Cloud Services
Malaysian Government has identified cloud computing as a major focus area and had earmarked cloud computing as the foremost strategic technology under the MSC Malaysia program. The Malaysian Information System Officer Association expects cloud computing to lead to increased transparency and reduced ICT expenditure by up to 50 percent, while improving efficiencies.

Conclusions 

Cloud computing is still at its infancy stage, however, and local services may not yet be available in every countries. Thus, latency issues may arise as well as issues of the location of data storage could be a sticking point in the overarching equation. The other barrier to providing cloud services locally in emerging markets is power. Power infrastructure in the emerging countries are still unreliable and expensive , this issue is exacerbated by the staggering cost for backup data centers in these countries. In term of regulations, in many countries it is still in its early stages. Privacy and security are often a mixed bag. This was apparent during Google’s struggles with Chinese government as well as the pressures from India and Middle East placing on Research in Motion(RIM) regarding Blackberry’s use of encryption.

It goes without saying that any cloud provider businesses select for an emerging market need to be keenly aware of the local culture and regulatory requirement. It should also demonstrate long term commitment to that market via sizable investment and partnerships with local providers and governments. Thus, there is obviously a huge potential for cloud providers in emerging markets and the winners will be the ones who can seize these opportunities fast and furious.