We know that cloud computing has taken off in U.S.-based enterprises since the term was coined in mid-2007, but how is it faring in other parts of the world? Where will the growth come from in this US$40.7 billion industry that Forrester Research forecasts will grow to a projected US$241 billion by 2020? While the North American market accounts for the bulk of cloud investment and infrastructure today, Ovum Associates forecast that this will drop to approximately 50 percent by 2016 in the face of strong growth in Asia and Europe.
The Asia Cloud Computing Association has identified ten factors that affect cloud adoption rates, which can be broadly grouped into three classes: regulatory, physical infrastructure, and market conditions. Regulatory concerns include data protection laws, the extent of Internet filtering, and other government policies. Physical infrastructure refers to power grid reliability, broadband penetration rates, and international connectivity. And market conditions relate to the overall sophistication of a country’s IT industry and the perceived political risk of doing business in a country.
With that, let’s first take a look at cloud computing, beyond the borders, in Asia. And as all the above factors are applicable to other geographies, next time we’ll talk about the cloud in Europe.
The IT world is looking to Asia with high expectations…and uncertainty. Everyone agrees that Asian cloud computing growth will be impressive: analysts quote industry CAGR figures of 20-35 percent from 2010 to 2014 and beyond. Nobody knows quite how much it will grow, however, because of persistent and thorny issues.
Asia consists of many countries in various stages of development. Those with well-developed infrastructure and institutions – Japan, Singapore, South Korea, Australia, and New Zealand – have experienced the greatest growth in cloud adoption to date. While Asian interest in the cloud is, in general, sky-high, many other countries lack the infrastructure to deliver. According to Per Dahlberg, CEO of the Asia Cloud Computing Association, this puts Asian cloud uptake approximately three years behind that of the United States.
What drives Asian cloud uptake? What hinders it? Answers to both questions are as diverse as Asia itself.
Many Asian countries are developing economies with poor or outdated IT infrastructure. They see cloud computing as a way to modernize government and private IT systems, while spurring the development of home-grown industry. In its current five-year plan, released in 2010, the Chinese government designated next-generation information technology as one of seven “Strategic Emerging Industries,” designed to drive innovation for indigenous Chinese industry. The plan highlights cloud computing as a key investment area that should receive special focus. Business Cloud News reported that this will help propel cloud investment in China to a forecasted US$154 billion by 2015. China Mobile alone plans to invest US$52 billion in that time-frame to build its cloud offerings.
Another pan-Asian driver of cloud growth is increased broadband penetration. The proliferation of mobile phones with always-on 3G and 4G data connections will continue to drive migration to the cloud. As people gain faster data pipes they can take anywhere, they increasingly want to store their content in the cloud. Likewise, companies want employees to be mobile, thus necessitating the secure availability of company data anywhere it’s needed.
Finally, Asia has untold millions of small businesses with the desire, but not the IT know-how, to be global competitors. IT as a service will come to play an important role in helping these firms reach new markets and compete globally.
Of course, different parts of Asia are poised to take advantage of the impending storm at different levels. Many factors hinder cloud adoption, including shoddy power grids and connectivity issues. But cutting across all countries is the problem of fragmented regulatory regimes with wildly varying requirements for everything from data protection to vendor lock-in. For example, a nation might prohibit its citizens’ data from physically leaving the country. This prevents building regional data centers and realizing the key cloud benefits around economies of scale. Another open question revolves around jurisdiction. If a data center in Singapore holds information on Indonesian nationals, which country’s laws should govern that data and that data center? What if the information is replicated to a data center in China? A coherent pan-Asian regulatory framework will help to alleviate this, but questions around privacy, security, and freedom of speech will likely persist.
Cloud uptake in Asia will see tremendous growth over the next few years. The ultimate heights of that growth and how quickly it is achieved will depend in large part on the degree to which the region as a whole enables it via development of physical and regulatory infrastructure.
Next time up, Europe’s cloud.